Headlamp – Why is Alaska overtaxing its most important industry?

December 4, 2017 | Posted in : News

Tax more, get less? As we head into the homestretch of much-needed tax reform in Washington, Americans back home need to understand that the political turmoil doesn’t just reside in the Swamp. States facing significant financial hardships face difficult choices as well. And instead of looking to create fair policy that encourages growth, some states, like Alaska, are looking to reprimand industries who are the backbone to the economy – costing Americans opportunity and growth. Alaska’s Legislature is particularly known for debating the role the oil and gas industry plays in the state’s economy. In fact, economic opportunity in the Last Frontier has long been inextricably linked to oil and gas. That’s true for the thousands of Alaskans who make their living in energy development or in support of it. Yet, it’s also true for state government, which relies almost exclusively on the taxes and royalties paid by the industry to provide services and stay solvent. One would think that a state that derived 72 percent of unrestricted revenue last year from a single source – the oil and gas industry – would work hard to ensure that it is able to operate in a stable business and policy environment. And when market conditions turn against that source – as they have amid low crude prices and high operating costs – conventional wisdom suggests that keeping tax and regulatory burdens from becoming too heavy should be a priority.

Don’t crack the champagne cork yet. Sens. Lisa Murkowski and Dan Sullivan both voted for the GOP-sponsored tax reductions that passed the Senate early Saturday — a step that also brings the Arctic National Wildlife Refuge to the brink of being opened for oil leasing. The senators, both Republicans, said the bill would be good for Alaska’s economy and its middle class, as critics denounced the measure as a hastily written giveaway to corporations and the wealthy. “Do I wish that we would have allowed for that full, written text to be distributed and reviewed? Yes. I’m not going to make excuses for that,” she said. But, she added: “We have made no secret about the desire to open ANWR. Every single Congress there have been bills to do that. We have had hearings on it.” Murkowski added that she would have voted for the legislation even without the refuge provision. She and Sullivan also each got amendments added to the final bill that benefit Alaska Native corporations and cruise lines. Drilling proponents, meanwhile, can’t crack their champagne corks just yet: The Senate’s ANWR proposal is still expected to go before a conference committee of senators and House members, who would sort out differences between the two tax bills approved by each chamber.

Takin’ it to the street. You may have seen it in your local paper Sunday, the Alaska Gasline Development Corporation (AGDC) has published a 12-page informational brochure about the state’s gas project – Alaska LNG. AGDC will provide the House Resources Committee with an update on the project Monday. The Corporation says the goal behind the brochure is to provide Alaskans with detailed information about where the project stands, after the company signed a joint development agreement with China last month, in the presence of both the U.S. and Chinese presidents. Sunday’s brochure was printed in color, on large-format, glossy paper at a price of 80 cents each. Rosetta Alcantra, a spokesperson for AGDC, said she could not provide information, on a Sunday, about how many brochures were printed using public funds, but Alcantra says the quality was important when choosing the piece. “I thought ours was a very modest piece, that was a very good, informational piece, has a lot of information, has a lot of good graphics that can really only be presented in a colored format,” Alcantra said of the document, which was published in the Anchorage Daily News, Fairbanks Daily News Miner, Peninsula Clarion, Juneau Empire, and the Alaska Journal of Commerce. Additional copies were printed for the Alaska Resource Development Council.

First Reads:

Why Is Alaska Overtaxing Its Most Important Industry?
Real Clear Markets, Pete Sepp, 12/04/17

Alaska senators vote for tax bill, with extras for ANWR, cruise industry, Native corporations
Anchorage Daily News, Nathaniel Herz, 12/03/17

AGDC publishes brochure in local newspapers, ahead of gas project update
Liz Raines, KTVA, 12/03/17

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Headlamp – Senator Sullivan smack down on the Washington Post.

December 1, 2017 | Posted in : News

Senator Sullivan smack down on the Washington Post. In expressing opposition to the responsible development of a small slice of Alaska’s Arctic National Wildlife Refuge, The Post’s editorial board recycled stale, 40-year-old talking points without adding a single voice from the vast majority of Alaskans — Democrats and Republicans — who support the development. In so doing, The Post failed to include a serious discussion about new technologies and environmental safeguards that would greatly limit the footprint of development in the area. Indeed, the fundamental disconnect in this debate about developing ANWR’s coastal plain, mirrored in The Post’s editorial, is that the debate has not kept up with Alaska’s world-class environmental standards or advancements in technology.

“Extraordinary” efforts from ConocoPhillips to protect Alaska. ConocoPhillips is pressing ahead with plans to drill a closely watched North Slope prospect starting in January, after taking steps to address the nearby village of Nuiqsut’s concerns. But the company still faces an uphill battle to drill at a site 3.5 mile east of Nuiqsut, said Mamie Pardue, the mayor. “The majority of the village is against it,” she said of the drilling. Opposition from the Inupiaq village of 450 stopped ConocoPhillips’ exploration plans at the Putu prospect last winter, the oil giant said. Putu means “hole” in Inupiaq. But this winter, ConocoPhillips has taken “extraordinary” steps to reduce impacts, said Lanston Chinn, chief executive of Kuukpik Corp., the village’s Native corporation. One key step involves running an electric line sheathed in protective ice about a mile across tundra to power the drilling rig. The electric drilling operation will be used instead of a diesel-fueled drilling rig.

No seven-year itch at Kensington. Kensington gold mine Assistant General Manager Mark Kiessling has a few statistics he’s optimistic about. The underground mine has milled three times more ore in 2016 than 2010, their first year of mining. Safety incident rates are down and cost efficiency has improved, Kiessling said at a Thursday Juneau Chamber of Commerce luncheon. Seven years in and the mine is hitting its stride, Kiessling said under holiday decorations and in front of a packed house at the Juneau Moose Lodge. Recovered ounces have increased year over year from just over 40,000 in 2010 to around 124,000 in 2016, he said. The mine has also improved its cost efficiency. It cost Kensington around $900 to produce an ounce of gold when it opened. Now, it costs around $800, a number much closer to industry standard.

From the Washington Post’s Daily on Energy:

FERC CHAIRMAN SLAMS PIPELINE PROTESTERS: Federal Energy Regulatory Commission Chairman Neil Chatterjee took a break from discussing a high-profile plan to prop up coal and nuclear plants on Thursday to criticize environmentalists’ efforts to delay pipeline approvals. All the oxygen in the room: “I understand the significance of that proceeding to everyone in this room, particularly our press friends in the corner, but as you know much has been written on this topic already,” Chatterjee told a natural gas industry luncheon in Washington. “It is a topic that has consumed much of the oxygen in the room over the past several weeks.” The plan looks to provide coal and nuclear plants with market-based incentives that would reward their ability to keep the lights on when the grid is significantly strained. The plan faces major opposition from oil and natural gas producers to the wind industry. Pipeline protesters delaying permits: Instead, Chatterjee used his remarks before the Natural Gas Roundtable to slam what he called the well-funded and legally savvy campaigns by climate change activist groups to significantly delay the natural gas pipeline approval process at FERC. Activists have targeted natural gas pipelines because of the perceived link between the drilling process known as fracking and pipeline development. Ideologically driven: “It is not hard to see that opposition to natural gas pipeline projects has become much more ideologically driven than it used to be,” Chatterjee said.

FATE OF ARCTIC DRILLING RESTS ON GOP TAX BILL VOTE FRIDAY: Sen. Lisa Murkowski, R-Alaska, chairwoman of the Senate Natural Resources Committee, said Republicans have overcome a procedural snag and are on track to pass a bill allowing drilling in Arctic National Wildlife Refuge as part of the Senate’s tax reform package. Without providing details, Murkowski took to the Senate floor Thursday night to say she was re-submitting a second version of the ANWR bill after Republicans ran into procedural problems.

First Reads:

Developing Alaska’s wildlife refuge is a win-win-win
The Washington Post, Dan Sullivan, 11/30/17

ConocoPhillips moves forward with plans to drill near North Slope village
Anchorage Daily News, Alex DeMarban, 11/30/17

Seven years in, Kensington hits production high
Juneau Empire, Kevin Gullufsen, 12/01/17

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Headlamp – Will ANWR get the Byrd (rule)?

November 30, 2017 | Posted in : News

Byrd rule? A bid to open the Arctic National Wildlife Refuge to oil drilling faces a hold up over an arcane budget rule, a development that may mean it can’t be included in the tax overhaul legislation. Senate Democrats objected to the provision opening Alaska’s pristine coastal plain to oil drilling, saying measures to fast-track environmental approvals violate the so-called Byrd rule, according to congressional aides. That rule, named after former West Virginia Democratic Senator Robert Byrd, is designed to limit budget procedures to provisions that are mainly fiscal in nature. While its fate is unclear, stripping out that measure would be a blow to Alaska Republican Lisa Murkowski, a key swing vote and champion of Arctic drilling. Easy Fix in Murkowski’s view.

When will the bleeding stop? The Alaska Department of Labor and Workforce Development states that the number of jobs in the Prudhoe Bay region dropped this year to the lowest levels since 2007. Alaska’s Energy Desk reported Wednesday that the region had a record 13,485 jobs in March 2015, but that number has since dropped to 8,923. The region is dominated by the oil sector and the industries that support it and has been hit hard by the oil price crash that began in 2014. Oil prices have gone up recently, but state economist Neal Fried said it’s hard to predict whether the increase in prices will restore jobs. Fried said sectors like fisheries, tourism and the military could help add jobs to the region, even if the oil industry doesn’t start adding jobs again.

New FERC Commissioner. Democrat Richard Glick formally joined the Federal Energy Regulatory Commission (FERC) on Wednesday, bringing the board one step closer to being fully staffed. The Senate confirmed Glick and Republican Kevin McIntyre to FERC on Nov. 2, though neither were sworn in to the panel until Glick was formally added on Wednesday. McIntyre, Trump’s pick to lead the commission, has yet to join FERC, though acting Chairman Neil Chatterjee said Tuesday that it’s “simply a matter of timing, prioritization, getting documents signed” before McIntyre is sworn in.

Alaska’s Christmas List. One by one, the items on Alaska’s wish list are being checked off as the first Christmas of the Trump administration nears. With Republicans appearing to gather enough votes in the Senate to secure passage of their tax overhaul bill, we could see President Trump signing legislation that will finally open the coastal plain of the Arctic National Wildlife Refuge. Also in December we’ll see Italian oil major Eni begin drilling exploratory wells into the federal Arctic Outer Continental Shelf from its Spy Island in state waters following the Nov. 28 approval of the plan by the Bureau of Safety and Environmental Enforcement. On Dec. 6 in Anchorage, the National Petroleum Reserve-Alaska bids will be opened after the Interior Department made all 10.3 million acres currently available part of the annual lease sale. That will follow the third-largest amount of bids ever received in the 2016 sale and reflects the commitment of the administration to unlock Alaska’s energy potential.

Russian LNG. After more than five years of construction, Novatek’s $27 billion Yamal LNG project has received state permission to commission the first liquefaction train, 58 gas wells, and the respective infrastructure. The first shipment of liquefied natural gas, expected before the end of the year, will be destined for China in a symbolic move previously announced by Novatek. Yamal LNG constitutes Russia’s second LNG plant, after Sakhalin II, and its first in the Arctic. The facility will receive natural gas from the Yuzhno-Tambeyskoye field and other fields on the Yamal Peninsula. In its final configuration the plant will consist of three production lines, or trains, and have an annual capacity of 16.5 million tons of LNG. The completed first production line has a capacity of 5.5 million tons and trains 2-3 are expected to open by 2021.

From the Washington Examiner’s Daily on Energy:

EPA KEEPS ETHANOL MANDATE INTACT: The Environmental Protection Agency will keep next year’s Renewable Fuel Standard intact with only minor changes, the agency announced Thursday.

Pruitt seeks stability: “Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the agency by upholding the rule of law,” EPA Administrator Scott Pruitt said.
Keeping Iowa’s promise: Thursday’s final RFS targets for 2018 underscore a promise that Pruitt and President Trump made to lawmakers who opposed an earlier EPA proposal that sought to cut the biofuel program by 2.5 percent. Although Pruitt said that the agency was only contemplating potential cuts, the ire of biofuel supporters from Iowa was felt at the White House and led to Pruitt sending a letter assuring Iowa Republican Sens. Chuck Grassley and Joni Ernst that he would follow the law and not seek reductions in the annual goals.
The requirements: The RFS requires refiners to blend ethanol and other renewable fuels in the nation’s gasoline and diesel supplies by ever-increasing amounts through 2022. The 2018 total renewable fuel blending requirement will be 19.29 billion gallons, which includes both the conventional and more advanced blending standards. That’s a slight bump from the original proposal of 19.24 gallons. The bulk of the standard is met by corn ethanol.
Rest of RFS kept low: The biomass-based diesel standard will be kept at the same level of 2.1 billion gallons for 2018 and 2019, which the cellulosic requirement is set at 288 million gallons for next year.

First Reads:

Oil Drilling in Alaska Refuge Hits Snag Over Budget Protocol
Bloomberg, Ari Natter and Eric Wasson, November 29, 2017

Number of jobs in Prudhoe Bay region drops to decade low
KTUU/Associated Press, November 30, 2017

Democratic commissioner sworn in to energy regulatory board
The Hill, Devin Henry, November 29, 2017

AJOC EDITORIAL: Alaska’s wish list getting shorter
Alaska Journal of Commerce, Andrew Jensen, November 29, 2017

Novatek’s Yamal LNG to be commissioned and begin production
Arctic Now/High North News, Malte Humpert, November 30, 2017

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Headlamp – 50% of something really is better than 90% of nothing. Rocambolesco!

November 29, 2017 | Posted in : News

According to Tillerson – “We’re late to the game.” In an interview Tuesday, U.S. Secretary of State Rex Tillerson acknowledged that while the Arctic is globally important and will become more important in the future, the U.S. continues to lag behind other Arctic nations — and even non-Arctic nations — in its engagement in the region. Tillerson’s remarks came at the conclusion of a conversation at the Woodrow Wilson Center in Washington, and were widely noted (and criticized) elsewhere for Tillerson’s response to criticisms about cuts to the State Department. (Disclosure: Arctic Now owner Alice Rogoff co-chairs the Wilson Center’s Polar Initiative.) In response to a final question from moderator Jane Harman, Tillerson said the opening of new shipping routes in the region “from an economic and trade standpoint, but certainly from a national security standpoint, is vitally important to our interest,” and admitted that “we’re late to the game.”

What can we say but – Rocambolesco!! A subsidiary of an Italian energy company has received a federal permit to drill the first oil exploration wells in U.S. Arctic waters in two years. The federal Bureau of Safety and Environmental Enforcement announced Tuesday it has approved an application from Eni U.S. Operating Co. Inc. to drill exploratory wells in the Beaufort Sea. Drilling could begin next month from Spy Island, a gravel artificial island in state waters about 3 miles (4.8 kilometers) off the coast near Prudhoe Bay. Eni will use extended-reach drilling techniques to reach federal submerged lands. The drilling would be the first in federal Arctic waters since Royal Dutch Shell in 2015 sent down an exploratory well in the Chukchi Sea off Alaska’s northwest coast. Former President Barack Obama last year banned oil and gas exploration in most of the Arctic Ocean. President Donald Trump in April ordered Interior Secretary Ryan Zinke to review the ban with the goal of opening offshore areas. Environmental and Alaska Native groups in May sued to maintain the ban.

50% of something really is better than 90% of nothing. It’s the closest the state has been in the forty-year battle to open up lands designated for oil and gas production in the 1002 area of the Arctic National Wildlife Refuge, and the fight isn’t close to being over. While Alaska’s Statehood Pact secured a 90:10 split with the lion’s share going to the Greatland, which is something the United States has never paid out, the ANWR provision at least gets the state 50:50 – a great deal more than it has received historically. Senator Dan Sullivan R-AK: “The 90 is where I think a lot of Alaskans, myself included, wanted to be – but you make some compromises to make sure that you get provisions that are important.” For Sullivan, it is more than the money to be made directly from extracting Alaska’s natural resources. Senator Dan Sullivan R-AK: “Hopefully it will also be a psychological boost for Alaska. We need to get out of this recession, and we need to have more opportunity and more jobs. Good paying jobs, pay raises for hard working Alaskan families.”

Fuel barge anchored with protective boom. A Ketchikan-bound fuel barge loaded with a million gallons of diesel and gasoline that detached from its tug is now anchored with a protective boom around it while it awaits inspections by Canadian authorities. The Zidell Marine 277 barge detached from its tug Sunday while transiting through the Canadian portion of the Inside Passage. A second tug was able to re-attach the 430-foot barge early Monday. Now it’s anchored off Campbell Island near the community of Bella Bella, British Columbia. Fuel transport through the notoriously narrow Inside Passage is controversial among First Nations communities and environmentalists.

From the Washington Examiner’s Daily on Energy:

MEANWHILE, ENGINEERS RAIL AGAINST HOUSE REPEAL OF EDUCATION TAX CREDITS: Top scientific and engineering groups urged the Senate “to resist” provisions in the House-passed tax bill that would kill vital tax credits for advanced scientific degrees, including those sought by the energy industry. “Repealing the very provisions that allow graduate students to continue to study in critical STEM [Science, Technology, Engineering and Math] fields means that we will be shutting the door on new opportunities for discovery, exploration and innovation,” said a letter sent to Senate leaders led by the American Association for the Advancement of Science. Oil industry study: The American Petroleum Institute, coincidentally, issued a report Wednesday that underscored the need for STEM education for the fossil fuel industry. “The oil and natural gas industry will experience significant turnover and growth in the years to come, greatly expanding career opportunities for women and communities of color,” said API President Jack Gerard. “This study shows that STEM education is the key to creating a workforce that reflects the many faces of this great nation with skilled workers of all backgrounds.”

First Reads:

Tillerson: US lags ‘behind all the other Arctic nations’
Arctic Now, Krestia DeGeorge, November 29, 2017

Eni receives federal permit for US Arctic offshore drilling
Associated Press, Dan Joling, November 29, 2017

ANWR Provision Heads To Senate Floor
KSRM Radio Kenai, Dorene Lorenz, November 28, 2017

Distressed fuel barge awaits inspection following tug detachment
Alaska Public Media, Jacob Resneck, November 28, 2017

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Headlamp – Elf on a shelf or LNG on the shelf and fears of an oversupplied LNG market.

November 28, 2017 | Posted in : News

Elf on a shelf…or LNG on the shelf. Low oil prices and a volatile market are prompting a South African energy and chemical company to drop plans for an $11 billion to $14 billion U.S. plant in Mossville, just outside of Lake Charles, to convert natural gas to liquid fuels and to pull out of Canadian shale. “Sasol will not invest in further greenfields gas-to-liquids projects,” the company said Thursday in a news release posted on its website. Its current GTL plants “are generating good returns and cash flows,” but new projects aren’t worth it in the current market, the statement said. The company had announced in January that it was delaying final investment plans for the plant near Lake Charles because of a collapse in world oil prices.

Fears of an oversupplied LNG market – Part 2. NextDecade, the developer of one of three LNG export terminals proposed for Brownsville, Texas, said Monday that while it was sticking to its original plans, it does not need to build all six production trains for the project to be economic. The comments come as the second wave of liquefaction terminals being designed for US shores struggle to secure firm long-term take-or-pay contracts with overseas buyers of their output on terms that would allow them to finance the billions of dollars in construction costs. Fears about an oversupplied market also continue, and there is no consensus about exactly when supply and demand will balance. For its part, NextDecade has made several moves this year to boost the prospects of its up to 3.6 Bcf/d Rio Grande LNG project, including a merger that gave it a public listing and access to capital for development. It also reached a preliminary agreement with the company that runs the main port serving Ireland to consider jointly developing a floating storage and regasification unit that would be fed by the Texas facility. Now, NextDecade is updating its thinking about the scale of the project. “NextDecade can take a final investment decision (FID) on the Rio Grande LNG project for as few as two trains (about 9 mtpa),” the company said in a statement. “The project is scalable up to six trains (27 mtpa).”

Juneau mining committee gets new members. The list of new additions to the city’s Mining Subcommittee was approved Monday night, and the four new members were given the right to vote on the committee as well. At the subcommittee’s Nov. 9 meeting, the three current Assembly members on the committee — chair Norton Gregory, Maria Gladziszewski and Beth Weldon — were split on whether to give the new members of the committee a vote on committee decisions. Weldon proposed at that meeting that the three Assembly members would be the only voting members, but Gladziszewski was opposed to that. Gregory was in favor of the idea, but at this Monday’s Assembly meeting, he changed his tune. “Ultimately the final vote is going to come to this Assembly here to decide on it,” Gregory said, “so I see no reason to limit anybody else’s voting abilities.”

Nothing to see here… The head of the Federal Energy Regulatory Commission (FERC) on Tuesday denied that there is a “conspiracy” to delay the addition of two new members on the five-person board. Chairman Neil Chatterjee told reporters that he is not trying to delay Republican Kevin McIntyre and Democrat Richard Glick from being sworn in. McIntyre — who is slated to be the new chairman of the body — and Glick were confirmed by the Senate Nov. 2, and President Trump recently processed their paperwork for ascension to the commission. But they have not been sworn in. “I do want to be clear with everybody: you guys are reading way too much into this. There is no conspiracy here. There is no intentional delay or dragging things out to some nefarious end,” Chatterjee said after speaking at a Consumer Energy Alliance event.

From the Washington Examiner’s Daily on Energy:

ANALYSTS PREDICT NINE-MONTH EXTENSION OF OPEC DEAL: Goldman Sachs analysts say they expect OPEC and other key producers of crude oil, including Russia, to agree to a nine-month extension of their production cuts when they meet in Vienna Thursday. “We view risks to oil prices as skewed to the downside this week as we believe that current prices, time spreads and positioning already reflect a high probability of a nine-month extension,” the analysts said in a research note. OPEC meeting stakes: OPEC and other producers are set to meet Thursday to discuss whether to extend the cuts beyond their expiration in March, in an effort to limit global supply to increase prices. Uncertainty persists: The Goldman analysts warn in their note that Russia may be hesitant to extend the deal with oil prices poised to top $60 a barrel, a level not seen since June 2015. “We believe that the outcome of this meeting is much more uncertain than usual,” the Goldman analysts said.

First Reads:

African firm drops plan for $14 billion Lake Charles plant
Times-Picayune, Associated Press, November 24, 2017

NextDecade says no immediate need for six trains at proposed Texas LNG terminal
Platts, Harry Weber, November 27, 2017

Assembly approves new appointees to Mining Subcommittee
Juneau Empire, Alex McCarthy, November 27, 2017

Energy regulator denies ‘conspiracy’ to delay addition of new commissioners
The Hill, Timothy Cama, November 28, 2017

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Headlamp – All China, all the time

November 27, 2017 | Posted in : News

Alaska’s “carefully cultivated” relationship with China. The newly signed agreement for Alaska to work with major Chinese institutions to advance a massive North Slope natural gas project was the product of a carefully cultivated relationship that will continue, Gov. Bill Walker said. The joint development agreement signed earlier this month in Beijing brings Sinopec, the Bank of China and the China Investment Corporation onto the team to develop a project sending natural gas from Arctic Alaska to Asian markets. That document, signed in the presence of President Trump and Chinese President Xi Jinping , followed months of meetings and discussion, Walker said in a speech last week to the Resource Development Council for Alaska.

More on China. During President Trump’s visit to China, the U.S. signed US$250 billion worth of potential trade and investment deals that would boost American exports to China and Chinese investment in the United States. The two single largest potential deals were signed in the energy sector at the official U.S.-China Business Exchange, which took place on November 8th and 9th during President Trump’s visit. The agreements are just memorandums of understanding (MoU), not final contracts, but they set the stage for a stronger energy relationship between the two powerhouses of the global energy production and consumption. There is some concern that Chinese investment in U.S. energy could undermine free market principles. On the Chinese side, it’s unclear if Beijing is convinced that the U.S. will not use energy to retaliate against China by cutting supplies if disputes or disagreements escalate, Forbes contributor Sara Hsu writes.

Contamination at Titan plant. Interior Gas Utility staff are aware of diesel fuel contamination at the site of the Titan LNG gas liquefaction plant, said the utility’s general manager Jomo Stewart. “It is an identified risk for which there is a plan in place to address this,” Stewart said. The IGU is poised to purchase Titan LNG’s parent company Pentex and its assets for $60 million from the state’s economic development authority. The purchase is part of a plan to bring more clean burning natural gas to areas of the Fairbanks North Star Borough. Located in Point McKenzie off Knik Goose Bay Road, the Titan LNG gas liquefaction plant was owned by Harrington Partners, before the Alaska Industrial Development and Export Authority purchased it in 2015.

Up, up, up! U.S. oil prices hit their highest levels in more than two years on Friday after the continued shutdown of a pipeline running from Canada to the United States was expected to reduce supply into a major storage facility. U.S. West Texas Intermediate crude futures (WTI) CLc1 settled up 93 cents, or 1.6 percent, at $58.95 a barrel. Trading volumes were thin on Friday due to the U.S. Thanksgiving holiday. Benchmark Brent crude LCOc1 rose 31 cents, or 0.49 percent, to settle at $63.86 a barrel.

ASRC and the Arctic. The well-worn narrative of oil industry exploitation in Alaska goes roughly like this: Multinational oil company with insatiable appetite for profit and little concern for the environment targets the Arctic, estimated to contain 30% of the planet’s undiscovered natural gas and 13% of its undiscovered oil. On cue Indigenous peoples join forces with environmental activists to oppose the proposed exploitation of one of the last great unspoilt natural regions on Earth. In recent history they’ve been winning. In December 2016, that coalition scored a notable victory when the US and Canada banned new leases for oil and gas drilling in the Arctic. However, a month earlier few people appeared to notice when 21 of Shell’s former federal leases in a part of the Beaufort Sea Lease Area called Camden Bay were snapped up by ASRC Exploration, a subsidiary of Arctic Slope Regional Corporation (ASRC), the wealthiest Native corporation in Alaska.

From the Washington Examiner’s Daily on Energy:

EPA REJECTS CHANGES TO BIOFUEL MANDATE SOUGHT BY REFINERS, CARL ICAHN: The Trump administration is rejecting a proposal backed by oil refiners and billionaire Carl Icahn to change biofuel policy,

Point taken: The Environmental Protection Agency denied petitions by Valero Energy and other refiners to change the rules regarding the “point of obligation” so that refiners wouldn’t be responsible for blending corn-based ethanol into gasoline.
Pressure point: Icahn, a former special adviser to Trump, also pressed the administration to change the requirement. One of his investment firms, Icahn Enterprises, owns a large stake in an oil refinery business, CVR Energy. Icahn resigned as special adviser to the president in August after the New Yorker published an article about the conflicts created by his advisory role.
Commitment to RFS: The decision to keep the rules as they are comes after EPA Administrator Scott Pruitt pledged to Midwestern senators that he would not change the Renewable Fuel Standard, which requires refiners and importers to blend increasing amounts of biofuels into gasoline and diesel. Pruitt had previously proposed weakening the fuel standard at the behest of oil refiners, but he changed course after protests from Midwestern states.
Final decision coming: The EPA must release its RFS requirements by Thursday.

First Reads:

Alaska-China LNG deal was the result of careful — and ongoing — work, says governor
Arctic Now, Yareth Rosen, November 22, 2017

U.S. Energy To See Huge Investments From China
OilPro.com, Tsvetana Paraskova, November 26, 2017

IGU recognizes old fuel spill at Titan site
Fairbanks Daily News-Miner, Kevin Baird, November 26, 2017

U.S. crude tops two-year high as Keystone outage hits supply
Reuters, Catherine Ngai, November 23, 2017

Drilling the Arctic: will native Alaskans succeed where others have failed?
Offshore Technology, Julian Turner, November 22, 2017


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Headlamp – A busy winter for ConocoPhillips and some help from DC for Alaska LNG

November 17, 2017 | Posted in : News

Road to energy dominance will lead through Alaska. Some new developments in the Great White North show that America’s road towards global Energy Dominance in the oil and gas sector will inevitably travel through Alaska. With a party-line, 13-10 vote on Wednesday, Republicans on the Senate Energy Committee have given new life to the possibility of opening up the northernmost sliver of the gigantic Arctic National Wildlife Refuge (ANWR) to exploration for oil and natural gas. The vote, led by Senate Energy Chairman Lisa Murkowski (R-AK) is the latest skirmish in the forty-year battle over whether this sensitive part of Alaska’s North Slope should be made available for resource development. “For many of us, we believe that [ANWR] is one of the best places that we can go for responsible development, and we should have done this some time ago,” Murkowski said in the wake of the vote.  Sen. Murkowski, in pursuing this goal, is carrying on the legacy of her father, former Alaska Sen. Frank Murkowski, who made several similar attempts during his 21 years in the U.S. Senate.

“Long way betwixt and between.” The U.S. House on Thursday passed a tax cut package. Like all but 13 Republicans, Alaska Congressman Don Young voted for the bill. “There’s some people saying it’s not so good, but overall if the actuarial figures are good, it’ll be about $3,000 in every tax-paying family’s pocket, that they didn’t have before,” Young said after the vote. “That’s how much the cut’s going to be.” Democrats say the House bill gives and outsized tax cut to the wealthy. A fact sheet issued by the Democratic National Committee says 11 percent of middle-income Alaska households would face a tax increase, of $600 on average. The figure comes from a report by the Institute on Taxation and Economic Policy, a left-leaning think tank. The House bill does not include opening the Arctic National Wildlife Refuge to oil drilling. Young says the plan is to pass ANWR in the Senate version of the bill, and then fight for it in the conference committee, where the two chambers negotiate their differences and write a final version. “I expect the House to concede to the Senate on the ANWR provisions and become a reality,” Young said. “Again, though, I want to warn people don’t go to the bank right away, because it’s a long ways betwixt and between.”

How many zeros in a trillion? Earlier this autumn, Norway’s oil fund reached the stunning value of $1 trillion. Built on transfer of oil revenue from May 1996, the fund is today the world’s largest sovereign wealth fund is supposed to secure pensions for generations to come. The fund has invested in some 9,000 companies in 77 countries around the world. In value, the fund owns 1 percent of all listed companies worldwide. Now, Norges Bank, who manage the investments, is shocking the petroleum market by recommending the removal of oil stocks from the fund’s benchmark index. In a letter to the Ministry of Finance on Thursday, the bank writes, “In the Bank’s view, this will make the government’s wealth less vulnerable to a permanent drop in oil and gas prices.” The letter informs that the vulnerability of government wealth to a permanent drop in oil and gas prices will be reduced if the fund is not invested in oil and gas stocks, and advise removing these stocks from the fund’s benchmark index. Norges Bank underlines in a press release that this advice is based exclusively on financial arguments and does not reflect any view on the sustainability of the oil and gas sector.

It’s going to be a busy winter for ConocoPhillips. The company that has led exploration into the National Petroleum Reserve-Alaska west of the existing North Slope oil fields is heading back into the federal lands to drill four more greenfield wells early in 2018, according to spokeswoman Natalie Lowman. Last January ConocoPhillips announced the Willow discovery in the NPR-A that the company’s Alaska leaders believe contains 300 million barrels of recoverable oil and is capable of producing up to 100,000 barrels per day with the right production and processing facilities. With another exploration well planned for state acreage recently added to the Colville River Unit just east of the NPR-A, the five wells make for the company’s largest North Slope winter exploration program since 2002, Lowman said. “There’s three to help us further appraise Willow and Putu and then this other one that we’re calling Stony Hill,” she said further. The Putu well could be ConocoPhillips’ last chance at developing a prized chunk of state land around the Native village of Nuiqsut just south of the company’s Alpine oil field in the Colville River Unit. It’s on the southern edge of the Pikka Unit, which holds the 1.2 billion barrel-plus Nanushuk oil prospect that operator Armstrong Energy just sold to Australia-based producer Oil Search Ltd.

From the Washington Examiner’s Daily on Energy – Alaska LNG gets some help from DC. 

FEDS, CHAMBER START NATURAL GAS EXPORT INITIATIVE: The U.S. Trade and Development Bank and the Chamber of Commerce launched a new joint energy initiative to promote U.S. natural gas exports Friday. Public-private partnership: The federal trade promotion agency, the Chamber of Commerce, the 27th World Gas Conference 2018, and LNG Allies, announced the U.S. Gas Infrastructure Exports Initiative at the U.S. Chamber of Commerce’s headquarters in Washington. Expanding natural gas exports has been a top priority of Trump’s pro-growth energy dominance agenda. How it will assist exports: The trade agency will deploy a range of tools, including reverse trade missions, feasibility studies, training, technical assistance, and the Global Procurement Initiative to accelerate and promote the export of liquefied natural gas. The agency is working with the energy industry and the government “to facilitate new gas infrastructure exports, including LNG exports through the development of gas-related infrastructure in key LNG receiving countries.” Helping U.S. allies: Karen Harbert, head of the Chamber’s Global Energy Institute, tweeted Friday that “US natural gas will help our allies around the world be #Energy Strong.”

Employment Down 1.3 Percent, Unemployment Rate Unchanged. Alaska’s total employment was down by an estimated 1.3 percent in October compared to October 2016, a loss of about 4,100 jobs. While the state continues to shed jobs, over-the-year losses have gradually slowed in 2017. The largest loss during the current downturn was -2.6 percent in fall 2016. Oil and gas employment was down by 7.8 percent, followed by construction (-7.2 percent). The only industries to add jobs were health care (2.0 percent) and local government (0.2 percent), which includes public schools and tribal government. Federal employment was down 1.3 percent and state government was down 2.0 percent.

First Reads:

With Or Without ANWR, Alaska’s Oil And Gas Fortunes Are Rapidly Reviving
Forbes, David Blackmon, November 16, 2017

House passes tax plan, the bill Young says will open ANWR
Alaska Public Media, Liz Ruskin, November 16, 2017

Norway’s oil fund wants out of oil and gas investments
Arctic Now/The Barents Observer, Thomas Nilsen, November 17, 2017

ConocoPhillips plans for busy exploration season
OG Links/Alaska Journal of Commerce, November 15, 2017

Employment Down 1.3 Percent, Unemployment Rate Unchanged
Department of Labor Press Release, November 17, 2017

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Headlamp – RDC Conference accentuates the positive. Oil & Gas Leasing 101 for Al Franken

November 16, 2017 | Posted in : News

Accentuate the positive… There is plenty for the players of Alaska’s extraction industries to be positive about and that should translate into a cheery Resource Development Council for Alaska conference. The annual gathering for some of the state’s largest industries will be held Nov. 15-16 as it usually is at the Dena’ina Civic and Convention Center in downtown Anchorage. RDC for Alaska Executive Director Marleanna Hall said some of the good vibes are being sent all the way from Washington, D.C. Last year’s conference convened shortly after President Donald Trump was elected and while there was anticipation about what a Trump White House would mean for Alaska businesses, no one knew quite what to expect. “There’s some optimism out there and a lot of it is coming from the changes in the energy outlook for America; it’s coming from opportunities to revise and revamp federal regulatory processes and a lot of it is coming from the top down,” Hall said.

Oil & Gas Leasing 101 for Al Franken. Senators had to explain to Democratic Sen. Al Franken of Minnesota the economics underlying federal oil and gas leasing during a hearing on opening up more areas in Alaska to drilling. Franken opposes a Republican bill to open a small portion of the Arctic National Wildlife Refuge (ANWR) to oil and gas exploration, arguing it could impact the porcupine caribou native to the region Franken also went on a long rant about why it didn’t make economic sense to him to open more Alaskan lands to drilling when millions of acres were left untapped by oil companies. Franken sits on the Senate Committee on Energy and Natural Resources. “This is a very contentious issue and since there’s another million acres that are already leased — oil companies don’t lease land, at least I don’t think they do, it doesn’t make any sense to me,” Franken said in the hearing. “I don’t know the oil business, but why would you lease anything where you didn’t think there was oil?” Franken said. “It doesn’t make any business sense.”

Vietnam signs MOU with AGDC. Alaska Gasline Development Corporation (AGDC) and PetroVietnam Gas (PVGAS) today signed a memorandum of understanding setting forth the basic principles to collaborate on potential opportunities of LNG supply from AGDC to serve LNG import projects in Vietnam and to evaluate the possibility of upstream resource investment in Alaska. The agreement was signed in Hanoi, Vietnam by executives of AGDC and PVGAS in the presence of U.S. President Donald Trump and Vietnam President Trần Đại Quang. PVGAS is a subsidiary of state-owned PetroVietnam (PVN). PVGAS is developing LNG receiving and regasification terminals in Vietnam, namely Thi Vai LNG Terminal and Son My LNG Terminal, in order to supply natural gas to newly built and proposed power plants and existing gas users. “The agreement with Vietnam fits very well with AGDC’s broader marketing program and recently announced deal with Sinopec, which leaves a portion of the Alaska LNG production capacity with AGDC for sale to regional Asian markets such as Vietnam,” said Keith Meyer, president, AGDC. “Vietnam is a new entrant to the LNG industry but has the potential to be a rapidly growing customer of LNG and we look forward to participating in the growth of the Vietnamese economy by providing reliable and stable natural gas supply.”

Ice, Ice Baby. Alaska officials expect a busy ice road construction season on the North Slope this winter, a sign of improving economic activity in the state’s oil patch after years of layoffs and low oil prices. Ice roads and snow roads used for exploration drilling and the cleanup of old wells in the National Petroleum Reserve-Alaska are key to the plans, said Melissa Head, who oversees the state’s ice road permitting program.

First Reads:

Optimism abounds in advance of annual RDC gathering
Alaska Dispatch News/Alaska Journal of Commerce, Elwood Brehmer, November 14, 2017

Al Franken Gets Schooled On How Federal Oil Leasing Works During A Hearing
The Daily Caller, Michael Bastasch, November 15, 2017

Alaska Gasline Development Corporation Signs MOU with PetroVietnam Gas
Informed Infrastructure, Parul Dubey, November 13, 2017

North Slope frozen road construction is up this winter
Alaska Dispatch News, Alex DeMarban, November 15, 2017

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Headlamp – Murkowski and Cantwell fight over Arctic drilling.

November 15, 2017 | Posted in : News

From the Washington Examiner’s Daily on Energy:

MURKOWSKI, CANTWELL FIGHT OVER ARCTIC DRILLING: The Senate Energy and Natural Resources Committee on Wednesday began debating Republican legislation to allow oil and natural gas drilling in a portion of the Arctic National Wildlife Refuge. Amendments galore: Committee Chairwoman Lisa Murkowski, R-Alaska, said senators offered more than 50 amendments as the panel began marking up the legislation with hopes to vote on it later Wednesday. As debate began, Murkowski and Sen. Maria Cantwell of Washington, the committee’s top Democrat, argued about the purpose of the legislation and the process by which Republicans conceived it. Murkowski’s legislation to permit drilling in a 1.5 million-acre section of the 19.6-million-acre Alaskan refuge, with the expectation that energy development there will raise just over $1 billion over 10 years. “We are being asked to consider legislation that is different than previous bills [that tried to allow drilling in ANWR], and has not been subject to single hearing. At its core, the chairman’s mark [bill] would change current law and turn the refuge into a petroleum reserve.” ‘Plenty of time’: “We have given members plenty of time to review the legislation and consider amendments,” Murkowski countered. “This was done in regular order.”

What the bill does: Murkowski’s bill requires the Interior Department to hold at least two lease sales within 10 years of the bill’s passage, the first within four years and the second within seven years. It says that lease sale areas should include at least 400,000 acres with a strong potential for drilling. But surface development would be limited to 2,000 acres of the coastal plain. GOP-friendly process: Republicans are considering the bill under budget reconciliation, meaning it is not subject to a Senate filibuster and can pass with a simple majority The introduction of the bill fulfills the terms of a budget resolution passed by the GOP-controlled House and Senate that directed the committee to create legislation to raise $1 billion over a decade to help pay for tax reform. The refuge was created under former President Dwight D. Eisenhower in 1960. In 1980, Congress provided additional protections to the refuge but set aside the 1002 area for study and future drilling if lawmakers approved it.

‘Turn everything on its ear’: Cantwell argued that Murkowski’s legislation would mandate oil and drilling in the 1002 area of the refuge in a manner that has never been done before. No other refuge in America has expressly permitted oil and gas development as part of its purpose, she said. “By putting that purpose in, you turn everything on its ear.” The committee passed the legislation out with ANWR provisions on a 13-10 vote. 

Shiver me Timbers. The largest potential timber sale in the Haines State Forest in decades was put on hold this summer. The decision from the Department of Natural Resources was made in response to a successful appeal of the forest land use plan for the 855-acre sale. Now, the Division of Forestry has put forward a new plan. The Baby Brown Timber Sale, about 35 miles northwest of Haines, offers up 20 million board feet of old-growth spruce and hemlock. Astoria Forest Products offered $270,000 for the timber last year. They were the only bidder. But the sale hasn’t gone forward. DNR Commissioner Andrew Mack canceled the deal as it was being offered, because Lynn Canal Conservation successfully appealed the state’s forest land use plan. The original plan was only for a portion of the sale. Lynn Canal Conservation said it shouldn’t have gone out to bid until plans were complete for the entire area. Haines Forester Greg Palmieri said that’s the main difference between the new document and the old one. “This plan takes into account the entire sale offering, which is 11 harvest units,” Palmieri said. “The first forest land use plan only offered a harvest plan that applied to the first two units that were going to be for the sale.”

AVTEC’s Alaska Maritime Training Center Receives $95,000 donation from Andeavor. The AVTEC Alaska Maritime Training Center announced today that it received a donation of $95,000 from the refining, marketing and logistics company Andeavor. The donation will support AVTEC’s arctic and ice navigation readiness project, which will upgrade the school’s full mission bridge ship simulator to enhance its ice navigation capabilities. The donation was prompted by a two-day training event sponsored by Andeavor (formerly Tesoro) and hosted at AVTEC’s Alaska Maritime Training Center. The event provided more than thirty ship masters and pilots the opportunity to hone their skills in navigating the ice-covered waters of Cook Inlet. The licensed deck officers participated in ten training scenarios navigating through ice in Cook Inlet that was programmed into the Alaska Maritime Training Center’s three interactive full mission bridge ship simulators. It was during this training event that Andeavor announced the gift, which will be directed at enhancing the bridge simulators through an upgrade of hardware and software.


First Reads:

State publishes new land use plan for proposed 855-acre timber sale near Haines
Alaska Public Media, Abbey Collins, November 14, 2017

AVTEC’s Alaska Maritime Training Center Receives $95,000 Donation from Andeavor
AVTEC news release, November 15, 2017

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Headlamp – Bristol Bay Native Corp. against Stand for Salmon initiative

November 14, 2017 | Posted in : News

BBNC comes out against Stand for Salmon. The Bristol Bay Native Corporation is opposed to the Pebble Mine, but the regional Alaska Native corporation is not backing the ballot initiative known as “Stand for Salmon.” “Notwithstanding BBNC’s opposition to Pebble, BBNC believes responsible resource development can take place in Bristol Bay. Development that aligns with local opinion and does not threaten the region’s fisheries and fish habitat can and should be given an opportunity to proceed,” BBNC President and CEO Jason Metrokin said in a written statement. BBNC does not support HB 199 – sponsored by Kodiak Republican Rep. Louise Stutes – or the Stand for Salmon initiative. “Each would unnecessarily and negatively impact resource development projects and potentially the subsistence activities upon which our shareholders depend,” Metrokin wrote. Stand for Salmon’s provisions might make Pebble impossible to permit, and two of its backers hail from Bristol Bay. Gayla Hoseth is a second chief with the Curyung Tribe in Dillingham, and Brian Kraft operates the Alaska Sportsman fishing lodges nestled in east and west side headwaters.

The right mine at the right time? The Trump administration is currently weighing a decision that could alter the future of the Pebble Mine — and the Bristol Bay region communities that would see the mine built in their backyard. That includes Dillingham and Iliamna. They were the only two places the Environmental Protection Agency visited last month to get public input on whether to scrap an Obama-era proposal to put restrictions on the mine. In Dillingham, residents spoke unanimously against the idea. But in Iliamna, the reaction was more mixed. At least one resident is still deciding whether the mine is a good idea.

From the Washington Examiner’s Daily on Energy:

NEBRASKA COMMISSION TO RULE ON KEYSTONE PIPELINE: The Nebraska Public Service Commission announced it will make its long-awaited decision on whether to allow the completion of the Keystone XL pipeline on Nov. 20. The five members of the commission will vote on whether Keystone XL developer TransCanada can build a section of the 1,200-mile pipeline as proposed. The final step: The vote represents the last regulatory hurdle facing the pipeline, which has been protested by environmental activists. Trump granted a permit for the pipeline in March.

Wanted: a diversified workforce. Industry is committed to making its workforce more diverse. Now and over the next decade or two, there’s great opportunity to realize that goal. With 40 percent or more of industry’s worker base on track to retire by 2035, research indicates hundreds of thousands of women and minorities will help fill the ranks through the next decade and beyond. Critically important is properly preparing them to be petroleum engineers, geologists, welders, electricians, accountants, business managers and more. API President and CEO Jack Gerard, in remarks prepared for last month’s energy policy summit of the American Association of Blacks in Energy (AABE):

“We’ll need the talent of everyone, without regard to gender, race, or background. … To address the disparity between where we are and where we need to be, API is working in partnership with organizations like AABE, to increase the awareness of our industry in currently underrepresented communities with a focus on STEM education.”

First Reads:

Bristol Bay Native Corp. against Stand for Salmon initiative
Alaska Public Media/KDLG, Dave Bendinger, November 13, 2017

A potential neighbor to the Pebble Mine sees both sides
Alaska Public Media, Elizabeth Harball, November 13, 2017

Working For A More Diverse Workforce
Breaking Energy, Energy Tomorrow Blog, November 13, 2017

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