Morning Headlamp — Clinton’s Podesta Emails on Arctic Issues

November 7, 2016 | Posted in : News

Podesta emails reach Alaska. According to recently released emails from Hillary Clinton’s campaign chairman John Podesta, Clinton was not aligned with President Obama on Arctic issues after Obama allowed Arctic drilling to continue in 2015. One of the messages recently posted by WikiLeaks shows how Podesta and Clinton energy policy advisers reacted to  Shell’s announcement last Fall to leave the Arctic. The exchange highlights the “great news” Podesta tweeted, “Shell’s move to halt offshore oil exploration is great news for the climate, the Arctic oceans & the fragile wildlife that calls them home.”  Headlamp is disappointed to see someone so closely aligned with a Presidential candidate turn their back on jobs, tax revenue and national security, suggesting that responsible resource development can’t be done. 

Former Interior Department official David Hayes, also reportedly a Clinton climate adviser referred to the Bush Administration, stating that “Perhaps the best part of this is that the Bush-era leases in the Chukchi and Beaufort Seas that were purchased for $2+ billion in 2006 are now likely to expire before any new finds are confirmed.” Elections matter. 

The Walker administration this week reversed its earlier rejection of a lease transfer between two oil companies, opening the door for ConocoPhillips to expand a North Slope unit and drill an exploratory well according to the Alaska Dispatch News. The reversal of the decision came Thursday, when Natural Resources Commissioner Andy Mack approved the assignment of the leases to ConocoPhillips. The company is pleased with Mack’s decision, said Natalie Lowman, communications director for ConocoPhillips Alaska. “We believe this is the fastest route to developing the acreage,” she said.

Brooks Range Petroleum, eligible for a small slice of revenue if the field goes into production, was also happy. “We’re very pleased with the decision by the commissioner and hope to see activities on the position in the near future,” said Bart Armfield, chief operating officer at Brooks Range Petroleum.

Independent companies, Accumulate Energy Alaska and Great Bear Petroleum, are hoping to tap into easier-to-flow, conventional pools of oil. They won’t be the giant pools Alaska is known for, such as at Prudhoe Bay, but they could boost oil moving through the trans-Alaska pipeline and support the companies’ more ambitious efforts to crack open shale rocks for oil. After completing an exploration well early this year, Accumulate Energy is now asking the state to approve plans to drill another well to conduct more exploration and test well-flow rates, on an existing gravel pad near the Dalton Highway 40 miles south of Deadhorse. The company is operator of state leases extending across 270,000 acres.

Headlamp would like to finish by offering our thoughts and prayers to Gov. Bill Walker and his family following the announcement that he has been diagnosed with prostate cancer. We are glad to hear the situation is manageable and wish him a speedy recovery.

 

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First Reads

WikiLeaks: Clinton Campaign Emails Broke With Obama On Arctic Oil Drilling
Forbes, Tim Daiss, November 7, 2016

Oil company considers North Slope fracking test
Alaska Dispatch News, Alex DeMarban, November 5, 2016

Alaska’s U.S. Senate candidates don’t agree on much
Alaska Dispatch News, Erica Martinson, November 6, 2016

Walker administration reverses course, opens door for ConocoPhillips exploration
Alaska Dispatch News, Alex DeMarban, November 6, 2016

With fracking concerns growing in Alaska, group wants public hearings
Alaska Dispatch News, Alex DeMarban, November 6, 2016

Oil industry bracing for 11th-hour Obama regulations
Washington Examiner, John Siciliano, November 6, 2016

 

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Extra Edition – Alaska’s History – Biting the Hand that Feeds It – Craig Medred For the Win!

November 4, 2016 | Posted in : News

Here are a few excerpts from a powerful piece by Craig Medred, chronicling Alaska’s ability to bite the hand that feeds it – repeatedly:

“At some point someone has to ask what went wrong with what was once a symbiotic relationship between Alaska and Big Oil.”

“Let’s recognize right here that Big Oil is greedy. Exxon-Mobil, BP, and Conoco-Phillips are the engines of capitalism. They exist purely to make money.”

“But let’s also accept that Alaskans are greedy. Every damn one of us.”

 

To read the entire post, click here: The broken marriage

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Friday’s Fast Five

November 4, 2016 | Posted in : News

Top Story of the Week

This week Alaska’s big three producers released their earnings reports, all of which saw a considerable dip in revenue. “While we operated well this quarter, low commodity prices continued to impact financial results,” ConocoPhillips Chief Financial Officer Don Wallette Jr. said. “The environment remained volatile over the quarter and continued to impact quarterly earnings across the sector,” BP Chief Financial Officer Brian Gilvary said. The third major oil company in Alaska, Exxon, told a similar story. Its earnings were down 38 percent compared to the third quarter of last year.

Top Reads of the Week

Coast Guard advances plans to build 3 icebreakers
Alaska Dispatch News, Erica Martinson, October 28, 2016
The U.S. Coast Guard is moving forward on its long-range plan to build new icebreakers, asking potential builders this week to weigh in on their plans and timeline.

Shell sells some swell wells
Alaska Highway News, Nelson Bennett, October 31, 2016

Shell Canada is selling off some non-core natural gas assets in Alberta and B.C., but analysts say that should not be read as the first step towards a complete divestment in B.C. and abandonment of its multi-billion dollar LNG Canada project.

88 Energy Secures Funding, Redesigns Onshore Alaska Shale Oil Well
Natural Gas Intel, Charlie Passut, October 31, 2016
88 Energy said the design for the Icewine No. 2 well had been changed during the third quarter, and will be spud on schedule during 1Q2017.

Quote of the Week

“Why would anyone invest in a state that has one foot over the edge of a precipice and the other standing on a banana peel? – Dave Harbour, former chairman of the state regulatory commission.

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Morning Headlamp — “A lot of projects chasing that gap”

November 4, 2016 | Posted in : News

According to the Alaska Journal of Commerce, the Alaska Gasline Development Corporation is finishing up its negotiations to take over the leadership role on the gasline megaproject, negotiating the transition of project assets from the three producer partners, ExxonMobil, ConocoPhillips and BP. The state-owned corporation is now examining different options for project structure before filing its final application to FERC and is trying to market North Slope gas to worldwide markets, most aggressively in Asia. “There are a lot of other projects chasing that gap, so we’ve got to be competitive,” Alaska LNG Project Vice President Fritz Krusen said. “Second of all … it takes years and years to get there. We have to make a decision to move, to catch that window, fairly soon.”  The difference between a valid pipeline project and a pipedream is a fine line – and Alaska shouldn’t proceed with spending hundreds of millions of dollars on a project that is most likely to fail. 

Friendly neighbors. According to Damian Bilboa, Alaska LNG Business Development Manager for BP, “Without the support of the community, goals remain unfulfilled.” Bilboa penned an op-ed in the Alaska Journal of Commerce emphasizing BP’s commitment to the community at large, specifically graduation rates. According to Bilboa, “High expectations and community support can also enable our children to reach their full potential. That is why I support the 90% by 2020 community effort to improve high school graduation rates in Anchorage and why I am proud to be its co-chair. 90% by 2020 is a unique collaboration to improve high school graduation rates to 90% or above by 2020, and then continue to improve. We do that through a data driven effort to drive improvement in graduation rates.”

According to new findings from the EIA, oil wells drilled horizontally through hydrocarbon-bearing formations are often among the most prolific oil wells in the United States. In 2015 nearly 77% of the most prolific U.S. oil wells, or those producing more than 400 barrels of oil equivalent (BOE) per day, were horizontally drilled wells. For about 85,000 moderate rate wells producing in 2015, defined here as more than 15 BOE per day and up to 400 BOE per day, 42% were drilled horizontally. Of the approximately 370,000 lowest-rate, marginal oil wells in 2015, also known as stripper wells, only about 2% were horizontal wells.

 

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First Reads

When it comes to Alaska LNG project, the big elephant in the room is cost
Alaska Journal of Commerce, Elizabeth Earl, November 3, 2016

Interior race between political veterans could shape Alaska Senate
Alaska Public Radio News, Rachel Waldholz, November 3, 2016

Want something done? Raise your expectations…
Alaska Journal of Commerce, Damian Bilboa, November 3, 2016

State wins fight over attorney fees following ‘bad faith’ decision against Justice Department
Alaska Dispatch News, Alex DeMarban, November 4, 2016

Oil wells drilled horizontally are among the highest-producing wells
US Energy and Information Administration, November 4, 2016

 

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With 19% of the world’s coal, who will be Alaska’s coal champion?

November 3, 2016 | Posted in : News

In Mont. governor race, candidates vie to be coal’s champion
Benjamin Storrow, E&E reporter
Published: Wednesday, November 03, 2016

Montana gubernatorial candidate Greg Gianforte (R) has visited the town of Colstrip six times in the last year. The community of 2,300 might seem like an odd place to mine for votes — but what Colstrip lacks in electoral heft, it makes up for in symbolic importance.

The eastern Montana prairie town is home to the second-largest coal-fired power plant west of the Mississippi River. And like most coal plants these days, its future is very much in doubt. Two of the plant’s four units are scheduled to shut down by 2022 (ClimateWire, April 12).

Gianforte, who is locked in a tight race with Democratic incumbent Steve Bullock, has positioned himself as a defender of the Colstrip power plant and, by extension, Montana’s coal industry. He excoriates Bullock, saying the governor has not done enough to defend the state from the Clean Power Plan, President Obama’s carbon-cutting regulations. The governor’s administration, Gianforte is fond of warning voters, is littered with environmental extremists.

“Unfortunately, we’ve seen outrageous federal overreach through the Clean Power Plan that will have catastrophic impact on Montana,” Gianforte told E&E News, pointing to a 2015 study from the University of Montana, which predicted the regulations could cost the state 7,100 jobs. “It’s prudent to plan for all eventualities, but I’m not giving up on Colstrip.”

In truth, both candidates are coal backers. Both support enhanced funding for carbon capture and sequestration research. Both say they want to streamline permitting for new projects. And both want to keep Colstrip’s four units operating.

Bullock has opposed the Clean Power Plan, questioned a federal proposal to overhaul the royalties that companies pay to mine on public land and pleaded with Washington Gov. Jay Inslee (D) to block his state’s utilities from cutting their ties to Colstrip. He says Gianforte lacks a plan for protecting Montana’s miners and power plant workers.

Heated rhetoric aside, the candidates’ similarities highlight an uncomfortable truth for a state with roughly a fourth of America’s unmined reserves: When it comes to coal, the decisions will largely be made elsewhere.

“We’re dependent on outside interests for these decisions,” said Jerry Johnson, a professor of political science at Montana State University. “I’m not sure we have a lot wiggle room.”

Montana accounts for roughly 4 percent of U.S. coal production, but its reserve base of 120 billion tons of recoverable coal is the largest in the nation. A long line of coal companies have proposed building new mines or expanding existing ones in hopes of reaching those reserves. But those projects’ fortunes are more closely linked to international thermal prices than who occupies the corner office in Helena.

In 2014, roughly a third of the state’s production was sent abroad, according to Headwaters Economics, a Bozeman-based think tank. Seaborne prices collapsed earlier this year, all but bringing thermal exports to a halt, though prices have rebound in recent months. Coal firms, already laboring to shed previous debts, have subsequently shelved or abandoned expansion plans.

Montana’s next governor will also have little say over the Clean Power Plan. The regulation’s legal fate and the outcome of the presidential election will be far more consequential in deciding if Montana has to comply with the emission cuts outlined in the plan.

Even so, the next governor will have to deal with the fallout of coal’s decline. While western Montana’s economy has posted solid growth in recent years, fueled by an infusion of telecommuters, eastern Montana remains highly reliant on resource extraction. Colstrip alone contributes roughly $100 million to state and local coffers annually.

The question is less can Montana save Colstrip and more how does the state manage its decline, said Mark Haggerty, an analyst at Headwaters.

“We think we need to have some kind of plan in place that the people who lose jobs have some access to opportunity that helps them move on and communities have resources to plan for their future,” he said.

Falling coal revenues have contributed to declining tax collections, but Montana is well-placed to ride out a downturn in the coal market, analysts said. Total coal revenues account for 2 percent of all state tax collections.

The political stakes are considerably higher. Colstrip allows Gianforte to paint the governor as an environmentalist beholden to Washington, D.C., said Lee Banville, a journalism professor at the University of Montana and longtime watcher of state politics. For Bullock, Colstrip presents more of a challenge. He must appear pro-coal without losing environmentalists who support regulations like the Clean Power Plan, Banville said.

All the positioning obscures a harder point: Whoever wins in November will be hard-pressed to deliver something more than symbolism to Colstrip.

 

*These quotes come from the following article reprinted from Energywire with Permission from Environment & Energy Publishing, LLC. www.eenews.net 202/628-6500

 

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Morning Headlamp — What should the industry ask Alaska’s U.S. Senate candidates?

November 3, 2016 | Posted in : News

Misery loves company. Following the release of BP, ConocoPhillips and Exxon Mobil’s earnings reports, it’s obvious “you don’t need a business degree to know it’s a rough time to be an oil company.” “While we operated well this quarter, low commodity prices continued to impact financial results,” ConocoPhillips Chief Financial Officer Don Wallette Jr. said during the company’s third-quarter earnings call last week. “The environment remained volatile over the quarter and continued to impact quarterly earnings across the sector,” BP Chief Financial Officer Brian Gilvary said on Tuesday. The third major oil company in Alaska, Exxon, told a similar story. Its earnings were down 38 percent compared to the third quarter of last year. Unfortunately for any future modeling of the situation, forecasters like the U.S. Energy Information Administration don’t expect oil prices to bounce back to 2014 levels anytime soon.

Banana peels and billions of barrels. Forbes recently featured Caelus CEO Jim Musselman and discussed his company’s recent find in Smith Bay. On his 2-billion-barrel discovery, “That [strike is] just the start,” says Musselman, “There’s so much oil yet to be found.” The feature also highlights the difficult regulatory and fiscal environment Alaskan producers continue to face – specifically, grievances with Governor Walker. “What the governor has done is the opposite of what Alaska needs,” says Dave Harbour, former chairman of the state regulatory commission. “Why would anyone invest in a state that has one foot over the edge of a precipice and the other standing on a banana peel? What we need to show investors is that in Alaska a deal is a deal.”  Headlamp applauds Mr. Harbour for clearly stating the issue – and Mr. Musselman for pointing out that more oil can help the state solve its fiscal problems – long term. 

“We can help the state of Alaska solve its fiscal problem for the next three or four generations, if they’ll let us.” Musselman says to Walker: “Don’t spook the money. If you spook the money, they stay spooked.”

The Alaska Dispatch News asked Alaska’s five candidates for Senate a series of questions ahead of next week’s election. We were pleased to see a question addressing the driving industries of Alaska’s economy and that each candidate answered oil and gas as an industry that will continue to lead Alaska for years to come.

 

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First Reads

Alaska’s top oil companies adjusting to low prices
Alaska Public Radio News, Elizabeth Harball, November 2, 2016

Alaska And Oil: A Lesson In Biting The Hand That Feeds You
Forbes, Christopher Helmen, November 2, 2016

Five questions for Alaska’s U.S. Senate candidates
Alaska Dispatch News, Erica Martinson, November 2, 2016

Seaton: Alaska faces dilemma
Homer News, Rep. Paul Seaton, November 2, 2016

 

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Morning Headlamp — Alaska’s Need for Interior Gas Project

November 2, 2016 | Posted in : News

Give the people what they want. According to a Fairbanks Daily News Miner editorial, an interior gas project should be high priority for Alaska in the near future. According to the News Miner, “as oil and gas prices continue to slump and local officials express concern that the project may once again be bogging down, it’s a tough picture for the project. But the goal of long-term, low-cost energy supply for the Interior is one that residents should continue to support…Only five years ago, heating fuel prices were double their current level, with some residents leaving the community or curtailing business plans because of the outrageous cost. The Interior still needs a long-term supply of clean, affordable energy, because it would be just as easy for prices to shoot back up to their former levels.” Headlamp has written before about the folly of pursuing a project that isn’t commercially viable. The delay in the project can only be overcome with government subsidies. 

 

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First Reads

A still-necessary energy solution: Despite doubts, goals of Interior gas project worthwhile
Fairbanks Daily News Miner, October 27, 2016

$50 oil helps BP turn $1.6B profit
Alaska Journal of Commerce, Elwood Brehmer, November 1, 2016

All but one claim against CH2M dismissed in port lawsuit
Alaska Journal of Commerce, Elwood Brehmer, November 1, 2016

Even before the election, Alaska lawmakers are positioning for control of the House and Senate
Alaska Dispatch News, Nathaniel Herz, November 1, 2016

Iceland shows what beats populist parties: Growth and jobs
Arctic Now, Omar Valdimarsson, November 1, 2016

Administration Official Sees Alaska Offshore Drilling Ahead
EOS, Randy Showstack, November 1, 2016

 

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Morning Headlamp — Tourism Surges While Oil Prices Flounder

November 1, 2016 | Posted in : News

Australia’s 88 Energy Ltd. said the design for a well that will target an untested liquids-rich shale play in the onshore North Slope of Alaska has been revised from a lateral to vertical completion, and will be subject to multi-stage stimulation and subsequent flow test. 88 Energy said the design for the Icewine No. 2 well had been changed during the third quarter, and will be spud on schedule during 1Q2017. The well, part of a joint venture (JV) between the junior explorer and Houston-based Burgundy Xploration LLC, will target the Brookian Formation, which is adjacent to the Prudhoe Bay reservoir.

Come one come all. The number of tourists visiting Alaska continued climbing in 2016, according to preliminary numbers. But industry leaders say a drop in state support for marketing could hurt visitor businesses. Any optimism however was tempered by the effect of the state’s ongoing financial woes, which are tied to the oil industry. Headlamp is thrilled Alaska had another banner year for tourism. However, most Alaskans know that without a vibrant oil & gas industry, which requires a healthy investment climate, our whole state struggles. Local businesses see declines in revenue, and worry about higher taxes when the state faces budget deficits. We’ll repeat it again: more oil in the pipeline helps all Alaskans, and that should be a focus for all policy makers.

Earlier this week, Tourmaline Oil Corp. (TSX:TOU), an Alberta oil and gas company, announced it had struck a deal with Shell to acquire $1.4 billion worth of its natural gas assets in Alberta’s Deep Basin and in Northeastern B.C.’s Montney formation. The assets in B.C. are sizeable – 220,000 acres of gas leases – much of it undeveloped. “Shell is still quite keen on the Montney,” said Wood Mackenzie analyst Michael Hebert. “They still have over 200,000 acres in the Montney, so they can provide any kind of feedstock for LNG in the future.”

 

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First Reads

Shell sells some swell wells
Alaska Highway News, Nelson Bennett, October 31, 2016

Alaska tourism numbers up but leaders wary of less marketing
Fairbanks Daily News Miner, October 31, 2016

Native Americans Join Coalition Seeking Federal Leases for Oil and Gas Production at Alaska’s North Slope
CNS News, Penny Star, October 31, 2016

88 Energy Secures Funding, Redesigns Onshore Alaska Shale Oil Well
Natural Gas Intel, Charlie Passut, October 31, 2016

 

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Obama Administration attempts “Death by Regulation” for the Arctic: Elections Matter for Arctic Development

October 31, 2016 | Posted in : News

From a Greenwire story published on Friday, October 21st:

“The Obama administration is advancing a plan that would limit exploratory drilling and seismic surveys in the Arctic, in an effort to minimize impacts on marine mammals, subsistence hunting and the physical environment.

The final environmental impact statement analyzes the “potential direct, indirect, and cumulative impacts” of oil and gas activities in the Arctic Ocean, according to a notice in today’s Federal Register. The document details six alternatives, including a “preferred alternative” that would limit seismic surveys to seven per year and exploratory drilling programs to two per year.

The EIS’s preferred alternative would allow up to four seismic surveys annually in the Beaufort Sea and three in the Chukchi Sea, with only one in each sea that involves ice breaking. One exploratory drilling program would also be allowed in each sea.”

The Obama administration’s “preferred alternative” is the most restrictive alternative. Being even more restrictive than the Obama administration’s new safety and environmental regulations announced in July, to control offshore drilling in the Arctic Ocean off the Alaskan coast.

One rig per basin per year. Other alternatives would allow up to 11 total seismic surveys and eight exploratory drilling programs.

The administration attempts to justify this choice by claiming that it correlates to the expected amount of activity for the area, suggesting that if more activity were to occur, other alternatives could be explored.  Headlamp is not confident that an anti-development administration would follow through on this commitment. 

This EIS comes as the Obama administration considers whether to include Arctic leases in its 2017-2022 oil and gas leasing program. The draft plan includes three leases off Alaska, but environmental groups have urged the administration to remove them all, saying any new drilling would thwart the Paris climate agreement.

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Morning Headlamp — Latest Arctic Developments Long Overdue

October 31, 2016 | Posted in : News

Come sale away. The state is conducting an annual lease sale in the Beaufort Sea and North Slope that could provide clues about how the industry views oil opportunities in the state. The state’s sale, announced Friday, will conclude Dec. 14 when officials publicly open bids. Bids will be accepted until Dec. 12. The sale comes amid growing interest over a different lease sale proposed for federal waters of the U.S. Arctic Ocean; with pro-development forces concerned the federal government will not allow sales in the Beaufort and Chukchi seas in its 2017-22 program. The sale also comes quickly following large finds from Caelus and Armstrong. More oil in the pipeline is good for all Alaskans. 

Common ground. Four of Alaska’s five U.S. Senate candidates found a lot to agree on in the state’s first Arctic debate in Barrow. The four candidates “will probably agree on lots of things,” independent Margaret Stock said at the start of the debate. “I think we’ll agree that the federal government should be paying more attention to the Arctic. I think we will agree that the federal government should be increasing its research on the effects of climate change on subsistence, on resource development and on national security in the Arctic. I think we will agree that the federal government should be building more icebreakers.” The group broadly agreed that the U.S. needs more focus on national security in the Arctic, given recent Russian aggression in the region.

A dream come true. The debate was well-timed as the U.S. Coast Guard announced it is moving forward on its long-range plan to build new icebreakers, asking potential builders this week to weigh in on their plans and timeline. The U.S. has only two heavy-duty icebreakers. One, the Polar Sea, is unusable and all but scrapped, while the other, the Polar Star, is dedicated to scientific missions in Antarctica. A third icebreaker, the medium-duty Healy, travels in the Arctic mainly as a research ship.

 

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First Reads

State lease sale announced on heels of 2 large oil discovery announcements
Alaska Dispatch News, Alex DeMarban, October 30, 2016

Here’s what Alaska’s US Senate candidates had to say at the first-ever debate in the Arctic
Alaska Dispatch News, Erica Martinson, October 28, 2016

Coast Guard advances plans to build 3 icebreakers
Alaska Dispatch News, Erica Martinson, October 29, 2016

Time for Walker to change course
Alaska Journal of Commerce, Jonathan Katchen, October 30, 2016

 

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