Morning Headlamp – Alaska smack in the center of Trump’s Energy Dominance Plans

House Majority plays Battleship – or maybe Chutes and Ladders?  Even after threats of a state-wide shutdown were averted by the state legislature, some significant items remain for Alaska to address. A capital construction budget and the multi-million dollar budget deficit facing the state have yet to be resolved. Despite a continuance of the special session, little work is being done in Juneau. “I think that one thing that all of us in the Capitol can agree on is this has probably been the single most contentious legislative session that most of us have experienced,” Speaker of the House Bryce Edgmon said Thursday night. “I think we have more work to do. I think both sides understand that,” said Senate Majority Leader Peter Micciche, R-Soldotna, shortly afterward. “I think the Legislature needs to take some time off, cool down, come back together and work out solutions to the remaining issues that have to be dealt with this year.”

Headlamp would note that Rep. Geran Tarr has the ability to move things forward by calling a conference committee meeting on HB 111 – oil and gas tax credit  legislation – but has refused to do so.  Alaskans are tired of the games – do the job you were elected to do.

The last time I saw Paris.  The Trump administration intends to define what it means by “clean energy” during a week-long series of discussions, media appearances and discussions with businesses to explain its ideas for an America First energy plan, according to Energy Secretary Rick Perry. “This week will also reaffirm our commitment to clean energy,” Perry said. “The binary choice between being pro-economy and pro-environment that was perpetuated by the Obama administration, it set up a false argument,” he said. “We can do good for both, and we will.”

Epic Battle:  Oil vs. Natural Gas.  President Trump has uncorked yet another controversy over energy vs the environment and it promises to be a heavyweight battle. The White House budget proposal includes a revenue line of almost $2 billion from selling oil and gas leases in the richly oil-prospective northeastern coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska. Until the climate change debate came along, leasing and drilling in the ANWR (pronounced an-war) Coastal Plain was arguably the most ferociously contested item on the oil and gas industry’s wish list at the national level.

Global domination Trump style. President Donald Trump will promote surging U.S. exports of oil and natural gas during a week of events to highlight the country’s growing energy dominance. Trump also plans to emphasize that after decades of relying on foreign energy supplies, the U.S. is on the brink of becoming a net exporter of oil, gas, coal and other energy resources.

Investors should prefer oil companies who can prove profitable in challenging times. BMO’s Brendan Warn and Nikolas Stefanou contend that major oil producers like Exxon and Chevron can survive at $40 oil, but life is a heck of a lot easier at $60 a barrel. At ~$40/bbl, the sector’s operating cash flows fail to cover current capex and dividend expectations, even with the aid of scrip, whereas at >$50/bbl, the majors should, on aggregate, be able to match full cash outflows. Note to legislators considering tax increases at current prices: when operating cash flows are negative, raising taxes doesn’t help anyone. 

AKLNG competition? Cheniere is looking at new ways to finance more terminals that chill gas to a liquid and ship it across the globe, including skipping banks altogether and seeking out other capital sources, Chief Executive Officer Jack Fusco said in an interview at the company’s headquarters in Houston. The company has room to grow: It’s leased additional acres at its flagship Sabine Pass terminal in Louisiana and has the option to purchase more land at a Corpus Christi, Texas, site, where another export project is under construction.

MORE AKLNG competition?  A gas company from Korea, one of the largest buyers of liquefied natural gas in the world, said it commenced a sales agreement with a U.S. supplier. The Korea Gas Corp. commenced a 20-year sales and purchase agreement with Cheniere Energy Inc., which operates the only facility in the United States with the permits necessary to export super-cooled LNG.

 

First Reads

Big Oil: Surviving at $40, Thriving at $60
Barron’s, Ben Levinsohn, June 26, 2017

Legislature averts shutdown, but more work remains
Alaska Journal of Commerce, James Brooks, June 26, 2017

Perry: Trump doesn’t need Paris to advance ‘clean energy’
The Washington Examiner, John Siciliano, June 26, 2017

Trump’s ANWR move could spawn epic oil, natural gas battle: Fuel for Thought
S&P Global Platts, Bob Williams, June 26, 2017

Trump to call for US ‘dominance’ in global energy production
Bloomberg, Jennifer A. Dlouhy, June 26, 2017

Cheniere Gets Ready for ‘Next Round’ in Global Gas Export Market
Bloomberg, Ryan Collins, June 26, 2017

U.S. now supplying LNG to South Korea
UPI, Daniel Graeber, June 17, 2017