Same song, 7th verse. The Alaska Legislature passed a late-night deal Saturday to end cash payments to oil companies, beating a midnight deadline to end its special session with an hour to spare. The House vote was 33-6 and the Senate’s was 18-0, in actions that both came after 10:30 p.m. Saturday. There was no public or industry testimony on the latest version of the legislation, House Bill 111, which emerged at a joint House-Senate conference committee meeting earlier in the evening after hours of delays.
Uncertainty is the enemy of Investment. With the passing of H.B. 111, it’s now the 7th change in oil tax policy in past 12 years. The bill includes a legislative working group that will monitor Alaska’s oil and gas issues. Alaska Oil and Gas Association President and CEO Kara Moriarty says the working group, which will keep the oil and gas tax debate going, sends a message to the industry that more changes to oil tax policy could be coming.
Rumor mill is wrong. Rumors about Armstrong and Repsol’s plans for the Pikka unit development being slowed down are unsubstantiated. In fact, operator Armstrong is getting ready to file a permit for the Pikka 2 well, which will be drilled this winter in the southern tip of the Pikka unit a couple of miles from where the Putu 1 well should have been drilled last winter.
Secret Science Soiree. Members of the House Committee on Science, Space and Technology, led by the committee’s chairman, an outspoken climate skeptic, made a secretive trip to key Arctic research sites in May, according to a new report from Buzzfeed News. The congressional delegation was led by Rep. Lamar Smith, a Republican from Texas, head of the science committee and vocal skeptic of climate science. Scientists quoted by the news outlet said that they were told to keep mum about the visit.
Make room for more. ExxonMobil is proposing a dramatic increase in oil production at a North Slope field, under the terms of a 2012 settlement with the state that ended a seven-year legal battle, according to a newly submitted development plan. The oil giant has begun working on engineering studies and seeking regulatory approval to boost the light oil, or condensate, being produced at the Point Thomson field – to more than 50,000 barrels daily from its current capacity of up to 10,000 barrels.
Petroleum Price Pendulum. Oil swung between gains and losses in New York after China’s economic growth in the second quarter surpassed expectations, while OPEC’s commitment to supply curbs weakened. While oil rose last week, prices in New York have been below $50 a barrel on concerns elevated global supplies will offset output curbs by the Organization of Petroleum Exporting Countries and its allies.
Dry hole blues. Statoil has made a smaller-than-expected gas find in the Barents Sea near its Snoehvit gas field, the company said on Monday. The find at the Blaamann well is estimated to hold up to 3 billion standard cubic meters of recoverable gas. No oil was found. “We were exploring for oil and this is not the result we were hoping for,” Jez Averty, Statoil’s head for exploration in Norway and Britain, said in the statement.
State has the means. A top credit rating agency this week downgraded Alaska’s credit, the latest drop the state has seen as its financial problems drag on. Moody’s Investors Service downgraded Alaska’s general obligation debt one notch, from Aa2 to Aa3, the agency said Thursday. Moody’s also maintained a negative outlook for Alaska. “The downgrade reflects the state’s ongoing structural budget imbalance, a small economy with concentration in energy production, large fixed costs, and heavy pension burden,” the Moody’s statement said. Alaska “still has the means” to fix its fiscal problems, Moody’s said, “and our baseline expectation remains that the state will do so before exhausting its still-considerable liquid reserves.”
First Reads –
Alaska Legislature passes last-minute oil tax deal, but capital budget is still pending
Alaska Dispatch News, Nathaniel Herz, July 16, 2017
Latest change to oil tax policy could impact future investment
KTUU, Blake Essig, July 16, 2017
Congressional science committee members secretly visited Arctic research sites
Arctic Now, Kelsey Lindsey, July 14, 2017
Under settlement, ExxonMobil proposes more oil production at Point Thomson field
Arctic Now, Alex DeMarban, July 17, 2017
Oil Snaps Winning Streak as Doubts Over OPEC Cuts Weigh on Price
Bloomberg, Jessica Summers, July 16, 2017
Statoil says Norwegian Arctic gas find disappoints
Reuters, Reuters Staff, July 17, 2017
Pikka development on track, new well in works to replace COP’s Putu
Petroleum News, Kay Cashman, July 16, 2017
Moody’s downgrades Alaska’s credit rating again
Alaska Dispatch News, Annie Zak, July 14, 2017