Headlamp – Will the energy industry even want to drill in ANWR?

Hibernation begins with the rig count. While higher than last year, a survey of U.S. exploration and production activity in October suggests the sector may go into hibernation during the winter. The analytics division of commodity pricing group S&P Global Platts recorded 1,033 rigs in active service in the United States last month, down about 1 percent from the previous month. Rig counts serve as a metric for activity geared toward exploration and production and serve as a loose barometer to gauge sector confidence.

Unprecedented exploration on the North Slope this winter. A federal geologist said Thursday there are dozens of potential oil pools in just one corner of the Alaska petroleum reserve where the Trump administration recently expanded access for the oil industry. A geological prospect around that northeast section of the National Petroleum Reserve-Alaska should see “unprecedented” exploration this winter, said David Houseknecht, the U.S. Geological Survey’s lead geologist for oil and gas resources in Alaska. Seven exploration wells are planned within that corner and just outside the reserve. ConocoPhillips plans five and Armstrong Oil and Gas plans two, he said.

Comprehensive AND controversial. Got Gas? A comprehensive plan to get more natural gas to the Interior is halfway home. The Alaska Industrial Development and Export Authority board of directors unanimously approved a $331.2 million financing plan authority leaders hope will enable the Interior Gas Utility to bring the Interior Energy Project to fruition. Included in the deal is the sale of Fairbanks Natural Gas and its Titan LNG plant on Point MacKenzie in Southcentral for $59.5 million, as well as passing of the gas supply contract AIDEA secured in September with Cook Inlet producer Hilcorp Energy. The three-year gas contract, which starts Jan. 1, essentially underpins the whole project. AIDEA officials had been trying to reach a gas supply deal with Cook Inlet producers since early 2016 but the fact that the ultimate demand for gas is still unknown hampered progress.

Revenue sharing for Alaska in the house! A House Republican leader introduced a comprehensive bipartisan energy bill on Friday that would open up financial incentives for states that allow energy development off their shores. The SECURE American Energy Act was introduced Friday by House Majority Whip Steve Scalise of Louisiana, who was joined by House Natural Resources Committee chairman Rob Bishop of Utah. Democratic Reps. Henry Cuellar and Vicente González of Texas also signed onto introducing the legislation. Scalise explained that the bill provides “incentivizes” for offshore energy production by extending revenue-sharing agreements from Alaska to the Atlantic states while raising existing revenue-sharing caps to provide Gulf states like Louisiana with hundreds of millions in additional dollars to help restore their coasts.

Move the legislature, please! A ballot initiative is in the works to move legislative sessions out of Juneau. The group “Equal Access Alaska” filed with the Alaska Public Offices Commission Saturday. According to the filing, it was created to “support efforts to provide more government access to Alaskans.” Dave Bronson, Chairman of the group, says the measure is intended to move legislative sessions, not the capital, from Juneau. If backers get enough signatures, the question would be on the ballot in 2020.

How much oil is in ANWR? All eyes were on a Senate hearing in Washington D.C. yesterday, as Democrats and Republicans once again sparred over whether to drill for oil in the Arctic National Wildlife Refuge. But one federal scientist whose work could sway the Arctic Refuge’s future wasn’t at the hearing — he was here in Alaska, giving a talk to an industry group. David Houseknecht works for the U.S. Geological Survey, and he’s trying to figure out two key questions: How much oil is in the Arctic Refuge, and where is it? The answers could decide ANWR’s fate, no matter how the politics play out. Houseknecht’s audience was packed with industry people and their political allies, eager for clues on where more oil might be hiding in the Arctic. But Houseknecht wanted to make one thing clear right off the bat: he’s doesn’t like taking sides.

From the Washington Examiner’s Daily on Energy:

WILL THE ENERGY INDUSTRY EVEN WANT TO DRILL IN ANWR? Republicans are closer than ever to achieving their long-time goal of allowing oil and natural gas drilling in the Arctic National Wildlife Refuge, but energy companies might not be interested in taking up the opportunity. ‘What we do’: Energy industry groups say they expect a rush of activity if Congress opens a 1.5 million-acre section of the Alaskan refuge, but the companies themselves are less bullish about their plans. Some doubt that drilling in the refuge can meet Republicans’ expectations that drilling can raise $1 billion for the government over 10 years, with oil prices hovering around $50 a barrel and competition steep from natural gas in the nation’s shale regions. “There is a lot of pressure from the shale play and Lower 48, and the price structure currently is not terribly supportive of activities in Alaska because we are a high-cost environment to produce oil,” said Tom Walsh, public affairs chairman and an oil and gas consultant with the Alaska Support Industry Alliance. “But we are an oil and gas resource state. That’s what we do.” Alaska’s energy needs: Alaskan politicians are especially eager to tap the refuge because oil production in the state has fallen from more than two million barrels per day in the late 1980s to under a half-million barrels per day — a big deal in a state whose government provides residents an annual check from oil revenue. “Everyone understands ANWR to be the biggest prospective onshore conventional oil field in North America,” said Robert Dillon, an energy consultant and former senior staffer for Murkowski. “There is substantial interest both from Alaskans and energy companies.” Energy companies non-committal: Yet energy companies that have experience operating in Alaska’s remote, capital-intensive terrain are less direct about their expectations. ConocoPhillips already has operations in the National Petroleum Reserve, a 23.5-million acre federal land in northwest Alaska set aside for energy development. “If the 1002 area was authorized for leasing, we would consider it against other opportunities in our portfolio, just as we do with exploration opportunities worldwide,” said Daren Beaudo, director of media relations for ConocoPhillips.

First Reads:

U.S. exploration and production slowing down
UPI, Daniel Graeber, November 3, 2017

With high expectations, Alaska’s petroleum reserve should see ‘unprecedented’ exploration this winter
Alaska Dispatch News, Alex DeMarban, November 3, 2017

AIDEA approves sale of LNG plant to Fairbanks gas utility
Alaska Dispatch News/Alaska Journal of Commerce, Elwood Brehmer, November 4, 2017

Steve Scalise introduces bill to expand offshore energy incentives to all states
The Washington Examiner, John Siciliano, November 3, 2017

Ballot initiative aims to relocate Alaska Legislature
KTVA, Liz Raines, November 5, 2017

Geology gets political as federal scientists pursue new ANWR oil assessment
Alaska Public Media, Elizabeth Harball, November 3, 2017