Morning Headlamp – New House Minority Plan Reduces Government & Keeps Money in Private Sector

House Minority rolls out big plan. A new deficit-reduction plan from the Alaska House Republican Minority would maintain Alaskan’s Permanent Fund dividend checks at current levels, rely on structured  withdrawals from state savings and implement further budget cuts. House Bill 192 is largely aligned with the Permanent Fund restructuring bill approved by the Senate Majority last week, with one major distinction: the plan would pay dividends of nearly $2,000 this year, compared to $1,000 under the Senate plan. Legislation sponsored by Anchorage Republican Rep. Lance Pruitt, would preserve the dividend payments by relying on bigger withdrawals from state savings and a proposed $600 million cut in state spending over four years — a 14 percent reduction.

Time is now for OCS. In a guest commentary, Robert Dillon of the American Council for Capital Formation, argued strongly for the U.S. to seize the day on Arctic OCS. After eight years of retreat, it’s time for America to charge back into the energy-rich waters of the outer continental shelf and secure once and for all its rightful place as an energy superpower. Responsible development of our offshore resources has long been a major contributor to the economic health and security of our country. Taxes, royalties, and rents from offshore production are the treasury’s second-highest source of revenue — right after the annual contributions of the millions of Americans who pay income taxes. The U.S. offshore holds an estimated 90 billion barrels of oil and 327 cubic feet of natural gas. Of the nation’s 1.7 billion offshore acres, though, less than 1 percent — or 17 million acres — are currently under lease. When Obama left the White House in January, he’d succeeded in barring oil and gas activity in almost every corner of the OCS, including nearly all waters off the coast of Alaska. Today, roughly 90 percent of federal offshore areas are off-limits. After years of falling production and government neglect, our strategic offshore resources are ready for the kind of renaissance that has made our onshore oil and gas activity the envy of the world.

Home stretch, budget and oil taxes. The major budget bills are moving in the Legislature and the state House may have the most controversial bill of the legislative session, a bill raising oil taxes, ready for floor action the week of March 27. With lawmakers more than two-thirds of the way through their scheduled 90-day session, the pace of activity is picking up. Few expect the session to really end on the 90th day, or April 16, however. The Senate will sharply disagree with the House proposal for a personal income tax now in HB 115 and the House does not like the Senate’s spending cap formula that is in SB 26. The House Finance Committee dove head first into the Democrat-led majority’s oil tax and credit bill with several lengthy hearings March 20 to 22 reviewing the history of the state’s oil tax and getting detailed analysis from Tax Director Ken Alper in multiple hearings per day. The Department of Revenue projects HB 111 would garner between $60 million and $75 million per year in additional near-term tax revenue while also saving the state more than $100 million per year in tax credit payments and deductions.

Furie ramping up. Furie Operating Alaska is gearing up for a busy season in Cook Inlet with plans to complete a gas production well drilled last year and drill two more wells including a deep test to assess potential oil resources in Jurassic-age rocks, according to Vice President Bruce Webb. Webb said Furie’s first order of business this spring is to move a small workover rig to its platform to do some work on the KLU-3 well. As soon as the Inlet is clear of ice, the Randoph Yost jack-up rig will move out from winter storage at the OSK dock in Kenai to complete Furie’s A-1 well that was started last year but not finished. “We see a large oil potential there. We know there is gas, based on our earlier drilling of the KLU-2 well,” Webb said. Dan Seamount, a member of the Alaska Oil and Gas Conservation Commission, said Cook Inlet has produced 1.3 billion barrels since production began in the region in 1958, and U.S. Geological Survey studies show there could still be 34 billion barrels of oil-in-place in the Inlet’s deep source rocks, mainly the Jurassic. There are billions of barrels of oil that are unaccounted, and many of us believe it’s still down there,” said Seamount, who said he spoke from his experience as a geologist and for the commission, which is a regulatory body. “We’ve barely skimmed the surface,” of the Inlet’s potential, he said. “We’ve only tapped some of the oil that was trapped in the shallow conventional traps.”

 

First Reads

GOP bill would pay bigger PFDs, pull more cash from state savings

Alaska Dispatch News, Nathaniel Herz, March 23, 2017

Explorers ready to spud Slope shale well

Alaska Journal of Commerce, Elwood Brehmer, March 22, 2017

GUEST COMMENTARY: Time is now to regain US edge on OCS

Alaska Journal of Commerce, Robert Dillon, March 22, 2017

Budget bills on the move; oil tax hike heard in House Finance

Alaska Journal of Commerce, Tim Bradner & Elwood Brehmer, March 22, 2017

Agency wants review of second Hilcorp pipeline

Associated Press, Dan Joling, March 22, 2017

Pebble, EPA pushing to settle lawsuit

Alaska Journal of Commerce, Elwood Brehmer, March 22, 2017

Furie gears up for busy 2017, plans deep test for oil in Inlet

Alaska Journal of Commerce, Tim Bradner, March 22, 2017

Word of new oil is encouraging but Alaska shouldn’t bank on it

Alaska Dispatch News, Tim Bradner, March 23, 2017