Headlamp – Alaska needs Armstrong, Tesla needs Alaska, Alaska LNG needs…

September 5, 2017 | Posted in : News

Do we make up or break up? For the last two months, the state’s gasline corporation has asked potential customers and investors in the state-led project to formally show interest in the massive pipeline project, without being bound by a contract. It’s called an open season, and it has been a chance for the state to get an idea of just how much the global market wants Alaska’s gas. And while the state corporation and the governor are optimistic, some lawmakers aren’t sure there has been enough interest to continue pouring state money into the $45 billion project. Last year, Gov. Bill Walker told a reporter at the Alaska Dispatch News that he would give the state-run LNG pipeline project a year to find its footing and a market for the state’s North Slope gas reserves. Headlamp would note that Friday, September 1st was the deadline. Where do we go from here?

EPA takes it away. The Environmental Protection Agency has taken the unusual step of putting a political operative in charge of vetting the hundreds of millions of dollars in grants the EPA distributes annually, assigning final funding decisions to a former Trump campaign aide with little environmental policy experience. In this role, John Konkus reviews every award the agency gives out, along with every grant solicitation before it is issued. According to both career and political employees, Konkus has told staff that he is on the lookout for “the double C-word” — climate change — and repeatedly has instructed grant officers to eliminate references to the subject in solicitations. Konkus, who officially works in the EPA’s public affairs office, has canceled close to $2 million competitively awarded grants to universities and nonprofit organizations. Although his review has primarily affected Obama administration priorities, it is the heavily Republican state of Alaska that has undergone the most scrutiny so far. Headlamp would certainly hope that ENGO’s who have previously received “grants” from the EPA and used the funds to advocate against jobs in Alaska are on the list.

Armstrong poised to add 120,000 barrels of oil. An independent oil company has made ambitious plans to produce oil from one of the three large discoveries that explorers have made in recent years on Alaska’s North Slope. Now, the U.S. Army Corps of Engineers is taking comments on the project, which includes filling some federally protected wetlands. Denver-based Armstrong Oil and Gas wants to drill up to 146 production and injection wells at its Pikka field, producing up to 120,000 barrels of oil daily, according to a permit application filed with the Corps. The field could be Alaska’s biggest oil producer since ConocoPhillips’ Alpine development began producing oil 17 years ago. Peak production there reached 139,000 barrels of oil daily, in 2007.

Tesla needs Alaska Miners. Morgan Stanley predicts more than 1B electric vehicles will be on the road by 2050, and Tesla’s success is a major reason why after showing that “the consumer preference for internal combustion engines can be swayed.” “The Tesla Model S has taken a 30% share in the $100K-plus U.S. luxury market, and with over 400,000 orders in less than a month after initial launch, the Tesla Model 3 launch also suggests there is plenty of consumer demand for the right electric vehicle product at the right price,” Stanley analysts write.

UAF leads nation with clean coal example. The nation’s only coal-fired power plant currently under construction is being built at the University of Alaska Fairbanks, a distinction that highlights the steep challenges facing the coal industry in Alaska and nationally — even as President Donald Trump fights to revive it. The small, $245 million effort, set for completion in late 2018, will replace the university’s old and troublesome coal-fired boilers with a cleaner-burning system that provides heat and power campus-wide. It will make a potentially catastrophic midwinter shutdown far less likely than the old plant, university officials say. And it will reduce emissions of air pollutants, including climate-altering carbon and the fine particulates that have pushed Fairbanks air pollution past federal health levels.

Seismic data goes public. The state is planning to release a trove of seismic data from oil exploration surveys as early as mid-September that cost many millions of dollars to collect in an unusual step aimed at attracting new exploration on the North Slope. The release of the seven seismic reports, associated primarily with past North Slope exploration, is required for projects that benefited from Alaska tax credits. The requirement was created in 2003, but seismic information can’t be released under the program until 10 years have passed since its collection.

An ounce of prevention…In late July, the Aqua-Guard Triton RotoX dipped into the icy Beaufort Sea. The goal was to test whether the prototype could clean up an oil spill in the Arctic. The oil skimmer, which was remotely controlled from the deck of the icebreaker Coast Guard Cutter Healy, is one of many technologies being examined by the U.S. Coast Guard’s research and development program. The Canadian-designed RotoX was made to skim oil off Arctic water littered by broken sea ice — the very problem that environmental groups say should preclude oil development in offshore Alaska. The test comes as Arctic waters become clear of ice because of climate change. As the region warms faster than any other in the world, different industries — from oil production to defense to tourism — are eyeing the newly accessible seaways.

No NAFTA? No way! As NAFTA negotiations resume Friday, oil industry leaders are desperate to preserve the 23-year-old trade deal that drove a North American oil and gas renaissance and paved the way for $34 billion worth of energy exports to Canada and Mexico last year. “Any changes that disrupt energy trade across our North American borders, reduce investment protection or revert to high tariffs and trade barriers that preceded NAFTA could put at risk the tens of millions of jobs,” said the top oil and gas trade groups from the U.S., Canada and Mexico in a joint position paper released last month.

Energy dominance without Alaska LNG? The Energy Department is proposing to streamline the approval process for companies that want to carry out “small-scale” exports of liquefied natural gas (LNG). Under a proposal published Friday in the Federal Register, companies would get automatic approval of gas export applications as long as the proposed exports are 140 million cubic feet per day or less and the Energy Department does not need to do an extensive environmental review. The proposal comes as the Trump administration seeks to ramp up exports of fossil fuels produced in the United States under President Trump’s “energy dominance” agenda.

First Reads:

As the state’s gasline corporation hopes for investment interest, lawmakers look for answers
Alaska Public Media, Rashah McChesney, September 1, 2017

EPA now requires political aide’s sign-off for agency awards, grant applications
The Washington Post, Juliet Eilperin, September 4, 2017

Corps taking comments on big North Slope project proposing 146 wells
Alaska Dispatch News, Alex DeMarban, September 3, 2017

Oil field data worth millions of dollars is about to be made public
Alaska Dispatch News, Alex DeMarban, September 4, 2017

Tesla’s success one reason Morgan Stanley foresees 1B electric cars by 2050
Seeking Alpha, Carl Surran, September 1, 2017

There’s only one coal plant being built in the nation, and it’s at UAF
Alaska Dispatch News, Alex DeMarban, September 4, 2017

Coast Guard tests new oil spill technology as Arctic waters open up
Alaska Dispatch News, Kelsey Lindsey, September 3, 2017

Oil Firms That Cheered Regulatory Cuts Are Quaking on Nafta
Bloomberg, Jennifer Dlouhy, September 1, 2017

Energy Department wants to speed ‘small-scale’ natural gas exports
The Hill, Timothy Cama, September 1, 2017

Alaska uses Exxon Valdez settlement funds to preserve land
The Associated Press, September 2, 2017

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Headlamp: Walker’s busy Thursday – rejection, special session, court motion

September 1, 2017 | Posted in : News

Headlamp wishes you a safe and fun Labor Day weekend. We’ll be back on Tuesday, September 5th!

Forth time’s a charm? That’s not the saying Governor. Gov. Bill Walker said Thursday that he will call the Legislature back for a fourth special session primarily focused on revenue. The session would convene on Oct. 23 in Juneau. Walker did not say what revenue options he’ll put on agenda for the session. There is a $2.36 billion gap between what the state spends and what it raises in taxes, fees and oil royalties. The Legislature has used savings to close that gap the last three years. Walker said in a statement: “We cannot continue to rely on the volatility of oil prices to fund classrooms, roads and troopers.” Members of the mostly Democratic House majority said they’re willing to consider what Walker proposes.

And the hits just keep coming… On Tuesday, the Walker administration denied a proposal by ExxonMobil Corp. to expand oil production at the Point Thomson field, calling it “vague” and asserting the oil giant is not meeting the terms of a 2012 settlement that allowed it to keep operating there. The rejection by Division of Oil and Gas Director Chantal Walsh comes after the state struggled for decades to force ExxonMobil to develop the field, located just west of the Arctic National Wildlife Refuge in northeast Alaska.

All aboard? Not so fast. A month after lawmakers wrapped up a third special session, Gov. Bill Walker is calling them back for a fourth. This time, on raising new revenues — which could mean a statewide tax. Earlier this year, the Senate voted down an income tax Walker supported. “We’ve been clear that spending cuts, a spending limit and no income taxes are very important to us — and our position won’t change much on that,” said Senate President Pete Kelly (R-Fairbanks). “Unless there’s something new, it might be a waste of time. If we’re just going to rehash old stuff, I don’t see things changing much.”

Will he or won’t he? Mark Begich in an interview with Channel 2 News sounded like he is gearing up to run for governor, but the former U.S. senator said he is in no hurry to make a firm decision. The Democrat is the most prominent member of his party in Alaska, and what he settles on in the end will have big implications for a race that will be difficult to predict under almost any scenario. Gov. Bill Walker was elected in 2014 as an Independent with support of the Democratic Party, and he is attempting to follow a similar path to another term.

Let’s go back to the way it was. The State of Alaska is going to stand by President Donald Trump’s side in court to defend an order aiming to reopen large parts of the Arctic Ocean to oil drilling. Today, Gov. Bill Walker’s administration filed a motion to intervene in support of President Trump in a lawsuit over whether he can reverse President Obama’s Arctic drilling ban. In the waning weeks of his Presidency, Obama removed the Chukchi Sea and most of the Beaufort Sea from any future oil leasing. Then in April, President Trump signed an executive order to reverse that decision. Soon after that, a coalition of environmental groups filed a lawsuit against the Trump administration, claiming the reversal is illegal.

Thank you for your service? Secretary of State Rex Tillerson wants to do away with special envoys focused on the Arctic and climate change, as part of his effort to overhaul the State Department. The proposal comes just months after Tillerson visited Alaska and spoke about the importance of the Arctic. Some worry it’s a sign the Trump administration will be less engaged in the region. Tillerson came to Fairbanks in May to hand over the chairmanship of the Arctic Council, the main organization for cooperation among the world’s eight Arctic nations.

We have a quorum. On August 4, the Senate confirmed the nominations of Neil Chatterjee and Robert F. Powelson to fill two of the four open seats on the Federal Energy Regulatory Commission (FERC), ending a six-month, no-quorum period. FERC entered a no-quorum period in February of this year when the number of commissioners fell below the required minimum of three. With a voting quorum reestablished, the commissioners can begin issuing certifications for natural gas pipeline projects and considering other backlogged orders and issues. The first commission meeting, open to the public via webcast, will be held on September 20.

Strength in numbers. Four members of the Outer Continental Shelf Governors Coalition called on the US Department of the Interior to include all leasing options in the 2019-24 Outer Continental Shelf program that are being developed, “understanding that circumstances affecting leasing decisions could change during the course of the program’s development and implementation.” Access to offshore energy resources will allow coastal states and communities to realize significant opportunities, Gov. Paul R. LePage (R-Me.), the coalition’s chairman, and Govs. Phil Bryant (R-Miss.), Kay Ivey (R-Ala.), and Bill Walker (I-Alas.) said in their Aug. 17 letter to US Interior Sec. Ryan Zinke.

First Reads:

State rej ExxonMobil plan to expand oil production at Point Thomson
Alaska Dispatch News, Alex DeMarban, August 31, 2017

Gov. Walkerays fourth special will be in October, focus on revenue
Alaska Public Media, Andrew Kitchenman, August 31, 2017

Senate President on 4th special session: ‘It might be a waste of time’
KTVA, Liz Raines, August 31, 2017

Mark Begich sounds like he wants to run for governor, but no firm decision yet
KTUU, Austin Baird, August 31, 2017

Walker lends support to Trump in lawsuit over Arctic drilling
Alaska Public Media, Elizabeth Harball, August 31, 2017

Tillerson proposes scrapping Arctic and climate envoys
Alaska Public Media, Rachel Waldholz, August 31, 2017

Federal Energy Regulatory Commission (FERC) regains quorum
U.S. Energy Information Administration Natural Gas Weekly Update, August 31, 2017

Four coastal state governors express support for more OCS leasing
Oil & Gas Journal, Nick Snow, August 21, 2017

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Headlamp – Drug testing legislators? Justin Parish says “yes.”

August 31, 2017 | Posted in : News

Drug testing legislators? Mendenhall Valley’s representative to the Alaska Legislature still believes Alaska needs a “light income tax” to fix its multibillion-dollar deficit. Rep. Justin Parish, D-Juneau, addressed a small crowd Tuesday night at the Mendenhall Valley Public Library in a town hall billed as an update on the legislative session. “It’s my conviction that we should pay for our government rather than kicking it down the path,” Parish said. “I’m convinced, as I was from the time I ran, that the wisest course would be to implement a light income tax.” During the discussion on dividend cuts, a Valley resident reacted with incredulity: “Do they take drug testing on legislators?” “It seems perfectly reasonable if we could find the funding,” Parish said.

We are an Arctic nation – Icebreakers, please. U.S. Coast Guard Commandant Adm. Paul Zukunft has one very clear message: the country needs more icebreakers. Zukunft reiterated that point during an Aug. 24 speech to members of the Alaska policy nonprofit Commonwealth North in Anchorage. He recalled a conversation he had with then-National Security Advisor Susan Rice when Rice asked him what President Barack Obama should highlight shortly before the president’s extended trip to Alaska in late August 2015. “I said (to Rice) we are an Arctic nation. We have not made the right investments and we do not have the strategic assets to be an Arctic nation and that translates to icebreakers and that’s almost exactly what President Obama said when he came up here,” Zukunft said.

Strategic Petroleum Reserve to the rescue. The Department of Energy said Thursday it will ship crude oil to a Louisiana refinery in a bid to prevent gasoline prices from spiking after Hurricane Harvey left much of the Gulf Coast’s fuel-making capacity paralyzed. The move by the DOE comes as President Donald Trump has raised expectations this week that Washington would move quickly to address the disaster in Texas, telling an audience in Corpus Christi on Tuesday, “We’re going to get you back and operating immediately.” The Energy Department’s release from the its Strategic Petroleum Reserve — its first since 2012 — comes amid rising fears that Harvey might cause sharp spikes in gasoline prices as the refineries clustered along the Texas and Louisiana coast struggled to restart after being pummeled by several feet of rain.

The sound of silence. The Interior Department inspector general’s office has dropped an investigation into whether the Trump administration pressured Alaska GOP Sens. Lisa Murkowski and Dan Sullivan over their health care votes. A pair of House Democrats had sought the investigation over phone calls Interior Secretary Ryan Zinke made to the senators. Zinke reportedly suggested Alaska could pay a price if they crossed President Donald Trump on the GOP’s plan to repeal President Barack Obama’s health care law. Deputy Inspector General Mary Kendall wrote that her office “does not believe it could meaningfully investigate the matter further” because Murkowski and Sullivan declined to provide statements or be interviewed. Sullivan voted in favor of the GOP health repeal bill that failed in late July, while Murkowski was opposed.

A big comeback. The U.S. E&P industry has survived an agonizing downturn, and now it seems poised to make a comeback. A rapid run-up of drilling activity in some parts of the U.S. suggests that companies have found ways to operate new wells profitably with oil prices that have, so far, been sustainably higher than what the industry experienced in 2016. OPEC’s move to muster an oil output cutback—among its member countries and other large producers—also has played a part, propping up oil prices high enough for shale operators to rally. One obvious indicator of American activity this year is the Baker Hughes U.S. rotary rig count, which stood at 958 active units on July 28. The current total is more than double what was counted a year ago, representing an increase of 495 working rigs.

First Reads:

Coast Guard commandant keeps up push for icebreakers
Arctic Now/Alaska Journal of Commerce, Elwood Brehmer, August 31, 2017

Energy Department taps petroleum reserve amid fears of gasoline price spike
Politico, Ben Lefebvre, August 31, 2017

The Latest: Interior drops probe into secretary, senators
The Associated Press, Alan Fram, August 30, 2017

U.S. operators are teed up for a drilling resurgence
World Oil Magazine, Alex Endress, Craig Fleming, Kurt Abraham, August 2017

At town-hall meeting, Parish advocates state income tax
Juneau Empire, James Brooks, August 31, 2017

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Headlamp – In the midst of fiscal crisis, Governor flies ENTIRE cabinet to Bethel.

August 30, 2017 | Posted in : News

Actions speak louder than words. For the better part of three years, Headlamp has been listening to Governor Walker describe the fiscal crisis that exists in Alaska, but has been skeptical of his actions to support the claim. His “hiring freeze” has never really existed. His office has paid hundreds of thousands of dollars to special consultants. And travel restrictions were put in place, yet according to this press release, the Governor chose to fly his entire cabinet (24+ people) to Bethel for a meeting.

Flooding shuts down refinery. The largest crude oil refinery in the United States was shutting down on Tuesday night due to flooding from Tropical Storm Harvey in its 603,000 barrel-per-day (bpd) Port Arthur, Texas plant, said sources familiar with operations. The refinery’s owner, Motiva Enterprises [MOTIV.UL], said the refinery was operating at 40 percent capacity on Tuesday evening. Earlier in the day, the refinery was operating at 60 percent of its capacity, the company said.

More, please. 3.6 billion more barrels of oil. It is estimated 40% of the entire undiscovered recoverable oil and gas of the United States lies in Northern Alaska with an estimated 30 billion barrels of oil resources waiting to be discovered. In addition to recent finds, there is currently a project underway in Alaska which has the possibility to become one of the most significant oil discoveries for a London listed stock in recent years. This project is being led by 88 Energy , who is pushing forward with the Icewine project covering some 690,000 gross acres and in the process, hoping to prove there is 3.6 billion recoverable barrels of oil. Achieving this would be monumental not only for the Alaskan oil industry but for the stakeholders of 88 Energy. The Icewine project is targeting the HRZ shale play which has laid largely untouched since Alaska’s oil boom in the 1970’s and 88 Energy hopes to reignite this boom by proving the viability of what would be the second largest field in the area.

If you can’t beat em…. change your name? The Alaska Democratic Party voted last year to change its rules to allow independents to run for its nomination for office. But state officials blocked the move. Now both sides are in court over the issue. The proposed change would allow the party to support a candidate without having the word “Democratic” appear on the ballot by the candidate’s name. Alaska Democratic Party Executive Director Jay Parmley said there have been multiple times when local Democrats endorsed independents when there were no Democratic candidates. “We believe that there are certain circumstances where there are candidates who would like the Democratic Party’s support, but they would like to remain as an independent,” he said. “They are progressive.”

All hope is not lost. After years of steady decline in production and bottomed-out oil prices, Alaska is in a rough spot. They’re over a billion dollars in debt, in large part thanks to unfulfilled cash incentives to oil companies, and now many of their remaining oil producers are pulling out at the same time that the North Slope and Cook Inlet oil fields face thousands of layoffs. Over the last three decades the Trans-Alaska Pipeline System, which peaked back in 1988, has been steadily draining. Where 2.1 million barrels oil once flowed through daily, now 500,000 barrels trickle through. Older oilfields in Alaska’s oil-rich North Slope have long since been drilled dry, with onetime powerhouses like Prudhoe Bay, the Kuparuk River and the Alpine now nearly out of commission.

First Reads:

Largest U.S. crude refinery shutting due to Harvey: sources
Reuters, Erwin Seba, August 29, 2017

88 Energy – one of the most significant oil discoveries of recent years?
UK Investor Magazine, August 30, 2017

Alaska Democrats seek chance for independents to run in party primaries
Alaska Public Media, Andrew Kitchenman, August 29, 2017

Alaskan Oil Returns With A Vengeance
OilPrice.com, Haley Zaremba, August 30, 2017

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Headlamp – Violent ENGO Actions don’t go unnoticed.

August 29, 2017 | Posted in : News

Violent ENGO actions don’t go unnoticed. Judicial Watch announced on Wednesday it filed suit against the Department of Defense and Army Corps of Engineers, seeking to obtain communications between government officials in the Obama administration and environmental groups related to protests last year opposing the Dakota Access pipeline. The conservative watchdog group’s Freedom of Information Act lawsuit, filed June 29 in the U.S. District Court for the District of Columbia, charges that the Obama administration and environmentalists worked “hand-in-glove” to try to stop the pipeline’s construction and asks to review communications between the two camps to prove it.

$1 Trillion with a capital “T.” Just how big are the overall expectations for the Arctic? Guggenheim Partners, a U.S.-based advisory and infrastructure-financing firm, put the region’s potential at around $1 trillion. The Arctic is vast – a region of panoramic expanses and glittering landscapes that spans the sovereign areas of eight countries. Other than for its four million inhabitants, this region has long been thought of, in both popular conception and practical terms, as remote, inaccessible, and generally off-limits. Make no mistake: As far as economic development and investment go, that era is over. This fact is largely, although not exclusively, the result of climate change, which most of us consider to be a clear negative. But a fact it is. Increased investment and development in the Arctic is inevitable and it’s already happening. And that is a positive – if it is done the right way.

Statoil empty handed. Norway’s hope of discovering a large oilfield in the Barents Sea has suffered a major setback after the far north Arctic‘s most promising reservoir turned out to contain only small amounts of natural gas. Statoil, the country’s top oil and gas producer, has stepped up drilling in the Barents Sea this year as the government seeks to attract more explorers to its Arctic waters to make up for declining North Sea output. But Statoil said on Tuesday that after drilling the northernmost exploration well in the highly anticipated Korpfjell prospect it had found only non-commercial quantities of gas and no oil. Korpfjell was the first exploration well drilled in the Norwegian section of a formerly disputed area between Norway and Russia, where Statoil and its partners had hoped to make a major discovery.

Harvey brings two-year highs for gas prices. Oil markets were roiled on Monday after Tropical Storm Harvey wreaked havoc along the US Gulf Coast over the weekend, crippling Houston and its port, and knocking out several refineries as well as some crude production. US gasoline prices hit two-year highs as massive floods caused by the storm forced refineries in the area to close. In turn, US crude futures fell as the refinery shutdowns could reduce demand for American crude.

Harvey doesn’t impact Alaska oil. Hurricane Harvey has caused nearly 100 oil and gas production platforms in the Gulf of Mexico to temporarily shut down. Since the storm came ashore last Friday, oil production in the region has dropped by more than 300,000 barrels per day according to data from the Bureau of Safety and Environmental Enforcement. But that drop in production doesn’t necessarily translate to a higher demand for Alaska’s oil.

Enstar secures more gas thru 2021. A deal between the regional gas utility ENSTAR and the Texas-based independent producer AIX may cover a small slice of the region’s demand for heat and energy until 2021. AIX, which operates a four-well pad in Kenai’s Kenai Loop gas field, could supply ENSTAR with a total 3.9 billion cubic feet of natural gas between August 2018 and March 2021, if the contract is approved by the Regulatory Commission of Alaska, which announced it Friday.

Civic Engagement at a young age. Alaska Youth for Environmental Action (AYEA) is petitioning the Alaska Department of Environmental Conservation for concrete action on climate change. The more than one 100 page document calls for a regular inventory of greenhouse gas emissions in the state, and a reduction of those pollutants. DEC’s commissioner, Larry Hartig, invited the teens to meet with him on the topic. He agrees the state needs to do a better job of communicating what it’s doing on climate change. “I certainly hope that this generation will keep that fire in them,” Hartig told the group. “And that what we leave you will be something that we can be proud of.” Headlamp is encouraged to see young people involved. For a comprehensive look at what the state of Alaska is doing click here.

Industry Appreciation Day in Kenai. While celebrating the industries that fuel the Kenai Peninsula, Gov. Bill Walker stressed the importance of diversifying Alaska’s commerce. “You look at the career opportunities in this state, as far as the resources in the ground, and you have to ask what we are doing to develop our resources and our careers,” Walker said in an interview during the annual Industry Appreciation Day, held on Kenai Park Strip on Saturday. The event brought together community members and those involved in the oil and gas, commercial fishing, tourism and medical industries to recognize the contributions of local businesses and individuals. “I look out today and see the celebration of industry and, you know, no one in Alaska does it like you do,” Walker said to the crowd, which was spread out among the park, enjoying free barbecue and a salmon bake, playing games or talking to political candidates. Headlamp congratulates the Alliance for winning the award for Outstanding Business Support for the Oil and Gas Industry at this event.

Strange bedfellows. Two Alaska legislators and a longtime Republican organizer are trying to prohibit lawmakers from collecting expense payments if they fail to pass a state budget on time. A new ballot initiative, billed the “Alaska Government Accountability Act,” would also limit some campaign contributions, require legislators to announce conflicts of interest before votes, and limit lobbyist gifts. Rep. Jonathan Kreiss-Tomkins, D-Sitka; Rep. Jason Grenn, I-Anchorage and Bonnie Jack of Anchorage are behind the initiative, which was submitted to the Alaska Division of Elections on Monday. Each was named an initiative “co-chair” in a press release announcing the initiative. The division could not provide the formal language of the proposal, but Jim Lottsfeldt, the initiative’s “mechanic,” confirmed it was submitted.

First Read:

An investment model for the Arctic
The Wilson Quarterly, Tero Vauraste, Summer 2017

Norway’s Arctic oil ambitions suffer setback as most promising well yields none
Arctic Now/Reuters, Nerijus Adomaitis, August 29, 2017

Judicial Watch files lawsuit for communications with environmental groups on Dakota Access pipeline
The Washington Examiner, Josh Siegel, August 24, 2017

Oil markets roiled as Harvey hits US petroleum industry
The Business Times/Reuters, August 28, 2017

Hurricane Harvey won’t impact Alaska oil and gas
Alaska Public Media, Rashah McChesney, August 28, 2017

Alaska teens call for stricter control on climate change
KTVA, Liz Raines, August 28, 2017

ENSTAR contracts with AIX energy for supply until 2021
Peninsula Clarion, Ben Boettger, August 28, 2017

Walker celebrates industry, talks diversification
Peninsula Clarion, Kat Sorensen, August 26, 2017

New ballot initiative targets legislators’ per diem pay
Juneau Empire, James Brooks, August 29, 2017

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Headlamp – “The State of Alaska has become Animal House.” Helping Victims of Hurricane Harvey.

August 28, 2017 | Posted in : News

“The State of Alaska has become Animal House.” Oil companies owed hundreds of millions of dollars in tax credits from the State of Alaska are canceling projects, protesting publicly, and in one case, suing the state to force it to set aside some $5 million in unpaid cash it claims to be owed. But some say the companies should have known the potential consequences before they signed up for the state’s generous tax credit program. State law shows they risked a slowdown in payments if oil prices crashed and the state’s economy tanked. And that’s exactly what happened. But industry representatives and company executives say small independent companies that the credits were meant to attract sunk hundreds of millions of dollars into projects, after getting the impression from the state that it would make timely payments. “It’s not what companies who invested in resource development in Alaska planned on happening,” said Carl Giesler, chief executive of Cook Inlet Energy. Headlamp would refer to the quote below, from the comment section of the paper:

The State of Alaska becomes Animal House: “You f’ed up. You trusted us.” Heck of a way to do   business. Even a better way to make sure there is no more business afterward. And commenters cheerlead this malfeasance. There is an old HL Mencken quote: “Democracy is the theory that the common people know what they want and deserve to get it good and hard.” Those of you who elected Walker and the House majority are about to get it good and hard. Unfortunately so are the rest of us. Cheers.”

Oil and Water don’t mix. US energy companies were forced to shut-in about 22%, or 378,633 barrels of oil per day, of Gulf of Mexico oil production due to Tropical Storm Harvey, according to the Bureau of Safety and Environmental Enforcement. Roughly 26% of Gulf natural gas production was also down as of Sunday.

Wolverines and Buckeyes. The Federal Energy Regulatory Commission on Friday cleared the way for construction of the $2 billion NEXUS Gas Transmission project to begin despite strong opposition from landowners and residents. The 255-mile-long pipeline will move 1.5 billion cubic feet of gas per day from Ohio to Michigan and Canada.

Survey Says: 86% of voters are concerned about infrastructure. Earlier last week, the president signed an Executive Order to refine our environmental review and permitting process for infrastructure. But in order for this infrastructure revitalization to succeed, we need timely access to the minerals that make it all possible. For example, minerals like copper, molybdenum, zinc, iron ore and kyanite are the foundation of U.S. infrastructure projects—from the development of railways and subway lines to the building of powerlines and phone lines.

High interest rates passed on to Alaska municipalities. October’s round of municipal elections will ask Alaskans for permission to borrow money for critical infrastructure in local communities. Thanks to the Alaska Legislature’s failure to erase a multibillion-dollar deficit, that infrastructure will cost more. In some cases, it might be a lot more. The issue is the state’s municipal bond bank, which cities and boroughs use to borrow money. That bank relies on the state’s credit rating, and as the state’s credit has fallen, the cost of borrowing money has gone up. “Certainly, the bond bank program, as the state has been downgraded, has been similarly downgraded,” said Deven Mitchell, the state’s debt manager and executive director of the bond bank.

Hilcorp’s plans for more oil in TAPS. Hilcorp Alaska’s plan for developing the Liberty oil field in the Beaufort Sea is spelled out in the draft environmental impact statement that the Bureau of Ocean Energy Management issued on Aug. 17. The Liberty field is on the federal outer continental shelf, in Foggy Island Bay, about 15 miles east of Prudhoe Bay. The development plan proposed in the EIS involves the construction of an artificial gravel production island about five miles offshore and the laying of a buried subsea pipe-in-pipe pipeline to carry crude oil to shore. The pipeline would connect with the existing Badami pipeline for transporting the Liberty oil to the trans-Alaska pipeline.

Headlamp is keeping our Texas friends in their thoughts. If you are interested in helping victims of Hurricane Harvey – a few options below:

  • Hurricane Harvey Relief Fund.Houston Mayor Sylvester Turner has established the Hurricane Harvey Relief Fund that will accept tax deductible donations. The fund is administered by the Greater Houston Community Foundation, a 501(c)(3) public charity.To make a financial donation, visit the GHCF website.
  • American Red Cross. To make a financial donation, visit their website, call 1.800.RED CROSS or text HARVEY to 90999 to make a $10 donation for those in need.

First Reads:

About 22 percent of U.S. Gulf oil output offline due to Harvey
Reuters, Reuters Staff, August 27, 2017

Oil companies owed hundred of millions of dollars by state should have known risk, some say
Alaska Dispatch News, Alex DeMarban, August 27, 2017

Federal agency OKs gas pipeline project fought by residents
The Associated Press, Mark Gillispie, August 28, 2017

New Poll Shows Overwhelming Majority of Voters are Concerned About the State of American Infrastructure
National Mining Association, August 15, 2017

State’s credit trouble trickles to street level
The Juneau Empire, James Brooks, August 27, 2017

Hilcorp’s plan proposed
Petroleum News, Alan Bailey, August 27, 2017

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Headlamp – Industry is recovering in Texas; contract for IGU?

August 25, 2017 | Posted in : News

All my exes live in Texas. Oil companies across Texas added about 20,000 jobs over the past year as oil prices stabilized, drilling rigs returned to the prolific Permian Basin, production grew and the industry recovered, according to an index that tracks energy activity in the state. The number of Texas oil and gas jobs rose to almost 213,000 in July, up 10 percent over the same period last year, according to the Texas Petro Index, released Wednesday, which tracks the health of the oil industry. “Clearly, the industry is in a state of recovery right now,” said Karr Ingham, an Amarillo economist who compiles the data for the Texas Alliance of Energy Producers.

State of Alaska’s debt du jour. The state of Alaska and an oil company operating in Cook Inlet settled a dispute over millions of dollars in unpaid tax credits on Tuesday. The state said it has set aside money for partial payments until a larger dispute, also playing out in bankruptcy court, is resolved. Miller Energy Resources on Aug. 2 had asked the U.S. Bankruptcy Court in Alaska to have the state set aside money for payments of tax credits, claiming it is owed $5.2 million. Miller Energy was the parent of Cook Inlet Energy, but the two companies and affiliates filed for bankruptcy in October 2015. Proceedings in that case are still ongoing, but Cook Inlet Energy has reorganized and operates in Cook Inlet and the North Slope. It’s still owned by another company, but that company now is Glacier Oil and Gas.

What does the future hold for IGU? The fate of the long pursued Interior Energy Project will soon come into better focus. The state funded effort hinges on a natural gas supply from Cook Inlet, and that’s expected next month. The North Star Borough voter formed Interior Gas Utility is a utility without any gas to sell, but IGU general manager Jomo Stewart said a forthcoming contract with a Cook Inlet producer could change that. Stewart said he can’t yet share details, but the contract is central to presentations planned for a September 5th IGU board meeting. “We already have scheduled, at our next board meeting, to get the first run of financial modeling of this project as it will stand having secured a gas supply,” Stewart said. Headlamp would note that the ability to secure a natural gas supply from Cook Inlet has been jeopardized by the changes in oil tax structure with HB 247 and HB 111. The irony? IGU has been Governor Walker’s priority and his administration is encouraging policy that jeopardizes it.

Secretary Chao putting Alaska in the driver’s seat. U.S. Transportation Secretary Elaine Chao, visiting Alaska for a two-day trip, announced measures on Thursday to streamline what she called the “burdensome” federal regulatory process in Alaska and to accelerate a long-delayed project to reroute the Sterling Highway near Cooper Landing. After a day meeting with Alaskans to talk transportation, she announced a new draft agreement between the state and the Federal Highway Administration. She said the agreement would allow the state, not the national government, to conduct environmental reviews for federally assisted highway projects in Alaska.

The times, they are a changin’. A Russian-owned tanker, built to traverse the frozen waters of the Arctic, completed a journey in record time from Europe to Asia this month, auguring the future of shipping as global warming melts sea ice. The Christophe de Margerie, a 984-foot tanker built specifically for the journey, became the first ship to complete the Northern Sea Route without the aid of specialized ice-breaking vessels, the ship’s owner, Sovcomflot, said in a statement. The journey was the culmination of a centuries-old navigational dream and of a decade-long plan by President Vladimir Putin of Russia, whose government has indicated it plans to take political and economic advantage of changes to the Arctic’s climate. “This is a big event in the opening up of the Arctic,” Putin said of the tanker’s maiden voyage this year. The ship, transporting liquefied natural gas, completed the trip from Norway to South Korea on Thursday of last week in just 19 days, 30 percent faster than the regular route through the Suez Canal, the company said.

Technology = money. The future is arriving—a few tons at a time—at Suncor Energy Inc.’s North Steepbank oil sands mine in Alberta, Canada. Human-operated excavators scrape away the top layers of soil to get to the hydrocarbon-rich tar sand beneath in much the same way they always have. But now they’re dumping that dirt into driverless trucks that use GPS systems and lasers to find their way through the massive mine. The trucks, part of a multiyear test, are just one way that Suncor and other oil sands producers are trying to bring down the cost of what traditionally has been one of the most expensive ways to extract crude.

First Reads:

State, Cook Inlet Energy find some agreement on $5 million owed in tax credits, but bigger question looms
Alaska Dispatch News, Alex DeMarban, August 24, 2017

Long awaited Interior natural gas contract expected
Alaska Public Media, Dan Bross, August 24, 2017

Texas oil and gas companies add 20,000 jobs over year
Houston Chronicle, David Hunn, August 23, 2017

U.S. transportation secretary announces efforts to speed up project development in Alaska
Alaska Dispatch News, Alex DeMarban, August 24, 2017

 Russia’s Arctic LNG tanker completes Arctic passage without aid of icebreakers
Arctic Now/New York Times, Russell Goldman, August 25, 2017

Can Oil Sands Pay Off at Just $50 a Barrel?
Bloomberg Business Week, Kevin Orland, August 24, 2017

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Headlamp – Zinke keeps the monuments; is Greenpeace an eco-terrorist?

August 24, 2017 | Posted in : News

A monumental decision. Interior Secretary Ryan Zinke said he’s recommending that none of 27 national monuments carved from wilderness and ocean and under review by the Trump administration be eliminated. But there would be changes to a “handful,” he said. Zinke told The Associated Press that unspecified boundary adjustments for some monuments designated over the past four decades will be included in the recommendations he planned to give President Donald Trump on Thursday. None of the sites would revert to new ownership, he said, while public access for uses such as hunting, fishing or grazing would be maintained or restored.

A road by any other name…The Bureau of Land Management’s official visitors guide paints an ominous picture of travel on the remote Dalton Highway. “The road is narrow, has soft shoulders, high embankments, and steep hills,” the guide says. “There are lengthy stretches of gravel surface with sharp rocks, potholes, washboard, and, depending on the weather, clouds of dust or slick mud.” “Watch out for dangerous curves and loose gravel … you may encounter snow and ice north of Coldfoot any month of the year,” it continues. “Expect and prepare for all conditions.” Headlamp would like to thank E&E News and Margie Hobson for her series honoring the men and women who built TAPS and what it has meant to Alaska.

All-aboard the technology train! Big data, advanced analytics and the internet of things have taken longer to gain traction in the oil patch compared with some parts of the economy. But they are rapidly changing operations in an era of low oil prices and slim profit margins. “Our industry and world are changing faster than I or anyone else could have imagined just a few years ago. It is exponential. If companies don’t get on board now, they will be left behind,” Brian Pugh, chief operations officer for production at BP Lower 48, said during a panel at the Colorado Oil and Gas Association’s Energy Summit on Tuesday.

Not taking it lying down. Energy Transfer Partners LP on Tuesday sued Greenpeace and other environmental groups, accusing them of launching an “eco-terrorism” campaign aimed at blocking the Dakota Access Pipeline, the center of months of opposition by Native American and green groups. The pipeline operator said Greenpeace, Earth First and other organizations engaged in “acts of terrorism” to solicit donations and interfere with its pipeline construction activities, damaging its “critical business and financial relationships.”

What makes Alaska go ‘round? The Kenai Peninsula, of course, draws largely from the oil and gas industry for a not insignificant chunk of revenue and a good number of jobs. Every three years, the Alaska Oil and Gas Association runs the numbers on such things with the McDowell Group, a consulting firm in Anchorage. Wednesday, Donna Logan, an economist with McDowell, presented the latest findings to a joint meeting of the Kenai and Soldotna chambers of commerce.

Tillion still fighting. After oil was discovered in Alaska in 1968, the state auctioned off leases all along the North Slope and brought in a small fortune. It’s still known in this state as the windfall. And lawmakers had a choice – save it or spend it.

First Reads:

The long (long) road to a famous dead end
E&E News, Margaret Kriz Hobson, August 23, 2017

Zinke won’t eliminate any national monuments
KTVA/Associated Press, Matthew Brown and Brady McCombs, August 24, 2017

Petroleum operators at Denver conference drilling deeper into the data
The Denver Post, Aldo Svaldi, August 22, 2017

Energy Transfer sues Greenpeace over Dakota pipeline
Reuters, Valerie Volcovici, August 22, 2017

Study shows state reliance on oil and gas industry
KDLL, Shaylon Cochran, August 23, 2017

In Alaska, One Man Fights To Save Oil Fund As Reserves Dry Up
NPR, Jennifer Pemberton, August 22, 2017

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Headlamp – Sanctions for North Korea supporters.

August 23, 2017 | Posted in : News

Sanctions slapped on companies supporting North Korea oil and gas. As tensions rise over North Korea, the U.S. Treasury this morning said it was slapping new sanctions on Chinese and Russian entities conducting oil, coal and banking business with Pyongyang, and propping up the country’s weapons program. The sanctions target 16 Chinese and Russian individuals and companies, with the bulk targeting Chinese entities which have been buying and selling oil and coal with North Korea, or offering related banking services to facilitate these transactions. “The Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” said Treasury Secretary Steven T. Mnuchin.

 Gasping for air. In spite of low prices and unprecedented competition in the gas/LNG industry, Alaska’s government subsidized North Slope gas monetization project continues to tread water, shall we say, “gasping for air.” It seems to be awaiting a life-saving miracle as it responds to regulatory questions, keeps staff and contractors employed and manages ‘marketing’ offices in Tokyo and Houston. The September 1 deadline established by Governor Walker for a go/no-go decision on the project looms large. Headlamp hopes that decisions, such as the IRS determination, are valued properly and any decisions to progress the project are based on sound economics.

Can’t get enough LNG? Both the Alaska Gasline Development Corporation and Larry Persily are doing weekly LNG updates. You can sign up for AGDC’s updates here and you can receive Persily by emailing him here.

Juneau Assembly weighs in on climate change. The Juneau Assembly voted to affirm its commitment to climate action on Monday — but not without a fight. “We need to continue to understand and predict what is coming – what might be coming – and how climate will change over the next century, which is vital to our economy and to our community,” said University of Alaska Southeast Professor Jim Powell, a former Juneau Assemblyman.

First Reads:

U.S. Sanctions Chinese, Russian Companies Aiding N. Korea
OilPrice.com, Damir Kaletovic, August 22, 2017

Alaska’s Government Gas Pipeline/LNG Project Still Treads Water
Northern Gas Pipelines, Dave Harbour, August 21, 2017

Juneau Assembly reaffirms commitment to climate goals
KTOO Public Media, Jacob Resneck, August 21, 2017

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Headlamp – If you don’t have the facts, you can’t be wrong.

August 22, 2017 | Posted in : News

mining mattersIgnorance is bliss – opposition groups refuse meeting. An advisory committee made of Alaskans and others from the lower 48 states met for an in person meeting with the Pebble Partnership Monday in Anchorage. The Pebble Partnership invited opposition groups to hear about its future plans for a mine project in the Bristol Bay Region but they declined. “At a very high level we just did an outline on some of our thoughts that we started to share about a smaller mine plan and for the rest of our Alaska audience that’s something we’ll be doing in a more formal way this fall,” said Pebble Partnership Spokesperson Mike Heatwole. At the same time a group of protesters gathered on the corner of 4th avenue and K Street. Many carried anti-Pebble Mine signs and chanted “wrong mine, wrong place.”

Game on for ANWR!! Spurred by a president who wants oil companies to drill in the Arctic National Wildlife Refuge, federal geologists have begun poking around the controversial Alaska coastal plain, collecting oil-soaked rocks to help update the area’s petroleum potential. The recent fieldwork adds to studies already underway by the U.S. Geological Survey. The work is helping geologists get a jump-start on Interior Secretary Ryan Zinke’s order in May seeking updated oil and gas assessments of the 19 million-acre refuge.

Icewine early success. A unique effort to test the benefits of hydraulic fracturing on the North Slope is still underway, but the focus is shifting away from a well that’s already been drilled to new sites 25 miles to the west. Accumulate Energy Alaska drilled a production test well this summer from an existing gravel pad along the Dalton Highway. Oil-flow tests are still underway at that well, known as Icewine No. 2. But early information helped determine “the size and extent of the oil bearing formations, and the best means for producing from them,” says Accumulate, in a proposed update to its oil spill contingency plans filed with Alaska regulators July 31. The proposed changes, announced by the Alaska Department of Environmental Conservation on Thursday, are under agency review.

Life support. A federal bankruptcy judge on Monday approved a $1 million loan to keep the lights on and the doors open at Alaska Dispatch News as the company works its way through a Chapter 11 bankruptcy. Judge Gary Spraker and Northrim Bank also gave the OK for Alaska Dispatch News to use its money in its bank account to pay wages to employees and to pay past-due health insurance premiums.

No go for Manchin. Sen. Joe Manchin (D-W.Va.) is quashing speculation that he’ll leave the Senate to become President Trump’s Energy secretary. The Democratic senator, who is facing a tough 2018 reelection bid, said at a town hall that he would not be jumping to the Trump administration.

Are we better off than we were 4 years ago? Gov. Bill Walker registered Monday as a candidate for next year’s election for governor. He’ll be joined again on an unaffiliated ticket by Lt. Gov. Byron Mallott. Walker said being unaffiliated has helped him and Mallott work on issues without concern about party politics. It will allow them to avoid a primary battle before a general election that could include candidates for both major parties. “I think it will be a lively race,” Walker said. “I think there will be lots of competition, not for us certainly in the primary, but in the general. We’ll see how that plays out and we’ll just continue to do our job in making Alaska a safer place, and work on the fiscal situation and work on the future of the state, in terms of growing Alaska.”

Korea looking to ship through the Russian Arctic. As Arctic ice reaches historical lows, Asian shipping companies are developing more interest in trans-shipments along the Northern Sea Route, the Russian Arctic connection between Asia and Europe. Hyundai Merchant Marine is planning to use container ships capable of carrying 2,500-3,500 twenty-foot equivalent units, or TEUs, on the route, newspaper Korea Times reports with reference to industry sources. Trial shipments might start in year 2020. According to the newspaper, Korean President Moon Jae-in discussed an enhanced Arctic cooperation with Russia’s Vladimir Putin during the recent G20 summit in Germany. The Northern Sea Route is also likely to be on the agenda in talks between the two presidents during the upcoming Eastern Economic Forum in Vladivostok.

First Reads:

New effort underway to find how much oil is beneath ANWR, NPR-A
Alaska Dispatch News, Alex DeMarban, August 21, 2017

After fracking test launched on North Slope, company presses ahead to drill two new wells
Alaska Dispatch News, Alex DeMarban, August 21, 2017

Judge approves crucial loan to keep Alaska Dispatch News operating through bankruptcy
Alaska Dispatch News, Annie Zak, August 21, 2017

Pebble Partnership seeks feedback on mine plans, opposition groups decline invitation
KTUU, Dan Carpenter, August 21, 2017

Walker, Mallott file to run for re-election
KTOO Public Media, Andrew Kitchenman, August 21, 2017

Manchin rules out becoming Trump’s Energy secretary
The Hill, Jordain Carney, August 18, 2017

Korean company eyes container shipping along Russia’s Arctic coast
Arctic Now/The Barents Observer, Atle Staalesen, August 22, 2017

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