Headlamp – Never kill a rule that’s already dying.  

September 22, 2017 | Posted in : News

Never kill a rule that’s already dying. A federal appeals court has dismissed a lawsuit over the validity of a hydraulic-fracturing regulation instituted by the Obama administration. The 10th Circuit Court of Appeals ruled Thursday that a lawsuit over the rule is unnecessary because the Trump administration is working to repeal the rule. The court also vacated a lower judge’s ruling that the Bureau of Land Management had overstepped its bounds by trying to regulate fracking. The court ruled that it would not consider the merits of the rule — and instead overturned a lower court’s decision to do so — because the government is working to undo it.

One giant step for IEP. The Alaska Industrial Development and Export Authority board unanimously passed House Bill 105 resolution for the Interior Energy Project on Thursday, clearing a major hurdle in bringing more natural gas to the Interior. House Bill 105 authorized financing for the Interior Energy Project, but certain requirements had to be met before these tools could be accessed. A recent deal with Hilcorp — a Texas-based natural gas developer with an operation in the Cook Inlet — to supply natural gas to the Interior through March 31, 2021, helped AIDEA meet those requirements. This resolution unlocks those financing tools. “Not having those finances was holding us up,” said Gene Therriault, the Interior Energy Project’s team lead at AEDIA. “We’ve got a (request for proposal) on the streets right now for the storage tank, and we’re making considerations to expand the liquefaction plant — all of those things can move forward. And that expanded capacity (to deliver natural gas to more customers) cannot move forward until those are built.” The financing package includes $57.5 million in state funds, plus $275 million in financing: $125 million Sustainable Energy Transmission Supply program (SETS) loans, and an authorization to take out $150 million in AIDEA bonds to complete the project.

Pennies from heaven, aka, Secretary Zinke. On Thursday, U.S. Secretary of the Interior Ryan Zinke announced that $856,021 will be distributed to the state of Alaska for outdoor recreation and conservation projects, through the Land and Water Conservation Fund (LWCF). The LWCF is a federal grant program that provides funds in partnership with individual states and U.S. territories from offshore oil and gas leasing. “From Detroit, Michigan, to Juneau, Alaska, the program benefits citizens across the nation by helping state and local governments make infrastructure investments in urban, suburban and rural parks,” said Zinke. The Alaska Department of Natural Resources reports “37 million in LWCF grants has been invested in about 350 projects in Alaska, since inception of the program in 1965.”

Another entry in the Governor’s race. Business entrepreneur and political activist Scott Hawkins has filed a letter of intent to run for governor, becoming the third major Republican candidate to do so. Hawkins founded and has operated a supply chain management company for 18 years, with business in Alaska, the Lower 48, the Caribbean, and South America. Advanced Supply Chain International (ASCI) has approximately 200 employees. Hawkins has been active in politics with The Accountability Project and AlaskaWins.org, which helps produce the annual Alaska Business Report Card, a project that scores legislators on how pro-business and pro-jobs their actions are in Juneau using a detailed and rigorous scoring criteria. Hawkins is an economist by training and said his candidacy will focus on Alaska’s economy and growing jobs, as well as on closing the fiscal gap and public safety issues. “In talking with people across Alaska, it is clear to me that voters are very dissatisfied. They overwhelmingly feel that Alaska is on the wrong track, and they hold our current leaders responsible. They are ready for a change of direction. They are ready for a governor who will bring new solutions and fresh ideas to Juneau,” Hawkins said. The letter of intent allows Hawkins to raise funds and talk with Alaskans across the state about the future. Headlamp appreciates that Hawkins company ASCI is a long-time member of the Alliance and that he has been a strong advocate for responsible resource development in Alaska.

First Reads:

AIDEA clears path for natural gas
Fairbanks Daily News-Miner, Kevin Baird, September 22, 2017

Department Interior to give $850,000 to Alaska for outdoor recreation
KTUU, Sean Maguire, September 21, 2017

Court dismisses lawsuit over Obama-era fracking rule
The Hill, Devon Henry, September 21, 2017

Breaking: Hawkins files for governor; focus will be on economy, dividends, crime
Must Read Alaska, Suzanne Downing, September 21, 2017

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Headlamp – Stop demonizing Pruitt; Let’s Make a Deal & methodology matters

September 21, 2017 | Posted in : News

Stop demonizing Pruitt. Scott Pruitt is under fire, this time for trying to stay safe. Because the EPA chief requires 24/7 security, according to a new Washington Post report, the agency has pulled agents from environmental investigations to serve on his security detail.  There is an obvious solution to this staffing problem. End the demonization of Pruitt in the press and the threats against the environmental administrator will taper off. A safer Pruitt will inevitably free-up agents to pursue dangerous polluters.  Normally the EPA’s Criminal Investigation Division doesn’t do VIP security. G-men with green thumbs, they follow up leads and knock down the doors of criminal polluters. “These guys signed on to work on complex environmental cases, not to be an executive protection detail,” explains former special agent Michael Hubbard. “It’s not only not what they want to do, it’s not what they were trained and paid to do.”

Let’s Make a Deal. The Alaska Industrial Development and Export Authority-owned Titan LNG has reached a natural gas supply deal with the Texas-based Hilcorp, which owns a natural gas development operation in the Cook Inlet. This morning the AIDEA board will meet to decide whether the deal satisfies requirements of House Bill 105, which authorized the state to finance the Interior Energy Project. Gene Therriault, team leader of the project, said if the board finds this deal with Hilcorp satisfies the requirement, it would unlock the entire funding package for the Interior Energy Project: $57.5 million in capital funds, $125 million in an AIDEA loan program, and authorization for as much as $150 million in bond funding. Unlocking the full financing package for the Interior is crucial to adding more customers.

Got guts? Trump does. During a speech in Anchorage today, a top Interior Department official said kick-starting oil development in the Arctic National Wildlife Refuge, or ANWR, is a priority for the Trump administration. “The untapped potential of ANWR is significant. But it is the Trump administration that had the guts to step up to the plate and facilitate production,” Vincent DeVito, the Interior Department’s Counselor for Energy Policy, told a conference for ocean researchers in Anchorage Wednesday. DeVito occupies a new post created by the Trump Administration, advising Interior Secretary Ryan Zinke on developing oil and other resources from federal land and waters. Last week, the Washington Post reported the Trump administration is pushing to allow seismic testing in the Arctic Refuge. Seismic testing would provide new information on where and how much oil is in the Refuge.

May the force be with you. Lawyers expect a spate of force majeure contract lawsuits after Hurricane Harvey tore through Southeast Texas and parts of Louisiana last month, paralyzing a fifth of U.S. fuel output and pushing some oil production offline. Hurricanes and other natural disasters can affect the energy industry’s ability to honor contracts related to oil and natural gas production, transport and oilfield services. Force majeure is a legal declaration that means the operator cannot fulfill a contract due to circumstances outside its control. Damage in Texas wrought by Harvey is estimated at around $180 billion, according to Texas Governor Greg Abbott, with some of that in the oil-rich Eagle Ford shale region southwest of Houston. While the full extent of Harvey’s effect on the Gulf Coast energy industry is still being tabulated, damage from hurricanes Katrina and Rita in 2005 shut in more than 8 billion cubic feet of gas production and 1.5 million barrels per day of oil production.

Getting rid of red tape at FERC. US Sens. James Inhofe (R-Okla.) and Angus S. King Jr. (I-Me.) introduced a bill aimed at improving coordination of federal interagency National Environmental Policy Act reviews of interstate natural gas project applications before the US Federal Energy Regulatory Commission. Four national oil and gas associations immediately welcomed the Sept. 20 measure. “By streamlining the permitting process, we can get pipelines from planning to serving the public faster and more efficiently,” Inhofe said. “This bill brings all federal, state, and local regulatory agencies to the table early on to coordinate participation—resulting in a more collaborative and timely review process.” King noted, “By establishing timelines for federal reviews, the legislation cuts through red tape in a way that can deliver relief for Maine families and businesses facing high energy costs while in no way compromising environmental standards.” The legislation is necessary because the permitting process for interstate gas pipelines has become more protracted and challenged despite the obvious need for them to be built, Interstate Natural Gas Association of America Pres. Donald F. Santa said. “We hope the Senate takes prompt action on this legislation that will facilitate the responsible and orderly development of infrastructure, enabling consumers to enjoy more fully the benefits of America’s abundant and affordable natural gas supply,” he said.

Methodology matters. Some of the affected parties are raising concerns as state tax assessors are finalizing a methodology for valuing oil and gas properties other than the Trans-Alaska Pipeline System for the first time. Alaska Petroleum Property Assessor Jim Greeley said in an interview that the way the state currently assess values for oil and gas properties isn’t new; it’s been phased in over the last five years. However, the means for assessing the industry’s often complex and extremely expensive infrastructure has never been spelled out in state regulations, according to Greeley. “The regulation provides only high-level, broad guidance that basically says for production properties you have to use replacement cost (valuation),” he said. “Then for pipelines it says you can use sales, income or replacement cost and it stops there so there’s no specifics of methodology in currently. That’s what we’re trying to fix.” The vagueness of the regulations opens the door to subjectivity by the state and local governments or the property owners, creating a situation that’s “ripe for appeal,” Greeley added.

Making the hard decisions. As Alaska’s largest newspaper struggles to stay in business after drowning in millions of dollars of debt, the Alaska Dispatch News reported Wednesday night, the layoffs have begun. According to the ADN website, “A “significant” number of employees have been laid off at Alaska Dispatch News as part of a restructuring under the company’s new owners.” The article says every department in the company was affected: from advertising to the newsroom, including editors and reporters.  The paper says job reductions began last week and continued through Wednesday.

No money? No Ferry. A legislative mistake may mean a spring shutdown of the Alaska Marine Highway. Pat Pitney, director of the Alaska Office of Management and Budget warned legislative leaders of the oversight in a letter dated Sept. 19, and on the following day, Sen. Bert Stedman, R-Sitka, revealed the trouble to attendees of the annual Southeast Conference meeting here. “The marine highway’s going to run out of money sometime in early April,” Stedman said to a room surprised into silence.  Department of Transportation commissioner Marc Luiken confirmed that the state does not have enough money to operate its ferry system through the end of the fiscal year but said the exact date will depend on a variety of factors, such as fare revenue, that aren’t known.

First Reads: 

LNG makes deal with Texas-based firm for supply of natural gas
Fairbanks Daily News-Miner, Kevin Baird, September 21, 2017

Interior official says Trump administration has the ‘guts’ to allow oil exploration in ANWR
Alaska Public Media, Elizabeth Harball, September 20, 2017
Energy contract lawsuits expected to jump in Harvey’s wake
Reuters, Bryan Sims, September 20, 2017

US Senators offer bill to improve FERC application review process
Oil & Gas Journal, Nick Snow, September 20, 2017

State works to formalize method for assessing oil and gas properties
Alaska Journal of Commerce, Elwood Brehmer, September 20, 2017

Alaska Dispatch News begins layoffs
KTVA, KTVA Web Staff, September 20, 2017

Alaska Legislature’s mistake may shut down state ferry system
The Juneau Empire, James Brooks, September 20, 2017

Angry that Scott Pruitt pulls agents off of environmental investigations for his security detail? Then stop demonizing him
The Washington Examiner, Philip Wegmann, September 21, 2017

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Headlamp – Meet Alaska’s Senior Climate Advisor.

September 20, 2017 | Posted in : News

Meet Alaska’s Senior Climate Advisor. The Walker administration has said for more than a year that it’s working on a new set of policies to address climate change. Those policies have yet to materialize. This month, Gov. Walker appointed Nikoosh Carlo to the newly created position of senior climate adviser. “I think I probably took a deep breath and paused for a long time,” Carlo said, laughing about her reaction when asked to tackle climate policy. “It’s such a huge issue.” Originally from Fairbanks and Tanana, Carlo most recently worked with the U.S. State Department’s delegation to the Arctic Council. She also ran the commission that wrote Alaska’s official Arctic Policy. Carlo said her first step will be outreach: bringing together local and tribal leaders, industry and citizen groups. She said it’s going to be a long process. “But I’m excited,” Carlo said. “I think the interest to address this issue is definitely there within the state. I think we’re all going to come together on this. We have to.”

Potential in Arctic field confirmed. Austrian oil company OMV believes the Wisting license in Norway’s Barents Sea could hold up to 80 million standard cubic meters of recoverable oil equivalents. Resource estimates for the prospective area in the Barents Sea appear more certain as OMV gets data from its recent appraisal well. The semisubmersible Island Innovator did the drilling about two kilometers south of the spot where OMV in 2013 made its Wisting discovery. The appraisal well encountered an oil column of about 55 meters in sandstones from the Middle Jurassic to Late Triassic, the Norwegian Petroleum Directorate said. The resource estimates for the Arctic field will now be updated. OMV previously believed the Wisting held between 20-80 million standard cubic meters of recoverable oil equivalents.

“Big prospects for growth of oil production.” A small Alaskan independent oil company, Glacier Oil and Gas, is rebuilding production at two small fields it owns after acquiring them in 2014 from Miller Energy Resources, of Tennessee, which had filed bankruptcy. The overall production is small, about 5,000 barrels per day, but it was up 50 percent in mid-2017 compared to the same time in 2016, company president Carl Giesler said. Giesler spoke to the Alaska Industry Support Alliance, an oil service company contractor group, in Anchorage on Sept. 14.

All aboard the Nigerian LNG train. Baker Hughes, a GE company, said Wednesday it has secured a contract from Nigeria LNG, the operator of the giant Bonny export plant. Under the deal, BHGE will provide asset performance management software services to reduce unplanned outages and trips for Nigeria LNG’s trains. Using APM software, BHGE developed an outcome-based solution with a digital trip reduction program and has committed to a reduction of 20 percent of trips on the LNG trains and related balance of plant (BoP) within three years, the company said in the statement. BHGE will supply the bundle of its software services, powered by GE’s Predix, the platform for the industrial internet, in a multi-year agreement that includes support from GE Power Services and GE Digital. The company is also the main contractor of the project’s LNG trains, power generation and electrical motors units and has had a contractual service agreement in place with NLNG since 2003.

Politics over production in Norway. Norway’s ruling Conservative Party is willing to abstain from oil and gas exploration in a key Arctic region for another four years, in return for continued parliamentary support for its minority government, tabloid VG reported online on Wednesday. The fish-rich waters surrounding the Lofoten, Vesteraalen and Senja region have for years been off limits to drillers as a way for governments to secure backing for their broader agendas from parties focused on protecting the environment.

Arctic nations look at microgrids. A program is leading representatives of Arctic nations to Alaska, Canada, Iceland and Greenland to look at the microgrids in remote communities. The Arctic Remote Energy Network Academy, or ARENA, is in the middle of its pilot year and gives participants a look at innovative remote energy networks. They hope to gather information and contacts that could benefit their communities. This week, some academy participants are in Finland to present at the Arctic Energy Summit, which begins today and continues until Wednesday. In March, participants stopped by Yellowknife, Canada, for a week. In June, they visited Kotzebue, Fairbanks and Nome. One participant — George Roe is a University of Alaska research professor affiliated with the Alaska Center for Energy and Power, one of the organizations behind ARENA — visited Kodiak. And next, they’ll go to Iceland. Roe said networking is a big part of the program.

First Reads:

OMV’s new appraisal well confirms potential in Arctic field
Arctic Now/Independent Barents Observer, Atle Staalesen, September 20, 2017

Diminutive Glacier Oil and Gas boosting its Alaska production
The Frontiersman, Tim Bradner, September 19, 2017

Walker administration appoints climate adviser, promises new policy “soon”
Alaska Public Media, Rachel Waldholz, September 19, 2017

Baker Hughes nets Nigeria LNG contract
LNG World News, September 20, 2017

Norway may maintain oil moratorium in key Arctic region –report
Reuters, Reuters Staff, September 20, 2017

Arctic nations tour microgrids, exchange green energy knowledge
KTOO Public Media, Kayla Desroches, September 18, 2017

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Headlamp – The death of oil and diesel engines is greatly overexaggerated.           

September 19, 2017 | Posted in : News

The death of oil and diesel engines is greatly overexaggerated. Judging by some of the headlines we’ve seen recently, you could be forgiven for thinking petrol and diesel engines were about to be consigned to the scrap heap. Yet the reality is rather different. There is no question that the car industry is undergoing a radical change. At this year’s Frankfurt Motor Show – currently under way in the German city – the buzzword throughout the cavernous exhibition halls has been “electrification.” The day before the show, for example, Volkswagen said it would build electrified versions of every model in its range – including those sold under the Audi, Skoda, Seat and Porsche brands – by 2030. The same evening, Mercedes’ parent company Daimler said it would have electrified versions of its own models by 2022. These are undoubtedly ambitious plans – but it is important to recognize their limitations. They are not saying they will get rid of diesel or petrol cars completely. They are simply promising to make electrified versions of them available. It is also important to recognize what “electrified” actually means.

6 Arctic Icebreakers funded. The U.S. Senate on Monday passed a $692 billion defense authorization bill that included provisions to bolster missile defense systems in Alaska and approval for building up to six Arctic icebreakers. The Alaska provisions are a mark of success for the state’s lawmakers, who have long pushed for the provisions. But seeing them through to reality will require Congress to manage the full scope of appropriations bills in the coming year — something that happens rarely. Since 1976, Congress has passed all 12 appropriations bills by Oct. 1, the fiscal year deadline, only four times, according to the Bipartisan Policy Center. This year, Congress has already agreed to kick the process to December, but it is unclear if that will lead to legislative success. Though Congress struggles with appropriations, it has managed to pass the annual National Defense Authorization Act (NDAA) for more than 50 years, and once again Monday. The NDAA directs the Pentagon’s budget and provides general congressional direction to the military. The House of Representatives passed a $696 billion version of the bill in July.

Satre’s sage advice. A local mine executive urged the Juneau Assembly to reconsider a resolution urging federal action on transboundary mining, and the Assembly did on Monday night. The resolution would have urged the federal government to invoke a treaty to enforce protections for Alaska resources from upstream mines in British Columbia. Recently, the borough assemblies of Sitka and Ketchikan passed a similar resolution. In 2015, the Juneau Assembly did, too. Heather Hardcastle of Salmon Without Borders said transboundary mining should be tackled at the highest levels between Ottawa and Washington. “This by no means is an anti-mining resolution,” she said. “This is a chance to get binding protections in place that only come about in an agreement between two nations.” Juneau Deputy Mayor Jerry Nankervis put the brakes on the resolution. “We were all on the Assembly provided a letter by a gentlemen in our community speaking to this resolution and what he believes to be inaccuracies in it,” Nankervis said. “And I am also concerned about the message we’re sending with this.” The letter he referred to was an email from Mike Satre, an executive with Hecla Greens Creek Mine. The email urged the Assembly to work through Gov. Walker’s efforts on transboundary mine safety at the state and provincial levels rather than trying to invoke international treaties.

Private sector prospers…in Juneau. This week, the JEDC released its annual “Economic Indicators and Outlook” report for Juneau and Southeast Alaska. It’s the annual physical for Juneau’s economy — how things are growing (or not) and how they have changed over the past year. You already know the bad news: Alaska remains in a recession, and Juneau isn’t immune. The city’s population fell last year, so did the number of jobs, and so did total wages. The report does have a silver lining. For that, you have to look at the private sector.

First Reads:

Defense bill passes US Senate with provisions for icebreakers, Alaska missile defense
Arctic Now/Alaska Dispatch News, Erica Martinson, September 19, 2017

Why switching to fully electric cars will take time
BBC News, Theo Leggett, September 19, 2017

After mining exec weighs in, Juneau Assembly holds off on boundary mine resolution
KTOO Alaska Public Media, Jacob Resneck, September 19, 2017

JEDC finds economic silver lining in Juneau’s private sector
Juneau Empire, James Brooks, September 19, 2017

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President Trump and the Paris Accord: Should I stay or should I go now?

September 18, 2017 | Posted in : News

ConocoPhillips boosts Alaska’s economy. Defying lackluster crude oil prices, ConocoPhillips is planning an aggressive North Slope exploration program this winter. “We are currently considering up to a five-well winter exploratory drilling program in 2018, four wells in the National Petroleum Reserve–Alaska and one well on State of Alaska acreage, subject to final budget and permit approvals,” spokeswoman Amy Burnett said. At least one other exploration well is planned by Armstrong Oil and Gas. Most of the work is focused on the western North Slope near where recent discoveries have been made by ConocoPhillips and Armstrong.

New sheriff in town. Heidi Hansen will join the Alaska Department of Natural Resources as a deputy commissioner effective Sept. 18. In a Sept. 8 statement, DNR Commissioner Andy Mack noted: “Her knowledge of natural resource issues in Alaska, her legal expertise, and extensive work on federal natural resource policy…”

It’s a bird, it’s a plane… Use of Unmanned Aerial Vehicles in the north is the focus of meetings in Fairbanks this week. The University of Alaska Fairbanks “Alaska Center for Unmanned Aircraft Systems and Integration” is hosting industry representatives to talk about UAV based operations in Alaska and the Arctic (Listen now). “It’s everything from wildlife monitoring to looking at sea ice, infrastructure monitoring, law enforcement support, such as search and rescue, and a bunch of other Alaska focused issues,” Center Director Cathy Cahill said. Cahill said unmanned aircraft opportunities are growing as the technology is well suited to Alaska and the Arctic.

News about the Paris accord: 

Tillerson says U.S. could stay in Paris climate accord
Reuters, Lucia Mutikani, September 17, 2017

The Energy 202: Two things you should know when Trump administration talks about Paris climate accord
The Washington Post, Dino Grandoni, September 18, 2017

Cohn: Trump still planning to withdraw from Paris climate accord
CNN, Kevin Liptak, September 18, 2017

First Reads:

ConocoPhillips bucking low oil prices with increased exploration
The Frontiersman, Tim Bradner, September 18, 2017

Heidi Hansen new DNR deputy commissioner
Petroleum News, September 17, 2017

UAV industry reps discuss the vehicles’ future in Fairbanks
Alaska Public Media, Dan Bross, September 15, 2017

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Headlamp – The fight to open ANWR continues; unemployment rises.

September 15, 2017 | Posted in : News

Note: Governor Walker is holding a press conference at 12:30 today to discuss the special session and there is some indication a crime bill may be added to the call. Watch via livestream at 12:30.

Up is usually good – unless it’s unemployment rates. Alaska’s seasonally adjusted unemployment rate was 7.2 percent in August, up two-tenths of a percentage point from July. The comparable national rate was 4.4 percent. August employment was down by an estimated 1.4 percent, or 4,800 jobs, compared to August 2016. Preliminary estimates show job losses spread across most industries, although the losses remain concentrated in industries closely tied to oil or oil revenue. Oil and gas led employment losses (-1,000 jobs), followed by construction (-1,000), professional and business services (-800), manufacturing (-600), and state government (-600). Health care, local government, and federal government were all up slightly over August 2016 levels. Headlamp would like to remind readers that oil and gas and construction jobs are among the highest paying in our state and the ones suffering the greatest losses.

Perry doesn’t want to touch SPR. Energy Secretary Rick Perry says the United States shouldn’t sell off its emergency crude oil supply to boost the federal budget, breaking with the White House. Perry was asked at a Friday press conference if Hurricanes Harvey and Irma, both of which harmed Gulf Coast infrastructure, have led him to reassess a Trump administration proposal to sell off portions of the Strategic Petroleum Reserve (SPR), a component of the White House’s May budget proposal. “I think this is a good example of why we need a SPR,” Perry said at the Federal Emergency Management Agency. “I didn’t write that budget.” he said. “I’m a big believer that it makes sense for us to have a Strategic Petroleum Reserve.”

Red Team/Blue Team. The Trump administration is looking to create a “red team” to challenge the accepted science on climate change and the impact of carbon dioxide emissions on the Earth’s temperature, but there is no timeline on when that exercise will occur even though it is “very important,” according to Environmental Protection Agency chief Scott Pruitt. The EPA administrator sat down with the Washington Examiner for an interview that included discussion of the proposed red team-blue team process that he says will open up a dialogue over the science behind global warming to see what is true and what is not. “The red team-blue team is still being evaluated,” Pruitt said. “I think it’s very, very important. I think the American people deserve an open, honest dialogue about what do we know, what don’t we know with respect to CO2 and its impact.”

 Is resource nationalism good for the US? Canadian miner Eldorado Gold Corp’s threat this week to freeze investments in Greece after years of frustrating and costly permit delays highlighted the risks the industry faces when it strays away from mining-friendly countries. After moving into higher-risk countries in recent years to mine new deposits, companies are being forced to seek safe havens during a rise in so-called resource nationalism and other political headwinds. From Indonesia and Tanzania to South Africa and Zambia, governments are demanding greater control over mineral riches as metals prices rise, often seeking higher royalty payments. In Eldorado’s case, the company faces a leftist-led Greek government that publicly backs investment but has powerful insiders that oppose privately owned mining projects.

On the rise? Oil ended higher Thursday for a fourth consecutive session, with the U.S. benchmark settling at a more-than-six-week high on expectations for stronger demand and efforts by major producers to maintain a cap on crude output. October West Texas Intermediate oil CLV7, -0.28% on the New York Mercantile Exchange rose 59 cents, or 1.2%, to settle at $49.89 a barrel after hitting a session high of $50.50. Prices settled at their highest since July 31, which was also the last day they finished above $50, FactSet data show.

VOICE calls for economic development and the opening of ANWR. Voice of the Arctic Iñupiat (VOICE) announced its support for opening the Arctic National Wildlife Refuge (ANWR) to drilling. The board of directors passed the resolution last week officially backing safe and responsible development in the refuge – specifically the 1002 coastal plain area that represents eight percent of the total ANWR acreage. With this announcement, VOICE joins the Governor, the Alaska delegation, the leadership of the North Slope Borough, the majority of Arctic Slope village leadership and the overwhelming majority of Alaskans in calling for resource production in a small portion of the Arctic refuge. “The VOICE organization and the villages it represents strongly support economic development in the region,” said John Hopson, Jr., mayor of Wainwright, Alaska and vice chairman of Voice of the Arctic Iñupiat.

First Reads:

Unemployment Rate at 7.2 Percent in August
Alaska Department of Labor, Press Release, September 15, 2017

Bolstered by Trump, Big Oil Resumes Its 40-Year Quest to Drill in an Arctic Wildlife Refuge
Fortune, Bob Reiss, September 14, 2017

Perry rejects calls to sell off emergency oil reserve
The Hill, Devin Henry, September 15, 2017

EPA evaluating ‘red teams’ to challengclimate science despite hurricanes
The Washington Examiner, John Siciliano, September 15, 2017

Gold miners seek safety as political risks rise
Arctic Now/Reuters, Nicole Mordant, September 15, 2017

Oil extends win streak to 4 days, finishes at 6-week high
Market Watch, Myra P. Saefong and William Watts, September 14, 2017

VOICE passes resolution supporting ANWR development
VOICE Press Release, September 8, 2017

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Headlamp – Strong future for fossil fuels in EIA international outlook.

September 14, 2017 | Posted in : News

Today the Energy Information Administration, the non-partisan research arm of the federal government, released its annual International Outlook. The International Outlook presents an assessment by the U.S. Energy Information Administration of the outlook for international energy markets through 2050. Of note:

  • World natural gas consumption increases by 43% from 2015 to 2040.
  • China accounts for two-thirds of the net increases in world installed nuclear capacity from 2015 to 2040.
  • Petroleum and other liquid fuels consumption grows by 18% between 2015 and 2040.
  • Economic growth will be greater in non-OECD countries and drive energy demand.
  • The industrial sector continues to account for the largest share of energy consumption through 2040.
  • Energy and carbon intensity are projected to continue to fall.

Doing more with less. Alaska’s oil workforce has been hit hard by low prices, yet the companies in the state have managed to buck a longstanding trend and increase production for the last two years. So what gives? For state Labor Department Economist Neal Fried, the curiosity in the numbers goes back further than when oil prices started tumbling from the $100-plus per barrel plateau in August 2014. “The whole trend in oil production and employment has been very interesting just because in 2015 we reached a record number of employees in oil and gas in the state’s history, which is pretty amazing given the fact that we were producing significantly less than our peak in 1988 or for many years before that,” Fried noted. He said that the decade-long run-up in oil and gas sector jobs exceeded the generally accepted notion that oil fields — the three primary North Slope fields are 17 to 40 years old — require more investment as they age.

Slow and steady wins the race. Efforts to drill for oil in the Arctic Ocean put Alaska at the center of an international debate. It’s a highly political topic, one both former President Barack Obama and President Donald Trump weighed in on. And to this day, there hasn’t been any oil produced from Arctic waters solely owned by the federal government. So today, when it comes to drilling for oil in Alaska’s Arctic Ocean, you’d be forgiven for thinking not a lot is happening. Yes, Shell’s multi-billion dollar effort to find oil in federal Arctic waters is a thing of the past. And yes, the Obama administration then took several steps to cut back on drilling in Arctic waters — actions the Trump administration is now working to undo. But it turns out there is movement to get oil out of federally-owned parts of the Arctic Ocean. It’s happening slowly, steadily and without a lot of fanfare. Two companies’ efforts to drill for oil in the Beaufort Sea are chugging forward and, at least for now, they’ve largely avoided the national spotlight.

House votes down job-killing regulation. Lawmakers voted Wednesday to block implementation of a key Environmental Protection Agency (EPA) pollution rule. The House voted 218-195 to strip funding for an Obama-era EPA effort to limit methane emissions from new oil and gas drilling sites. Eleven Republicans voted against the amendment, and 3 Democrats voted to block funding for the regulation. “This rule is currently facing litigation and uncertainty, and Congress must act to block this job-killing regulation estimated to cost the U.S. economy $530 million annually,” Rep. Markwayne Mullin (R-Okla.) said during debate on the measure last week.

China confuses Canada with new trade route. China’s state news agency Xinhua reported last week that a Chinese ship had conducted a successful test of a trading route along the long-fabled Arctic Northwest Passage. This was a milestone, according to the agency, which proclaimed that “a new channel” between North America and Northeast Asia had been opened. The trip, which had seen a ship called the Xue Long (or “Snow Dragon”) travel for 2,293 nautical miles through the Canadian Arctic, had lasted for eight days and would provide “a wealth of navigation experience” for future Chinese ships, Xinhua reported. But if the announcement caused celebration in Beijing, it provoked confusion in Canada — the nation that claims sovereignty over the waters containing the Northwest Passage. The Globe and Mail reported Monday that the Canadian government considered the Snow Dragon trip a scientific research trip and that Canadian scientists were also on board. Though the Canadian government said that the trip was purely for science, some experts viewed it differently. China is “preparing for a very substantial increase in the amount of shipping,” Arctic expert and professor Rob Huebert told the Globe and Mail. “It is obvious this is going into the planning to a degree that we don’t see in Western shipping companies.”

First Reads:

International Energy Outlook 2017
U. S. Energy Information Administration, September 14, 2017

Slope producers doing more with less
Alaska Journal of Commerce, Elwood Brehmer, September 13, 2017

Beneath political firestorm on Arctic Ocean drilling, two projects make steady progress
Alaska Public Media, Elizabeth Harball, September 13, 2017

House votes to block funding for EPA methane pollution rule
The Hill, Devin Henry, September 13, 2017

China sent a ship to the Arctic for science. Then state media announced a new trade route.
Arctic Now/The Washington Post, Adam Taylor, September 13, 2017

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Headlamp – Save Our Salmon denied; a victory for responsible resource development.

September 13, 2017 | Posted in : News

Save Our Salmon isn’t saved. Lt. Gov. Byron Mallott denied an application on Sept. 12 to put a voter initiative on the 2018 statewide ballot that would have tightened the state’s permitting requirements for development projects with the potential to impact salmon streams. Assistant Attorney General Elizabeth Bakalar wrote a Sept. 6 letter to Mallott recommending he not certify the initiative because it would strip the Legislature of its power to allocate resources — in this case salmon habitat — and thus violate the Alaska Constitution.

What lies beneath? State entices investment. Somewhere in Anchorage, the state is hiding four giant suitcases, filled with top-secret pictures of the ground. The Deputy Commissioner of the Department of Natural Resources, Mark Wiggin, said they weigh about 150 pounds apiece. “…And in there are stacked blocks. These seven to eight terabyte-per-block basically floppy drives,” Wiggin said. Add them all up and those drives hold about 300 terabytes of valuable information from seismic testing and exploratory wells — essentially a map of what lies beneath the surface of Alaska. It’s just one of the data sets the state has slowly been collecting from oil and gas companies since 2003. That’s when it launched a tax credit program that required companies to turn over that data if they wanted to redeem the credit. Alaska’s Oil and Gas division is releasing valuable oil exploration data from leases on the North Slope and Cook Inlet.

Back to basics with the EPA. Few Trump administration agency chiefs have moved as decisively to implement an agenda as Scott Pruitt, the administrator of the Environmental Protection Agency, and he’s quite clear about what he wants to do. He calls it a “back to the basics” agenda, removing the government from what he considers extraneous activity — namely, the climate change battle taken up by former President Barack Obama, who he questioned as an “environmental savior.” Asked to define his early legacy, Pruitt, in a wide-ranging interview with the Washington Examiner at EPA headquarters Monday, reached for his coffee mug, leaned his small, stout frame forward in his chair, and embarked on a lengthy denunciation of the Obama administration.

Chenault tests the water. Nikiski’s state legislator is looking for support for a run for state governor. Rep. Mike Chenault (R-Nikiski) announced his intention to run in October 2018 in a letter of intent filed with the Alaska Public Offices Commission Tuesday. Though he did not list the office for which he intends to run in the letter of intent, he said he’s testing whether there’s adequate support for him to run for the governor’s seat. “We’d been looking and talking about it for a while, so I decided to put a letter of intent in, try to gauge how much support I have across the state, and then we’ll make a final decision in the next few weeks,” he said.

The team of Elliott and Pearce at PHMSA. The White House intends to nominate Howard R. Elliott, who presently leads public safety, health, environment, and security operations for CSX Transportation in Jacksonville, Fla., to serve as the new administrator of the US Pipeline & Hazardous Material Safety Administration, it announced on Sept. 8. Elliott is a 40-year US freight rail industry veteran. “[Elliott’s} portfolio of responsibility included hazardous materials transportation safety, homeland security, railroad policing, crisis management, environmental compliance and operations, occupational health management, and continuity of business operations,” the White House said. It called Elliott “a pioneer and leading advocate in developing and implementing computer-based tools to assist emergency management officials, first responders, and homeland security personnel in preparing for and responding to a railroad hazardous materials or security incident.” Headlamp reminds readers that former Alaska legislator Drue Pearce was recently appointed Deputy Director of the agency.

Finland and Russia collaborate on Arctic Oil Spill Response. The Finland-based Lamor company is establishing a joint venture with the Russian oil company Rosneft in Roslyakov, the formerly closed military town outside Murmansk. The cooperation between the companies will include the manufacturing of equipment for oil spill preparedness, response and recovery. It will unfold in the premises of Shipyard No 82, an object over which Rosneft secured control in 2013.

First Reads:

Mallott rejects salmon habitat ballot initiative
Peninsula Clarion/Alaska Journal of Commerce, Elwood Brehmer, September 12, 2017

Seeking investment, Alaska goes open source with oil & gas data
Alaska Public Media, Rashah McChesney, September 12, 2017

Scott Pruitt criticizes Obama as ‘environmental savior,’ moves EPA away from climate change
Washington Examiner, Josh Siegel, September 13, 2017

Chenault tests waters for gubernatorial bid
Peninsula Clarion, Elizabeth Earl, September 12, 2017

White House plans to nominate Elliott for PHMSA administrator
Oil & Gas Journal, Nick Snow, September 11, 2017

Finnish company comes to Murmansk, sets up Arctic oil spill response unit with Rosneft
Arctic Now/Independent Barents Observer, Atle Staalesen, September 13, 2017

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Headlamp – BREAKING NEWS: Dunleavy is out, Huggins is in.

September 12, 2017 | Posted in : News

Governor’s race gets interesting. On the Rick Rydell Show this morning, former Sen. Charlie Huggins announced his run for governor. His wife, Becky Huggins, made the call on his behalf, since Huggins is hunting this week on a long-scheduled trip. Huggins has filed his letter of intent, which allows him to raise money and explore how strong support would be for his candidacy. Huggins is a Republican who served in the Alaska Senate, representing District E, the Wasilla area. He was Senate president during the 28th Alaska Legislature, with a caucus of 13 Republicans and two Democrats.

New owners for ADN. A federal bankruptcy judge on Monday approved the sale of Alaska Dispatch News to the Binkley family of Fairbanks for $1 million, the amount the Binkley family company has already loaned the news operation. The decision means Alaska’s largest newspaper and news website will avoid a sudden shutdown, and that the Binkleys acquire Alaska Dispatch News for what they’ve spent. “The balance of the purchase price is zero,” U.S. Bankruptcy Court Judge Gary Spraker said in an order signed Monday. In front of a packed downtown Anchorage courtroom full of lawyers, reporters and onlookers, Spraker said the sale price of $1 million was fair and reasonable, especially since ADN would be unable to continue operations otherwise. Headlamp again wishes the Binkley Co. well as they try to right the ship they’ve pulled off the rocks.

Second verse, same as the first. The Alaska Dispatch News will be able to stay in business under the new ownership of the Binkley Co. after a federal bankruptcy judge on Sept. 11 gave the go ahead despite concerns that the sale price of $1 million seemed a giveaway to those owed money from former owner Alice Rogoff. After hearing arguments lasting most of the day, Judge Gary Spraker of U.S. Bankruptcy Court, Division of Alaska, acknowledged the accelerated pace from filing to sale. Rogoff filed for Chapter 11 bankruptcy on Aug. 12, contending she suffered a revenue shortage of $125,000 per week and didn’t have cash on hand to pay vital bills such as employee insurance premiums and the newspaper carriers that deliver the paper. She came, she saw, but certainly didn’t conquer. Instead, she left debts unpaid, While the deal has gone through, Headlamp would remind readers that Ms. Rogoff stiffed hundreds of creditors including Alaska businesses. Not what we would call neighborly.

One step forward for Alaska LNG? The state-owned Alaska Gasline Development Corporation (AGDC) said it took a step forward in the development of its planned $40 billion LNG export project with the completion of the project’s capacity solicitation process. Alaska LNG project has three major components, a gas treatment plant located at Prudhoe Bay, an 800-mile pipeline to Southcentral Alaska with up to five offtakes for in-state use, and a natural gas liquefaction plant in Nikiski authorized to process 20 million tons of LNG per year. The capacity solicitation process that ran from June 15 through August 31 enabled AGDC to secure foundation customer status on the transportation and liquefaction system in an open and non-discriminatory process, said AGDC President Keith Meyer.

Tax cuts, job creation win Norway’s election. Norway’s tax-cutting Conservative Prime Minister Erna Solberg declared victory on Tuesday after a parliamentary election, narrowly defeating a Labour-led opposition with her promises of steady management of the oil-dependent economy. The win is historic for Solberg, whose supporters compare her firm management style to that of German Chancellor Angela Merkel, because no Conservative-led government has retained power in an election in Norway since 1985. “It looks like a clear victory,” for the center-right, a beaming Solberg told cheering supporters in Oslo just after midnight, following Monday’s voting.

New bill gives states control over oil and gas development. Rep. Liz Cheney is co-sponsoring a bill that would hand more control of oil and gas development on federal lands to the states, stoking fears from environmental groups that the range of access and protections from federal agencies is narrowing. The Federal Land Freedom Act allows states to prove they have the enforcement muscle and regulatory infrastructure to oversee oil and gas permitting, leasing and production on available federal land. The bill’s proponents, including the congresswoman from Wyoming, say states have faced a decline in leasing on federal land in recent years under the Obama Administration. The bill would reverse that trend.

First Reads:

Breaking: Charlie Huggins files for governor
Must Read Alaska, Suzanne Downing, September 12, 2017

Sale of Alaska Dispatch News to Binkley group is approved by judge
Alaska Dispatch News, Annie Zak and Michelle Theriault Boots, September 11, 2017

ADN sold after no other bidder surfaced
Alaska Journal of Commerce, Naomi Klouda, September 11, 2017

Alaska LNG export project wraps up capacity solicitation
LNG World News, LNG World News Staff, September 12, 2017

Norway’s right-wing government wins re-election fought on oil, tax
Reuters/Arctic Now, Henrik Stolen and Joachim Dagenborg, September 12, 2017

Cheney bill seeks to put oil and gas development in state hands
Casper Star Tribune, Heather Richards, September 10, 2017

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Headlamp – September 11, 2001 – WE WILL NEVER FORGET.

September 11, 2017 | Posted in : News

Tax cuts for economic growth or tax hikes for government growth? Norwegians voted on Monday on the second and final day of a knife-edge parliamentary election in which Prime Minister Erna Solberg’s center-right bloc and a center-left opposition are vying to rule Western Europe’s top oil and gas producer. Solberg’s Conservatives want to cut taxes in a bid to boost growth, while opposition Labour leader Jonas Gahr Stoere wants tax hikes to improve public services such as education and healthcare for Norway’s 5 million citizens. The outcome could impact Norway’s oil industry, as either Solberg or Gahr Stoere is likely to depend on one or more small parties that want to impose limits on exploration in Arctic waters off the northern coast. The tension is so high in this election that the Norwegian government has chosen to hand count ballots to avoid any voter fraud.

The whole enchilada. The fate of Alaska’s largest newspaper and news website will be decided in a U.S. Bankruptcy Court on Monday morning. The stakes for Monday’s hearing are high, according to attorneys for the seller and potential buyers: If a federal bankruptcy judge does not approve a sale of the Alaska Dispatch News to the Binkley family of Fairbanks over the objections of some creditors, the newspaper will no longer have a buyer. Absent another buyer emerging Monday morning, the company could be forced to shut down within a week. The Binkley family has put $1 million into operating the newspaper since it filed for Chapter 11 reorganization last month and doesn’t want to delay taking ownership, said Erik LeRoy, an Anchorage attorney representing the ownership group. “If we don’t get the whole package done tomorrow I don’t know what choice there is but the paper closes down,” LeRoy said.

Locking out your competition? The world’s largest oilfield services company, Schlumberger NV, is spending billions of dollars buying stakes in its customers’ oil and gas projects – investing in the same ventures it supplies with equipment and expertise. The new business model gives Schlumberger a say in drilling decisions, oilfield management and even on hiring other Schlumberger units for service contracts, the company has told investors. The expanded operational authority saves Schlumberger from bidding for each of the many jobs that typically require separate contracts on a large drilling project – effectively locking out the firm’s competitors.

Money from miners for education – again. Hecla Mining Company Aug. 31 donated another $300,000 to the University of Alaska Southeast as part of the Greens Creek Mine owner’s ongoing support of the campus’ “Pathways to Mining Careers” program. This program was created in 2011, when Hecla made an inaugural US$300,000 donation to develop a unique approach to engage local high school students and to educate and train them for future employment in the mining industry. Since that time, the program has been expanded to include adults new to mining.

Cognitive Computing Considered. The oil and gas industry was considered conservative when it came to technology changes. However, the need to reduce costs in an era of lower oil prices prompted change, delegates were told during the O&G TechWeek Conference in Rio de Janeiro. During the conference held in late August, executives from major oil together with supply and technology companies met to discuss technology trends that can benefit the oil and gas industry. According to a report from the World Economic Forum, digital transformation in the oil and gas industry could unlock about $1.6 trillion of value for the industry, its customers and wider society. If existing organizational and operational constraints are relaxed and the impact of “futuristic” technologies such as cognitive computing are considered, the amount could rise to about $2.5 trillion.

First Reads:

Norwegians split over oil and tax as they vote in tight election
Arctic Now/Reuters, Terje Solsvik, September 11, 2017

Monday bankruptcy hearing will decide future of Alaska Dispatch News
Alaska Dispatch News, Michelle Teriault Boots, September 10, 2017

The next oil major? Service firm Schlumberger’s big bet on production
Reuters, Liz Hampton, September 7, 2017

Mining News: Hecla continues support of UAS program to train local miners
Petroleum News, Shane Lasley, September 10, 2017

Digital Era Revolutionizes Oil, Gas Industry
E&P Magazine, Bruno Braga, September 8, 2017

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