Morning Headlamp: Alaska gets a champion; Hilcorp securing Alaska’s future.

Headlamp congratulates Wackowski! Great news yesterday for Alaskans – Interior Secretary Zinke announced that longtime Alaskan Steve Wackowski will serve as senior adviser for Alaskan affairs.  Wackowski worked for the Senate Commerce, Science and Transportation committee and worked for Senator Ted Stevens as well as Senator Murkowski.

OPEC in Deepwater? According to Wood Mackenzie, deepwater oil projects are declining in cost and will become more competitive with shale and could become a challenge to OPEC’s market share. The average breakeven price is expected to fall to $50 by next year, down from $62 in the first quarter.

Let the games begin. Alaska Gov. Bill Walker’s administration emailed nearly 20,000 state workers Tuesday warning they could be temporarily laid off if the Legislature fails to pass a budget before July 1st. State lawmakers, divided over how to fix Alaska’s $2.5 billion deficit, have already missed two other deadlines: the flexible 90-day limit on the regular session imposed by voters, which came and went in mid-April, and the 121-day limit set by the state constitution. The layoff warnings — to be followed with contractually required paper mailings Thursday — are the latest milestone in the Legislature’s march toward the June 30 deadline.

Interior Aims To Put Native-Corps In The Driver’s Seat. Ryan Zinke said the Interior Department needs to look at more opportunities to “get government out of the way” and give Alaska Native villages more input into federal decisions affecting their communities. On Tuesday, Zinke also expressed support for streamlining permitting decisions to put more oil in the 800-mile trans-Alaska pipeline, without relaxing government accountability.

The future’s so bright. Hilcorp is planning to significantly increase their investments in safety and infrastructure inspection. While Hilcorp’s business model in Alaska to-date has been to rejuvenate old fields cast aside by oil majors, the company is gearing up to spend approximately $75 million laying new pipelines on the Cook Inlet floor and converting some existing lines from gas to oil carriers to allow it to close the Drift River oil terminal. When the project is complete — which Hilcorp hopes will happen late next year — oil will flow from its West Inlet Granite Point facility under the inlet directly to Tesoro’s Nikiski refinery via what is now the Cook Inlet Gas Gathering System. On the North Slope, Hilcorp is expecting to see the first draft of an environmental impact statement for its offshore Liberty oil prospect in the next month or so from the federal Bureau of Ocean Energy Management. About six miles offshore in the Beaufort Sea, the company plans to build a gravel island in the shallow water similar to how other nearshore North Slope oil discoveries have been developed. Hilcorp, which bought into Liberty in 2014 as part of a $1.25 billion deal with BP, estimates the long-awaited project could produce up to 70,000 barrels of oil per day at its peak. Headlamp is excited to see this kind of activity and investment in Alaska. More oil. More jobs. More revenue!


First Reads

With Legislature gridlocked, Alaska state employees warned of potential shutdown — again

Alaska Dispatch News, Nathaniel Herz, May 31, 2017

New Interior secretary ready to work with Alaska Natives on sharing federal management duties

Alaska Dispatch News, Alex DeMarban, May 31, 2017

Hilcorp looks ahead after Inlet incidents

Alaska Journal of Commerce, Elwood Brehmer, May 31, 2017

Secretary Zinke supports more offshore drilling in Alaska

KTVA, Dave Leval, May 30, 2017

Zinke names Alaska adviser
E&E News, Brittany Patterson, May 31, 2017

Now There’s Another Source of Oil That’s Starting to Get Cheap
Bloomberg, Serene Cheong and Sharon Cho, May 30, 2017