Morning Headlamp—Walker needs to check his numbers on oil and gas taxes and one step at a time for AKLNG

Focusing on the task(s) at hand. Last Wednesday, representatives of the Alaska LNG Project partners — the state of Alaska, BP, ExxonMobil, and ConocoPhillips — said at an Anchorage press conference that despite market uncertainty, AKLNG will move steadily into pre-FEED. In a public meeting Saturday at the Kenai Visitor Center, Alaska LNG Community Stakeholder Advisor Josselyn O’Connor said these possible changes were not prompting hesitation with the project’s work. “Our marching orders are to get through and complete pre-FEED,” O’Connor said, using the project’s acronym for pre-Front End Engineering and Design — the preparatory work needed to decide whether to invest in building the 806-mile pipeline to carry natural gas from the North Slope. In the coming months, Alaska LNG will have to submit 13 reports of the project’s estimated effect on the local environment and culture to the Federal Energy Regulatory Commission, a national licensing authority. Alaskans are confused about the status of this project; as AKLNG employees continue work, Governor Walker removes $7 million in funding for AKLNG support positions in DNR and holds a press conference to announce change…but no detail.  Headlamp has said it before:  Uncertainty is the enemy of investment. 

House members question whether Walker’s administration has done enough analysis of proposed oil and gas tax changes – as well as other tax increases Walker has proposed. Speaker of the House Mike Chenault says it’s important for legislators to study economic models showing how the changes will affect the state’s economy. The state didn’t conduct statistical modeling before Walker proposed the tax changes. “They were told basically they have no modeling – or that they were working on modeling” Chenault said. “Well, it’s hard to put together a tax bill if you don’t have modeling.” Economic modeling is the backbone of any fiscal reform—it’s frankly irresponsible not to model potential changes before voting on them. Headlamp agrees with concerned House members, the Walker administration must be well-informed before they propose such sweeping changes.

Oil exploration closer to home. In an effort to encourage oil and gas drilling in a large chunk of Southcentral Alaska, a preliminary determination document was signed on February 2, 2016 by Corri Feige, director of the state Division of Oil and Gas. The document is part of a plan to declare about 50 million acres of state land open for oil and gas exploration. The proposed area north and east of Anchorage extends to the Canadian border, with boundaries encompassing some state waters — such as Prince William Sound — and communities that include Talkeetna, Tok and Cordova. Jonathan Shick, pre-exploration team lead for the state said that the program is “geared toward smaller-scale investors and exploring unknown areas.” Headlamp is always happy to hear when responsible resource development is proposed for Alaskans. Hopefully the exploratory licenses will evolve into drilling licenses and Alaskan’s can prosper through small-scale drilling operations.

Global LNG developments. A liquefied natural gas (LNG) tanker docked on Sunday at the Sabine Pass terminal in Louisiana, with only days to go before the United States ships its first export cargo of seaborne gas from the lower 48 states. Set to load the first shale gas to export markets, the Asia Vision LNG tanker docked at Cheniere Energy’s Sabine Pass LNG terminal on Sunday, Reuter’s ship tracking data showed. Once operational, Sabine Pass will be the first LNG export terminal outside of Alaska. The United States has been exporting LNG mostly to Japan from Alaska since 1969.


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First Reads

AK LNG project pace holds steady
Peninsula Clarion, Ben Boettger, February 21, 2016

House Speaker questions administration’s analysis of oil, gas tax changes
Alaska Public Radio News, Andrew Kitchenman, February 19, 2016

What’s it like to work at an oil field on the North Slope?
Alaska Dispatch News, Annie Zak, February 19, 2016

First U.S. shale gas exports imminent as tanker docks at Sabine Pass
Reuters, Jacob Gronholt-Pederson, February 22, 2016

State encourages small-scale efforts to hunt for oil and gas in Southcentral
Alaska Dispatch News, Alex DeMarban, February 19, 2016

House wants details on impacts of oil, gas tax changes
KTOO, Andrew Kitchenman, February 19, 2016

An inevitable delay for natural gas: Price slump, supply glut a one-two punch to Alaska LNG timeline
Fairbanks Daily News Miner, February 19, 2016