The House Majority has already rejected the Governor’s compromise, released just yesterday, that includes an Education Head Tax and full funding of Education. In fact, it also fully funds their bloated budget that increased the size of government while the private sector struggles through a recession.
The quote below from House Majority Leader Chris Tuck gives Headlamp readers insight into the absurdity that exists within House leadership:
“We’re still pretty determined on getting our fiscal house in order, and so, I know people look at negotiations as always meeting in the middle, but, that’s not necessarily so,” Tuck said. “You want to set up a situation where it’s a win-win situation for everyone. And the House has done that and now we just need to convince the Senate on how they benefit as well from the package that we put together, and how Alaskans benefit from the package that we put together.”
A few thoughts:
- Tuck – the definition of negotiation is “bargaining to reach agreement.” If you aren’t bargaining you aren’t negotiating. Clearly, the House isn’t bargaining.
- A “win-win” would imply that more than one entity is in fact, winning. Refusing to negotiate and demanding others capitulate is not the definition of win-win.
- The House has had 142 days to “convince” the Senate and Alaskans that their package works and that Alaskans benefit from it. They have failed.
- The majority of Alaskans, according to Dittman Research polls, do not support an income tax or a bloated budget; key components of the House plan. The House Majority’s package doesn’t work for Alaskans.
- The “Alaskans” who support the House deal are supporters of public education, who want more $ for education, and the state employee unions, who want to maintain jobs, benefits and raises. The Governor’s compromise accommodates both of those.
While Headlamp would like to make a plea to the House Majority to actually find compromise and work toward a reasonable solution, we know it would fall of deaf ears. We hope the constituents of those holding up progress (those truly responsible for the pink slips) will let their Representatives know enough is enough.
Another one bites the dust. According to spokesperson Casey Sullivan, Caelus won’t be drilling the appraisal well at Smith Bay this winter for financial reasons. First, oil prices have stayed lower than the company anticipated. Second, Sullivan said the ongoing oil tax policy debate in the legislature made drilling the appraisal well too risky. “Without knowing quite what the rules are or the clarity around funding of past tax credit payments and things of that nature, it just creates a lot of uncertainty,” Sullivan said. “And for a program like Smith Bay, which really is a significant undertaking that takes a lot of front loading and logistics, we really need that sort of certainty to be able pull off a program like that.” Headlamp wishes the House Majority understood basic economics. It’s terrifying to put the future of Alaska’s private sector in the hands of legislators who don’t understand business principals.
It’s a bird, it’s a plane! It’s a ship that can break through 2.1-meter-thick ice with up to 172,600 cubic meters of liquefied natural gas on board. The Christophe the Margerie is the first of 15 ships of the kind made to transport LNG from the remote Yamal LNG project. The carrier, built at the Daewoo Shipbuilding Marine Engineering (DSME) in Korea, sailed to St. Petersburg after weeks of testing in Arctic waters. “The Christophe the Margerie is the most modern ice-class tanker and will become flagship in a fleet of 15 similar vessels, all of them assigned for the grand Yamal LNG project which we are developing together with French and Chinese partners,” Putin said in a ceremony to name the ship. “We expect new perspective and huge projects to be launched in the resource-rich Arctic, some of them in cooperation with our French, Chinese and other foreign partners,” the president added.
Walker Tries To Bring Legislature Together On Budget. Gov. Bill Walker proposed a “compromise fiscal package” on Monday with a sharply reduced income tax in an effort to break the state Legislature’s logjam over a budget and deficit-reduction plan. House leaders said Walker’s compromise proposal would go nowhere in their chamber, arguing that it’s the Senate’s responsibility to come up with a package that fully balances the budget. House leaders say their own proposal, with the $700 million from income taxes, would close the deficit within three years, while Walker’s plan would leave a $300 million gap. Another piece of Walker’s proposal would set the Permanent Fund dividend at $1,000, the level favored by the Senate majority, instead of the $1,250 favored by the House. Headlamp commends the Governor for engaging in the discussion. While we might not agree with every aspect of his plan, his willingness to broker a compromise is commendable. Meanwhile, the House with their punative taxes aimed at destroying Alaska’s private sector, simply continues to disappoint.
Alaskans Mixed On Privatization Of ATC. The President’s announcement yesterday to privatize Air Traffic Control was met with no surprise by Adam White, who manages government and legislative affairs for the Alaska Airmen Association, but he was still disappointed. White agreed that the system needs modernization, but he cautioned that not all privatization stories are positive. He pointed in particular to systems across Europe and in Australia, where he said the general aviation communities were negatively affected by programs that focused on commercial air travel meaning noncommercial pilots end up at the end of the line, considered last in airport efficiency. John Parrott, manager of the Ted Stevens International Airport in Anchorage, said he was heartened to see changes to the makeup of the board in the president’s plan, which he felt was less weighted toward commercial airlines than efforts in the past. Changes are necessary, Parrott said: The FAA has struggled to implement the “Nextgen” air traffic control system upgrade. But the manager said he wasn’t sure that privatizing the system would necessarily solve that problem.
Alaska Dispatch News, Nathaniel Herz, June 6, 2017
Alaska Dispatch News, Erica Martinson, June 6, 2017
Alaska Journal of Commerce, James Brooks, June 5, 2017
Caelus postpones appraisal well for big North Slope oil discovery
Alaska Public Media, Elizabeth Harball, June 5, 2017
At naming ceremony for Russia’s icebreaking LNG tanker, Putin advances vision of Arctic energy future
The Independent Barents Observer, Atle Staalesen, June 5, 2017
House rejects compromise
Juneau Empire, James Brooks, June 5, 2017
Walker’s Infrastructure Wish List includes gas line project. Alaska Gov. Bill Walker has sent President Donald Trump a wish list of projects for inclusion in a potential federal infrastructure package — roads, ports, assistance for the state’s gas pipeline project and cash to relocate rural villages threatened by climate change. The gas line request includes federal loan guarantees, faster environmental permitting and investment for AKLNG, the proposed $43 billion natural gas pipeline and liquefied natural gas export project that would run from Alaska’s North Slope to the Kenai Peninsula.
It’s all in the technique. In Hobbs, New Mexico, Occidental Petroleum Corp. and a few other oil producers have been using a technique that has been heralded worldwide as a way to reduce carbon emissions and boost oil output. “When everyone else in the oil industry was going down, Oxy kept working,” said Joshua Grassham, vice president of Lea County State Bank and a Hobbs Chamber of Commerce board member. The city of 35,000 rests on the Permian oilfield, the largest oilfield in the United States.
Note to Alaska: more rigs = more jobs. American oil producers put up eight drilling rigs this week in West Texas, Colorado and North Dakota, bringing workers back into the oil patch after a job-killing oil bust. By conservative estimates, the surge in U.S. drilling has brought more than 15,000 jobs back to oil patches across the nation — and that’s just the rig crews.
Anchorage sticks with Paris. Anchorage Mayor Ethan Berkowitz is promising to maintain efforts to lower greenhouse gas emissions following President Donald Trump’s decision to pull the United States out of the Paris climate deal, while some advocates question why Alaska Gov. Bill Walker hasn’t approached the issue more energetically. “We’ll continue to address climate change,” Berkowitz said in a phone interview Friday, a day after Trump’s announcement. “And we’re doing it because it is a part of looking out for the future of the local economy and it’s about making sure we’re good stewards of the place we live.” Anchorage hasn’t developed a comprehensive analysis of its emissions or outlined formal targets for reductions. Berkowitz’s pledge came as Walker faces growing pressure from environmental advocates and Democratic legislators for more aggressive state action on climate change. The governor issued a statement Thursday that neither endorsed nor denounced Trump’s proposal, saying that in spite of the withdrawal, “Alaska will continue to work to boost national defense and security measures for our 6,640 miles of Alaskan coastline, increase resilience for Arctic communities and provide energy leadership for the nation.”
Headlamp would note that the United States has contributed $1 billion dollars towards the worldwide effort while large polluters like China and India have made no financial contributions. Dear mainstream media: Take a deep breath. Leaving the Paris climate deal does not mean the United States won’t address climate change.
Alaska Dispatch News, Nathaniel Herz, June 4, 2017
Alaska Dispatch News, Nathaniel Herz, June 4, 2017
Big oil, small U.S. towns see new reward in old production technique
Reuters, Ernest Scheyder, June 5, 2017
Oil jobs rebound as U.S. drilling fleet grows for 5 straight months
Fuel Fix, Collin Eaton, June 2, 2017
Alaska officials show no strong response to U.S. leaving the Paris accords
Alaska Public Media, Rachel Waldholz, June 2, 2017
Oil and gas drives Alaska economy despite decline
KTUU, Blake Essig, June 2, 2017
Energy Industry Data Released. Research and consulting firm McDowell Group released wage and jobs data at the Alaska Oil and Gas Association conference Wednesday in Anchorage. Even with the slight decline, the numbers illustrated the industry’s powerful impact on the state’s economy. Counting public and private jobs supported by the industry’s contracts, taxes and royalties, oil and gas accounted for $6 billion in Alaska wages in 2016, or 35 percent of all wages in Alaska, and 104,000 jobs, or 32 percent of jobs in Alaska. Companies ExxonMobil, Tesoro, Alyeska, BP, and ConocoPhillips combined to spend $4.6 billion with about 1,000 Alaska contractors in 2016, providing critical spending that rippled throughout the economy, resulting in additional jobs and wages. They also paid $2.1 billion in taxes and royalties.
Headlamp hopes that those in Juneau who are saying we are done with our oil economy take the time to read this report.
Tolsona Challenges AOGCC Fine. Tolsona Oil and Gas Exploration, owned by Ahtna, is challenging some of the assertions made by the Alaska Oil and Gas Conservation Commission. Tolsona issued a statement Friday acknowledging “unsuccessful” communication with the agency and its relatively limited experience as a first-time owner and operator of a well. But the company said it has taken “immediate action” to comply with the agency’s May 24 order. The Native Corporation began drilling Tolsona No. 1 well in September hoping to find natural gas to foster new businesses and lower energy prices for its Native shareholders.
No to NATO? Russia announced Thursday that it has beefed up its Northern Fleet’s nuclear capacity to phase “NATO out of [the] Arctic,” according to the state-owned media outlet Sputnik. The Northern Fleet “has received two nuclear-powered submarines — the Yuri Dolgoruky and the Severodvinsk), a diesel-electric one (the Saint Petersburg) and the Yuri Ivanov medium reconnaissance ship,” Sputnik.
Alaska Dispatch News, Alex Demarban, June 2, 2017
Alaska Dispatch News, Nathaniel Herz, June 2, 2017
Alaska Dispatch News, Alex DeMarban, June 2, 2017
Russia’s Northern Fleet beefs up its nuclear capabilities to phase ‘NATO out of Arctic’
Business Insider, Daniel Brown, June 1, 2017
Hope on the Horizon. Expressing greater hope in the future, Kevin Durling, president of Petroleum Equipment and Services, said the number of drilling rigs operating statewide has more than doubled, from a low of four in mid-2016 to nine currently, in part because oil prices have improved. “We’re right in the middle” between the economic downturn and better times, Durling said. His company is a specialty tool provider that relies on rig work. Durling and other industry executives said they are hopeful that potentially large new projects on the horizon, such as discoveries within or near the National Petroleum Reserve-Alaska, would result in new work.
Cleaning up Obama’s EPA Mess. In August 2015, the Environmental Protection Agency was in charge at the abandoned Gold King Mine near Silverton, Colo., when a 3-million gallon flood of dangerous mine waste, including 880,000 pounds of toxic chemicals (lead and arsenic), blasted through the mine’s exit, through a creek, into the river and downstream. Despite then-EPA Administrator McCarthy’s statement that the “EPA is taking responsibility” for the “tragic and unfortunate incident,” it refused to pay the $1.2 billion in claims stating federal law made it immune from liability. Lawyers for the slowly-developing Trump administration made the same argument in filings in February; the issue is now before EPA Administrator Pruitt.
Obama EPA Mess Part 2. The Environmental Protection Agency (EPA) has halted an Obama administration rule to cut down on pollution of methane, a greenhouse gas produced at oil and natural gas drilling wells. The EPA on Wednesday said it had issued a 90-day stay of agency rules designed to limit methane leaks at drilling sites, as well as rules setting standards for equipment and employee certification. President Trump ordered the EPA to reconsider the methane standards in March when he signed an executive order to repeal several Obama administration climate regulations that added cost without adding value.
Zinke declares Alaska “Open for Business.” An order issued by the U.S. Department of the Interior calls for “the clean and safe development of our Nation’s vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation. The prudent development of these natural resources in Alaska and beyond is essential to ensuring the Nation’s geopolitical security.” Interior will review the possibility of increasing oil production in the National Petroleum Reserve-Alaska and begin to assess how much oil and gas could be extracted from part of the Arctic National Wildlife Refuge. The order seeks to revise BLM’s Integrated Activity Plan to evaluate “efficiently and effectively maximizing the tracts offered for sale during the next NPR-A lease sale.” It also tells officials to come up with a plan to measure undiscovered, technically recoverable oil and natural gas resources of Alaska’s North Slope, focusing in part on Section 1002 of the ANWR. Headlamp can’t think of a better place for the Secretary to have signed the order than the Alaska Oil & Gas Association’s annual conference. Alaska needed a win, and yesterday Secretary Zinke delivered.
Energy industry contractors see hope in rising Alaska rig count, new prospects
Alaska Dispatch News, Alex DeMarban, June 1, 2017
The EPA wrecked a Colorado river, then wreaked legal havoc on the affected landowners
The Washington Examiner, William Perry Pendley, June 1, 2017
EPA halts Obama-era rule on methane pollution
The Hill, Devin Henry, May 31, 2017
Order Number 3352U.S. Department of the Interior May 31, 2017
Politico Pro, May, 31, 2017
Alaska Journal of Commerce, Elwood Brehmer, May 31, 2017
Alaska Journal of Commerce, Elwood Brehmer, May 31, 2017
Headlamp congratulates Wackowski! Great news yesterday for Alaskans – Interior Secretary Zinke announced that longtime Alaskan Steve Wackowski will serve as senior adviser for Alaskan affairs. Wackowski worked for the Senate Commerce, Science and Transportation committee and worked for Senator Ted Stevens as well as Senator Murkowski.
OPEC in Deepwater? According to Wood Mackenzie, deepwater oil projects are declining in cost and will become more competitive with shale and could become a challenge to OPEC’s market share. The average breakeven price is expected to fall to $50 by next year, down from $62 in the first quarter.
Let the games begin. Alaska Gov. Bill Walker’s administration emailed nearly 20,000 state workers Tuesday warning they could be temporarily laid off if the Legislature fails to pass a budget before July 1st. State lawmakers, divided over how to fix Alaska’s $2.5 billion deficit, have already missed two other deadlines: the flexible 90-day limit on the regular session imposed by voters, which came and went in mid-April, and the 121-day limit set by the state constitution. The layoff warnings — to be followed with contractually required paper mailings Thursday — are the latest milestone in the Legislature’s march toward the June 30 deadline.
Interior Aims To Put Native-Corps In The Driver’s Seat. Ryan Zinke said the Interior Department needs to look at more opportunities to “get government out of the way” and give Alaska Native villages more input into federal decisions affecting their communities. On Tuesday, Zinke also expressed support for streamlining permitting decisions to put more oil in the 800-mile trans-Alaska pipeline, without relaxing government accountability.
The future’s so bright. Hilcorp is planning to significantly increase their investments in safety and infrastructure inspection. While Hilcorp’s business model in Alaska to-date has been to rejuvenate old fields cast aside by oil majors, the company is gearing up to spend approximately $75 million laying new pipelines on the Cook Inlet floor and converting some existing lines from gas to oil carriers to allow it to close the Drift River oil terminal. When the project is complete — which Hilcorp hopes will happen late next year — oil will flow from its West Inlet Granite Point facility under the inlet directly to Tesoro’s Nikiski refinery via what is now the Cook Inlet Gas Gathering System. On the North Slope, Hilcorp is expecting to see the first draft of an environmental impact statement for its offshore Liberty oil prospect in the next month or so from the federal Bureau of Ocean Energy Management. About six miles offshore in the Beaufort Sea, the company plans to build a gravel island in the shallow water similar to how other nearshore North Slope oil discoveries have been developed. Hilcorp, which bought into Liberty in 2014 as part of a $1.25 billion deal with BP, estimates the long-awaited project could produce up to 70,000 barrels of oil per day at its peak. Headlamp is excited to see this kind of activity and investment in Alaska. More oil. More jobs. More revenue!
Alaska Dispatch News, Nathaniel Herz, May 31, 2017
Alaska Dispatch News, Alex DeMarban, May 31, 2017
Alaska Journal of Commerce, Elwood Brehmer, May 31, 2017
KTVA, Dave Leval, May 30, 2017
Zinke names Alaska adviser
E&E News, Brittany Patterson, May 31, 2017
Now There’s Another Source of Oil That’s Starting to Get Cheap
Bloomberg, Serene Cheong and Sharon Cho, May 30, 2017
Alaska Governor’s Race Re-Election Questions Loom. Gov. Bill Walker has not yet said whether or not he will seek a second term as Governor. Not only will he not say if he is considering a run, but he also has not declared whether he will register as a Republican or Democrat, and run in a partisan primary, or whether he will continue as an independent on a unity ticket – which propelled him to office in 2014. Three potential Republican candidates, Wasilla Sen. Mike Dunleavy, businessman Scott Hawkins and Rep. Mike Chenault, the former House speaker from Nikiski — said in interviews last week that they’re thinking about launching campaigns for Governor in 2018.
Alaska Considers Unique Oil And Gas Exploration Near Talkeetna and Willow. The state has received an application for an exclusive oil- and gas-exploration license in an area of the Susitna Basin mostly west of the Parks Highway near Talkeetna and Willow. The request for the Susitna Valley exploration license is unique because the area that might be opened lies far from Cook Inlet and the North Slope, where oil and gas companies have operated for decades. The 1.5 million acres of state-owned land that Alaska officials are considering making available to exploration falls under a state program designed to encourage prospecting in little-explored regions. State officials have not released the name of the applicant. Headlamp is excited at any new opportunity for responsible resource development and the jobs and revenue that come with the project!
What goes up…May 30 U.S. crude oil prices rose towards $50 per barrel on Tuesday as a strong start to the summer driving season in the United States suggested strong fuel demand in months ahead. U.S. demand for transport fuels such as gasoline used in cars and diesel in buses tends to rise significantly as families visit friends and relatives or go on vacation during the summer months, with the so-called summer driving season officially kicking off on the Memorial Day holiday at the start of this week.
Money for nothing – Juneau-based Lawmakers Still Cashing Checks. Despite the fact the House held one floor session longer than four minutes and no committee hearings, Juneau Democratic Reps. Sam Kito III and Justin Parish both said in phone interviews Friday that they’ll be claiming their taxable $220 daily payments this week — meant to cover lodging and meals — in spite of a slow work schedule. Juneau’s third legislator, Democratic Sen. Dennis Egan, didn’t respond to requests for comment Friday. All three collected the payments during the Legislature’s 121-day regular session. Twenty of the 60 legislators in the House and Senate responded whether they plan to ask for the expense checks this week, with most saying they would only claim them for days they were in Juneau. Headlamp is disappointed to see members of the House Majority who are touting their “Fiscal Responsibility” take per diem for sleeping in their own beds — and not doing any work.
Interior Secretary Visits The Last Frontier. Interior Secretary Ryan Zinke spent Memorial Day weekend on a tour organized by Senator Lisa Murkowski. After attending a rolling thunder ceremony at Byers Lake, he visited Denali National Park on Sunday and Monday. The Secretary’s schedule takes him to Anchorage on Tuesday and Wednesday where he will meet Interior department employees and the Alaska Federation of Natives, a keynote speech at the Alaska Oil and Gas Association’s annual conference and a hike at the Nike Site Summit in Arctic Valley. A joint press release from Alaska’s congressional delegation said stops would also be made later in Prudhoe Bay and Fairbanks.
Alaska Dispatch News, Nathaniel Herz, May 29, 2017
Alaska Dispatch News, Alex DeMarban, May 29, 2017
Alaska Dispatch News, Nathaniel Herz, May 29, 2017
Alaska Dispatch News, Erica Martinson, May 29, 2017
Strong start to summer driving season pushes US oil towards $50
Reuters, Henning Gloystein, May 30, 2017
Headlamp will be back on Tuesday, May 30th.
Over this long weekend we remember, and give thanks for those who made the ultimate sacrifice in service of our country.
California dreamin’. A California-based transportation company has spent more than $700 million to enter the Alaska market over two years by buying up freight companies and upgrading facilities. Officials with Matson on Tuesday said they are taking a long view and are ready to jump at new opportunities in Alaska, including a rebound in oil patch activity if prices rise or, more remotely, if Alaska’s giant gas-export project enters construction. Matson, headquartered in Oakland, California, acquired Horizon Lines’ Alaska operations in 2015 and cargo hauler Span Alaska in 2016. The purchases totaled $669 million. The company slightly boosted its workforce at its Alaska operations following the acquisitions. It now employs more than 300 in the state, officials said.
Lawmakers Look to Energy Industry to Solve Budget Issues. David Williams, president of the Taxpayers Protection Alliance, wrote a piece in the Juneau Empire highlighting the irresponsible spending of the legislature while continuing to place the fiscal burden on the energy industry. Oil and gas is responsible for nearly one out of every three jobs in the state. Ninety percent of the state’s revenues are tied to energy production. House Bill 111, which passed the house in April and was adopted in an amended form last week in the state senate, is now poised to put those jobs and the state’s economy in peril. The tax hike in the House version of the bill is projected to skyrocket from $130 million in 2019 to an astounding $485 million by 2026. A tax increase on energy production would be the seventh change to the state’s energy tax structure in the past 12 years.
Buy low, sell high. President Trump’s plan to sell oil from the US strategic reserve to raise funds could help OPEC rebalance global petroleum markets. Sales could start with $500 million in 2018 and get as high as $3.9 billion in 2027.
Working hard? Or hardly working. While the special session isn’t over yet, the majority of our legislators are headed home in an effort to save the state money. With estimates that special session in Juneau costs around $30,000 per day, Headlamp applauds what should be the first step in practicing what they preach: government efficiency. When conference committees finish their work and all legislators are needed to vote the compromise bills up or down, Headlamp suggests they take their fiscal restraint one step further and hold the meetings on the road system.
Apocalypse Now! The abundance of shale gas in the Marcellus basin has resulted in the construction of dozens of power plants in the region. The problem: not enough electricity demand. “Everything in fossil fuels is for sale,” said Ted Brandt, chief executive officer at Marathon Capital LLC, a mergers-and-acquisitions adviser in Chicago. “People are bleeding.”
Alaska Dispatch News, Alex DeMarban, May 24, 2017
Juneau Empire, David Williams, May 23, 2017
Reuters, Catherine Ngai, May 23, 2017
Special session isn’t over, but lawmakers are headed home
KTVA, Liz Raines, May 23, 2017
Bloomberg, Naureen S. Malik & Brian Eckhouse, May 23, 2017
ANWR Drilling as a means of raising revenues. The Trump administration’s budget document includes a plan to open up Alaska’s Arctic National Wildlife Refuge (ANWR) for oil drilling, and proposes drawing down the nation’s oil reserve — two strategies for raising new federal revenues. According to budget documents proposals to lease drilling sites in ANWR by 2022, something long opposed by Democrats and environmentalists would raise $1.8 billion by 2027. Headlamp is pleased to see the President recognizes the value to the nation of more drilling in ANWR.
Higher taxes aren’t the answer for Alaska. Peter Sepp, President of the National Taxpayers Union, highlighted the budget issues facing the state. Alaska wants to fill a budget deficit created in part by challenging economic conditions for the oil and gas industry by making them more challenging via higher taxes. The revenue windfall for the state would not be huge: around $200 million. But the long-term impact on elements of the industry with poor cash would be, in the words of those who offered the plan, “massively significant.” According to Sepp, this is perversely inefficient and ill-advised tax policy. Effective tax policy drives growth and creates opportunity across all sectors. That leads to a more robust economy, which then leads to more revenue. Headlamp couldn’t agree more. High taxes aren’t effective taxes.
Superior Court Hears Claims of Legislative Building Ownership. The owners of the former Downtown Anchorage Legislative Information Office building contended in a Friday morning state Superior Court hearing that legislators did not afford them appropriate recourse on a $37-million contract claim after the Legislature decided to leave the six-story building last year. Legislators moved out of the Downtown Anchorage building late last September and into Midtown office space purchased for $11.8 million from Wells Fargo via the state capital budget.
The Hill, Devin Henry and Timothy Cama, May 22, 2017
Juneau Empire, Peter Sepp, May 21, 2017
Alaska Journal of Commerce, Elwood Brehmer, May 22, 2017