Headlamp – Update: ExxonMobil Plan of Development for Point Thomson

September 29, 2017 | Posted in : News

Point Thomson Update. In an article written September 26, for Platts, Tim Bradner concluded that a lower than expected production could “put the company in technical violation of the settlement.” Headlamp rarely, if ever, disagrees with Mr. Bradner, however, acknowledging that the design for the Initial Production System (IPS), the current Point Thomson Unit Project in the settlement agreement, is geared towards gas handling, with an objective of condensate production and noting the definition of IPS in the agreement is:

2.13 “Initial Production System” or “IPS” means the gas cycling facilities designed with capacity to produce and re-inject (cycle) 200 million cubic feet of gas per day utilizing reciprocal compression and with the objective of a minimum of 10,000 barrels per day of condensate for delivery into the TransAlaska Pipeline System (“TAPS”).

One could make the argument that the company has not breached the terms of the Settlement Agreement as claimed by the DNR since they are able to produce and handle 200 McfD of gas.

Prudentially unripe. With a court dismissing a challenge to federal rules on hydraulic fracturing, producers said it was time for President Trump to erase the law altogether. “The industry recognizes that every energy-producing area has different geologic, topographic, and hydrologic conditions, which is why the states are far more efficient and effective at regulating hydraulic fracturing than the federal government,” Barry Russell, the president and CEO of the Independent Petroleum Association of America, said in a statement.

15 years, what do you get? Qatar’s RasGas Co signed a 15-year liquefied natural gas (LNG) sales and purchase agreement with Bangladesh Oil, Gas and Mineral Corp (Petrobangla) on Monday, RasGas said in a statement late on Monday. Under the agreement, the Qatari company will supply 2.5 million tonnes of LNG every year to Petrobangla for 15 years. Deliveries will be made to Petrobangla’s floating storage and regasification unit (FSRU) near Moheshkhali Island in Bangladesh, marking RasGas’ first long-term contract delivered to a FSRU, the company said. The deal is Bangladesh’s first LNG import agreement and will help to cover the country’s domestic natural gas shortfall. The contract with the world’s biggest LNG exporter underscores the rise of South Asia as a new market for the fuel. Bangladesh’s first floating storage and regasification unit (FSRU), supplied by Excelerate Energy of the United States, is to be commissioned by April 2018. Its second, supplied by the country’s own Summit LNG of the Summit Group, is due for commissioning by next October. Bangladesh is also looking to add two additional floating LNG terminals next year. Bangladesh, a country of more than 160 million people, could import as much as 17.5 million tonnes of LNG a year by 2025, Nasrul Hamid, Bangladesh’s state minister for energy and power, told Reuters last month.

Birch asks Governor to cut costs. Lawmakers are supposed to head to Juneau for a special session next month, but one Anchorage representative is suggesting they stay in Anchorage. Rep. Chris Birch (R-Anchorage) sent a letter to Walker asking him to consider amending his special session proclamation. Birch says holding hearings in Anchorage would not only save the state money but also cut costs for members of the public who want to participate. “From my experience in local government, there’s nothing that can really replace the face to face discussion and dialogue that happens in the public testimony and hearings,” said Birch. “We’re not talking about moving the capital, we’re talking about a cost-savings, and permitting the public direct access to their legislature as they consider the important issues of anti-crime legislation and the governor’s proposed income tax.”  Next month’s special session will be the legislature’s fourth one this year. It’s scheduled to begin Monday, October, 23.

Begich scolds Walker for “show and tell and no action.” Former U.S. Senator Mark Begich is critical of Gov. Bill Walker’s call for a special session on new revenue next month. Walker is asking state lawmakers to consider a 1.5 percent, capped income tax on people who work in Alaska. “I think this October special session’s a lot of show and tell and no action. I think this is a total waste of time and energy,” said Begich, in an interview at the Bartlett Club’s luncheon Thursday. Begich blasted Walker’s proposal for being too regressive. “It’s only taxing wages, that means people that are working every single day and trying to make a living, they’re the ones that are going to be pinned,” said Begich. “When you look at what’s exempted: capital gains, dividends, basically for wealthier people, and I think that that’s an unfair tax system. I can’t wait to see the debate because I don’t think that’s going anywhere.”

Practical and Legal Hurdles for Teens. Alaska Gov. Bill Walker’s administration Wednesday rejected a proposal by a group of youth environmental activists that asked the state to start regulating emissions of climate-warming greenhouse gases. There are “practical and legal hurdles” to the Department of Environmental Conservation approving the request, Commissioner Larry Hartig wrote in a four-page denial letter dated Wednesday. Among them, he said, are that the regulations that the proposal asks for are too broad, that the Legislature might not budget enough money to carry them out and that the changes required to cut greenhouse gas pollution could hurt the state’s economy. “These decisions are inherently difficult and require consideration of many conflicts and tradeoffs, and balancing the needs of many constituencies,” Hartig wrote. He added a suggestion that the activists focus their attention on state lawmakers instead, writing: “Policy questions of this nature are best addressed in partnership with the Legislature.”

First Reads:

Erase fracking regulations, industry tells Trump
UPI, Daniel J. Graeber, September 26, 2017

Qatar signs 15-year LNG supply agreement with Bangladesh
O&G Links/Reuters, Jessica Jaganathan, September 26, 2017

Anchorage lawmaker asks to move special session
KTVA, Liz Raines, September 28, 2017

Begich: Oct. special session ‘total waste of time’
KTVA, Liz Raines, September 28, 2017

Alaska Gov. Walker’s administration rejects teen activists’ call for cutting carbon emissions
Alaska Dispatch News, Nathaniel Herz, September 28, 2017

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Headlamp – Sullivan pushes royalties from revenue and newsflash: tax policy matters!

September 28, 2017 | Posted in : News

Sullivan seeks royalties from ANWR as revenue raiser. Alaska Senator Dan Sullivan said he’s pushing for budget language that would make it easier for Congress to allow oil and gas drilling in part of the Arctic National Wildlife Preserve. “You’re damn right I am,” Sullivan, a Republican, said in an interview Wednesday. He said the Senate Budget Committee is considering adding a provision to the budget resolution that would allow the chamber to pass such a measure with a simple majority vote without needing Democratic support. Republicans plan to use the budget resolution to allow fast-track consideration of a tax overhaul plan. Royalties from oil and gas production in the wildlife reserve would be a revenue-raiser that could help offset some of the tax cuts the GOP is proposing. Sullivan and fellow Alaska Republican Lisa Murkowski have backed legislation that would allow oil and gas development in as much as 2,000 acres of the refuge. Democrats are largely opposed, and some Republicans have had reservations in the past.

Russians using social media for anti-fracking campaigns? A U.S. House committee investigating whether Russia has tried to influence U.S. public opinion on fossil fuels asked Facebook (FB.O), Twitter (TWTR.N) and Alphabet (GOOGL.O) on Wednesday to turn over information about Russian entities that may have bought anti-fracking advertisements. House Science and Technology Committee Chairman Lamar Smith, a Texas Republican and climate change denier, asked the CEOs of the technology companies to turn over documents by Oct. 10 that detail the involvement of Russian-based or funded entities detected on their platforms, information on ads they purchased, and any communications concerning ads advocating for “so-called green initiatives.” Smith and the Republicans on the committee that oversees U.S. scientific agencies have targeted mainstream climate change scientists, questioning their integrity and calling for eliminating federal funding for climate research. They have also accused environmental groups of colluding with Russians to push for regulations to curb fossil fuel extraction.

Dear Alaska: Tax Policy Matters. This summer, observers across the nation watched as lawmakers in the state of Alaska pulled together a buzzer-beating compromise that prevented a potentially catastrophic budget shutdown and kept the government funded through the coming fiscal year. For countless Alaskans who simply wanted their government to continue to operate, the compromise is a win. The alternative — an unprecedented shutdown — would have been untenable, resulting in significant upheaval for Alaskans seeking to utilize programs ranging from fishery permitting to cruise ship oversight to early education and Head Start services. For political and policy junkies, it was a budget showdown that checked nearly every box, complete with flaring tempers, bruised egos, high stakes, and the discussion of policy shifts that could send ripples through the economic landscape for years to come. This is particularly true in the case of the oil and gas industry, a sector that is looking at increased taxes in the eye in Alaska while simultaneously facing extremely challenging market conditions across the nation and around the world.

Tick. Tock. The clock is running out fast on the latest of countless efforts to commercialize Alaska’s massive natural gas reserves: the state-owned Alaska Gasline Development Corporation will be out of cash next year unless a large buyer is identified first, and policymakers grappling with a $2.5 billion budget gap are unlikely to throw more cash at the Alaska LNG Project (“AKLNG”) without visible progress. Gov. Bill Walker championed the effort long before he assumed office three years ago and throughout his term has done his best to woo the biggest potential buyers.

One step closer? Help is on the way for Fairbanks residents caught in the struggle between affordable heat and clean air. Last week, the Alaska Industrial Development and Export Authority Board approved a plan advancing the state’s effort to increase availability of natural gas in the Interior. It is secured by a newly inked Cook Inlet gas supply contract with Hilcorp, a key plan component required by the enabling legislation. The Alaska State Legislature provided $300 million in financing to create components like the Cook Inlet LNG processing plant expansion and additional gas storage in Fairbanks. The Interior Energy Project targets a consumer gas price equivalent to $2 a gallon heating oil, and the most recent AIDEA projections indicate it’s achievable as new customers sign up for service. Next steps for moving the project forward include incorporating infrastructure into a single public utility to serve Fairbanks and North Pole. It is expected that the Fairbanks North Star Borough’s Interior Gas Utility will buy and merge operation with AIDEA-owned Fairbanks Natural Gas.

First Reads:

Alaska Senator Seeks Arctic Drilling Measure in Budget
Bloomberg, Eric Wasson, September 27, 2017

U.S. lawmakers ask Facebook, Twitter for information on anti-fracking ads
Reuters, Valerie Volcovici, September 27, 2017

GUEST COMMENTARY: Amid low crude prices, tax policy matters more than ever
Alaska Journal of Commerce, Dr. Margo Thorning, September 27, 2017

Governor pitches Alaska natural gas to Chinese sovereign wealth fund
KTUU, Austin Baird, September 27, 2017

Affordable Energy For Interior One Big Step Closer
KSRM, Dorene Lorenz, September 27, 2017

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Headlamp – Mining Group Agrees with State That Proposed Initiative is Unconstitutional

September 27, 2017 | Posted in : News

CAP: Proposed initiative unconstitutional. The Council of Alaska Producers (CAP) has filed in Alaska Superior Court in support of the State’s action rejecting proposed ballot initiative 17FSH2. CAP’s Executive Director, Karen Matthias, issued the following statement about the lawsuit: “The proposed initiative would have negatively impacted communities and businesses all across Alaska. It would have delayed or stopped vital construction projects like wastewater treatment plants, roads, airports, ports, and pipelines. Resource development activities like fish processing, oil production, mineral extraction, timber harvests, and tourism would have been brought to a halt. Alaska is in a serious economic recession and needs more not less economic growth and opportunity. CAP agrees that Alaska’s salmon habitat should be protected and strongly believes that our current permitting process has done that. Any proposals to change these processes should be based on sound science, not establish a hierarchy that places one resource above another. The Council of Alaska Producers concurs with the State of Alaska’s legal ruling that the proposed initiative is clearly unconstitutional.” CAP is a non-profit trade association that represents the interests of large metal mines and mine developmental projects in Alaska. CAP advocates on legislative and regulatory issues, supports and advances the mining industry, educates members, the media, and the general public on mining related issues, and promotes economic opportunity and environmentally sound mining practices.

Hilcorp leases Kenai airport hangar. An oil and gas producer will sublease a hangar at the Kenai Municipal Airport for flights to its facilities on the west side of Cook Inlet. The Peninsula Clarion reports the Kenai City Council approved the sublease between Schilling Rentals and Hilcorp at their meeting on Sept. 20. Hilcorp, which became the largest producer in the Cook Inlet oil and gas industry after major producers Chevron and Marathon sold their interests in the region’s declining oil fields to it in 2011 and 2012, flies at least one plane from the Kenai airport. Kenai airport administration states Hilcorp flew 3,574 people from the Kenai airport in 2015 and 4,328 people in 2016. Schilling Rentals previously subleased the hangar to ConocoPhillips.

Waiver for Jones Act. The Trump administration said it is evaluating whether to waive U.S. shipping restrictions for Puerto Rico, where residents are without power after two devastating hurricanes. A decision is “unlikely” to be made Wednesday, senior Department of Homeland Security officials said, as DHS works with other parts of the government to make a determination. The Trump administration has faced fierce backlash following reports on Tuesday that the agency would not be temporarily lifting the Jones Act rule, which requires that cargo shipments between U.S. ports only take place on American-made and operated vessels.

Manchin says “no” to Trump mine safety nominee. Sen. Joe Manchin (D-W.Va.) on Wednesday said he plans to vote against confirming President Trump’s nominee to head the Mine Safety and Health Administration (MSHA). In his statement, Manchin recalled the numerous miner deaths in West Virginia, including 12 so far this year. Trump tapped David Zatezalo for the job earlier this month. Zatezalo is a retired former executive of Rhino Resources, which had frequent run-ins with MSHA for alleged safety violations during his tenure. “While I appreciate Mr. Zatezalo’ s willingness to serve, I cannot support his confirmation to lead MSHA,” Manchin said in his statement.

China likes Arctic deep-water ports. The development of a deep-water port on the Northern Dvina River will enable Chinese company COSCO to bring in big-tonnage ships, the company says. “This project has triggered big interest in China”, General Director of COSCO Russia Tu Deming underlined in a meeting this week with Arkhangelsk Governor Igor Orlov. ”We hope that construction will be completed quickly, it will give us the opportunity to take big-tonnage ships to the port and consequently increase shipping volumes”, he added, the Arkhangelsk regional government informs. Deming and his company delegation spent two days to familiarize themselves with local port infrastructure, a press release reads. COSCO has since year 2013 actively explored trans-shipping along the Northern Sea Route and has so far in 2017 sent six vessels across the Arctic route, Deming told Governor Orlov.

Porcupine caribou herd in the news. Gwich’in people in northern Canada and Alaska are targeting a handful of U.S. senators in their efforts to prevent oil drilling in the Arctic National Wildlife Refuge (ANWR) in Alaska. “At one time or another, they showed compassion for the Refuge. They once voted in the right way,” said Bernadette Demientieff, the executive-director of the Gwich’in Steering Committee, which represents Gwich’in people in the Northwest Territories, Yukon and Alaska. The committee is urging the public to contact five Republican senators in Nevada, Arizona, Colorado and South Carolina and ask them to help stop oil exploration in the calving grounds of the Porcupine caribou herd in the northeast corner of Alaska. The migration route of the herd ranges from northeast Alaska, across Yukon, and into the northwest fringe of the Northwest Territories

First Reads:

Trump administration considering Jones Act waiver for Puerto Rico
The Hill, Melanie Zanona, September 27, 2017

Texas-based oil producer subleases Kenai airport hangar
KTUU/The Associated Press, September 27, 2017

Sen. Manchin won’t vote for Trump’s mine safety nominee
The Hill, Timothy Cama, September 27, 2017

Chinese company confirms interest in trans-Arctic shipping to Arkhangelsk
Eye on the Arctic/Independent Barents Observer, Atle Staalesen, September 27, 2017

Indigenous group targets U.S. Senators to oppose drilling in Arctic wildlife refuge
CBC, Dave Croft, September 26, 2017

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Headlamp – AGDC’s Meyer disses Alaska press in China.

September 26, 2017 | Posted in : News

AGDC’s Meyer disses Alaska press in China. Alaska’s sputtering and stalling natural gas pipeline project appears to roaring forward again no matter what the media might be reporting. Just weeks after Alaska Gov. Bill Walker told the Alaska Resource Development Council that he thought the $45 billion to $65 billion project “doubtful,” the governor’s natural-gas czar has suggested to the Chinese the project is on the way to the start of construction in 2019. Xinhua, the official press agency for the People’s Republic of China, on Sunday reported that Keith Meyer, the president of the state-owned Alaska Gasline Development Corporation, “dismissed a recent local Alaskan newspaper report which quoted Governor Walker as saying that Alaska will not put more money into promoting the LNG project until firm commitments are made by customers.”   Xinhua writers Yang Shilong and Zhou Xiaozheng went on to quote Meyer – Walker’s half-million-dollar LNG promoter – saying “the project is full steam ahead. The governor indicated we are expecting market agreements before the end of next year before asking for more money from the state. However, we fully expect to have customer commitments and also will be engaging strategic partners. “The project will keep moving without question. Unfortunately, the Alaskan press misinterpreted the governor, which is quite common here in Alaska.”

The fast track to success. Alaska Gov. Bill Walker (I) first grasped the dramatic changes in store for his state under the Trump administration when he attended an inaugural event early this year. As Walker and his wife began to leave a late-night reception, they bumped into Ryan Zinke, whom President Trump had already selected to head the Interior Department. As Walker recalled at a recent business forum, “We were introduced, and [Zinke] said, ‘You’re the governor of Alaska?’ And I said, ‘Yes I am.’” “He grabbed my hand and said, ‘You’re going to love me.’” During the previous eight years, Alaska state officials and oil industry executives had been in a virtual cold war with Washington over the Obama administration’s land preservation policies in the Frontier State. Now they have high hopes that Trump’s pro-drilling approach to federal land management will trigger a North Slope oil revival that could help stimulate Alaska’s failing economy, which has been ravaged by low crude prices. The administration has already fast-tracked three big oil projects in northern Alaska.

No sleep lost over electric cars. Alaska’s economy is powered by oil. So are the vast majority of cars and trucks worldwide. But globally, the market for electric vehicles is growing. So as more people move away from gasoline powered cars, the big players in the oil industry have started to pay attention — and that includes Alaska. On a recent weekend, nearly 70 electric vehicles were lined up in a bare parking lot near downtown Juneau. It’s the city’s annual electric vehicle fair. The 1980’s song “Electric Avenue” is playing in the background. John Cooper is here showing off his two EVs. And he’s proud to say he was one of Juneau’s early adopters. He invites me inside his fully-electric sedan and pops the keys in the ignition. Cooper says there are plenty of charging stations in Juneau. Range anxiety isn’t an issue. He says the convenience of owning an electric car was a big selling point. “When you’re on the way to work, your car is [at] full [charge],” Cooper said. “And it’s an incredible feeling to get in the car — like, the whole time we’ve been talking — this car has been on and idling.” It’s quiet because there’s no rumble of a gasoline-powered internal combustion engine. Not too long ago, electric vehicles weren’t commercially available. But over the span of about five years, the number of EVs has reached into the millions worldwide. That’s still only a tiny fraction of cars on the road. Even so, oil companies and Alaska state economist Neal Fried are paying attention. “Does it keep me up at night? Not too often,” Fried said. “But it’s not just a thought experiment by any means.”

First Reads:

Trump’s energy focus raises hopes in Alaska
E&E News, Margaret Kriz Hobson, September 26, 2017

How much could electric vehicles put the brakes on Alaska’s oil economy?
KTOO Public Media, Elizabeth Jenkins and Elizabeth Harball, September 25, 2017

AK’s got gas
Craig Medred Blog, Craig Medred, September 25, 2017


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Headlamp – My heart will go on for $80,000.

September 25, 2017 | Posted in : News

My heart will go on…for $80,000. The eco-focused Leonardo DiCaprio Foundation has awarded an $80,000 grant to an Alaska group working to protect waters in the southeastern part of the state from Canadian mining projects. The Juneau Empire reports that the grant to the Southeast Alaska Indigenous Transboundary Commission was announced last week, and it was among the more than $20 million in grants the actor’s foundation has given to more than 100 organizations around the world this year. Commission Chairman Frederick Otilius Olsen Jr. says the grant will help the group’s work in unifying the indigenous voice in protecting the environment from industrialization occurring across the border. The commission is made up of 16 federally-recognized tribes, and it’s seeking to reach an agreement with Canada on protecting salmon habitat on shared waters.

A “Very Good Marriage” with China. The US resources-rich state of Alaska sees natural gas as a new catalyst for closer mutually beneficial ties with China, its largest trading partner, a top local executive said. “We feel the Alaska liquefied natural gas (LNG) project is a perfect opportunity for bilateral trade and cooperation between China and America’s largest state,” Keith Meyer, president of the Alaska Gasline Development Corp (AGDC), told Xinhua in a recent interview, together with Alaska Governor Bill Walker, in Anchorage, Alaska’s biggest city. Meyer was talking about a mega-project that involves an 800-mile (about 1,300 kilometers) gas pipeline from the North Slope to south Alaska, where the gas can be super-chilled into LNG and loaded into oceangoing tankers. If built, the state-run project, which is estimated to cost more than $40 billion and would export up to 20 million metric tons per year of LNG to overseas markets. “So we look at the 1.4 billion people in China and their need for the clean burning natural gas that we have,” Walker said, adding that China, now the world’s second largest economy and biggest energy consumer, is moving fast from coal toward cleaner fuels.

The name is Bond. Aurora Exploration has filed petitions with the Alaska Oil and Gas Commission and with the U.S. Bankruptcy Court for the District of Alaska, challenging an AOGCC order requiring a $6 million bond if Aurora Exploration purchases the Nicolai Creek gas field from Aurora Gas. And AOGCC has agreed to reconsider its order. As reported in the Sept. 10 issue of Petroleum News, Aurora Exploration had proposed to AOGCC a $200,000 bond for the eventual plugging and abandonment of the six wells in the gas field onshore the west side of the Cook Inlet. However, AOGCC demanded a $6 million bond, on the basis that each well might cost $1 million to plug and abandon. As an alternative, Aurora Exploration can establish a $200,000 bond if the company also undertakes to plug and abandon three wells in Aurora Gas’s Three Mile Creek gas field, AOGCC has said. Aurora Exploration has no plans to acquire the Three Mile Creek field.

More zinc on the way. After getting off to a relatively slow start, the Red Dog zinc mine in Northwest Alaska is finishing 2017 strong. Teck Resources Ltd., the operator at Red Dog, said it now expects the mine to produce up to 550,000 metric tons of zinc this year, which is about 12 percent more than the company was anticipating at mid-year. Adding to the good news for near-term production at Red Dog, Teck reported promising results from a major exploration program at Aktigiruq, a significant high-grade zinc deposit the company is exploring about 7.5 miles north of the Red Dog mill. “We are pleased with the significant improvements in recovery at our Red Dog Operations in the last few months and consequently production will now exceed previous guidance for the year by approximately 50,000 tonnes (metric tons),” Teck President and CEO Don Lindsay said on Sep. 18. “As well, our exploration results at our nearby Aktigiruq deposit show its potential to be one of the best undeveloped zinc deposits in the world.”

Capped hybrid head tax. Say what? Gov. Bill Walker is proposing a new tax to close part of the gap between what the state government spends and what it brings in. The tax would be a flat 1.5 percent of wages and self-employment income. But there would be a limit in how much anyone pays. No one would pay more than twice what they receive in an Alaska Permanent Fund dividend. State Commissioner of Revenue Sheldon Fisher said the administration decided against asking for more new revenue bills. “We feel like we are most successful – and when I say we, I mean the administration and the Legislature working together – are most successful when there’s a single item of focus,” Fisher said. Both state residents and non-Alaskans working in the state would pay the tax. Administration officials have a mouthful of a name for the tax: the “capped hybrid head tax.” It’s not a true head tax, in which every person pays the same amount.

Murkowski frustrated by roadless rule. U.S. Sen. Lisa Murkowski, R-Alaska, today released the following statement after a judge from the U.S. District Court for the District of Columbia dismissed a lawsuit from Alaskans seeking to overturn the 2001 national Inventoried Roadless Rule. “While I am still reviewing this decision, I am deeply disappointed to see it handed down,” Murkowski said. “A judge can dismiss a case, but Alaskans cannot dismiss the negative impacts the roadless rule is having on our communities. The rule has decimated our timber industry and serves mainly to prevent the access needed to construct everything from roads and power lines to energy and mining projects. I recognize the damage this rule is causing, particularly in Southeast, and will pursue every possible legislative and administrative option to exempt us from it.” The roadless rule was imposed by the Clinton administration just days before it left office in January 2001. It prohibits timber harvesting and road construction on 9.5 million acres in the Tongass National Forest, an area nearly twice the size of New Jersey, and impacts every community and industry in that region. The rule also applies to 5.4 million acres of land in the Chugach National Forest in southcentral Alaska.

XTO works to reduce methane emissions. Exxon Mobil is launching a new program focused on reducing methane emissions and leaks from its U.S. oil and gas production and pipelines. The project is focusing on installing environmentally efficient equipment and more leak-detection sensors throughout its onshore shale oil and gas operations in the U.S. Exxon Mobil’s XTO Energy subsidiary is leading the project. The energy sector – including oil and gas production and coal mining – is the largest source of U.S. methane emissions, which are a major contributor to the planet’s greenhouse gas emissions, according to the U.S. Energy Department. Methane is a primary component of natural gas, and the surging gas production from the shale boom has given rise to increasing methane emissions throughout much of the past 15 years. “We need to minimize our impact on the environment,” said XTO President Sara Ortwein. “Focusing on emissions reductions – and here with methane – is one more step.”

Spill response efforts continue. Response efforts are continuing to clean up a crude oil spill at the Valdez Marina Terminal. Officials with the Alyeska Pipeline Service Company say “crews have recovered approximately 221 gallons of emulsified oil and water, which would indicate a spill larger than initially estimated.” Approximately 185 people have been involved in the response and there are more than 120 responders in the field. Efforts are focused on protecting sensitive areas around Port Valdez that include the Solomon Gulch Hatchery and Valdez Duck Flats – both areas were boomed overnight. Wildlife personnel are on the water and are equipped to respond and shoreline cleanup crews are mobilizing for action later this morning, said the spill fact sheet. The Alyeska Pipeline Service Company says “the source of the spill is secure and contained, and the piping has been flushed with salt water.”

First Reads:

Alaska sees natural gas new catalyst for closer ties with China
China Daily, September 25, 2017

Aurora Exploration appeals AOGCC’s $6 million order for Nicolai Creek
Petroleum News, Alan Bailey, September 14, 2017

Mining News: More Red Dog zinc
Petroleum News, Shane Lasley, September 14, 2017

Walker pitches 1.5 percent income tax with a limit
KTOO Public Media, Andrew Kitchenman, September 22, 2017

Exxon Mobil launches new methane emissions reduction program
Houston Chronicle, Jordan Blum, September 25, 2017

UDPATE: Crews recover around 221 gallons of emulsified oil and water from Port Valdez
KTUU, KTUU Staff, September 22, 2017

Leonard DiCaprio Foundation awards grant to Alaska group
KTUU/Associated Press, September 24, 2017

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

September 22, 2017 | Posted in : News

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

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

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

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

First Reads:

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

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

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

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

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

September 21, 2017 | Posted in : News

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

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

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

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

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

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

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

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

First Reads: 

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

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

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

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

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

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

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

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Headlamp – Meet Alaska’s Senior Climate Advisor.

September 20, 2017 | Posted in : News

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

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

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

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

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

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

First Reads:

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

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

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

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

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

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

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

September 19, 2017 | Posted in : News

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

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

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

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

First Reads:

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

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

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

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

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

September 18, 2017 | Posted in : News

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

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

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

News about the Paris accord: 

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

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

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

First Reads:

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

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

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

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