Morning Headlamp – Two Minds without a Single Thought; FILL THE PIPELINE WITH NEW DISCOVERIES

Two minds without a single thought. Speaker of the House Bryce Edgmon and House Rules Chair Gabrielle LeDoux threw their commitment to a fiscal plan out the window yesterday. The Alaska House passed a modified capital budget with a surprise, bipartisan amendment to inflate Permanent Fund dividends to more than $2,000 this year, nearly double what they had been prior to Wednesday. But the vote may have the effect of prolonging budget negotiations in the face of a government shutdown – all this after the majority claimed they were designing a bill to avoid a conference committee.  Headlamp supposes shutting down the government by increasing the deficit to almost $4 billion dollars does avoid a conference committee…

Thumbs Up to Representatives Gara, Grenn, Josephson, Kito, Kreiss-Tomkins and Ortiz for voting against their caucus on such a significant policy reversal. Thumbs Down for their vote to pass the bloated capital budget anyway, adding close to a billion dollars to the deficit.     

Thumbs Down to Representatives Eastman, Johnson, Millett, Neuman, Rauscher, Reinbold, Saddler, Sullivan-Leonard, Talerico, Tilton and Wilson for casting a vote that doesn’t get them any closer to restoring the PFD, but gives the House Majority a pandering win with the public. 

Two Thumbs Up to Representatives Birch, Chenault, Johnston, Knopp, Kopp, Pruitt and Thompson for holding the line and voting no on the amendment to double the PFD. 

FILL THE PIPELINE. By 2030, Wood Mackenzie predicts that 40% of oil production from the North Slope will be from fields not yet in production. Source: Wood Mackenzie. The discoveries come at a critical time for the North Slope, whose link to export markets has been the Trans-Alaska Pipeline System. Without the volumes from these fields coming on line in the next decade, the flow through the aging line was expected to drop below the level needed to justify the cost of keeping it operating. “We will see what happens,” said Alison Wolters, a research analyst for Wood Mackenzie adding, “It could be difficult to plan development and secure capital when there is so much volatility in the fiscal environment.”

America can see Russia from Norway…Spy toys abound for the US in Norway in response to President Vladimir Putin of Russia strengthening his country’s military and economic role in the Arctic. He has vowed to make Russia the dominant player in the high north as climate change opens up new shipping routes from Asia to Europe, new gas and oil prospects and a new arena for great power rivalry. The bedrock of Russia’s Arctic ambitions, said Katarzyna Zysk, an associate professor at the Norwegian Institute of Defense Studies, is the role of the region in Russia’s nuclear deterrence and naval strategies. At the center of these is the Borei submarine, a new generation of strategic weaponry that can carry at least 12 ballistic missiles, each armed with multiple nuclear warheads.

Educated into imbecility. Controversy now a “scientific” consideration in resource development? US District Judge James Boasberg on Wednesday instructed the US Army Corps of Engineers to conduct a new environmental review of the Dakota Access Pipeline but did not suspend the pipeline’s operations. He ruled that the US Army Corps’ review “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”

Business group runs ads against income tax proposal. Prosperity Alaska spent over $10,000 on anti-income tax advertisements that ran in Anchorage on Wednesday. The ads, from Prosperity Alaska, hit KTUU’s airwaves Tuesday and KTVA’s on Wednesday, according to filings with the Federal Communications Commission. The 30-second commercial features Scott Hawkins, the chair of the group’s board, petting a dog in a kitchen, where he argues “big-spending House liberals are crying wolf. But there is no wolf. Alaska has plenty of money to fund essential state services and pay a healthy dividend,” Hawkins says in the commercial. House majority members want to raise $700 million for the state budget with an income tax, which would ask higher income Alaskans to pay higher rates.

ReadlID extension. Alaskans will receive another extension on the Readl ID Act to allow access to military bases and federal facilities through early October. Leslie Ridle, deputy commissioner of the Alaska Department of Administration, said the state received news Wednesday that Homeland Secretary John Kelly would sign off on the extension. That extends the grace period for non-compliant Alaska IDs through Oct. 10, 2017.

Legislative action imperative for energy industry in Alaska. HuffPost contributor John Burnett called for lawmakers to arrive at a budget solution in order to “avoid cutting the legs out from under a sector that has, for generations, served as the lifeblood of Alaska’s economy.” At the heart of resolving differences, a fair and optimized tax structure that addresses the realities of today’s market but is not driven by cyclical price dynamics. The House bill, HB 111, represents a significant tax hike on the oil industry that would darken the future of the sector in Alaska with a “massively significant” change to the way that taxes are assessed. By 2026, the tax hike will amount to nearly $500 million, and the bill will increase the cost of producing oil in Alaska by $7 per barrel. If it’s not cutting off the legs, at minimum it would be hamstringing any hope for recovery.

 

First Reads

Alaska business-backed group spends more than $10,000 on last-minute anti-income tax television ads
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Alaskans get another extension as state prepares to implement Real ID
Alaska Dispatch News, Suzanna Caldwell, June 15, 2017

Budget standoff continues as House votes to double Permanent Fund dividends
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Encouraging American Energy Independence
Huffington Post, John Burnett, June 15, 2017

On a tiny Norwegian island, America keeps an eye on Russia
The New York Times, Andrew Higgins, June 13, 2017

Judge: Dakota Access Pipeline needs further environmental review
The Hill, Devin Henry, June 14, 2017

Major Alaskan Discoveries Promote Great Expectations
Journal of Petroleum Technology, Stephen Rassenfoss, April 21, 2017