Morning Headlamp – House Majority tries to hide their behavior. KABATA is dead?

May 9, 2017 | Posted in : News

How low can we go? Job loss and a veto of the Permanent Fund Dividend led to the first drop in personal income in 10 years. Alaska still ranks 8th in its national standing for per capita income. If the House Majority has their way, that ranking won’t last for long. HB 115, their income tax legislation which seems to have the support of the Governor, plans to tax everything that moves or works. 

House Majority blames others for their bad behavior. With 12 days remaining until the Alaska Legislature’s 121-day constitutional limit, the House Majority is attempting, once again, to blame oil and gas tax credits for all of our budget woes. The House’s deficit plan includes spending from the Alaska Permanent Fund’s investments, capping the PFD, INCREASING THE BUDGET,  and an “income tax” bill that includes many other taxes on Alaskans.   The Senate has proposed its own deficit-fighting plan. The Senate Majority’s proposal includes spending from the Alaska Permanent Fund’s investments, capping the PFD and steeper cuts to the budget. The Senate Majority has eliminated all of the oil and gas tax credits – going further than the House did. Headlamp is disappointed in the House Majority’s attempts to mislead the public into believing they have made budget reductions and that the oil and gas tax credit debate still exists. The Governor, the Senate and the House all declared their intent to eliminate the oil and gas tax credits. That goal has been achieved – but the House’s inability to cut one penny from the budget and their desire to get more revenue to support their spending habits forces them to look for someone else to blame for their mistakes. 

A bridge to nowhere. The Knik Arm Bridge and Toll Authority is closing down after more than 10 years of work and millions of dollars in state money spent. Grace Jang, a spokesperson for Governor Walker claims it will free up about $40 million in earmarked federal funds to be used for other projects. The money isn’t in the bank. The funds must be reallocated to transportation project that benefit Mat-Su residents commuting to and from Anchorage.

Omnibus Appropriations Bill includes Alaska priorities. The U.S. Senate passed an omnibus appropriations bill May 4 in a vote of 79-18 that funds major Alaska programs for the remainder of fiscal year 2017 including the Essential Air Service, the Denali Commission and energy assistance grants. Because Alaska is in the midst of a fiscal crisis, Sen. Lisa Murkowski believes the fiscal year 2017 budget infusion will provide a much-needed boost to the economy. “The bill provides new investments for our military, increased funding for fighting wildfires, and it will help Alaskans who grapple with some of the highest heating costs in the nation,” Murkowski said. “This bill empowers Alaskans to strengthen our economy and create safe and healthy communities at a time when we need it most.” Included in the bill is $10.6 million of funding for the Port of Anchorage and nine other Alaska harbors, including $2.4 million for evaluation of a deep draft port at Nome.

No crude leak; corrective order withdrawn. Only three gallons of liquid escaped from one of Hilcorp’s platforms into Cook Inlet in early April. A liquid called natural gas condensate had formed in the line. The federal Pipeline Hazardous Materials Safety Administration has withdrawn a corrective order they issued to Hilcorp after the incident.

 

First Reads

Oil issues stall Legislature

Alaska Journal of Commerce, James Brooks, May 8, 2017

Murkowski: Spending bill funds ‘Alaska priorities’

Alaska Journal of Commerce, James Brooks, May 8, 2017

Only 3 gallons spilled from Hilcorp platform in April…and it wasn’t crude
Alaska Public Media, Elizabeth Harball, May 8, 2017

Personal income in Alaska drops after decade of solid growth
Alaska Dispatch News, Alex DeMarban, May 8, 2017

Walker puts final kibosh on KABATA project
KTVA, Liz Raines, May 8, 2017

Jones Act tanker used to transport oil from Alaska’s North Slope to retire: operator
Reuters, Liz Hampton, May 8, 2017

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Morning Headlamp – More government jobs; more inaccurate information from the state; checkmate, Russia.

May 8, 2017 | Posted in : News

Alaska Employment Shrinks – Local Government Grows. The latest employment statistics released by the Alaska Department of Labor and Workforce Development indicated Alaska shed thousands of jobs over the past year, largely in oil, construction, state government and professional and business services. Three bright spots in their report included job growth in hospitality, healthcare, and local government.

Headlamp anticipates that local property owners in Anchorage who just saw a significant increase in their property taxes will wonder why the city added more than 100 jobs. 

We’re Back!  After several years of decline, Alaska’s mining industry seems to be clawing its way back. With a host of new mining exploration announcements in recent months as many commodity prices recover from a years-long tailspin, industry experts in the state say more companies are eyeing Alaska as a place to spend money prospecting and developing projects. Great news!  Headlamp would point out that mining jobs average over $100,000 in annual salary. 

Hand off to Finland.  The Week of the Arctic gets underway today as more than 1,000 people from around the world arrive in Fairbanks for a meeting that caps off the United States’ chairmanship of the Arctic Council. Fairbanks will host everything from high-level diplomatic talks and detailed policy workshops to public celebrations of culture, science and entrepreneurship in the Arctic. The Arctic Council is an international forum focused on all things Arctic, formed by the United States, Russia, Canada, Iceland, Norway, Denmark, Sweden and Finland. The council has been chaired by the U.S. for the past two years and the chairmanship will be handed to Finland at the ministerial meeting set to take place Thursday.

Inlet Efficiency. Hilcorp Alaska is pushing for a new pipeline project in Cook Inlet to bypass its controversial Drift River Terminal Facility. The proposed plan, which was announced on Thursday, still needs to be approved by regulatory authorities. If approved, it would allow Hilcorp to close down its Drift River Terminal Facility located near the base of Mount Redoubt, an active volcano, and deliver oil straight to the Tesoro refinery in Nikiski.

Better, Faster, Safer.  At the Offshore Technology Conference, the industry’s annual gathering of floating rig and subsea well suppliers, sales pitches this year are all about cost savings and faster time to first production. With U.S. crude priced under $50 a barrel, offshore projects with their typically high costs and long-lead times are now borrowing from leaner shale in the competition for oil company investment.

New Production Estimates Predict State Windfall.new oil production estimate from Alaska Gov. Bill Walker’s administration estimated the state will have an extra $111 million in unrestricted revenue next year. The spring forecast called for a 12 percent decline in oil production in the state’s next fiscal year, even though that figure actually is expected to rise slightly between 2016 and the current fiscal year. Some lawmakers said they were frustrated by the discrepancy, since they’re debating how much in new revenue and spending cuts they need to cover the state’s deficit. The new projections — which the state revenue department was clear to distinguish from an “official forecast” — assume a 4 percent decline, which the state revenue department said is “intended to account more realistically for recent increases in oil production.” The $100 million extra would close a fraction of the state deficit of roughly $2.5 billion. But it could affect the debate over deficit-reduction measures between the Republican-led Senate majority and the largely Democratic House majority coalition. Headlamp shares the frustration of lawmakers. The state’s inability to provide good data leaves a bad taste in everyone’s mouth. 

Get it while you can. The Congressional Review Act gives lawmakers 60 legislative days to undo regulations enacted by the executive branch. Congress had used the obscure law just once before Trump’s tenure. Lawmakers succeeded in putting 13 bills on Trump’s desk to overrule Obama administration rules this year.

Playing chess with Russia? The commandant of the U.S. Coast Guard issued a stark warning on Wednesday that Russia was leagues ahead of Washington in the Arctic. And while the warming Arctic opens up, the United States could be caught flat-footed while other geopolitical rivals swiftly step in.

 

First Reads

Local government was a growth industry in Alaska in 2016. Wait, what?

Alaska Dispatch News, Devin Kelly, May 8, 2017

Cook Inlet oil producer delays planned exploration until tax dust settles

Alaska Dispatch News, Alex DeMarban, May 8, 2017

Updated oil tax numbers from Gov. Walker’s administration boost state accounts by $100 million

Alaska Dispatch News, Nathaniel Herz, May 7, 2017

After years of decline, mining appears to be on rebound in Alaska

Alaska Dispatch News, Annie Zak, May 8, 2017

Week of the Arctic kicks off today
Fairbanks Daily News-Miner, Matt Buxton, May 8, 2017

Hilcorp pushes for new pipeline project in Cook Inlet
KTUU, Blake Essig, May 5, 2017

RPT-Slumping oilfield services sector bets on new offshore technology
Reuters, Jessica Resnick-Ault and Liz Hampton, May 4, 2017

White House faces rough road to deregulation as its favorite tool, the Congressional Review Act, expires
Washington Examiner, Sarah Westwood, May 8, 2017

US COAST GUARD CHIEF: Russia has ‘got us at checkmate’ in the Arctic
Business Insider, Robbie Gramer, May 6, 2017

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Morning Headlamp – Legislative Log Jam in Juneau

May 5, 2017 | Posted in : News

House and Senate – Just Down the Hall But Miles Apart. As the end of the legislative session approaches the House and Senate have varied widely in their approach to the final pieces of legislation on the docket. Since last week, House committees have held hearings on more than 30 bills including bills on legalization of agricultural hemp and the creation of an invasive species response fund. Meanwhile, the Senate has held hearings on two bills since last week — House proposals to increase oil taxes and levy a statewide income tax. Senators have held just one hearing this week, on oil taxes.

Just the facts ma’am. Steven Candito, Board Member and former Chief Executive Officer of the National Response Corporation, set out to clarify some of the inaccurate rhetoric surrounding Alaska’s oil spill response capabilities in his testimony before the Committee on Transport and Infrastructure Subcommittee on Coast Guard and Maritime Transportation this week.

From North Dakota to Illinois. The Dakota Access Pipeline, filling with crude oil in preparation for going into service May 14, should rearrange some crude oil flows and give a boost to the profit margins of oil producers in North Dakota, analysts told Bloomberg BNA. After delays, politics, protests and litigation, the $3.78 billion 1,172-mile pipeline built by Energy Transfer Partners L.P. will move crude from the Bakken Shale region to a pipeline hub in Patoka, Ill.

No wires crossed here. New high speed internet infrastructure is online in the Arctic, with an Anchorage-based telecommunications company poised to connect a handful of coastal villages to fiber optic cables by the end of the year.

Keeping Alaska’s lifeline going. Alyeska Pipeline Service Company announced on Thursday that the trans-Alaska Pipeline System will be closed for 18 hours this weekend starting at 6 a.m. Saturday for major maintenance along the system’s 800-mile route.

Hilcorp Announces $75M investment in terminal closure. Hilcorp has announced plans to close an oil terminal located near the Mount Redoubt Volcano. In a move praised by watchdog groups, Hilcorp Alaska will eliminate both the terminal and the need for Inlet-crossing tankers. David Wilkins, senior vice president for Hilcorp Alaska, told business officials at a Resource Development Council meeting in Anchorage the company will begin seeking regulatory approval for its plan to shut down operations at the Drift River Terminal in the western Inlet. To complete the closure, Hilcorp will need to build about 10 miles of new pipelines, including a subsea section in the Inlet.

Native Corps Allege Payments For Pebble Support. Opponents of the Pebble Mine project allege that the company behind the project is attempting to influence local voices by offering jobs and money. Nunamta Aulukestai, a group of Alaska Native village corporations and tribes from the Bristol Bay region where the mine would be built, said Pebble Limited Partnership lured away its executive director, Kimberly Williams, to a post on an advisory committee the company is organizing.

There’s Gold In Them There Hills…Again. The Lucky Shot Mine is set to reopen in 2018. Alaska Gold Torrent LLC has announced plans to re-open the Hatcher Pass mine. Gold Torrent officials say they hope to hire 85 people at the mill and mine — including some experienced miners they’re bringing in — plus 10 managers for at least four to six years. Lucky Shot last operated at full speed at the start of World War II. Historic records from the Lucky Shot and neighboring War Baby mines indicate the gold “has a high-grade nature to it,” Alaska Gold Torrent CEO Daniel Kunz said. “We’re keying off of that.” Alaska Gold Torrent’s joint-venture partners are Boise-based Gold Torrent Inc. — 70 percent owner — and the Miranda Gold Corp., a Canadian firm.

 

First Reads

Alaska Senate shuts down committees as clock ticks toward Legislature’s next deadline

Alaska Dispatch News, Nathaniel Herz, May 5, 2017

Hilcorp plans $75M project to remove dangers of oil tanks located near Redoubt volcano

Alaska Dispatch News, Alex DeMarban, May 5, 2017

Groups allege Pebble mine developer tried to buy off members

Alaska Dispatch News, Alex DeMarban, May 5, 2017

Historic Hatcher Pass mine could become ground zero for new Willow gold rush

Alaska Dispatch News, Zac Hollander, May 5, 2017

Alaska’s Oil Spill Response Rhetoric Questioned

The Maritime Executive, May 4, 2017

Dakota Access Pipeline Ready to Open for Business
Bloomberg, Alan Kovski, May 4, 2017

TAPS to close over weekend for major maintenance
Fairbanks Daily News-Miner, May 5, 2017

New high speed internet infrastructure goes online in Arctic Alaska
KTUU, Travis Khachatoorian, May 4, 2017

 

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Morning Headlamp – Pipelines, Petro Star and Point Thomson

May 4, 2017 | Posted in : News

Pipeline Permitting Progress. Republicans in the US House of Representatives are dusting off energy bills that died last year as they make a fresh attempt to expedite a permitting process for natural gas and oil pipelines they say takes too long. The bills under consideration include similar language included in legislation the House passed last year but that never became law. President Donald Trump has pushed to accelerate pipeline approvals, but Republicans view their bills as a more permanent fix to what they consider to be a flawed permitting process and avoid the types of issues that delayed the 830,000 b/d Keystone XL pipeline.

Petro Star Comes to Anchorage. Petro Star Inc., a subsidiary of Arctic Slope Regional Corp., will acquire fuel storage Terminal 1 from Tesoro at the Port of Anchorage. Last year, the Alaska Department of Law required the sale of the terminal in order to prevent Tesoro from having a gasoline monopoly. The move by the state came after Tesoro gained more fuel storage in North Pole in a purchase from Flint Hills Resources. The Terminal 1 sale is expected to close in about a month.

What does it all mean? ConocoPhillips has confirmed it’s giving up its small stake in the Point Thomson field on the North Slope. The move has some observers wondering if it’s a bad sign for the state’s effort to build a massive natural gas line.

Alaskans sue the President.  Environmental and Alaska Native groups sued Wednesday to overturn an executive order by President Donald Trump that could lead to expanded petroleum drilling in the Arctic and Atlantic oceans. Trump last week ordered Interior Secretary Ryan Zinke to review an Obama-era plan to permanently ban new offshore oil and gas drilling in the regions.

Give credit(s) where credit(s) is due… Lawmakers in the majority parties in both the House and the Senate seem to agree that the state oil tax credit system needs a change, but exactly what will change is unclear. The House’s bill cut credits that went to legacy fields like Prudhoe Bay. It doesn’t allow companies to dip below the state’s 4 percent minimum tax. And, it axed a credit that companies could trade to the state for millions in cash payments.  The Senate version of the bill also hardens the state’s minimum tax, but it allows companies producing new oil to take credits that would dip them below that minimum. Both the Senate and House versions of the bill have drawn criticism from oil and gas producers who have repeatedly asked lawmakers not to raise taxes during a low oil price environment.

 

First Reads

Petro Star to buy fuel storage terminal at Anchorage port

Alaska Dispatch News, Annie Zak, May 4, 2017

Divisions deepen as lawmakers tinker with Alaska’s oil tax credits

KTOO, Rashah McChesney, May 3, 2017

US House looks to expedite pipeline permitting

Argus Media, May 3, 2017

Conoco gives up stake in North Slope project seen as precursor to gas line

Alaska Public Media, Elizabeth Harball, May 3, 2017

Groups sue to keep drilling ban in Arctic, Atlantic waters

KTVA/Associated Press, May 3, 2017

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Extra Edition – There are Two Sides to Every Story

May 3, 2017 | Posted in : News

The Kenai Peninsula Borough under the leadership of Mayor Mike Navarre, has done an excellent job of providing project updates on AKLNG to the public.

Enter Larry Persily. Persily was Federal Coordinator of the Alaska Natural Gas Transportation Projects from 2010-2015 and now serves the Kenai Peninsula Borough Mayor’s Office as an oil and gas adviser.

He is widely recognized as the local expert on the project and is the author of the project updates.

His latest update comes on the heels of recent presentations by the Alaska Gasline Development Corporation (AGDC) about the project’s status and their optimistic timeline.

Click here to read Larry’s detailed, practical analysis of the project and the reality of the Federal Energy Regulatory Commissions (FERC) timeline.

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Morning Headlamp – 15 wells in the Arctic Ocean; Less regulation, More mines

May 3, 2017 | Posted in : News

Way up North. With the oil industry barely recovering from its most brutal slump in decades, you might expect the Arctic Ocean to be the last place explorers would hunt for new discoveries. The Barents Sea off Norway’s northern tip is different. Norwegian authorities expect companies including Lundin Petroleum AB and OMV AGto drill a record 15 wells in the Barents this year.

If it can’t be grown, it must be mined. Making changes to the City and Borough of Juneau’s mining ordinance would take a long time and a great deal of effort to do, and the city is looking into it. The conversation of amending the ordinance originated from a proposal from five businessmen who approached the Assembly members recently to discuss eliminating parts of the mining ordinance to make it easier for investors to open a mine in Juneau or to reopen the Alaska-Juneau Mine.

ConocoPhillips Leaves Pt. Thomson – Improves Q1 Earnings. ConocoPhillips reported Tuesday it has given up its small stake in the Point Thomson gas field, and said it earned $99 million in Alaska in the first quarter of 2017, not counting the Point Thomson transaction. In reporting its first-quarter income, ConocoPhillips, like Alaska’s other major oil producers, said higher oil prices have boosted its global income. The company held about 5 percent of the Point Thomson field. Conoco’s share went to the other owners, primarily Exxon Mobil Corp. and BP. ConocoPhillips on Tuesday reported $174 million “impairment” associated with the relinquishment at Point Thomson. Before our detractors hold this up as evidence the state is not getting “our fair share,” Headlamp would remind our readers that when oil companies make profits, the state gets more revenue. In fact, the state always gets more!

Legislature Stuck In Neutral on Uber Bill. Senate Bill 14, which would pave the way into Alaska for Uber and other “transportation network companies,” and Senate Bill 63, the smoking ban, passed the Republican-led Senate 14-5 and 15-5, respectively, earlier this year. But as the legislative session drags on past its 90-day deadline, both bills have stalled in the House. Currently SB14 is awaiting action from House Rules Chairwoman Rep. Gabrille LeDoux to send the legislation to the House floor. The sponsor of the House’s version of the transportation legislation, Fairbanks Democratic Rep. Adam Wool, acknowledged that the Senate bill is snarled in end-of-session wrangling between the two chambers — even though, he said, it has more than the 21 votes needed to pass. “It’s held up in rules for political reasons,” said Wool.

Alaska Airlines Posts Profits In Q1. The Seattle-based parent to Alaska Airlines, regional carrier Horizon Air and now Virgin America reported quarterly net income of $130 million excluding merger and fuel hedging costs, according to an earnings report released April 26. By comparison, Alaska Air Group earned $184 million in profits in the first quarter of 2016, just before announcing the deal to purchase San Francisco-based competitor Virgin America in a deal that totaled approximately $4 billion in cash and assumed debt.

First Reads

Earnings improve for ConocoPhillips, which says it has left the Point Thomson gas field

Alaska Dispatch News, Alex DeMarban, May 4, 2017

As lawmakers fight through fiscal crisis, anti-smoking, Uber bills remain stuck

Alaska Dispatch News, Alex DeMarban, May 4, 2017

Alaska Air Group posts $130M profit in first quarter

Alaska Journal of Commerce, Elwood Brehmer, May 2, 2017

Where the Arctic Oil Industry Is Booming

Bloomberg, Mikael Holter, May 3, 2017 

Assembly wants time to consider changing mining ordinance
Juneau Empire, Alex McCarthy, April 30, 17

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Morning Headlamp – A new 5-year plan on the horizon and EPA continues to rain down on Fairbanks

May 2, 2017 | Posted in : News

Federal Spending Bill Could Resolve SE Alaska Logging Dispute. The proposed federal spending bill — on page 904 of 1,665 pages — incorporates Senate Bill 131, a separate piece of legislation from Republican U.S. Sen. Lisa Murkowski that would trade land between the U.S. Forest Service and the Alaska Mental Health Trust Authority. The Authority — a state entity governed by its own board of trustees — had drawn local opposition from Ketchikan and Petersburg residents last year when it advanced plans to log nearby parcels. The Authority uses its vast land holdings to raise money for programs for Alaskans with mental illnesses and disabilities. Murkowski’s proposal, if approved, would include the Ketchikan and Petersburg parcels as part of an exchange. The Petersburg and Ketchikan properties would be added to the Tongass National Forest, while the trust would get parcels that could be logged on Prince of Wales Island, the home of Southeast Alaska’s largest remaining sawmill.

And we’re off…Interior Secretary Ryan Zinke officially began the process Monday to expand offshore drilling for oil and natural gas. At an industry conference in Houston, Zinke signed a secretarial order for the Bureau of Ocean Energy Management (BOEM) to start formulating a new five-year plan for drilling rights sales. Headlamp again applauds Sec. Zinke and the Trump administration for quickly moving forward with their efforts to help the U.S. responsibly develop our natural resources and put Americans to work!

Buy America? Not so fast. A directive requiring U.S. pipeline companies to use American steel and iron in their projects is testing President Donald Trump’s ability to keep his promises to two industries on opposing sides of the issue. In comments to the U.S. Department of Commerce, which is crafting the so-called “Buy American” plan, pipeline companies and their trade groups argued the change would increase costs and disrupt operations. Steel companies, meanwhile, embraced the policy as an opportunity to take advantage of the country’s surging oil and gas production. And Trump has vowed to support both.

Movin’ on up…Governor Bill Walker will be one of 10 Governors serving on a council that focuses on military issues and defense spending. According to the White House President Donald Trump intends to appoint Walker to the 10-member council.

EPA Standards Aim To Control Fairbanks Pollution. The decision by the Environmental Protection Agency downgrades Fairbanks’ status for continuing to violate pollution limits for fine-particle emissions. The agency is boosting the region’s “non-attainment” designation from moderate to serious. A “serious” designation means, for example, that the state must create a new plan by year-end that will seek to employ “the best” technology, such as new, EPA-certified wood stoves that produce less smoke than older stoves, said Suzanne Skadowski, a regional spokeswoman from the EPA in Seattle. The designation means the Alaska Department of Environmental Conservation and Fairbanks North Star Borough, working together on the plan, must review some 160 “best practices” that have been put in place elsewhere around the country, said borough Mayor Karl Kassel.

Polar Bear Habitat Challenge Will Not Be Heard By Supreme Court. The Supreme Court declined Monday to hear a case appealing the federal government’s decision to designate more than 187,000 square miles in Alaska as critical habitat for threatened polar bears. The state of Alaska and the Alaska Oil and Gas Association — joined by Native corporations and local governments — brought lawsuits against the Interior Department to overturn the regulation. But the Supreme Court said it would not accept the case. That means an appeals court ruling backing the U.S. Fish and Wildlife Service’s designation will stand. Headlamp is disappointed in this decision and looks forward to the ninth circuit court going away. Far, far away. 

 

First Reads

New federal spending bill would defuse Southeast Alaska logging controversy

Alaska Dispatch News, Nathaniel Herz, May 1, 2017

EPA sets stricter standards to control Fairbanks air pollution

Alaska Dispatch News, Alex DeMarban, May 1, 2017

Supreme Court rejects case challenging feds over polar bear habitat in Alaska

Alaska Dispatch News, Erica Martinson, May 1, 2017

Interior secretary starts process for offshore drilling expansion plan
The Hill, Timothy Cama, May 1, 2017

Pipeline Companies Push Back Against Trump’s ‘Buy American’ Rule
Bloomberg, Meenal Vamburkar, May 1, 2017

President Trump appoints Gov. Walker to The Council of Governors

KTUU, Ashleigh Ebert, May 1, 2017

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Morning Headlamp – Secretary of State Visits Alaska and AGDC sets sights on 2019 for construction.

May 1, 2017 | Posted in : News

Our cup runneth over – New Projects Could Add Over 100K Barrels by 2021. Since mid-2015, oil explorers have announced three large discoveries on the North Slope that together, if peak estimates are correct, could add 420,000 barrels of oil daily to TAPS. But some of the projects are not expected to be developed for at least five years. Referring to the big discoveries, Paul Decker of the Alaska Division of Oil and Gas said the division feels “pretty solid” about the production estimates at Pikka, a project involving Armstrong Oil and Gas of Denver and Spanish oil company Repsol. In January, ConocoPhillips heralded its Willow discovery in the National Petroleum Reserve-Alaska, saying the field could produce up to 100,000 barrels daily. In addition to those and other long-term prospects, Decker also highlighted about 10 prospects with shorter timelines to production. Those projects could begin producing oil within four years, although some are currently on hold as company profits suffer during the oil-price rout. Two projects that haven’t been postponed, with first production estimated between 2018 and 2021, are Greater Mooses Tooth 1 and 2 on federal land. The two ConocoPhillips prospects could yield between 55,000 and 60,000 barrels of crude daily. Headlamp remains hopeful that Alaska will help bring these projects online with the one thing we can control: a stable tax structure.

Tillerson in the House! United States Secretary of State Rex Tillerson will be in Fairbanks next month during the Week of the Arctic. The Week of the Arctic is a series of events, workshops, and presentations tied to the Arctic Council, an international body representing eight circumpolar nations. The United States is concluding its chairmanship of the council and, following tradition, will host a meeting as the next country takes over. That meeting is scheduled for Fairbanks the week of May 8. Finland is taking over the chairmanship.

Senate stays strong in opposition to income tax.  Higher oil prices have cut the projected gap between what the state government spends and what it raises. Senate Finance Committee co-chairwoman Anna MacKinnon said the state has time to close its budget gap if it passes Senate Bill 26 this year. The measure draws money from Permanent Fund earnings to pay for state government, and limits Permanent Fund dividends. “It is short-sighted to be thinking about an income tax at this point in time,” MacKinnon said.

Mining brings Money to Alaskans.  For the next ten years, the North West Arctic Borough will receive annual payments from Teck Alaska based on a fixed asset value of Red Dog mine. The payments are estimated to be between $14 and $18 million per year. Previous payments were $11.6 million annually. Wayne Hall, superintendent for environment and community relations with Teck Alaska, explains the annual payments to NAB have increased since the previous agreement.

If I had a hammer…Representatives of the Alaska Gasline Development Corporation were in Nikiski on Wednesday evening to present a state-led pipeline mega-project with a different economic approach but few technical changes from its previous incarnation, and few answers to questions of how the project could affect Nikiski. Fritz Krusen, Vice President of AGDC’s Alaska LNG project, said the project aspires to start construction by Jan. 21, 2019.

 

First Reads

New projects could add 100K barrels by 2021, but some are questionable

Alaska Dispatch News, Alex DeMarban, April 30, 2017

Oil prices shrink budget gap, but lawmakers remain far apart

Alaska Public Media, Andrew Kitchenman, April 28, 2017

Northwest Arctic Borough to receive almost $200 million over 10 years from Red Dog Mine
Alaska Public Media, Davis Hovey, April 28, 2017

AGDC shares new plans for LNG pipeline
Peninsula Clarion, Ben Boettger, April 29, 2017

Secretary Tillerson to attend Arctic Council meeting in Fairbanks
Alaska Public Media, Robert Hannon, April 28, 2017

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Extra Edition – Thumbs Up, Thumbs Down for Juneau

April 28, 2017 | Posted in : News

Thumbs Up: Senate majority for refusing to consider an income tax as part of their fiscal plan, choosing to reduce the size and scope of government before taxing Alaskans.

Thumbs Up: Governor Walker for achieving one of the goals from his “New Sustainable Alaska Plan” – oil and gas tax credit reform. The House, Senate and Governor all agree on this and the Senate revised the House bill to eliminate ALL of these credits.

Thumbs Down: Rep. Adam Wool, who said “to hope that production is going to go up is a fallacy” the day after the Department of Natural Resources presented their forecast for more than 100,000 new barrels a day over the next four years – if we don’t price ourselves out of the market.

Thumbs Down: Rep. Les Gara for saying “if you were born with great privilege, you have a moral obligation to chip in…” as a reason why he supports an income tax for the small number of Alaskan workers who would pay it. Headlamp is certain Rep. Gara doesn’t personally know all 100,000 Alaskans he was talking about and therefore must categorize this statement as either hyperbole or a misunderstanding of how hard people work to be successful.  You make the call.

Thumbs Down: Rep. Gabrielle LeDoux for her behavior in the House Rules committee she chairs, for refusing to allow other members to offer amendments, which is SOP, and for forcing her caucus to rein her in and do the right thing. So that’s actually three Thumbs Down.

Thumbs Down: The Office of Management and Budget for releasing a “study” to explain why our state is at the top of the chart below:

The irony of this is OMB has been unable to provide any accurate numbers about state employees for the last several years.   #wedonottrustanynumbersfromOMB

Thumbs Up: Gavel to Gavel for playing the theme music from Game of Thrones at the most opportune times during this session. Headlamp enjoys matching Game of Thrones characters to Legislative personalities.
#musictomatchourmadness

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Morning Headlamp – Investment, Income Tax, Icebreakers.

April 28, 2017 | Posted in : News

Trump reverses Obama on offshore drilling. President Donald Trump has signed an executive order to rollback Obama-era mandates and revise a five-year schedule for auctioning offshore drilling rights with the aim of potentially including territory that was previously deemed off-limits. Trump’s order also seeks to reverse a potentially more enduring decision by Obama to indefinitely withdraw most U.S. Arctic waters and some Atlantic Ocean areas from leasing forever. “It is better to produce energy here under reasonable regulations than to have it produced overseas with no regulations,” Interior Secretary Ryan Zinke told reporters at a White House briefing to describe the order Trump is slated to sign Friday.

Show me the money. Summer promises to be a busy construction season for the Interior due to a series of projects at the region’s two Air Force installations. The projects will inject more than $1.5 billion into the area’s economy. Work is just getting under way on a $22 million building at Eielson Air Force Base that will enable pilots of the new F-35 fighters that are coming here to train in a computer-simulated environment.

The British are coming. Quaterra Resources, Inc. announced that it had signed an agreement with Chuchuna Minerals Co., which is owned by village corporation Kijik Corp. and Alaska Earth Sciences. The agreement gives Quaterra the option to buy a 90 percent interest in the 40,000-acre Groundhog copper prospect, located not far from the embattled Pebble mine prospect.

Mailers target House Majority members who supported Income Tax. An anonymous anti-income tax mailer was delivered across the state this week to the districts of at least four Alaska House members who voted earlier this month to reimpose the state’s income tax. Several campaigns have attacked the income tax proposal, but none of the people or groups behind them took responsibility for the mailers this week. Another income tax opponent, Anchorage investor Bob Gillam, has already run newspaper and online advertisements attacking the proposal, and they’ve included a disclosure identifying Gillam.

Lawmakers meet and adjourn without confirmation votes. The Alaska House and Senate convened together Thursday to take confirmation votes on Gov. Bill Walker’s appointees to lead state departments, boards and commissions — then left without voting. The bizarre development in the House chambers came after the Senate canceled an earlier set of votes on appointees scheduled for April 13, saying they’d take up the nominations later. Walker then issued a formal proclamation Wednesday ordering lawmakers into a joint session Thursday to act on his appointments.

Absolute power corrupts? There are more signs of friction in Juneau this week. The latest example came between two House members, when a seemingly non-controversial committee meeting became anything but. It ended with one lawmaker calling for a reprimand of the House Rules Committee chair, Rep. Gabrielle LeDoux.

US behind in Icebreaker race. Almost a year after the Russian Ministry of Defense announced its plans to acquire a new class of icebreaking Arctic patrol vessels, the keel of the first “Project 23550” multipurpose Arctic patrol ship has been laid.

 

First Reads

Trump to Expand Offshore Drilling, Review Post-Spill Rules

Bloomberg, Jennifer Dlouhy, April 28, 2017

Anonymous mailers target Alaska House members who backed income tax

Alaska Dispatch News, Nathaniel Herz, April 28, 2017

Trump, reversing Obama, will push to expand drilling in Arctic, Atlantic oceans

Alaska Dispatch News, Juliet Eilperin, Brady Dennis – Washington Post, April 28, 2017

Alaska lawmakers meet for confirmation votes on governor’s appointees but leave without voting

Alaska Dispatch News, Nathaniel Herz, April 28, 2017

Construction at area’s Air Force installations to inject $1.5 billion into Interior economy

Alaska Public Media, Tim Ellis, April 27, 2017

British Columbia mining company to fund exploration at Alaska copper prospect

Alaska Dispatch News, Annie Zak , April 27, 2017

Eastman calls for reprimand after LeDoux blocks committee debate

KTVA, Liz Raines, April 27, 2017

Construction begins on Russian Navy’s first Arctic patrol ship
Arctic Now from High North News, Ryan Uljua, April 28, 2017

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