Morning Headlamp — Tax credits to take center stage & UA to make big cuts

88 Energy ltd has unveiled a new independent resource estimate which sees some 1.4bn barrels of oil equivalent in the HRZ shale that was encountered in the first Project Icewine well. “We look forward to providing additional information related to the project as we continue to complete the current 2D seismic acquisition and mature plans for the Icewine#2H well,” said 88’s chief executive Dave Wall. The company highlighted that the assumptions used by D&M are largely consistent with the internal view of the project, and the main difference relates to the views of how much of acreage would prove productive in the ‘success case’. Good news from 88 Energy, Headlamp hopes potential tax increases on the oil and gas industry don’t spoil an optimistic future.

No good will come of this. Following HB247 hearings this week, tax credits have emerged as a major budget item for Alaskan lawmakers. According to the Associated Press, a rewrite of Gov. Bill Walker’s oil and gas tax credit bill would phase out the credits for oil produced from newer North Slope fields and tax oil produced from Cook Inlet. Kara Moriarty, with the Alaska Oil and Gas Association, can see no positive elements to the House Finance Committee rewrite. She says it proposes a big shift in Cook Inlet tax policy and would negatively affect production, jobs and investment in Alaska. Headlamp can’t see anything positive either. Numerous companies came to and invested in Alaska because of a favorable long-term climate for business—Alaska is about to see these opportunities fade away.

Tick tock. In an interview with the Peninsula Clarion, Gov. Bill Walker is calling this year’s legislative session the “fix Alaska” session and next year’s the “build Alaska” session. “I’ve always said our plan is in pencil, not pen, and it is,” Walker said. “The part that’s in pen is to get it done now. Sitting back and saying, ‘We’ll get it done the next year or the next year isn’t acceptable to me. One of the biggest challenges we had a year ago…was helping Alaskans understand the magnitude of the situation we are in,” Walker said. “Until you recognize you have a problem, it’s really hard to work on a solution.” Fix Alaska? Headlamp wonders how Governor Walker can fix anything by jeopardizing the state’s most significant income source.   

According to a revised budget draft from University of Alaska President Jim Johnsen, the university may lose 200 to 300 full-time employees. If it is the larger cut, that range increases from between 400 and 500, according to Johnsen’s presentation. On top of that, Johnsen said, between 25 and 34 full-time senior-leadership jobs would be eliminated out of a total 167.


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First Reads

88 Energy Ltd unveils ‘billion barrel’ estimates for Alaska shale project
Proactive Investors, Jamie Ashcroft, April 6, 2016

House panel bill rewrite addresses oil taxes, credits
Associated Press, April 7, 2016

Walker: This year is to ‘fix Alaska’
Elizabeth Earl, April 7, 2016

University of Alaska president presents budget plans with hundreds of staff cuts
Alaska Dispatch News, Tegan Hanlon, April 7, 2016

House Passes Bill Limiting Governor’s Ability to Accept Federal Funds
Alaska Commons, Craig Tuten, April 7, 2016

State budget director outlines budget realities
KFSK, Joe Viechnicki, April 7, 2016