Headlamp – Oil dominates construction spending forecast.

February 8, 2018 | Posted in : News

In Alaska, the year was more mixed for BP. While BP Alaska leaders are celebrating the success of stemming production decline from the aging Prudhoe Bay oil field despite belt-tightening in the industry, the company’s global executives on Feb. 6 celebrated the announcement of a $3.4 billion profit in 2017. The $3.4 billion in earnings last year comes after the London-based oil super major managed to net just $115 million in 2016. The entire industry was boosted by a gradual return to oil prices of about $70 per barrel by the end of the year, but the fact that BP’s settlement payments related to the 2010 Deepwater Horizon oil spill have started to shrink also helped the company. It paid out $6.9 billion in spill payments in 2016 and $5.2 billion in 2017, according to the fourth quarter earnings report released Feb. 6. “2017 was one of the strongest years in BP’s recent memory,” CEO Bob Dudley said in a formal statement. “We delivered operationally and financially, with very strong earnings in the downstream; upstream production was up 12 percent; and our finances rebalanced. And we did all this while maintaining safe and reliable operations.” However, the company netted just $27 million in the fourth quarter after a $1.7 billion profit in the third quarter. That was primarily due to non-operating expenses accounted for in the quarter, according to the report.

Oil dominates 2018 construction spending forecast. Construction spending in Alaska this year will be around $6.6 billion, up 4% from 2017. But that overall increase is due just to a recovery in spending by the petroleum industry, which is expected to be up about 15%, to nearly $2.6 billion. Without petroleum, overall construction spending in 2018 is likely to be down about 2%, to $4.1 billion. But even though a number of sectors will spend less, some kinds of spending—particularly for national defense—will be up. These estimates are from the newly released 2018 construction forecast, prepared by Scott Goldsmith, professor emeritus of economics at ISER, for the Associated General Contractors of Alaska and the Construction Industry Progress Fund. He has made these forecasts of construction spending every year since 2004.

Oil cruises from Texas to the Emirates. The United Arab Emirates, a model Persian Gulf petro-state where endless billions from crude exports feed a giant sovereign wealth fund, isn’t the most obvious customer for Texan oil. Yet, in a trade that illustrates how the rise of the American shale industry is upending energy markets across the globe, the U.A.E. bought oil directly from the U.S. in December, according to data from the federal government. A tanker sailed from Houston and arrived in the Persian Gulf last month. The cargo of American condensate, a type of very light crude oil, was preferred to regional grades because its superior quality made more suitable for the U.A. E’s processing plants, a person with knowledge of the matter said, asking not to be identified discussing a commercially sensitive matter. “As a member of OPEC and a large crude producer, I would imagine they would be very self-sufficient in their own crude supply,” said Andy Lipow, president of Lipow Oil Associates LLC. The purchases of U.S. oil aren’t likely to continue, given the U.A.E.’s own supply, Lipow said.

Judge orders EPA to act now. A federal judge is ordering the Environmental Protection Agency to take steps that could lead to sanctioning a coal-fired power plant in Pennsylvania for increasing air pollution in Connecticut. Judge Warren Eginton for the district court in Connecticut is giving the EPA 60 days to make a decision based on the state’s request for the agency to act under the Clean Air Act, according to a Wednesday decision. The EPA missed the deadline for responding to the state’s formal claims to petition for relief as a downwind state. Connecticut argued in its petition that the power plant has harmed its ability to meet ozone regulations while raising harmful air pollution in the state. The petition has been lingering for nearly two years, which Eginton wrote “is clearly at odds with period of time that Congress deemed appropriate” for the EPA to review a Clean Air Act petition.


First Reads:

BP bounces back from 2016 with $3.4B profit in 2017
Alaska Journal of Commerce, Elwood Brehmer, February 7, 2018

Alaska’s 2018 Construction Spending Forecast
Alaskanomics, February 7, 2018

Oil World Turns Upside Down as U.S. Sells Oil in Middle East
Bloomberg Markets, Sheela Tobben and Wael Mahdi, February 7, 2018

Judge’s order could force Trump’s EPA to sanction coal plant
Washington Examiner, John Siciliano, February 7, 2018

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Headlamp – “Clear the decks” and end the “saga of cashable oil and gas tax credits.”

February 7, 2018 | Posted in : News

Sheldon Fisher: “clear the decks” on tax credits. This week, the Walker Administration introduced a bill to pay off up to $1 billion of outstanding oil and gas tax credits by issuing bonds to pay for them at a fair discount. By purchasing these tax credits held by small oil and gas exploration companies, the bill will free up frozen credit markets to allow new exploration and development to continue. This bill is part of Gov. Bill Walker’s economic stimulus plan calculated to put Alaskans back to work, and will ultimately result in increased production, leading to increased revenue for the benefit of all Alaskans. Some Alaskans are asking hard but good questions about why we are doing this. First some background. Last year, we worked with the Legislature to end the cashable oil and gas tax credits program. In many cases the program had worked — it brought small oil and gas exploration companies to Alaska to look for new fields. In Cook Inlet, the tax credit program largely solved the serious problem of disappearing gas supplies — gas that Alaskans need for electricity to light and heat their homes. And there have been new large oil discoveries on the North Slope, like the Pikka field, that have promise to put substantial volumes into the pipeline and bring new revenues to the State. With the passage of House Bill 111 last year, we have ended the program of cashable oil and gas tax credits. The tax credits had quickly added up to a huge sum, and given the collapse in oil prices, the state was simply unable to continue paying them immediately. The point of this bill is to be able to “clear the decks” and put the saga of cashable oil and gas tax credits behind us. Alaskans are asking, why provide a bail-out to large oil and gas companies? We aren’t. The point of the tax credits was to encourage small oil and gas companies to explore for new oil and gas reserves. We promised cash and they came. Not only that, they employed Alaskans. They borrowed hundreds of millions from banks and attracted capital from investors. They spent this money and hired Alaskans. In many cases they found new oil and gas. The production from these new finds will create new revenues for all Alaskans. We need to fulfill our side of the bargain.

Surprise! Unexpected decline in US crude supply. The American Petroleum Institute reported Tuesday that U.S. crude supplies fell by 1.1 million barrels for the week ending Feb. 2, according to sources. The API data also showed a decline of 227,000 barrels in gasoline stockpiles, while inventories of distillates saw a surprise climb of 4.6 million barrels, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a climb of 2.8 million barrels for crude inventories. They also forecast a rise of 200,000 barrels for gasoline, but a decline of 800,000 barrels for distillate supplies. March crude CLH8, -2.43% was at $63.80 a barrel in electronic trading, up from the settlement of $63.39 on the New York Mercantile Exchange.

We’ll see you in court! Washington Attorney General Bob Ferguson (D) warned Interior Secretary Ryan Zinke that he will sue the Trump administration if the state isn’t removed from a plan to expand offshore drilling. Ferguson in a letter sent to Zinke on Monday demanded that Washington be exempt from the plan to expand oil and gas drilling off the U.S., including off the state’s coast. The attorney general argued that the plan would damage the state’s economy, including the fishing and shipping industries, and that it could hurt ecosystems on Washington’s coast. “The proposal to open the Pacific Region Outer Continental Shelf to oil and gas leasing is unlawful, unsafe, and harmful to the economy and natural beauty of Washington’s coastline. As Attorney General, my job is to enforce the law and protect the people, natural resources, and environment of my state, and I will use every tool at my disposal to do so,” Ferguson wrote.

First Reads:

GUEST COMMENTARY: Bill to pay off credits fulfills state side of bargain
Alaska Journal of Commerce, Sheldon Fisher, February, 7 2018

API data reportedly show an unexpected weekly decline in U.S. crude supplies
Market Watch, Myra P. Saefong, February 6, 2018

Washington state threatens to sue over Zinke offshore drilling plan
The Hill, Jacqueline Thomsen, February 6, 2018

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Headlamp – Call it a new cold war. Goodbye tension. Hello pension.

February 6, 2018 | Posted in : News

Call it a new cold war: Russia, China and the United States all vying for influence and control in a part of the world that, this time, is quite literally cold. With more than half of all Arctic coastline along its northern shores, Russia has long sought economic and military dominance in part of the world where as much as $35 trillion worth of untapped oil and natural gas could be lurking. Now China is pushing its way into the Arctic, announcing last month its ambitions to develop a “Polar Silk Road” through the region as warming global temperatures open up new sea lanes and economic opportunities at the top of the world. At play is between one-fifth and a quarter of the world’s untapped fossil-fuel resources, not to mention a range of mineable minerals, including gold, silver, diamond, copper, titanium, graphite, uranium and other valuable rare earth elements. With the ice in retreat, those resources will come increasingly within reach.

North Slope Borough Mayor Talks Oil. The Trump administration’s vision for American “energy dominance” has big implications for Alaska, and this winter, some of them became more concrete. In December, the Arctic National Wildlife Refuge (ANWR) was opened to drilling. And in January the Interior Department released a new draft plan to open most of Alaska’s coastal waters to oil development. One of the places that stands to be significantly impacted by those decisions is the North Slope. Harry K. Brower Jr., is the mayor of the North Slope Borough. He works out of a big mint-green building smack dab in center of Utqiaġvik — with his name and title printed on the front. On the second floor of the building, Brower sits at a conference table in his office and talks about some of the changes that may be coming to the region. The North Slope Borough has the ability to tax oil and gas infrastructure within its borders, and that money is what allows them to build roads, keep the schools open and pay for the fire department. But as the prospect of offshore drilling in the Arctic takes shape, the borough is also registering its concerns for how to protect the bowhead whale and other marine life people here depend on for food.

Mallott and Sullivan talk mining with Canada. Lt. Gov. Byron Mallott and U.S. Sen Dan Sullivan, R-Alaska, have finished a day of meetings in Ottawa with high-ranking Canadian officials. In a conference call with reporters, Mallott and Sullivan said most of the talks were related to issues involving Canadian mines near the Alaska border. “This is not some kind of anti-resource-development focus. We just think that we have some very legitimate concerns given that we are downriver from most of these mines in terms of what could happen,” Sullivan said. Fishermen and environmental groups are concerned about mine development in the coast range; spills of acid-generating mine tailings are a particular concern for fishermen who rely on salmon-bearing rivers that originate in Canada.

Sturgeon gets some help from his friends…at the state. Alaska’s state government is continuing to support a 10-year-old struggle with the National Park Service over the federal government’s authority to regulate hovercrafts in a river in the Interior. Alaska’s governors and Congressional delegations have consistently supported the lawsuit of Anchorage moose hunter John Sturgeon, arguing the case defends the State’s rights to manage its own lands. On Monday, Alaska filed a new “friend of the court” brief in support of Sturgeon as he asks the U.S. Supreme Court to take his case for a second time. “The State owes a debt of gratitude to Mr. Sturgeon for continuing this fight, and the least we can do is support him in his efforts and defend the State’s sovereign rights,” Alaska Gov. Bill Walker said in a written statement. “We have and will continue working closely with John Sturgeon and his legal team to again seek Supreme Court review of the Ninth Circuit decision. We hope the Court will act to uphold Alaska’s sovereign interest in managing its lands and waters.” In 2007, Sturgeon was traveling by hovercraft on a shallow river in Yukon-Charley Rivers National Preserve in order to reach his regular moose hunting grounds. National Park Service rangers contacted him on a sandbar and told him the hovercraft couldn’t be used on the river because of a national Park Service regulation against hovercrafts

Goodbye tension. Hello pension. Alaska Sen. Dennis Egan, one of the Legislature’s most colorful members, and certainly its saltiest, plans to announce his retirement live on radio Tuesday. He said he will serve out the remainder of his term with the Democratic Party, but he will not stand for re-election in November. Egan, who will turn 71 in two weeks, said his retirement is related to his health and not any political issue in the Legislature. Egan said he’s had multiple sclerosis since 1978, though it was misdiagnosed as an optic nerve problem until MRI technology became common and he was scanned in the early 1980s. Egan now has trouble with dizziness and his balance, especially around water – a big problem in a tidal community like Juneau. Even walking on a boat dock gives him trouble, he said. Moreover, he told Channel 2 that his health forced him to sell his beloved boat. His aides say they worry about him falling, especially since he won’t use a cane outside his home. Egan has been Juneau’s senator since 2009, when he was appointed by Gov. Sarah Palin to take the place of Kim Elton, who left for the Department of the Interior. His father, Bill Egan, was Alaska’s first state governor. Dennis Egan spent years as a radio broadcaster – a position that has always seemed a bit incongruous given the four-letter words that pepper his normal speech. He said he will make his retirement announcement Tuesday morning as a talk-show guest on KINY, which is a radio station he once owned.

Senate leaders on oil and healthcare costs. Today in Juneau, the State Senate convened and spoke to the press, about major issues privy to all Alaskans. In our segment, Republican Senators Peter Micciche of Soldotna and Cathy Giessel of Anchorage, respond to queries concerning oil prices and soaring healthcare costs. Currently, Alaska has the highest healthcare costs across the nation, while the USA has the highest healthcare costs across the globe.


First Reads:

Russia and China vie to beat the US in the trillion-dollar race to control the Arctic
CNBC, Clay Dillow, February 6, 2018

Borough mayor on new potential development coming to the North Slope
Alaska Public Media, Ravenna Koenig, February 5, 2018

Lt. Gov. Mallott, Sen. Sullivan travel to Canada for boundary talks
Juneau Empire, February 5, 2018

Alaska files brief in support of hunter suing Park Service
Fairbanks Daily News-Miner, Sam Friedman, February 6, 2018

Juneau Senator plans retirement
KTUU, Richard Mauer, February 5, 2018

State Senate Discusses Oil Prices & Soaring Healthcare Costs
Your Alaska Link, Maria Athens, February 5, 2018

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Headlamp – Are you ready to rumble? Annual energy outlook to stoke a fight.

February 5, 2018 | Posted in : News, Uncategorized

Roads to Resources gets a re-fund. Alaska Gov. Bill Walker said he plans to re-fund the Ambler Road Project to the same point it was funded previously. The project lost its state funding in 2015 when Walker defunded several bond funded construction projects due to budgetary issues. The Ambler Road Project is a proposed 200-mile road that would connect the Ambler Mining District in Northwest Alaska with the Dalton Highway and Fairbanks. In a recent interview with the News-Miner, Walker confirmed that, if his FY19 budget proposal is passed, the project will be funded at the same level. “Our commitment to the Ambler Road was to get it up through the EIS process,” Walker said. “We are going to go ahead and advance that.” The Bureau of Land Management is working on an environmental impact statement for the project, identifying and analyzing concerns associated with the Alaska Industrial Development and Export Authority’s proposal. The EIS must be complete before the project can move to the permitting phase. The public comment period just ended after months of gathering input.

Groundhog day Part 2: Environmentalists sue to stop development. Two lawsuits filed Friday claim the federal government conducted petroleum lease sales without proper environmental review in a part of northern Alaska known for its wildlife. The Bureau of Land Management on Dec. 14 conducted the largest-ever lease offering within the National Petroleum Reserve-Alaska, putting out for bid 900 tracts covering 16,100 square miles (41,700 sq. kilometers), roughly the size of New Hampshire and Massachusetts combined. In the first lawsuit, five environmental groups said the BLM relied on an environmental review preceding a 2013 NPR-A management plan for the lease sale. Federal law for lease sales, the lawsuit said, required an updated environmental review of the specific land to be offered in a sale, and how wildlife and habitat would be affected. “The Trump Administration is in such a rush to sell off our public lands to the oil and gas industry that it isn’t even taking the time to comply with the law,” Suzanne Bostrom, an attorney for Trustees for Alaska, an environmental law firm representing the groups, said in a statement. In the second lawsuit, filed by environmental law firm Earthjustice, four other environmental groups claimed 2016 and 2017 lease sales in the reserve were illegal because the Interior Department failed to take a hard look at their effects on greenhouse gas emissions and climate change.

Bull or Bear? ConocoPhillips is pretty bullish about oil prospects on the North Slope. The company’s Alaska president, Joe Marushack, told a major business conference in Anchorage last week that he sees a possibility for up to 400,000 barrels a day of new oil coming into the Trans Alaska Pipeline System over the next few years. This would come from new oil projects that companies are working on including three by ConocoPhillips, Marushack said at an Anchorage Economic Development Corp.’s economic forecast luncheon held Feb. 1 at the Dena’ina convention center in Anchorage. Getting new oil into the oil pipeline is important because it is now carrying about 500,000 barrels per day, about one-fourth of its 2 million barrel-per-day design capacity, and if the oil “throughput” in TAPS drops further there would be operating problems, according to Alyeska Pipeline Service Co., the pipeline operator.

Small spill at Valdez Terminal. The Alaska Department of Environmental Conservation has reported a spill at the Valdez Marine Terminal. KTVA-TV reports that the department says the spill appears to be less than 200 gallons (757 liters) of crude oil from the Alaska North Slope. The spill was discovered Saturday morning by a worker who was doing routine rounds. The department says oil reached the water but “no sheen on water has been observed.” The cause of the spill is under investigation. But the department says the oil might have leaked from loading arms into containment. The department says there’s no impact to the Trans-Alaska Pipeline. The department will continue to monitor and clean the area. Skimming vessels have been deployed to the spill site.







China surpassed the United States in annual gross crude oil imports in 2017, importing 8.4 million barrels per day (b/d) compared with 7.9 million b/d for the United States. China had become the world’s largest net importer (imports minus exports) of total petroleum and other liquid fuels in 2013. New refinery capacity and strategic inventory stockpiling combined with declining domestic oil production were the major factors contributing to the recent increase in China’s crude oil imports.

One fish, two fish…Local fishermen and mining companies are picking sides this week over stringent new rules for construction on Alaska salmon habitat. One group did it through letters to a legislator. The other, with paper of a different sort: a $200,000 contribution. The Stand for Salmon initiative and a similar bill known as House Bill 199 establish a new procedure for construction permits on fish habitat issued by Alaska Department of Fish and Game. It’s more complicated than existing permitting, mining companies say, and would be prohibitively expensive for construction projects across the state. But fishermen say they simply want construction done responsibly. Without updates to a decades-old permitting law, commercial salmon fishing is put at risk by large oil, gas and mining projects. Flanked by the group of seven other Juneau fishermen, gillnetter Sommers Cole gave HB 199 a stamp of approval Thursday when he delivered a letter to bill author Rep. Louise Stutes, R-Kodiak, on behalf of 200 fishermen. About 30 of the signers are Juneau fishermen, Cole told the Empire before his meeting with Stutes at the Capitol.

From today’s Washington Examiner, Daily on Energy:

ANNUAL ENERGY OUTLOOK TO STOKE A FIGHT: The Energy Information Administration is set to release its annual outlook for 2018 Tuesday morning, which is expected to play up the effects of the oil and natural gas revolution, which in turn helps Trump’s energy dominance agenda. But that sort of reporting, even though it is factual, does not sit well with climate change groups who want to see renewable energy advances played up by the federal government over fossil fuels. Ahead of the report’s release, the Post Carbon Institute released a report Monday that looks to poke a hole in the EIA’s “rosy” projections. The report details how the government’s projections are not feasible out to 2050. “There is no doubt that the U.S. can produce substantial amounts of shale gas and tight oil over the short- and medium-term,” said David Hughes, the report’s lead author. “Unrealistic long-term forecasts, however, are a disservice to planning a viable long-term energy strategy. The very high to extremely optimistic EIA projections impart an unjustified level of comfort for long-term energy sustainability.”   The EIA outlook will provide projections of U.S. energy supply, demand, and prices. The projections also will include alternative assumptions that take into account changing economic growth rates, domestic energy resources, and other technologies, along with world oil prices.


First Reads:

Walker re-funds Ambler Road Project to EIS process
Fairbanks Daily News-Miner, Erin Granger, February 5, 2018

Groups sue to overturn Alaska petroleum reserve lease sale
AP News, Dan Joling, February 2, 2018

ConocoPhillips fired up about Alaska prospects in 2018
Mat-Su Valley Frontiersman, Tim Bradner, February 3, 2018

Alaska officials report oil spill at Valdez Marine Terminal
AP News, February 5, 2018

China surpassed the United States as the world’s largest crude oil importer in 2017
U.S. Energy Information Administration, February 5, 2018

Local fishermen, mining companies divided over fish habitat
Peninsula Clarion, Kevin Gullufsen, February 4, 2018

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Headlamp – Sold to the highest bidder. Andeavor purchases Kenai LNG facility.

February 2, 2018 | Posted in : News

Sold to the highest bidder! Andeavor has announced today, that they have acquired the Kenai Liquefied Natural Gas (LNG) facility from ConocoPhillips. In a statement from Andeavor they stated that they believe this facility is a natural extension of our long-standing operations in the State of Alaska. This acquisition further strengthens our integrated value chain by optimizing our operations in Kenai to provide low-cost fuel for our refinery to produce the fuels that consumers in Alaska need to keep their lives moving. Andeavor will be working to integrate the current employees and operations into the Kenai Refinery facility. In November 2016. ConocoPhillips’ announced that it was putting its Kenai LNG plant up for sale. In July the company announced they would be “scaling back” operations until they acquired an interested buyer for the plant. The Kenai plant, includes a dock and loading facility, was the only export facility of domestic liquefied natural gas in North America for nearly 50 years.

Oilmen, wildcatters, refiners, oh my! Oilmen, wildcatters and particularly refiners are reaping billions in gains from President Donald Trump’s tax overhaul, helping boost the staying power of old-style energy even as the world searches for cleaner fuels. The tax adjustments come as crude prices have rallied 54 percent since June. Together, the price rise and the new tax code have supercharged the oil industry in ways that could test the resolve of money managers who’ve vowed to divest from companies that have powered the world’s economic engines for two centuries. The top four refiners this week reaped $7 billion in gains, led by a $2.7 billion jump announced Friday by the biggest, Phillips 66.

Go big or go home on ANWR. President Donald Trump said Thursday he “really didn’t care” about opening a portion of Alaska’s Arctic National Wildlife Refuge to oil drilling but insisted it be included in tax legislation at the urging of others. Addressing fellow Republicans at the House and Senate Republican Member Conference in White Sulphur Springs, West Virginia, mentioned the wildlife refuge known as ANWR in Alaska’s northeast corner as he recounted accomplishments in the last year, including the tax bill passed by Congress in December. Trump said he “never appreciated ANWR so much” but was told of its importance by others. “A friend of mine called up, who’s in that world and in that business, and said, ‘Is it true that you’re thinking about ANWR?’ I said, ‘Yeah, I think we’re going to get it, but you know.’ He said, ‘Are you kidding? That’s the biggest thing, by itself.’ He said, ’Ronald Reagan and every president has wanted to get ANWR approved.” The comment had a major impact, Trump said. “I really didn’t care about it, and then when I heard that everybody wanted it — for 40 years, they’ve been trying to get it approved, and I said, ‘Make sure you don’t lose ANWR,’” Trump said. Oil in the refuge, Trump said, is one of the great potential fields anywhere in the world. “That by itself is a big bill,” he said.

Hurry up and wait. In mid-January, Alaska’s gasline corporation filed tens of thousands of pages of documents with the Federal Energy Regulatory Commission (FERC). Now, the state is waiting for the commission to make a decision on if, and when, the state can get to work on its massive liquefied natural gas (LNG) export project. Last week, the head of Alaska’s gasline corporation landed in Juneau for two days of meetings with lawmakers and updates on the Alaska LNG project. In between those meetings, Alaska Gasline Development Corporation (AGDC) President Keith Meyer sat down to answer some questions on the federal permitting process. In mid-January, the state corporation announced that it finished several months of work filing responses to questions FERC had on its application for the Alaska LNG project. Those questions were on everything from impacts on Alaska native culture to how the project could impact fish in the water bodies it crosses. With those answers, the application has ballooned from 36,000 pages that the state corporation filed last year — to a current total just shy of 100,000 pages. Now, Meyer and the state corporation are hoping that the federal commission will put out a schedule for completing that environmental review.

Zinke on Alaska issues. In an interview with Channel 2’s Washington D.C. bureau, Secretary of the Interior Ryan Zinke commented on several hot topics in the state. Those issues included a land swap to allow a road through the Izembek National Wildlife Refuge, the resignation of several National Park Advisory Board members, including former Alaska Gov. Tony Knowles, the possibility to change the name of Denali back to Mt. McKinley, and commercial fishing and salmon runs. When it comes to the road to King Cove, a controversial project that recently saw a lawsuit filed against the US government by environmentalists, Zinke said that its construction is “absolutely the right thing to do.” “A village that’s in the Aleutian chain has the right to have access to medical emergencies by an air strip and that’s exactly what we did. It’s a single lane gravel road that does no harm, but it’s the right thing for the village,” Zinke said.

First Reads:

Andeavor Has Acquired The Kenai LNG Facility From ConocoPhillips
KSRM Radio Group, Jennifer Williams, February 1, 2018

Billions From Trump Tax Cuts Supercharge Fossil Fuel Sector
Bloomberg Technology, Kevin Crowley, David Wethe & Alex Nussbaum, February 1, 2018

Trump explains support for oil drilling in Arctic refuge
AP News, Dan Joling, February 2, 2018

It’s hurry up and wait for state gasline corporation’s federal permitting schedule
Alaska Public Media, Rashah McChesney, February 1, 2018

In interview, Sec. Zinke responds to state-wide Alaskan issues
KTUU, Leroy Polk, February 1,2018

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Headlamp – “Knowledge shallower than a contact lens case.” Now you see me, Now you Don’t.

February 1, 2018 | Posted in : News

Now you see me, now you don’t…The State of Alaska offered, then abruptly revoked, help to the City and Borough of Juneau in an ongoing lawsuit. On Wednesday afternoon, the State of Alaska withdrew a legal memo it had filed Tuesday that supported the CBJ’s position in a case brought by the cruise ship industry. The withdrawal came as industry officials gathered in Juneau as part of an annual legislative fly-in. The legal memo, formally called an amicus brief, didn’t formally involve the state in the lawsuit, but it did offer a legal interpretation that supported the CBJ’s position. “The amicus brief was filed in error due to internal miscommunications,” Cori Mills, a spokeswoman for the Alaska Department of Law, told the Empire by email Wednesday. “The state will continue to monitor this case, but the state is not a party to the case nor does it directly implicate state statute.”

Alliance member NANA produces newest house member. The newest member of the Alaska Legislature has been sworn in. State Rep. John Lincoln of Kotzebue was sworn in Wednesday, one week after being appointed by Gov. Bill Walker. He was later confirmed by House Democrats. State law requires legislative vacancies be filled by someone from the same party as the predecessor. Election records show Lincoln switched from “undeclared” to Democrat on Jan. 22. Lincoln succeeds former Rep. Dean Westlake, who resigned in December after female aides accused him of unwanted touching and inappropriate comments. Westlake has said he is sorry if he made anyone uncomfortable. Lincoln is a vice president for NANA Regional Corp. He also is a pilot and has worked as an EMT for the Kotzebue Volunteer Fire Department, according to a bio from Walker’s office.

From our friends in the Senate: “ Thank you for taking the time to participate in our recent web survey. Duplicates and out-of-state submissions (424) were purged from the final tally.   See the results on-line here:”   https://www.alaskasenate.org/results

“Knowledge shallower than a contact lens case.” Nobody could blame Rep. Justin Parish for loving the sound of his own voice. The problem is that everything that comes out of the Juneau Democrat’s mouth regarding oil taxes following his baritone “Madam Chair” reveals a depth of knowledge that is shallower than a contact lens case. Parish was on full, cringe-worthy display at a couple recent hearings of the House Resources Committee, where co-chair Rep. Geran Tarr, D-Anchorage, is forcing oil industry representatives to hump to Juneau yet again for more hearings on another oil tax bill that’s going nowhere. If these hearings are good for anything — other than serving as a constant reminder that the state is on track to see its third straight year of production increases on the North Slope — it is to witness the Democrat-led Majority’s utter cluelessness on policy from definitional basics to more complex financial reporting. First up was Parish questioning Tax Division Director Ken Alper, whom Democrats have relied upon since taking the House majority in 2016 to help craft their seemingly endless series of oil tax increases. At the Jan. 26 hearing, Alper had an innocuous PowerPoint slide that noted Tarr’s proposal to raise the gross minimum tax from 4 percent to 7 percent is a 75 percent increase. Parish, who once wrote that “French is the international language of freedom,” decided to wade into the universal language of math. “We are contemplating increasing the effective rate by 3 percent,” Parish said. “It’s such a curious quirk of language. Because if we were increasing it from 1 percent to 2 percent, you could say we’re increasing the effective tax rate by 100 percent.”

ConocoPhillips acquires stake in North Slope development from Anadarko. ConocoPhillips posted a big $1.58 billion profit for the fourth quarter as the Houston oil giant continues to swing back to a moneymaking venture after the oil bust. But most of those earnings came courtesy of an extra $900 million from the new U.S. tax law and a $337 million settlement with Ecuador. Without those extra dollars, ConocoPhillips still would have earned about $400 million versus a $35 million loss in the final quarter of 2016 for the full year 2017, ConocoPhillips recorded a $900 million loss as it recovers from the oil crash, versus a much larger $3.6 billion loss in 2016. ConocoPhillips said it just paid $400 million to The Woodlands’ Anadarko Petroleum to acquire its 22 percent stake in Alaska’s Western North Slope development. The Houston oil and gas producer also is using its extra profits to give more money back to shareholders, increasing the quarterly dividend from 26.5 cents a share up to 28.5 cents. ConocoPhillips is moving forward with a share buyback program and also announced the pay down of $2.25 billion in debt. “While the outlook for commodity prices has improved, our operating plan remains unchanged and we have already taken clear actions to demonstrate our commitment to maintain discipline and follow our priorities,” said ConocoPhillips Chairman an CEO Ryan Lance. Apart from the $900 million in U.S. tax law benefits and the Ecuadorian settlement from the government’s previous confiscation of assets, Lance attributed most of the profits growth to the rising oil and gas prices worldwide.

Congratulations to Usibelli Coal Mine!


First Reads:

Lincoln sworn in as newest Alaska House member
AP News, Becky Bohrer, February 1, 2018

State offers, then withdraws, help to CBJ on cruise ship lawsuit
Juneau Empire, James Brooks, February 1, 2018

Parish flunks out on oil taxes
Alaska Journal of Commerce, Andrew Jensen, January 31, 2018

ConocoPhillips posts big profit, acquires Alaska stake from Anadarko
Chron, Jordan Blum, February 1, 2018

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Headlamp – EPA Pruitt’ Pandering Prohibits Process.

January 31, 2018 | Posted in : News

Can’t develop without a road. The window for public comment on a controversial road comes to a close this week. The Ambler Mining District Industrial Access Project — or Ambler Road — would start at the Dalton highway and stretch over 200 miles west. That’s a big road in a state with not that many of them. Proponents say it will enable growth of the mining industry, and create jobs. Detractors worry about impacts to subsistence and the environment. The road itself is an idea that’s been kicking around for decades. But it picked up steam back in 2011. At that time, the price of oil was high, the state had cash, and then-Governor Sean Parnell wanted to put some of that money toward encouraging natural resource development in parts of the state that were off the road system. Ambler Road was part of that push. It’s an area that has been explored for its rich mineral potential since the 1950s, but hasn’t been developed because of its remoteness.

Pruitt’s Pandering Prohibits Process. Scott Pruitt has done good work reining in his predecessor’s regulatory overreach. But that only makes the EPA Administrator’s decision late last week to rubber stamp a violation of due process toward a mine proposal in Alaska all the more disappointing. The Environmental Protection Agency said it will no longer seek to withdraw the Obama Administration’s pre-emptive veto of the proposed Pebble copper and gold mine in southwest Alaska. The Obama EPA issued that unprecedented veto in February 2014, blocking Pebble’s progress through the regular Clean Water Act process in which a company files for permits and receives an environmental review from the Army Corps of Engineers. EPA’s job is to weigh in at the end of the review, not short-circuit the application. EPA says that although the veto will remain in place, the agency will allow the Pebble Limited Partnership an additional three years to navigate the Corps process. This is less generous than it sounds. Pebble had already won that right in May 2017, when the EPA settled litigation Pebble brought that had exposed EPA’s phony science and the collaboration by EPA employees with anti-mine activists and native tribes to sabotage the project. As part of that settlement, EPA agreed to start formally withdrawing the veto. Mr. Pruitt’s about-face is the sort of arbitrary diktat that undermines capital investment. Shares in Northern Dynasty Minerals, which owns Pebble, fell 21% on Monday, the first trading day after the Pruitt announcement. EPA says its decision to maintain the veto is based on more than “one million comments” it has received since this summer that mostly oppose the mine, and Mr. Pruitt’s judgment that “any mining projects in the region likely pose a risk to the abundant natural resources that exist there.”

Merging with the competition. Plans to reopen a fertilizer plant in Nikiski are on hold after the company formerly known as Agrium entered a merger with its competition. The newly formed Nutrien faces the same problems in reopening the plant, plus delays from smoothening out the merger, the Peninsula Clarion reported Monday. The plant opening still depends on corporate investment priorities and the always-looming question of whether the global fertilizer manufacturer can get the natural gas it uses as raw material. But Nutrien Government Affairs Manager Adam Diamond said the merger has put some plans on hold, including whether to study a possible reopening of the plant. Nutrien formed from the combination of Alberta-based Agrium and its Saskatchewan-based rival Potash Corp. Werth. Diamond said Nutrien’s management would review their post-merger prospects over the next six months. In 2016 interviews, Diamond said reopening the plant would cost an estimated $275 million — a calculation he said the company hasn’t refined since. If Nutrien were to reopen the plant, it would be able to take advantage of a tax credit crafted by Republican state Rep. Mike Chenault of Nikiski, which went into effect in July 2017. Nutrien’s corporate income tax liability would be credited equal to the royalty payments made to the state by the producers who supply Nutrien its gas, making it financially neutral for the state government.

First Reads:

Support and concern as Ambler Road comment period draws to a close
KTOO Public Media, Ravenna Koenig, January 30, 2018

Pruitt’s Bad Pebble Precedent
The Wall Street Journal, The Editorial Board, January 30, 2018

Merger could delay plans to reopen Nikiski fertilizer plant
AP News, January 31, 2018


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Headlamp – Alaska take note: lower taxes lead to increased investment – $50 billion.

January 30, 2018 | Posted in : News

Alaska take note: lower taxes lead to increased investment – $50 billion. Exxon Mobil Corp. plans to spend $50 billion in the United States over the next five years, an investment enabled by the recent sweeping changes to U.S. corporate tax law, the company said Monday. Exxon said it will pour billions of dollars into the Permian Basin, a prolific oil field in West Texas and New Mexico, and it plans to build new manufacturing sites, improve its infrastructure and expand existing operations. “This will create thousands of jobs, strengthen the U.S. economy and enhance energy security,” Exxon CEO Darren Woods said in a blog post on the company’s website. Exxon’s investment comes after similar announcements by Apple and JPMorgan Chase & Co., which said they would invest billions in the United States after the U.S. corporate tax rate was lowered from 35 percent to 21 percent. It also comes on the heels of Exxon’s own plan to invest $20 billion over the next decade in projects along the Gulf Coast. Wood said the company is “actively evaluating” how the lower corporate tax rate will impact “the economics of several other projects currently in the planning stages to further expand our facilities along the Gulf Coast.”

Higher oil prices won’t save Alaska. It’s the year of the budget at the Alaska legislature. And while lawmakers debate new taxes and drawing from the Permanent Fund, oil prices marched steadily upward in January. Two days ago, the price of Alaska’s oil jumped up above $70 dollars per barrel for the first time in three years. And, that’s big news in Juneau. Some senate Republicans point to those rising oil prices as an argument to bolster their reluctance to vote for an income tax. It’s big news for Alaska too. Because that’s right about the price point when the state starts making nearly $70 million dollars for every dollar the price increases. But that doesn’t go far when you’re facing a budget deficit in the billions. Sure, the gap between what the state spends and what it makes starts closing faster. And that price is much higher than the $56 per barrel the state projected for the next year. State Tax Division Director Ken Alper said if prices stay in that range through next June, the state expects to bring in about $200 million more than previously thought. “That will cover a little less than one-tenth of the deficit which is estimated at about $2.5 billion,” Alper said.

If you discourage something, you get less of it. Oil company officials urged Alaska lawmakers on Monday to reject a $225 million production tax increase proposed in the House, saying it will damage the economy and reduce industry investment at a promising time. “The bill will stall the growing momentum in the industry that has and continues to drive Alaska’s economy,” said Cory Quarles, Alaska production manager for ExxonMobil, speaking to the House Resources Committee. “This is the wrong time to disincentivize development,” said Scott Jepsen, head of external affairs and transportation for ConocoPhillips Alaska. Several major projects are in the works, including by ConocoPhillips, Jepsen said. But a significant tax increase could threaten some, such as the Willow prospect, by boosting costs, he said. The company has yet to make a final decision to develop that field, which could produce 100,000 barrels daily. “We don’t have to pursue that,” he said. Reps. Andy Josephson and Geran Tarr, Anchorage Democrats and Resources co-chairs, and Paul Seaton, R-Homer, introduced the bill to boost the minimum production tax to 7 percent, from 4 percent.

Got gas? Call Agrium. Agrium could see the re-opening of its North Kenai fertilizer facility, the company’s new Alaska manager made the announcement on January 23. The Agrium facility employed 400 Alaska residents when it was in full operation before it closed in 2007. The new Alaska Manager is Fred Werth. The facility closed its doors when the Cook Inlet gas fields saw a major decline and the facility was unable to secure enough supply in order to keep operating. But the outlook has brightened. More gas is flowing in the aging oil-and-gas basin, and explorers have announced new discoveries. On September 12, 2016, Agrium announced that it had agreed to merge with PotashCorp, which will make the combined company, Nutrien, the largest producer of potash and second-largest producer of nitrogen fertilizer worldwide. Agrium is proposing a schedule in which it takes a year to inspect and assess the site, “Assuming plant rehabilitation is economical, and assuming an adequate supply of natural gas can be secured” the company will implement a 26-month plant renovation phase.

First Reads:

Exxon, citing tax, regulatory relief, to spend $50b in U.S.
Chron, Collin Eaton, January 29, 2018

Higher oil prices help, but don’t solve the state’s budget problem
Alaska Public Media, Rashah McChesney, January 29, 2018

Oil industry officials slam proposed hike in production tax
Anchorage Daily News, Alex DeMarban, January 30, 2018

Agrium Working To Re-Open North Kenai Fertilizer Facility
KSRM Radio Group, Jennifer Williams, January 29, 2018

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Headlamp – Gigantic flip flop by Trump EPA neither “deters nor derails” Pebble project.

January 29, 2018 | Posted in : News

Decision neither “deters nor derails”. Opponents of the Pebble mine project took Friday afternoon to celebrate a small but unexpected victory via Environmental Protection Agency Administrator Scott Pruitt. Pruitt announced Friday that the EPA would not finalize the proposed withdrawal of the 2014 proposed determination to prohibit a large mine in the Bristol Bay region through its Clean Water Act Section 404(c) authority. The agency said in a statement Friday that it has “serious concerns” about the impacts of mining activity in the Bristol Bay watershed and public comments in stakeholder meetings stressed the importance of the world’s largest wild salmon fishery. Pruitt said it would be disingenuous for the agency to not offer an environmental position at this stage of the project. Pebble Limited Partnership filed its wetlands fill permit application with the U.S. Army Corps of Engineers Dec. 22. The application outlines plans to fill 3,190 acres of wetlands at the mine site. While not specific to any mine plan — a point Pebble and parent company Northern Dynasty minerals have stressed — the Bristol Bay Watershed assessment published by EPA in 2014 concludes a mine that would fill more than about 1,100 acres would be too damaging to fish habitat to allow. Pruitt emphasized in his statement that his decision “neither deters nor derails” the Pebble environmental permit application process now underway while at the same time he has heard from stakeholders on whether to withdraw the proposed 404(c) restrictions.

Keep it simple. The City and Borough of Juneau Mining Committee voted Thursday to pursue changes to the city’s current mining ordinance — very minor ones, that is. The changes, if they’re made, will have one simple goal: make the ordinance easier to understand. At the request of the committee members, City Attorney Amy Mead will go through the 17-page ordinance and outline areas that could use clarification. She will not be suggesting any substantive changes to the ordinance, but will be making changes to language.

Port Mackenzie is out of the Alaska LNG project. The state-owned Alaska Gasline Development Corp. will begin soliciting equity investments by mid-year in the proposed $43 billion Alaska LNG Project, officials of the corporation told state legislators in briefings last week. An initial offering will be aimed at raising about $1 billion to be used for final engineering needed to prepare the project for final investment decision by the state and potential Chinese customers in mid-2019, Keith Meyer, AGDC’s president, told the resources and finance committees in the House and Senate. A recent accomplishment is the completion of answers to over 100 technical questions asked by the U.S. Federal Energy Regulatory Commission on the Alaska LNG Project’s application to the agency for a certificate for the giant project, Meyer said. Alaska LNG is now waiting for the FERC to set a schedule for the federal Environmental Impact Project that is needed. Meyer also explained why the Matanuska-Susitna Borough’s Port MacKenzie was eliminated early on as a site for the terminus of the Alaska LNG Project’s 800-mile, 42-inch pipeline and large liquefied natural gas plant. “Port MacKenzie is a little too close to Anchorage and ship traffic going there. Also, Port MacKenzie is a multi-use cargo port and federal law requires an LNG terminal to be single-use,” Meyer said. “The Alaska coast has many locations that would make wonderful port, but we wound up choosing Nikiski and we’re sticking with that,” he said.

Canada to rival US in shale revolution? The revolution in U.S. shale oil has battered Canada’s energy industry in recent years, ending two decades of rapid expansion and job creation in the nation’s vast oil sands. Now Canada is looking to its own shale fields to repair the economic damage. Canadian producers and global oil majors are increasingly exploring the Duvernay and Montney formations, which they say could rival the most prolific U.S. shale fields. Canada is the first country outside the United States to see large-scale development of shale resources, which already account for 8 percent of total Canadian oil output. China, Russia and Argentina also have ample shale reserves but have yet to overcome the obstacles to full commercial development. Canada, by contrast, offers many of the same advantages that allowed oil firms to launch the shale revolution in the United States: numerous private energy firms with appetite for risk; deep capital markets; infrastructure to transport oil; low population in regions that contain shale reserves; and plentiful water to pump into shale wells. Together, the Duvernay and Montney formations in Canada hold marketable resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator.

From today’s Washington Examiner, Daily on Energy:

EPA HALTS APPROVAL PROCESS FOR ALASKA GOLD MINE: The EPA on Friday night reversed a prior decision and halted the approval process of a gold mine in Alaska’s Bristol Bay. Pruitt said the Pebble Mine project would harm the area’s natural resources. “It is my judgment at this time that any mining projects in the region likely pose a risk to the abundant natural resources that exist there,” Pruitt said. Bottom line: The decision, a rare nod from Pruitt to environmentalists, does not cancel the mine outright, but leaves in place the Obama administration’s block of the project until the EPA solicits further comments. Pruitt said he made the decision after consulting with various stakeholders, including Alaska natives and tribal governments. Local opposition: The Obama administration had denied the mine a permit for years because of the potential impact it would have on water quality and the number of salmon that indigenous populations rely upon. That decision led to a lawsuit in 2014 by the Canadian company developing the mine.

First Reads:

Mining Committee seeks to make ordinance easier to understand
Juneau Empire, Alex McCarthy, January 28, 2018

EPA’s unexpected decision welcomed by Pebble opponents
Alaska Journal of Commerce, Elwood Brehmer, January 27, 2018

Port Mac not part of $43 million LNG Project
Mat-Su Valley Frontiersman, Tim Bradner, January 28, 2018

Why Canada is the next frontier for shale oil
Reuters, Nia Williams, January 28, 2018

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Headlamp – Stacking the Permanent Fund board to get cash for Alaska LNG?

January 26, 2018 | Posted in : News

Stacking the PF Board to get cash for Alaska LNG? Alaska lawmakers this week have been getting detailed updates on Gov. Bill Walker’s plans to ship North Slope gas to Asia. Thursday was the Senate’s turn to get a briefing on the proposed $43 billion project designed to export gas to Asian countries. Understanding the project requires navigating a complicated series of charts, spreadsheets and graphs. But Sen. Natasha von Imhof (R-Anchorage) took the discussion to something close to Alaskans hearts and bank accounts: the Permanent Fund. Von Imhof, who serves on both the Senate Resources and Finance Committees, asked Alaska Gasline Development Corp. President Keith Meyer if there are plans to tap the Permanent Fund to finance the project. The fund is currently valued at $66 billion. “The state, in my mind, has the first option to invest,” Meyer told members of both committees assembled for the two-hour hearing. “I don’t care necessarily where it comes from. I would encourage them to look at it, but we have no expectation at this point that funding would come from that source.” Still, von Imhof pressed. “So you will not actively pursue Permanent Fund investment?” she asked Meyer. “You will wait and see if the board of trustees come to you – is that what I’m hearing?” Meyer replied, “I think they ought to be interested enough to come and take a look at the project. Just to be clear, we do not intend to have the Permanent Fund to be a funder of the project. Don’t intend to exclude them either.” After the hearing, von Imhof remained concerned about the Permanent Fund’s role. She cites a possible change to the fund’s Board of Trustees could be imminent with Board Chair William G. Moran’s term expiring this year. Additionally, Walker recently appointed his former business partner, Attorney General Craig Richards, to the board. “When you’re stacking the board sympathetic to your cause, what’s stopping the Permanent Fund from being a significant investor in this project?” she asked. “Alaskans need to pay attention to Permanent Fund appointments. They matter.” Late last year, the state signed agreements with China’s state-owned oil company, Sinopec, and two Chinese financial institutions. They agreed to help Alaska advance the project, but the agreements did not come with any financial commitments It’s left some lawmakers questioning whether China is a serious partner.

Murkowski to ask Zinke to be sensitive. Alaska’s Republican senator said on Thursday she will ask Interior Secretary Ryan Zinke to remove certain sensitive offshore areas of Alaska from his proposed strategy to increase oil and gas drilling in federal waters. Senator Lisa Murkowski, who chairs the Energy and Natural Resources Committee, said the Alaska congressional delegation is “really bullish and optimistic” about the oil and gas potential of the Arctic and the Cook inlet. But she said they have concerns about more sensitive ecological areas in the Gulf of Alaska and in the Kawerak region in the Bering Straits.

From today’s Washington Examiner, Daily on Energy:

TRUMP WINS BIG ENERGY INVESTMENTS FROM TAX REFORM ADMIRERS IN DAVOS: The world’s energy companies pledged increased investment in the U.S. at the World Economic Forum in Davos, Switzerland, pleased with President Trump’s tax legislation. French oil giant to invest more: The CEO of Total, France’s global energy giant and the fourth largest oil company in the world, told Trump that the company is looking to pump up investment in the wake of the December tax cuts. The law cuts the corporate tax rate from 38 percent to 21 percent. “We invest around $15 billion each year, and at least $1 billion as an average in the U.S. … and even we will do more with your tax reform,” Total CEO Patrick Pouyanne told Trump at a Thursday night reception at the World Economic Forum. But are you happy? “So from the U.S. standpoint, you’re very happy about it?” Trump asked Pouyanne. The CEO replied, “Yes, I’m happy.” Electronics giant Siemens plans expansion: The head of global manufacturing and electronics giant Siemens told Trump that his tax reform package has driven its decision to start building advanced natural gas turbines for power plants in the United States. “We’re doing really well,” Joe Kaeser, chairman and CEO of Siemens, told Trump at the reception. “As a matter of fact, we’ve been investing quite a lot into the country. And since you have been successful with tax reform, we decided to develop next-generation gas turbines in the United States.” “So, congratulations on your tax reform,” he said. “You said this is what you’re going to do.”

First Reads:

Lawmakers: Is Permanent Fund part of LNG plan?
KTVA, Steve Quinn January 25, 2018

Senator asks Interior chief to shield parts of Alaska from offshore drilling
Reuters, Reuters Staff, January 25, 2018

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