Morning Headlamp — Opportunity knocks on Alaska’s door via Trump Cabinet Picks

Filling the roster. President-elect Donald Trump has tapped Republican Rep. Ryan Zinke, who has represented Montana’s at-large congressional seat for one term, to serve as secretary of the Department of the Interior, according to an individual with firsthand knowledge of the decision. In addition, Trump has picked Rick Perry to head the Energy Department, an agency whose name he forgot during a presidential debate even as he vowed to abolish it.

Alaska Senator Lisa Murkowski issued the following statement on Perry’s appointment, “I welcome the President-elect’s nomination of former Gov. Rick Perry to be Secretary of Energy. I strongly believe the leadership at this Department should have a broad understanding of the need to increase access to energy, make it more affordable, and improve environmental performance – all key factors that should drive our nation’s innovation policy. As a former governor of Texas, Rick recognizes the economic and security benefits of technology innovation and an energy supply that is diverse, reliable, and affordable. I look forward to meeting with Gov. Perry to discuss a wide range of important issues, including the high cost of energy in Alaska, the United States’ innovation excellence, the future of nuclear energy, LNG exports, and the Strategic Petroleum Reserve. I also look forward to learning more about the team he would put in place around him, and to considering his nomination before our committee at a hearing in early January.”

Headlamp applauds both choices as they signal a new commitment to responsible resource development that was absent from the Obama administration. 

Shell has turned away from giant “frontier” projects, focusing instead on exploring closer to home, such as in Malaysia where it has been producing oil for more than a century. Many of its rivals are following suit. Shell, like many of its peers including BP and Exxon Mobil, have been forced into such strategies as the chances of finding new and huge reservoirs in hitherto unexplored frontier areas has diminished. The rate of successful exploration has dropped sharply in the last decade, with the proportion of projects finding any oil or gas down from around 40 percent to about 30 percent, according to Andrew Latham, vice president of exploration at consultancy Wood Mackenzie. Fewer than half of the finds go into commercial production. For Shell, the success of the new strategy and the Alaskan failure mean it will not return to frontier areas in the near future, but Ceri Powell, Shell’s head of exploration still sees opportunities for big discoveries in the likes of West Africa, Namibia, South Africa, Uruguay and eastern Canada.

Without question, Trump is building the most pro-drilling Cabinet in American history. In addition, a portion of Trump’s promise to speed economic growth and create 25 million new jobs rests on his commitment to leasing more federal lands and offshore areas for drilling. In the campaign, Trump’s advisers estimated that such an expansion would generate nearly $100 billion a year in additional economic growth over the next decade. The source for their projections was a study by a Louisiana State University economist, Joseph Mason, published by the Institute for Energy Research, a group that champions pro-fossil-fuel policies. “There’s been a lot of rhetoric from Trump about ramping up U.S. oil and gas production, but I think there are relatively few regulatory steps they can take to achieve that,” said Jason Bordoff, a former energy adviser to President Obama who is the founding director of the Center on Global Energy Policy at Columbia University. “You can open a lot of new areas, and you can scrap a lot of environmental rules, and on the margin that might slightly reduce the cost of drilling a new well. But that has a negligible impact compared to the swings of the global oil market.”

The Exxon vs Gov. Walker feud got much more interesting with the presumptive appointment of Exxon CEO Rex Tillerson to Secretary of State. Exxon holds the state’s largest share of natural gas reserves and was, until recently, the lead partner in the effort to build a gas line, a role the state is now taking over. Tillerson, who said he’s been involved in Alaska natural gas projects at Exxon since 1985, told World Gas Intelligence that Alaska has been its own “worst enemy” on the pipeline project, saying the state changes its approach every time it changes governors. Gov. Walker has frequently fired back.


First Reads

After Alaska flop, Shell’s search for oil moves closer to home
Alaska Dispatch News, Ron Bousso, December 13, 2016

Donald Trump faces an oil price conundrum
Alaska Dispatch News, Jim Tankersley, December 13, 2016

Activists rally in Anchorage against massive Arctic oil, gas lease sale
Your Link Alaska, Ron Bousso, December 13, 2016

3 legislators look to next session
Juneau Empire, Ben Boettger, December 12, 2016

Exxon’s Tillerson, Trump’s choice for State Dept., has history in Alaska
Alaska Public Radio News, Rachel Waldholz, December 12, 2016

Trump taps Montana Rep. Zinke as interior secretary
Alaska Dispatch News, Juliet Eilperin, December 14, 2016

Trump taps Perry to head Energy Department
Fairbanks Daily News Miner, December 14, 2016