Morning Headlamp – Special, Special, Special, Special Session. Together Forever.

August 4, 2017 | Posted in : News

4th times a charm? The Alaska Legislature is likely to meet for a fourth special session starting in late October. That was the word from Sen. Dennis Egan, D-Juneau, as he spoke to the Juneau Chamber of Commerce’s weekly luncheon on Thursday. “Pretty soon, after AFN, I think we’ll have (special session) No. 4 to talk about new revenue,” Egan said, referring to the annual Alaska Federation of Natives convention, which takes place Oct. 19-21 in Anchorage.

Together Forever. Lt. Gov. Byron Mallott said Wednesday that he and Gov. Bill Walker will run for re-election next year.  He also said they’ll run together. Even for incumbents, that may be an uphill fight. Mallott went further than Walker has in talking about next year’s election. He spoke to host Pete Carran on Juneau radio station KINY. “Well, we have both decided that we will run again,” he said. Mallott said the decision isn’t absolute, because they don’t know what may occur in the future. But he said their minds are made up to run again. “Whatever we do, we’ll do together, for sure,” he said.

WOTUS review. The US Environmental Protection Agency and Army Corps of Engineers jointly began their reevaluation of and possible revisions to the Waters of the United States rule that was adopted during the Obama administration’s second term. They proposed rescinding the rule’s definition of US waters and returning to regulations that existed before a 2015 rule as their first step, the agencies said in a July 27 Federal Register notice. “Proposing to recodify the regulations that existed before the 2015 Clean Water Rule will provide continuity and certainty for regulated entities, the states, agency staff, and the public,” EPA and ACE said. “In a second step, the agencies will pursue notice-and-comment rulemaking in which the agencies will conduct a substantive re-evaluation of the definition of ‘waters of the United States’.”

Global war games. The U.S. military is moving toward more global exercises to better prepare for a more assertive Russia and other worldwide threats, a senior officer said in an interview with Reuters. Air Force Brigadier General John Healy, who directs exercises for U.S. forces in Europe, said officials realized they needed to better prepare for increasingly complex threats across all domains of war – land, sea, air, space and cyber. Some smaller-scale war games with a global focus had already occurred, but the goal was to carry out more challenging exercises by fiscal year 2020 that involved forces from all nine U.S. combatant commands – instead of focusing on specific regions or one military service, such as the Marines. “What we’re eventually going toward is a globally integrated exercise program so that we (are) … all working off the same sheet of music in one combined global exercise,” Healy said in an interview this week.

Fake oil production news? Oil is back at $50 per barrel, restoring some semblance of confidence in the market. But that is just about as much as we can expect in terms of a rally, according to most analysts, with momentum likely to dissipate from here. But not everyone agrees. Many are worried that oil prices will crash again next year as OPEC scrambles for an exit strategy, but there is actually a bullish case for oil that is not outlandish. First, crude oil inventories continue to fall. The EIA just released another week’s worth of data, showing another drawdown in inventories. It was a bit more modest last week – 1.5 million barrels – compared to previous four weeks, but the drawdowns continue. U.S. crude oil inventories are now down more than 50 million barrels from the peak hit in March, with stocks back within the five-year range.

One if by land, two if by sea? The “magic” of $50 oil is now in the sights of deep-sea drillers as they try to lure customer spending from shale wells on land. And after more than three years of pain, that prospect has some investors excited. Transocean Ltd. rose the most in more than eight months after the world’s biggest provider of offshore rigs predicted explorers could soon shift their spending from land to sea as crude futures inch closer to the key level. Shares of other deep-water service providers like Diamond Offshore Drilling Inc. and Noble Corp Plc also surged on the heels of Transocean’s rally.

It’s in the cards – Trumps record on rolling back regulations. The big question looming over much of this debate is whether the administration looks to repeal rules only, or eventually replace them. So far it’s a mixed bag. Regardless, the process is long and litigious. Repealing most rules will take at least a year, and replacing them even longer, because each step requires a proposal, public comment period, two White House reviews and then a final version. Along the way, legal and political pushback is certain, possibly prolonging things.

FERC back on track. The Senate voted Thursday evening to confirm two of President Trump’s nominees to the Federal Energy Regulatory Commission (FERC), paving the way for the commission to have its first quorum in six months. Neil Chatterjee and Robert Powelson were confirmed by unanimous consent and are slated to join the five-member board, which has seen its action paused since February following a pair of retirements. FERC is responsible for permitting decisions on energy projects like natural gas pipelines and export terminals. The lack of a quorum has left FERC unable to move such projects forward, inaction that has led to frustration in the energy, manufacturing and business communities. 

First Reads:

EPA, ACE begin review of Obama administration’s Waters of the US rule
Oil & Gas Journal, Nick Snow, August 4, 2017

Eyeing Russia, U.S. military shifts toward more global war games
Arctic Now/Reuters, Andrea Shalal, August 4, 2017

Is The EIA Exaggerating U.S. Oil Production?
OilPrice.com, Nick Cunningham, August 3, 2017

Oil at $50 Boosts Sea Drillers’ Hopes of Vying With Shale
Bloomberg, David Wethe, August 3, 2017

Senate confirms two energy commission nominees, restoring quorum
The Hill, Devin Henry, August 3, 2017

Lt. Gov. Mallott says he and Gov. Walker will run for re-election
KTOO/Alaska Public Media, Andrew Kitchenman, August 4, 2017

Egan: Fourth special session possible in October
The Juneau Empire, James Brooks, August 4, 2017

How Trump is rolling back Obama’s environmental rules
Axios, Amy Harder, August 4, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Morning Headlamp – Words you don’t want to hear from the government: Do as I say, not as I do. 

August 3, 2017 | Posted in : News

cook inlet jobs lostDo as I say, not as I do. A company drilling extended-reach oil wells at a fracking operation in Cook Inlet says it likely cannot afford to drill additional wells, and expects to lay off more than 150 full-time workers, because the state has not paid the oil-tax credit cash it planned on receiving. Headlamp was shocked to see this quote from John Hendrix, the governor’s oil and gas consultant: “We want them to have success and they’ve been working hard, but we need to see some production also, drill for oil, not tax credits.” 

In a previous life, Hendrix was in charge of Apache, a company exploring in Cook Inlet. During Hendrix’s tenure, the company applied for, and received tax credits, without any production. Additionally, Apache has since left the state but has continued to collect credits – $10 million according to the latest report.    

A boon for the Kenai economy. By fall 2018, oil produced by Hilcorp on the west side of Cook Inlet could be traveling by pipeline instead of barge, according to a plan for a cross-inlet oil pipeline introduced by Hilcorp Alaska Vice President David Wilkins in May. Operations manager Richard Novcaski of Hilcorp’s pipeline-owning subsidiary Harvest Alaska provided details at a Wednesday Kenai Chamber of Commerce luncheon. “The general concept, is to create a swap of capacity,” Novcaski said. The plan would repurpose an existing cross-inlet natural gas pipeline as an oil pipeline, and use part of an existing pipeline to transport the displaced gas. In all, the design — estimated to cost about $73 million — would require only about 9 miles of new pipe to be laid.

Pipelines Proceed. New U.S. sanctions will make it harder for Russia to build two gas export pipelines to Europe but the projects are unlikely to be stopped. U.S. President Donald Trump has reluctantly signed further sanctions on Russia into law, but some of the measures are discretionary and most White House watchers believe he will not take action against Russia’s energy infrastructure. This would allow Gazprom’s two big pipeline projects to go ahead — although at a higher price and with some delays.

Big deal for Alaska and CH2M. Jacobs Engineering and CH2M HILL Companies Ltd. announced they have entered into a definitive agreement under which Jacobs will acquire all of the outstanding shares of CH2M in a cash and stock transaction with an enterprise value (EV) of approximately $3.27 billion, including approximately $416 million of CH2M net debt. The combination unites two industry-leading, innovative companies with complementary capabilities, cultures and relationships, resulting in a differentiated, end-to-end value proposition for clients and an enhanced platform for sustainable, profitable growth. With trailing twelve month (TTM) revenues of $4.4 billion1 and a team of 20,000 employees, CH2M is a world-renowned design, engineering and program management firm, and is a leader in key infrastructure and government service sectors that Jacobs has previously targeted for growth, including water, transportation, environmental and nuclear. Applying CH2M’s advanced design, technical and program management expertise across Jacobs’ global footprint will enable the combined company to deliver more solutions to more clients in both the government and private sector.

First Reads:

Russian gas pipelines to go ahead despite U.S. sanctions
Arctic Now/Reuters, Oksana Kobzeva and Alissa de Carbonnel, August 3, 2017

Oil company says it likely can’t continue to drill unless state pays tax credits
Alaska Dispatch News, Alex DeMarban, August 2, 2017

Jacobs to Acquire CH2M to Create Premier $15 Billion Global Solutions Provider
Business Wire, August 2, 2017

Hilcorp details plans for cross-inlet oil pipeline
Peninsula Clarion, Ben Boettger, August 2, 2017
 

 

 

 

 

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Morning Headlamp: Another Alaska project shelved.

August 2, 2017 | Posted in : News
Alaska State Capitol
Alaska State Capitol

Broken promises. Project paused. For the second time this summer, an oil company is pressing pause on a project in Alaska because the state hasn’t repaid oil tax credits owed to them. BlueCrest Energy Inc. says it’s halting work on a project on the Kenai Peninsula, near Anchor point after the lawmakers and Governor Bill Walker agreed not to pay off cash credits to the company. Speaking from Texas, BlueCrest Energy’s CEO and President, Benjamin Johnson, broke the news in a phone interview with KTVA Tuesday afternoon. “Without the money that the state owes us from the tax credit payments, we frankly just can’t continue spending that money that we don’t have in the short-term,” said Johnson, adding that the decision had been made just minutes prior at a board of directors meeting in Fort Worth. Headlamp reminds readers that when people say tax credits were “fully funded,” they are wrong. Fully funded means that the money owed for work done is paid, in FULL. Paying the statutorily required minimum does not FULLY fund anything. 

THE NEPA nemesis. The story of the Trans-Alaska Pipeline System is the stuff of legends. The saga began shortly after Alaska became a state in 1959, when a young geologist convinced Alaska leaders to claim ownership of 1.6 million acres of frozen tundra along the Arctic Ocean. Nine years later, an exploration team drilled a well into the heart of those North Slope lands and discovered the largest oil field in North America. Oil companies with leases in the region were eager to commercialize their crude. But before the first shovel of dirt could be dug, the industry found itself enmeshed in the state of Alaska’s bitter dispute over Native ancestral land claims. Congress ultimately stepped in to pass the largest land claims settlement in U.S. history. The industry also ran headlong into a powerful new environmental law, the National Environmental Policy Act.

Big oil. Big impact. The US oil and gas industry’s total employment impact to the national economy in 2015, combining operational and capital investment impacts, amounted to 10.3 million full-time and part-time jobs and accounted for 5.6% of total US employment, according to a study commissioned by the American Petroleum Institute and conducted by PwC LLP. The jobs total included a 500,000 increase between 2011-15, encompassing both the shale boom and the onset of a downturn in oil and gas prices that began in the summer of 2014. Despite a down year, the industry’s total impact on US GDP in 2015 was $1.3 trillion, accounting for 7.6% of the national total.

10 percent or more? Refiners told the U.S. Environmental Protection Agency to cut biofuel quotas for 2018, arguing that a federal court decision against the agency shouldn’t prevent it from setting targets below levels enshrined in law. The administration of President Donald Trump still has the authority to waive congressional biofuel levels to avert economic or environmental harm, refiner Valero Energy Corp. and oil industry trade groups said at an EPA hearing on the issue Tuesday in Washington. Economic harm could result, industry groups said, if refiners are forced to blend more than 10 percent ethanol into the fuel supply, a level the oil industry dubs the blend wall. Headlamp would note the gasoline in Alaska is not blended with ethanol nor does the Nikiski refinery blend biofuels into its crude mix.

Revenue resignation. Alaska Revenue Commissioner Randy Hoffbeck will resign from his position later this month, Hoffbeck’s last day will be August 17, at which point Deputy Commissioner Jerry Burnett will take over until the governor announces a new appointment. “It is with mixed emotions that I have reluctantly accepted Randy’s resignation as revenue commissioner,” Walker wrote in a press release. “For three years, Randy has been an integral member of this administration, spearheading the state’s efforts to create a plan that steers Alaska toward a sustainable future.” In his resignation letter to the governor, Hoffbeck said he plans to continue pursuing religious work after his departure. Hoffbeck completed a master of divinity degree in October 2014, around the time he was asked to join Walker’s administration. Headlamp thanks Commissioner Hoffbeck for setting aside his personal life to serve the state in such a tough time. Best wishes. 

Stevens files for Lite Gov. Longtime Kodiak resident Republican state Sen. Gary Stevens will run for lieutenant governor in 2018.  Stevens has spent almost 18 years in the Alaska legislature. Before that, he was a familiar face in Kodiak’s local government. He’s served as mayor of both the Kodiak Island Borough and the city of Kodiak and was also school board president. Stevens has been in the senate since 2004, and previously served as a member of the Alaska House of Representatives. He said it’s been in the back of his mind to run for the position of lieutenant governor. Now that he’s in the first year of a four-year term, he said he’s in a good position to do it.

Russian Loophole. A gap in U.S. sanctions allows Western companies to help Russia develop some of its most technically challenging oil reserves, and risks undermining the broad aim of the measures, a Reuters investigation has found. When Washington imposed the sanctions on Moscow in 2014 over its annexation of Crimea and role in the Ukraine conflict, the U.S Treasury said it wanted to “impede Russia’s ability to develop so-called frontier or unconventional oil resources.” The restrictions were designed to prevent Russia countering declining output from conventional wells by tapping these hard-to-recover reserves which require newer extraction techniques like fracking, an area where it relies on Western technology.

First Reads:

Study: US oil, gas industry supported 10.3 million jobs in 2015
Oil & Gas Journal, O&G Editors, August 1, 2017

Big finds, bitter clashes and NEPA: The tale of Trans-Alaska
E&E News, Margaret Kriz Hobson, August 2, 2017

Refiners Argue EPA Can Cut Biofuel Quota Despite Defeat in Court
Bloomberg, Jennifer Dlouhy and Ari Natter, August 1, 2017

BlueCrest Energy halts project on the Kenai, says state credits are the cause
KTVA, Liz Raines, August 1, 2017

Alaska Revenue Commissioner to resign
KTUU, Cameron Mackintosh, August 1, 2017

State Sen. Gary Stevens files to run for lieutenant governor
Alaska Public Media, Kayla Desroches, August 1, 2017

Sanctions gap lets Western firms tap Russian frontier oil
Arctic Now/Reuters, Nerijus Adomaitis and Katya Golubkova, August 2, 2017

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Morning Headlamp – Alaskans on the not-so-special sessions.

August 1, 2017 | Posted in : News

No laughing matter? Interior Secretary Ryan Zinke says suggesting he threatened Alaska’s U.S. senators over a vote by one of them on health care is “laughable.”  Zinke said Sunday in Nevada that he regularly speaks with Republican Sens. Lisa Murkowski and Dan Sullivan and they get along. The Alaska Dispatch News last week reported that Zinke called the two and said Murkowski’s vote against proceeding on debate about legislation to repeal the federal health care law put Alaska’s future with the administration in jeopardy.

15 ships, 15 days. Loaded with liquefied gas from Norway’s Snøhvit field, the ice-breaking LNG tanker Christophe de Margerie is making an unescorted voyage across the Northern Sea Route to South Korea.

It is the first commercial voyage of the unique vessel, originally built for company Novatek and its grand Yamal LNG project. The Christophe de Margerie loaded LNG at Statoil’s Melkøya gas terminal on the Norwegian Barents Sea coast in late July and set a course east. On Aug. 1 the ship entered the Kara Sea on its way to North Korea, Yamal LNG said. It will make it through the Northern Sea Route without icebreaker assistance, the company says, in a voyage is expected to take 15 days.

Improving industry preparedness. The Arctic Oil Spill Response Technology Joint Industry Programme (JIP) is a five-year research program focused on six key areas of oil spill response. In May, the initiative published its findings and achievements in relation to improving Arctic spill response and the industry’s overall preparedness for such an event. Some of the key outcomes of our work include finding new data on response effectiveness in different conditions which will inform decision-making at all levels, from planning through to response.

Oil forecast boosted 8%. Canadian light oil producers will drill more wells than previously expected this year as the sector benefits from investors transferring capital out of the oil sands, the Petroleum Services Association of Canada said on Monday. In an update to its annual drilling forecast PSAC said 7,200 wells will be drilled this year, 8 percent higher than its prior estimate of 6,680 wells. The industry body said it had underestimated how fast investors looking for a swifter return on capital in a low oil price environment would switch from long-term investments in the high-cost oil sands to short-cycle, liquid rich natural gas and shale oil plays.

Fishermen Fined Fifty. Norton Sound Economic Development Corporation (NSEDC) will pay $51,050 in penalties after reaching an agreement with the U.S. Environmental Protection Agency. According to the EPA, during a 2016 inspection it was found that NSEDC’s Norton Sound Seafood Products (NSSP) plant in Nome violated the company’s seafood processing discharge permit. The EPA said violations included exceeding the dimension requirements for seafood processing waste residues, failing to complete required record keeping and not adequately monitoring the processing plant’s waste conveyance system. Tyler Rhodes, chief operating officer for NSEDC, responded by saying the corporation takes its responsibility to the environment seriously. In an emailed statement, Rhodes said NSEDC has, “fully cooperated with the EPA in this matter which has primarily dealt with record-keeping protocols.”

Who makes the grade? KTVA asked Anchorage residents what they think of the time lawmakers have spent in session, so far. “It’s not going the way it should be, but this is Alaska,” said Jerimy Sapalo. Sapalo and many of those surveyed outside Fred Meyer in Midtown Monday evening said they haven’t been paying close attention to what’s happened in Juneau, but they did notice when the legislature and the governor agreed to cap Permanent Fund dividends at $1,100 this fall. “If they were gonna actually put those funds to good use, I could justify them cutting into the PFD to you know further the state in a positive fashion. But I just don’t see that happening,” said Ryan Morgan.

Healy calls on Seward. Last week, the US Coast Guard Icebreaker Healy spent a few days in Seward, on its way up from Seattle for their first patrol of the season in the Arctic. In Seward, the opportunities to connect with travelers who are passing through town abound. A week ago, I was fortunate to encounter a Coast Guard personnel member named Purcell at the Hertz Car Rental office on Port Avenue. I asked him about the possibility of getting a tour of the Healy. “If they are doing tours, it would be on Wednesday. Just go to the gate and they’ll call up to ask.” The following day, I did just that. Lieutenant Junior Grade Brian Hagerty met two of us at Alaska Railroad’s recently updated security gate, walked us aboard the ship and took us to the ship’s bridge, a cavernous space with three separate locations from which to steer the 420 foot long icebreaker.

First Reads:

Zinke calls it ‘laughable’ to suggest he threatened Alaska senators
KTUU/Associated Press, July 31, 2017

Russia’s new Arctic super-tanker brings Norwegian LNG to Asia
The Independent Barents Observer, Atle Staalesen, August 1, 2017

Joint initiative hones Arctic oil spill response plan
OffshoreTechnology.com, Heidi Vella, July 31, 2017

Canadian industry body boosts oil, gas drilling forecast by 8 percent
Reuters, Nia Williams, July 31, 2017

Anchorage residents give lawmakers mixed grades
KTVA, Liz Raines, July 31, 2017

NSSP plant in Nome violated processing discharge permit, agreement reached with EPA
Alaska Public Media, Davis Hovey, July 28, 2017

USCG Icebreaker Healy: America’s Presence in the Arctic Calls on Seward
Seward City News, Kelley Lane, July 26, 2017

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Morning Headlamp: A Tale of Two Walkers – Best of Times, Worst of Times

July 31, 2017 | Posted in : News

It was the best of times: A wide array of Wisconsin environmental regulations would be waived in an effort to speed up construction of a $10 billion Foxconn electronics factory under a proposal Gov. Scott Walker unveiled Friday. Walker called on the Republican-controlled Legislature to consider his measure as early as Tuesday. It also would borrow $252 million to finish rebuilding Interstate 94, which connects Milwaukee with Chicago and runs near where the massive display panel factory is expected to be built. The plant would be the first outside of Asia to produce liquid crystal display monitors used in computers, televisions and other devices. Walker calls it a once-a-generation opportunity to transform Wisconsin’s economy. The envisioned factory, expected to open in 2020, would be 20 million square feet on a campus that spans 1.56-square-miles in what Walker is calling the “Wisconn Valley.” It would initially employ 3,000 people, but the deal calls for that to grow to 13,000 within six years

It was the worst of times: Gov. Bill Walker said Friday that he will probably run for re-election. But he currently has more pressing issues on his mind — including crafting a tax bill that he hopes will garner support from lawmakers. In a wide-ranging interview with The Associated Press, Walker said it’s imperative that revenue issues be addressed this year.  He expects to unveil a tax proposal for consideration sometime this year, but he could not provide a timeline for doing so or details on what the bill might include. He did say it would not be an oil tax bill. Headlamp doesn’t know whether to laugh or cry. Regardless, cheers to our cheesehead friends.  P.S.  Taxes Weaken Investment. 

US Capital Cliff Notes. The Affordable Care Act is here to stay, and that’s in large part because of Sen. Lisa Murkowski. Alaska’s senior U.S. Senator cast one of three decisive votes early Friday, joining fellow Republicans Sen. John McCain (Arizona) and Sen. Susan Collins (Maine), plus all of the U.S. Senate’s Democrats. The Friday vote is only part of the story, however, and Murkowski isn’t the only U.S. Senator from Alaska. If you’re just catching up with the health care story, or you’re looking for a quick summary of the past week, this is it.

Taxes weaken investment. A recent study from the Fraser Institute highlights a substantial problem for Ontario’s economy—the fact that business investment to the province remains weak. In fact, business investment still hasn’t recovered to pre-recession levels. After more than a decade of anemic economic growth, the province has finally seen growth tick back up over the past year, thanks largely to a booming housing market in Toronto. For a province that has suffered so much economic pain, an uptick in growth is certainly good news—but weak business investment raises concerns about the province’s prospects for sustainable growth over the long term. But why is business investment to Ontario so weak? The study identifies a number of factors that contribute to the high cost of doing business in Ontario, which likely discourage investment, including the province’s high tax rates in key categories. Specifically, the study draws attention to Ontario’s uncompetitive personal income tax system. (Paging Governor B. Walker, are you listening?)

Robots boost oil output. At a time when the five biggest oilfield servicers — still smarting from the price rout — have cut almost $1 billion from their research budgets, companies such as Ambyint Inc. are stepping into the breach. Ambyint uses iPhone-sized computers, digital signals and complex algorithms to control the flow of oil from older wells, boosting output and avoiding downtime. The old guard is taking note. This month, Halliburton Co., the largest provider of fracking services, bought Summit ESP, a company armed with 44 patents for technology to improve production. That followed by two months Helmerich & Payne Inc.’s acquisition of Motive Drilling Technologies Inc., with 14 patents, another dozen pending, and software in hand that can robotically steer drill bits located more than a mile underground.

More Korean LNG.  South Korea’s state-run Korea Gas Corp. has jointly submitted a preliminary bid with POSCO Daewoo Corp. construction for a terminal for importing liquefied natural gas (LNG) in Bangladesh, according to Korea Gas officials on Sunday. A consortium formed by Korea Gas and POSCO Daewoo recently submitted its expression of interest to the Bangladesh government for the terminal with an annual capacity of 7.5 million tons of LNG.

Offshore easier in Africa. Cameroon plans to begin exporting liquefied natural gas (LNG) later this year using a newly designed offshore plant that analysts say could slash production costs and unlock African reserves not previously considered economically viable. West and Central Africa’s Gulf of Guinea has seen a wave of new oil and gas exploration, particularly since Tullow Oil discovered Ghana’s huge Jubilee gas field in 2007. But the cost of pipelines and onshore liquefaction facilities means that relatively few gas finds have been developed. However, a new technology has the potential to boost West and Central Africa’s efforts to exploit its vast gas resources by allowing smaller plants to ship gas from less accessible fields. An FLNG vessel owned by Golar LNG will dock offshore Cameroon’s Atlantic coast in the coming weeks for testing. It will liquefy natural gas produced in nearby offshore fields for shipment directly overseas. Russia’s Gazprom has the rights to ship the gas to customers in Asia, Europe or South America. “Deploying offshore liquefaction facilities bypasses some of the difficulties associated with building infrastructure onshore. Sometimes, offshore is simply easier,” said Jean-Baptiste Bouzard, sub-Saharan analyst at Wood Mackenzie.

Gold fever. Endurance Gold Corp. July 24 said induced polarization and ground magnetic surveys carried out at its Elephant gold property in Interior Alaska have identified four prioritized geophysical anomalies that warrant drilling. The largest of these is a linear east-west trending low that entirely bisects the area covered by 43 line-kilometers of IP and 39 line-kilometers of magnetic surveying completed during the program.

Russian retaliation. Russia ramped up its retaliation against the United States over new sanctions passed by American lawmakers on Sunday, with Russian President Vladimir Putin saying that U.S. diplomatic and consular positions must be reduced to 755 staff, CBS News correspondent Elizabeth Palmer reports. All weekend, as the world waited, Putin didn’t utter a word on the topic. He was busy with the pomp of Russia’s Navy Day, both a celebration and a reminder to the international community that Russian muscle extends out over the oceans.

In a heartbeat. The Alaska Public Offices Commission has assessed a penalty of $725 against Heartbeat of Homer – Assembly Recall, the political group that registered to advocate for recalling three Homer City Council members. In a July 20 letter, APOC claimed that Heartbeat of Homer filed Independent Expenditure, or IE, reports 29 days late.

First Reads:

Alaska governor plans to propose tax bill to ease money woes
AP, Becky Boher, July 29, 2017

Scott Walker’s Foxconn deal waives all environmental regulations and permits
Wisconsin Gazette, Scott Bauer, July 30, 2017

The simple (Alaskan) guide to what happened in Congress this week
Juneau Empire, James Brooks, July 30, 2017

Obstacles to business investment in Ontario—uncompetitive tax rates
Fraser Institute, Ben Eisen and David Watson, July 26, 2017

Oilfield Rush to High-Tech Helps Smaller Companies Thrive
Bloomberg, David Wethe, July 26, 2017

Korea Gas, POSCO Daewoo jointly bid for LNG terminal in Bangladesh
O&G News Links, July 30, 2017

African LNG Exports To Get Boost From Offshore Projects
O&G News Links, July 28, 2017

Mining News: Endurance Gold identifies new Elephant Mountain drill targets
North of 60 Mining News, Shane Lasley, July 30, 2017

Russia ramps up retaliation against United States over new sanctions
KTVA, July 30, 2017

APOC assesses penalty against Heartbeat of Homer
Peninsula Clarion, Michael Armstrong, July 29, 2017
 

 

 

 

 

 

 

 

 

 

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Morning Headlamp: “Revenge is a dish that tastes best when served cold.” – Vito Corleone

July 28, 2017 | Posted in : News

The heat is on…After being diagnosed earlier this month with brain cancer, Sen. John McCain (R-Ariz.) cast the decisive vote early Friday morning to defeat the GOP’s last-gasp effort to roll back at least some of the Affordable Care Act in a narrow 49-to-51 vote. While McCain overcame that medical adversity, no Republican senator faced arguably greater political pressure than Lisa Murkowski of Alaska.

Revenge is a dish that tastes best when served cold. Democrats and their allies off the Hill pushed back hard at the Trump administration on Thursday after a report that Interior Secretary Ryan Zinke threatened projects important to Alaska in retribution for Senator Lisa Murkowski’s vote against health care legislation. A conservation group that often works with democrats sought internal documents on Zinke’s calls as well as to any others that he may have made to other GOP swing votes on health care.

Repeal and replace redux. The Bureau of Land Management on Thursday asked the 10th US Circuit Court of Appeals to indefinitely delay a decision on whether an Obama-era hydraulic fracturing rule is legal until the government repeals and replaces it. Since the process of replacing the rule could take up to five years, the BLM asked the appeals court to leave in place the current ruling by a Wyoming federal district judge, which deemed the regulation illegal, until a new rule comes into effect.

A bridge too far. Lawmakers on Thursday passed a capital budget that drives a knife deeper into two controversial megaprojects and then adjourned their third special session of the year. Even as they were all but killing the Knik Arm Bridge and the Juneau Access road project, they paid for a new effort to study Arctic roads. Supporters say the roads would make it easier to reach resources, but a critic said the roads could become a colossal waste of money. The Legislature approved the delayed capital budget almost four weeks after the July 1 start of the fiscal year, putting up more than $230 million in state funds to draw down $1.2 billion in matching federal funds.

Persily on Politics. Both Senators: John McCain and Lisa Murkowski, are in the center of the political drama playing out in Washington DC, with plot lines that could be straight out of a movie. Larry Persily was the federal coordinator for Alaska Natural Gas Transportation projects and has worked for three governors and advised many state legislators, including Lisa Murkowski. Thursday on KTVA News Extra, he voiced his opinions on the political drama.

Elections matter. With 42 elected offices opening up this fall, Kenai Peninsula residents will have ample opportunity to get involved in local governments. On October 3, voters will elect new members to the Kenai Peninsula Borough assembly, board of education, borough mayor’s office, Kenai and Soldotna city councils, and numerous service area boards. For those considering the further step of adding their names to that ballot, here is an overview of how to start.

First Reads:

The Energy 202: Messing with Murkowski may not be illegal, but it sure wasn’t very smart
The Washington Post, Dino Grandoni, July 28, 2017

US court asked to hold off on decision over fracking rules
Associated Press, Tatiana Flowers, July 28, 2017

Democrats vow investigation, lawsuit over ‘political blackmail’ against Murkowski
Politico, Elana Schor and Ben Lefebvre, July 27, 2017

ConocoPhillips earns $199M in 3 months in Alaska as projects near production
Alaska Dispatch News, Alex DeMarban, July 27, 2017

Alaska capital budget passes with $7 million to study North Slope roads
Alaska Dispatch News, Alex DeMarban, July 27, 2017

Larry Persily on political drama in Washington DC
KTVA, KTVA Staff, July 27, 2017

Step on up, take a seat
Peninsula Clarion, Peninsula Clarion Staff, July 27, 2017

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Morning Headlamp: Friends in high places – rather, enemies.

July 27, 2017 | Posted in : News

With friends like that…President Donald Trump isn’t going to just let go of Sen. Lisa Murkowski’s no vote on Tuesday’s health care plan. Early Wednesday, Trump took to Twitter to express displeasure with Murkowski’s vote. By that afternoon, each of Alaska’s two Republican senators had received a phone call from Interior Secretary Ryan Zinke letting them know the vote had put Alaska’s future with the administration in jeopardy.

Uncertainty is the enemy. AEDC reports Anchorage saw a total of 3,000 jobs lost in 2016 and 1,600 so far this year. They’re projecting 2,100 total jobs lost in 2017 and 700 more in 2018. “Unfortunately, due to the lack of a solution to the state’s fiscal crisis being developed by the legislature and the governor, we are now projecting a third year of recession in 2018,” said Bill Popp, president and CEO of AEDC. He estimates by the end of the year, Anchorage will have experienced a 3 percent job loss over two years, compared to a 15 percent job loss in the 1980s.

All in a day’s work. Lawmakers plan to spend as little as one day in Juneau, as they meet for their third special session this year. The Legislature is scheduled to gavel in at 11 a.m. A conference committee plans to meet on the capital budget early in the afternoon. And both the Senate and House could pass it later in the day. Associated General Contractors of Alaska Executive Director John MacKinnon said it’s important for the Legislature to act. “All in all, I’m very pleased we’re going to get a capital budget,” he said.

On the road again. There are four different options to relocate a 15-mile stretch of the Sterling Highway in order to avoid Cooper Landing including the Juneau Creek Alternative, which Governor Bill Walker and the Alaska congressional delegation prefer, and the G-South Alternative, which is the federal government’s choice route. (Photo courtesy of Alaska Department of Transportation and Public Facilities)

First Reads:

Trump administration threatens retribution against Alaska over Murkowski health votes
Alaska Dispatch News, Erica Martinson, July 26, 2017

AEDC projects another year of recession based on uncertainty from Juneau
KTVA, Daniella Rivera, July 26, 2017

Breaking down the AEDC 3-Year Economic Outlook report
KTUU, Beth Verge and Sydney Sullivan, July 26, 2017

UPDATE: Murkowski reacts to Trump saying she ‘let the country down’
KTUU, KTUU Staff & Associated Press, July 26, 2017

Lawmakers agree on capital budget funding for oil and gas tax credits, Kivalina school
KTOO, Andrew Kitchenman, July 26, 2017

Walker, congressional delegation advocate for northern Cooper Landing bypass route
Peninsula Clarion, Kat Sorenson, July 25, 2017
 

 

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Morning Headlamp: “Full and over-hyped LNG Bandwagon”; No gas, no project for IEP

July 26, 2017 | Posted in : News

“Full and over-hyped LNG Bandwagon.” A $27 billion energy project in Canada just became the latest casualty of a worldwide glut of natural gas. Malaysia’s Petroliam Nasional Bhd abandoned on Tuesday its plans for the Pacific Northwest LNG terminal, a plant that would have liquefied Canada’s gas and sent the fuel by tanker from the western shores of British Columbia to markets in Asia. Petronas cited market conditions in its decision. Pacific Northwest LNG joins a growing list of projects that have been killed in recent months by plummeting LNG prices, throwing the economics of export terminals from Australia to Russia to Mozambique into question. Prices have crashed as increasing volumes of gas from Australia and America’s shale formations hit the water, inundating the market with so much supply that analysts say demand may not catch up until the next decade.

Pick up the pace on pipelines. Two bills streamlining oil and gas pipeline permitting and a third easing ozone regulation have been passed by the US House of Representatives (OGJ Online, June 29, 2017). HR 2883 transfers authority over pipeline border crossings from the president to the Commission and sets time limits for approvals. If the legislation becomes law, FERC would have to act on border-crossing applications within 120 days of its completion of environmental reviews and on exports or imports of natural gas to or from Mexico or Canada within 30 days.

Burning the midnight oil. In June 1977, the first barrel of oil flowed down the trans-Alaska pipeline. That oil and the pipeline that carried it forever changed the state. Forty years later, Alaska’s Energy Desk explores that rich history.

No gas, no project. Slow progress securing a sufficient natural gas supply is causing problems for the Interior Energy Project. A gas contract is key to the Alaska Industrial Development and Export Authority lead project to provide a lower cost, cleaner burning fuel to the Fairbanks-North Pole area. IEP team leader Gene Theriualt said a gas deal with Cook Inlet producers is expected this summer. Another aspect of the Interior Energy project is merging FNG into the Fairbanks North Star Borough’s Interior Gas Utility, to form a single non-profit entity to distribute gas. The merger has been slowed by a funding issue. Theriault described a temporary restriction included in project funding legislation. “It said that we were not able to expand the scope of work under the existing loan until we identified the source of gas,” Theriault said.

Nome waits for ship to come in. Nome Joint Utility Systems (NJUS) staff and City of Nome’s public works department have been set to welcome the Vitus Energy fuel barge coming over the horizon bringing diesel fuel to add to existing inventory to bring the supply NJUS tanks to over three million gallons. However, the shipment, expected around July 24, will not come until late next month. John K. Handeland, utility manager, explained that Vitus is bringing a new barge that will allow the vendor to deliver Nome’s fuel in two loads. “With adequate product on hand, I opted to wait, as opposed to having Vitus use their smaller barges before the end of July, which would have required nine to 10 trips back and forth, at added time and cost,” Handeland explained. NJUS has 2.2 million gallons on order, the price of which has already been financed through Northrim Bank.

Court says “no” to Arctic seismic and “yes” to Enbridge pipeline. The Supreme Court of Canada has quashed plans for seismic testing in Nunavut, delivering a major victory to Inuit who argued they were inadequately consulted before the National Energy Board gave oil companies the green light to conduct this disruptive activity.  The Inuit have said the sound wave technology a Norwegian consortium sought to use in search of oil would have profoundly impacted marine life in the area. In a similar decision released Wednesday, the top court ruled unanimously that Enbridge could proceed with its reversal of the Line 9 pipeline in southwestern Ontario, arguing the Chippewas of the Thames were given enough say ahead of the project’s construction.

First Reads:

US House okays bills speeding pipeline permits
Oil & Gas Journal, OGJ Editors, July 21, 2017

Worldwide gas glut claims $27 billion victim in Canada
Arctic Now/Bloomberg, Natalie Obiko Pearson, Ryan Collins and Tim Loh, July 26, 2017

Midnight Oil
KTOO, Alaska Energy Desk

NJUS Awaits Fuel Barge, Money In Hand
Nome Nugget, Sandra Medearis, July 21, 2017

Supreme Court quashes seismic testing in Nunavut, but gives green light to Enbridge pipeline
CBC, John Paul Tasker, July 26, 2017

Slow gas deal causing problems for Interior Energy Project
Alaska Public Media, Dan Bross, July 25, 2017

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Morning Headlamp – Big Decisions on the Back Burner

July 25, 2017 | Posted in : News

 

Big decisions on the back burner. The Legislature will return to Juneau on Thursday to vote on a capital budget that Senators and House members have agreed to. Soldotna Republican Sen. Peter Micciche said the bill is unlikely to address the most contentious issues: Permanent Fund dividends and oil and gas tax credits. “Clearly those are going to be the most difficult issues that have to be solved going forward,” he said. “I don’t think they’re going to happen in this bill.” The Legislature will meet at 11 a.m. in the Capitol. The leaders of each chamber polled members, and more than two-thirds supported calling the Legislature into session to consider Senate Bill 23, the capital budget.

Falling into an oil discovery, literally. Richfield Oil Corporation found crude on the Kenai Peninsula this week in July 1957. That discovery helped Alaska on its way to statehood two years later, as Congress believed that Alaska would now be able to fund its own government. But that wasn’t the first time Alaskans had found oil. Alaska Natives used the black wealth oozing out of the hills and beaches long before white men came north. Northern Natives burned the tar-like chips, Southeastern Natives used it for war paint and others used oil shale in knives and nose rings.

Bear country. Oil’s bear market may finally be taking its toll on the shale boom. Hours after Halliburton Co. warned Monday that explorers are “tapping the brakes” on drilling, Anadarko Petroleum Corp. said it’s trimming spending in the first earnings report this quarter from a major shale producer. That could make this week a turning point for the troubled global oil market — the moment when shale companies showed signs of bowing to the low prices they helped inflict. The surge in U.S. production this year has stymied efforts by OPEC and other major oil exporters to unwind a supply glut that’s weighed on the crude market for three years.

Repeal and Replace…Fracking?  The Trump administration is proposing to completely repeal Obama-era standards governing hydraulic fracturing on federal land. The proposal from the Interior Department’s Bureau of Land Management (BLM) is due to be published Tuesday in the Federal Register. Trump officials say in the proposal released Monday that the Obama regulation is largely duplicative of state and tribal standards, and would cost the oil and gas industry up to $45 million a year to comply. “Considering state regulatory programs, the sovereignty of tribes to regulate operations on their lands, and the preexisting authorities in other federal regulations, the proposed rescission of the 2015 final rule would not leave hydraulic fracturing operations entirely unregulated,” the BLM writes in the proposal.  The BLM did say they intend to replace the rule.

Record highs for US crude oil production

 US Crude Oil by Region

 

First Reads:

Capital budget compromise unlikely to restore PFDs, address oil and gas tax credits
KTOO, Andrew Kitchenman, July 24, 2017

Shale Boom May Finally Have Succumbed to Oil’s Price Slump
Bloomberg, Alex Nussbaum, July 24, 2017

Trump administration seeks to repeal Obama fracking rule
The Hill, Timothy Cama, July 24, 2017

U.S. crude oil production forecast expected to reach record high in 2018
U.S. Energy Information Administration, Jeff Barron & Danya Murali, July 25, 2017

Story Time with Aunt Phil: Alaska crude oil’s explosive discovery
KTVA, Laurel Downing Bill, July 24, 2017

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Morning Headlamp – Red light, green light Russian style.

July 24, 2017 | Posted in : News

 

red light green stoplight

Red light. Green light. Congress struck a deal to finally punish Russia for the alleged meddling in the 2016 presidential election. But it was a bit of a rough road to reach that compromise without congressional approval. The compromise between leaders in the Senate, where the bill passed with an overwhelming 98-2 majority, and the House, where the sanctions package stalled, was welded with a carve-out for U.S. oil and gas interests. Here’s the deal: The bill, if passed and signed into law, would restrict U.S. firms from partnering with sanctioned Russian firms on projects in which those Russians owned at least a 33 percent stake. What it means: On its face, the compromise bill would give certain joint ventures the greenlight, while stopping others.

If you build it…The Alaska Legislature is coming back to the state Capitol in Juneau. The Legislature will convene Thursday for what is expected to be a one-day special session to pass the state’s capital construction budget. The capital budget funds road construction and building projects across Alaska, and most of its funding will come from the federal government, but it – like the state’s multi-billion dollar operating budget – was caught in the political divide between the coalition House Majority and the predominantly Republican Senate Majority. An agreement between those two sides has now been reached.

Top Secret Results. Experts say data from the KIC-1 well — the only well ever drilled in the refuge — remains the tightest of North America’s “tight holes,” an industry term for top-secret wells. The explorers, BP, Chevron and two Alaska Native corporations — subsurface landowner Arctic Slope Regional Corp. and village corporation Kaktovik Inupiat Corp.— have kept the data hidden, with only a small number of people aware of what the drillers found. But the results from the 1986 well, drilled 15 miles southeast of the village of Kaktovik, could be something of a Rosetta stone, helping to unlock the refuge’s complex geology and uncertain oil potential.

60 years at Swanson. Three generations of drillers, truckers, operators and other oil workers connected to the Kenai Peninsula’s first oilfield gathered for an anniversary at Kenai’s Cannery Lodge on Wednesday. The July 19, 1957 discovery of oil north of Sterling at Swanson River provided, according to Alaska’s first governor William Egan, “the economic justification for statehood for Alaska.” Many have agreed with his statement, including present Governor Bill Walker, who spoke at the lunch honoring the Swanson River field’s 60th anniversary, organized by its present operator Hilcorp. If you missed the video we shared last week, click here to check it out.

Buy America – Bye American Energy Dominance? Donald Trump’s allies in the oil industry are warning the president that his bid to boost U.S. steelmakers could backfire against their efforts to achieve his goal of “American energy dominance.” The intense lobbying effort comes as the Commerce Department faces a Sunday deadline to give the president a plan to require oil and gas pipelines use American-made steel, an idea Trump embraced in the initial days of his presidency. While the U.S. has imposed “Buy American” rules on government purchases for decades, it would be unprecedented to force those obligations on privately funded, commercial projects.

First Reads:

Russia sanctions carve out will help some energy companies
The Washington Post, Dino Grandoni, July 24, 2017

Mystery surrounds only oil well drilled in ANWR
Alaska Dispatch News, Alex DeMarban, July 23, 2017

Trump America-First Pipeline Plan Draws Ire of American Oil
Bloomberg, Jennifer A. Dlouhy, July 21, 2017

Alaska Legislature to meet Thursday on construction budget
KTVA/Associated Press, July 23, 2017

NordAq fined $100,000 for unplugged well
Peninsula Clarion, Ben Boettger, July 20, 2017

Oil workers celebrate 60 years of Swanson River
Peninsula Clarion, Ben Boettger, July 23, 2017
 

 

 

 

 

 

 

 

 

 

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