Headlamp – Angry Alaskans to blame for legislators quitting? Kara Moriarty’s reality check.

May 17, 2018 | Posted in : News

Ten percent of the Alaska’s lawmakers say they are quitting or retiring
KTUU, Richard Mauer, May 16, 2018

Six lawmakers — ten percent of the Alaska Legislature — have announced they are retiring or quitting months before they would face voters, and the filing deadline for the next election is still more than two weeks away. Another five lawmakers are abandoning their seats in the hope that voters will send them to a higher office. A lawmaker, an aide and a political party official attributed the high number of departures to the lengthy special sessions over the past few years. They also said that the state’s budget deficit, and the need to find new revenue or cut the budget — or both — has made the job much more difficult. Angry Alaskans have accused legislators of “stealing” their Permanent Fund dividend, or worse.

Our Take: If you can’t take the heat…

Oil, natural gas industry spends billions to reduce greenhouse gas emissions, report says
Washington Examiner, Josh Siegel, May 15, 2018

The U.S. oil and natural gas industry invested $108 billion in technologies to reduce greenhouse gas emissions from 2000 to 2016, according to a study released Tuesday. The study, conducted by T2 Associates on behalf of the American Petroleum Institute, shows the balancing act sought by major oil and gas companies that are aiming to help combat climate change, even as they embrace the Trump administration’s “energy dominance” agenda supporting fossil fuels.

Our Take: The oil and gas industry talks the talk and walks the walk: “ between 2000 and 2016, there was a total U.S. investment of $597.8 billion in low-emission or zero-emission technologies, the study shows. Of that, the oil and natural gas industry spent $108.2 billion, compared with $143.6 billion invested by other U.S. industries combined. The federal government contributed $152.7 billion to the total.”

Exclusive: Conoco moves to sell North Sea oilfields: sources
Reuters, Ron Bousso, May 14, 2018

U.S. oil major ConocoPhillips is preparing to sell its North Sea fields as the company focuses on shale operations in its home market, industry and banking sources said. The disposal of Conoco’s North Sea assets after more than 50 years in the British offshore basin could fetch as much as $2 billion, but it was unclear how much of the portfolio would be put up for sale, the three sources said.

Our Take: Conoco is the latest major oil company seeking to exit the North Sea as production in the aging basin declines, other areas become more competitive and costs for dismantling aging infrastructure weigh.

EIA calls for rejection of Alaska LNG pipeline application
Hydrocarbons Technology, May 16, 2018

The Environmental Investigation Agency (EIA) has called for the rejection of Alaska Gas Development’s (AGDC) application to construct an 800-mile liquefied natural gas (LNG) pipeline and terminal in Cook Inlet, Alaska, US. During the construction stage, the AGDC project plans to carry out 101 days of pile driving in the Cook Inlet, as well as other noise-causing activities.

Our Take: At first blush, this appears to be the well-respected, non-partisan Energy Information Administration – FAKE NEWS! The Environmental Investigation Agency is an NGO founded by three environmental activists in the United Kingdom. Interesting to see them attacking a project in Alaska – and using an acronym that misleads people.

‘Impossible to Ignore’: Why Alaska Is Crafting a Plan to Fight Climate Change
The New York Times, Brad Plumer, May 15, 2018

In the Trump era, it has mainly been blue states that have taken the lead on climate change policy, with liberal strongholds like California and New York setting ambitious goals for cutting greenhouse gas emissions. Now, at least one deep-red state could soon join them: Alaska, a major oil and gas producer, is crafting its own plan to address climate change. Ideas under discussion include cuts in state emissions by 2025 and a tax on companies that emit carbon dioxide.

Our Take: Governor Walker and Lieutenant Governor Mallott supported the recent decision by Congress to open the Arctic National Wildlife Refuge to oil and gas exploration, a move opposed by environmentalists, stating, “The state will continue to be an energy producer for as long as there is a market.” Thankfully, the task forced removed this language from their document: “There is an economic and ethical imperative to pursue a transition away from a global dependence on fossil fuels.” Kudos to Kara Moriarty, president and CEO of AOGA for a reality check: “I think they need to be focusing on things that will actually have an impact,” and “Climate change is a global problem, so unless you’re talking about a global carbon tax, I’m not sure this would move the needle in a state with only 750,000 people.”

Lobbyist seeks to run for Juneau’s state senate seat
Juneau Empire, James Brooks, May 15, 2018

Longtime Juneau resident and AFL-CIO lobbyist Don Etheridge is running for the Alaska Senate seat representing northern Southeast Alaska. On Sunday, Etheridge filed a letter of intent with the Alaska Public Offices Commission, an act that allows him to begin fundraising for office. He confirmed his run for office in a Tuesday morning phone call with the Empire. “I’ve been lobbying now for almost 24 years, and I just wanted to do something different, and with the seat wide open, I figured why not?” he said. Don will run as an independent.

CINGSA plans backup systems
Peninsula Clarion, Ben Boettger, May 16, 2018

After losing some capacity in March to a sand-clogged well and failed dehydration unit, Cook Inlet Natural Gas Storage Alaska (CINGSA) is planning to spend an estimated $41 million to back up its ability to store and dispense the fuel gas that generates most of south central Alaska’s heat and electricity. On April 27 CINGSA officials asked the Regulatory Commission of Alaska (RCA) — the state agency that oversees utility pricing — to allow them to recover the project’s cost in future storage rates. If approved, construction could start in January 2019 and the new features could be operating at the end of that year, according to CINGSA’s petition.

Our Take: CINGSA is an important part of our reliability and $41 million injected in to the economy is good for all.

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Headlamp – China seeks to dominate the world through infrastructure investment.

May 16, 2018 | Posted in : News, Uncategorized

House to Probe China Threat
The Washington Free Beacon, Bill Gertz, May 16, 2018

The House Permanent Select Committee on Intelligence will begin a major inquiry into the threat from China this week in a shift from its past attention on Russian subversion. The committee will hold a series of hearings, both open and in secret, examining threats posed by China in the military sphere, economic and industrial realm, technology arena, and Beijing’s significant influence operations against the United States, said committee aides.

Our Take: Our potential partners are being investigated for the “many challenges they pose to our national security through its aggressive territorial claims, unfair trade policies, espionage and cyber-attacks…”

IEA cuts outlook for global oil demand as crude nears $80 a barrel
Reuters, Reuters Staff, May 16, 2018

Global demand for oil is likely to moderate this year, as the price of crude nears $80 a barrel and many key importing nations no longer offer consumers generous fuel subsidies, the International Energy Agency said on Wednesday. The Paris-based IEA cut its forecast for global demand growth to 1.4 million barrels per day for 2018, from a previous estimate of 1.5 million bpd.

Legislative report misleads on ConocoPhillips profits
The Anchorage Daily News, Roger Marks, May 16, 2018

The Anchorage Daily News reported on May 6, about a report by Legislative Research Services comparing ConocoPhillips’ Alaska profits with profits elsewhere. Suppose you had a company that produced diamonds and gravel, and in some places, you produced more of one and less of another. Diamonds are, of course, much more valuable than gravel.

Our Take: We aren’t surprised it’s what they do – at the urging of Senator Wielechowski who has had this explained to him too many times to count -but continues to mislead the public.

LNG Edge Q1 2018 Trade Flow Report
ICIS, May 2018

China continued to surprise the market in the first quarter 2018, with a dramatic 65% year-on-year increase in imports as the country switched heating systems from coal to gas to improve air quality. The rate of increase accelerated from the previous quarter, but this is unlikely to be maintained during summer. The country has relatively low storage capacity so will have to rely more on importing at time-of-need rather than building up stocks in summer for the winter ahead.

Our Take: The LNG Edge: Q1 2018 Trade Flow Report draws on the latest voyage data from market-intelligence platform LNG Edge to analyze imports and exports in the global LNG market, bringing you market insights ahead of full data publication from customs authorities.

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There is an office of continuous improvement…in the government.

May 15, 2018 | Posted in : News

APNewsBreak: Alaska sued over Walker’s bonding proposal
AP News, Becky Bohrer, May 15, 2018

An Alaska resident sued the state Monday over Gov. Bill Walker’s plan to allow for the issuance of bonds to pay off the state’s outstanding oil tax credit obligations. The lawsuit was filed in state court on behalf of Alaska resident Eric Forrer, a former member of the University of Alaska Board of Regents. The action comes just days after the bill passed the Legislature; Walker has yet to sign it into law.

Our Take: We can’t say we’re surprised. Senator Wielechowski made passionate speeches about the issue – even though he had previously voted multiple times for bills that authorized bonds whose debt is serviced solely by independent and annual legislative appropriations.

Republican senator demands EPA scale back refinery biofuel waivers
Reuters, Jarrett Renshaw, May 15, 2018

Republican Senator Chuck Grassley on Tuesday said Environmental Protection Agency chief Scott Pruitt must scale back the use of biofuels waivers for small refineries, or else he will join other lawmakers calling for Pruitt’s resignation. Corn state senators like Iowa’s Grassley have been infuriated by the EPA’s decision to provide an unusually large number of waivers to refineries in recent months, exempting them from a law that requires biofuels like ethanol be mixed into the nation’s fuel.

Our Take: Who will win the battle in DC – corn vs oil? “The corn lobby supports expanding sales of E15 and reducing the waiver program, but opposes counting exports toward volume quotas. The oil industry, meanwhile, is resisting the expansion of E15 – because it worries the move will cut petroleum’s share of the fuel market – and supports both the waivers and the export tweak as ways of cutting regulatory costs.”

The Oil And Gas Situation: Four Big Factors Influence U.S. Oil Markets
Forbes, David Blackmon, May 14, 2018

Here are four big factors influencing the domestic oil and gas industry as the week begins:
The rig count continues to escalate steadily. The DrillingInfo daily rig count sits at 1105 as of May 13, up 25 from two weeks before. This is not surprising at all – crude oil prices remain strong, making an increasing population of potential drilling projects economic to drill. More than 80% of those rigs are drilling oil wells, and over half of them are doing it within the state of Texas. Again, no surprise, given that the preponderance of the vast Permian Basin lies within the state.

Our Take: The rest of the story? The oil price didn’t rocket up after President Trump’s Iran announcement. A widening Permian price differential could send capital to other U.S. basins during the second half of the year. The growing U.S. refinery/production mis-match means America’s crude exports will keep rising.

From today’s Washington Examiner’s Daily on Energy:

EPA SEEKS TO SPEED PERMITTING WITH EFFICIENCY OFFICE
The EPA announced Monday it will create a new efficiency office to speed permitting reviews and shorten the time it takes for the agency to complete other functions, such as meeting legal deadlines. The Office of Continuous Improvement aims to eliminate waste and resources, Pruitt said during an event at EPA headquarters. “Through lean management, EPA is tracking, measuring, and improving vital agency processes, such as permitting and meeting legal deadlines on time, for the first time,” Pruitt said. “Establishing the Office of Continuous Improvement will ensure that these actions are implemented throughout the agency and produce lasting results for years to come.”

Our Take: They had us at “office of continuous improvement.”

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Headlamp – What do we have to GAIN? Grow America’s Infrastructure Now.

May 14, 2018 | Posted in : News

Grow America’s Infrastructure Now
May 14, 2018

Grow America’s Infrastructure Now (GAIN) is a diverse coalition of businesses, trade associations, and labor groups that share an interest in creating jobs and strengthening our nation’s economy through infrastructure development. Investing in our nation’s infrastructure creates both long and short-term benefits for our communities and keeps our economy competitive in an increasingly global marketplace. We’ve let the integrity of our roads and bridges slip, our energy grid and infrastructure need updating, and scores of Americans are unable to access high speed internet. It is time for lawmakers in Washington to overhaul and improve our infrastructure. To learn more head to www.gainnow.org.

Our Take: This effort to develop infrastructure in America is crucial to Alaska’ future. Check out the website and sign up to receive updates.

China’s night-owl retail investors leverage up to dominate oil futures trade
Reuters, Meng Meng and Josephine Mason, May 14, 2018

As 9 pm approaches every weekday night in China, a small army of individual investors from around the country log onto trading apps on their mobile phones and laptops. Wall Street may be about to open but these night owls are interested in trading something much closer to home – the new Shanghai crude oil futures contracts that were launched in late March. Armed with risky loans from online firms or digging into their own savings, they threaten to play an outsized role in the new market, which has got off to a roaring start.

Our Take: As a potential partner for a $45 billion gas project – Alaskans are curious about China, especially their business acumen and investment environment. The trading activity here is high risk – and can have a significant impact on China’s role in oil trading

Alaska LNG developers in supply talks
Upstream, May 14, 2018

ExxonMobil and ConocoPhillips are continuing talks with the developers of the $43 billion Alaska LNG project to supply North Slope gas to the proposed facility. A spokeswoman for ExxonMobil said the company had recently met with Alaska Gasline Development (AGD), which is leading the Alaska LNG project, to “progress” potential gas sale agreements.

Our Take: It’s good to see all three of Alaska’s major companies working with the state on potential gas sales agreements.

Industry doesn’t always fight regulations. Here’s why
Axios, Amy Harder, May 14, 2018

It’s an easy political talking point to say industry opposes all regulations, but the real story is more complicated, and we’ve seen it unfold in dramatic fashion under President Trump. Why it matters: Trump’s deregulatory push has got Washington lobbyists anxious and industries parting ways with usual Republican Party allies. Here’s why companies lobby for and against certain regulations, while changing positions over time.

Our Take: A great read about industry compliance with regulations and the misconception that they always oppose regulations.

Rep. Guttenberg’s nephew files to run for vacant House seat
Fairbanks Daily News-Miner, Erin Granger, May 12, 2018

Grier Hopkins, nephew of Rep. David Guttenberg, D-Fairbanks, and son of former Fairbanks North Star Borough Mayor Luke Hopkins, has officially filed to run for Guttenberg’s soon-to-be vacant House seat. This announcement comes just days after Guttenberg announced he does not plan to run for reelection in this year’s upcoming state race. He will be facing Republican candidate Jim Sackett.

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Headlamp – Three cheers for Sullivan Smackdown; “Behold the latest Leftist anti-energy enviro-scam.”

May 11, 2018 | Posted in : News

Senator Eyes Canada Oil Tax After Alaska Drilling Clash
Bloomberg, Ari Natter, May 10, 2018

As Alaska’s congressional delegation worked feverishly last year to achieve the decades-long dream of drilling for oil in the Arctic National Wildlife Refuge, they came across a formidable opponent: Canada.
Now one lawmaker has a plan to punish the North American neighbor with what amounts to a new tax on hundreds of millions of barrels of Canadian oil imported annually into the U.S. Alaska Republican Senator Dan Sullivan said he will introduce legislation to end a loophole through which imported oil from Alberta’s oil sands deposits doesn’t come with a 9-cent-per-barrel tax to fund clean up of oil spills. Such a change would have generated about $47 million for the U.S. in 2016, according to the Congressional Research Service.

Our Take: Three cheers for Senator Sullivan!!! “It was outrageous,” Sullivan, a former Alaska attorney general and natural resources commissioner, said. “They were going to every office in the Senate.” “It was not a smart move,” he added. “It’s a loophole and we intend to close it.”

Oil prices could hit $100 a barrel next year, Bank of America says
CNN Money, Ivana Kottasová, May 10, 2018

The bank’s analysts wrote Thursday that collapsing oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as $100 per barrel in 2019. The analysts said their target price for Brent, the global benchmark, was $90 for the second quarter of next year. But they warned there was a risk that deteriorating conditions in Iran would push prices to $100, a level not seen since 2014.

Alaska LNG project president says he’s done ‘preaching to the non-believers’
KTOO Public Media, Elizabeth Harball, May 11, 2018

Since taking the lead on the gasline project about two years ago, the Walker administration has doggedly pursued its plan for the megaproject. In the process, they’ve chalked up some successes, including interest from China’s president and a tentative agreement with BP. Now, the president of the state-owned Alaska Gasline Development Corporation says he’s no longer bothering to convince skeptics that the project is real, and it’s moving forward.

Our Take: Good. It isn’t the job of a $750,000/year executive to “convince skeptics” that a $45 billion project is going to work. It’s his job to present a commercially viable project that will secure investors and customers and get the project done. Progressing a commercially viable project will quiet the skeptics.

NY AG Schneiderman: The Left Loses an Anti-Energy Elected Official; the Awfulness Continues
Red State, Seton Motley, May 9, 2018

Many of us are now aware of the mascara-wearing, woman-abusing, recently-ex-Attorney General of New York – Eric Schneiderman. Schneiderman put this massive abuse-of-power to really bad use. Schneiderman is a Leftist. And Leftists don’t like capitalism generally – or the energy that fuels it specifically. So Schneiderman spent years persecuting energy companies generally – and ExxonMobil specifically.

Our Take: Alaska is noted in this article as a prime target. Alaska is inordinately energy-rich (thank you very much, William Seward). So of course the Left is inordinately busy trying to prevent us from accessing any of it. Behold the latest Leftist anti-energy enviro-scam. Blocking another attempt at energy development – in the alleged name of allegedly saving salmon.”

 

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Headlamp – Dear Alaska – China is deepening oil and gas industry reforms to unleash potential.

May 10, 2018 | Posted in : News

Celebrate Alaska Mining Day by reading just how important the industry is to our state:

Economic Benefits of Alaska’s Mining Industry


What should Alaska do about climate change? Now’s your chance to weigh in.
KTOO Public Media, Rachel Waldholz, May 9, 2018

The Walker Administration is asking for public input as it develops a sweeping new climate policy for the state. The governor’s climate change task force has released an updated draft of the policy, and the public has until June 4 to weigh in online. The draft proposes a series of short-term targets to shrink the state’s carbon footprint. Those include cutting greenhouse gas emissions by about a third from 2005 levels; increasing energy efficiency by 15 percent; and generating half the state’s electricity from renewable sources — all by 2025.

Our Take: Say what you mean and mean what you say. If the “task force proposes Alaska increase investments in the state’s clean energy economy and promote natural gas as a potential “bridge fuel,” and “suggests using oil revenue to fund a ‘strategic transition’ to renewable energy and a more diversified economy,” they should take the lead on promoting a stable business climate for the industry whose money they hope to spend.

Oil and gas industry “needs 10,000 new roles” over next 20 years
BBC News, Orkney and Shetland, May 10, 2018

About 10,000 new oil and gas roles need to be created over the next 20 years to cope with the changing demands of the industry, it has been claimed. Skills and workforce body Opito said about 40,000 recruits are needed. A quarter of those would be new roles that do not currently exist – from data to robotics.

Our Take: Globally, as well as locally, the decline of the oil and gas industry is greatly exaggerated. Alaska should follow the path of other nations and embrace the industries that provide the highest paying jobs for its residents and does the most to improve the quality of life for them.

The Shape of a New Era: China’s evolving business environment
Spirit Now, February 16, 2018

Many of the major political meetings and national policy developments that impact ConocoPhillips’ business in China also take place in Beijing. Following the 19th Party Congress in October 2017, China’s policymakers are focused on enhancing the quality of economic growth through promoting more openness and flexibility. Policymakers are also looking to create sustainable economic growth and drive economic upgrading by emphasizing technologies such as artificial intelligence, smart manufacturing, electric automobiles and general innovation.

Our Take: China is excited about their energy future. Chinese policymakers are “deepening oil and gas industry reforms to unleash potential.” Policy matters.

Hilcorp again the lone bidder in Cook Inlet lease sale
Anchorage Daily News, Elwood Brehmer, May 9, 2018

For the second consecutive year, Hilcorp Energy had free rein over Alaska’s annual Cook Inlet oil and gas lease sale. The Houston-based independent producer was the only company to bid on tracts in the basin, which was revealed Wednesday morning when Division of Oil and Gas officials opened the bids.

Our Take: Good to see Hilcorp is still interested in exploring for gas in the Cook Inlet!

Fairbanks Rep. Guttenberg to retire from Legislature

Our Take: Many thanks to Representative Guttenberg for his service to the state and best wishes to him in the future.

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Headlamp – “It isn’t the bonding that injures the State’s balance sheet, it’s the spending”

May 9, 2018 | Posted in : News

Follow-up: HB 331 is Still a Good Deal
King Economics Group, Ed King, May 8, 2018

After we published an article about HB 331 last week, the “Alaskans for a Sustainable Budget” posted a retort questioning our conclusions. First, I have to say that they do bring forward one compelling argument. The advantage of HB 331 hinges on the fiscal responsibility of the legislature, and their history isn’t great. But we have to be careful that we are comparing apples to apples.

Our Take: We agree with Mr. King’s statement: It isn’t the bonding that injures the State’s balance sheet, it’s the spending.” HB 331 is a good bill. It is working through the Senate Finance committee today and should be on the Senate floor for a vote by Friday.

Great expectations for great exploration
Upstream Oil & Gas, Wood Mackenzie, May 9, 2018

The results are in. Comparing 2018 results to last years we look at how the industry is making headway and whether the foundations of success set in 2017 are strong enough to sustain future activity. We’ve also looked at what the industry was saying a decade ago. Are things as different as we might expect?

Our Take: Wood Mackenzie provides a great look at the future of exploration through the lens of industry: The role of exploration vs other growth options, the approach the companies are taking and the challenges that need to be overcome. A key message this year: Track record, risk appetite and commitment to exploration are characteristics of top explorers and almost half of the most exciting discoveries of 2017 were in the Americas.

Walker’s oil & gas advisor leaves for job at NANA
Alaska Public Media, Rashah McChesney, May 8, 2018

Gov. Bill Walker’s chief oil and gas advisor has taken a new job. Later this month, John Hendrix will join the NANA Regional Corporation as the president of its commercial group. That group includes subsidiaries that do oil field and mining support services, as well as construction and capital projects. Hendrix has been in Walker’s cabinet for nearly two years. When he was hired in 2016 for the $185,000 a year position, his focus was on figuring out how Alaska can produce more oil.

Our Take:   Welcome back to the private sector Mr. Hendrix! We know that your time in the Governor’s office can help all of us understand how to work together as a state to responsibly develop more of our resources.

U.S. refiners reap big rewards from EPA biofuel waivers
Reuters, Jarrett Renshaw, May 8, 2018

The U.S. Environmental Protection Agency’s expanded use of waivers to free small refineries from the nation’s biofuels law has saved the industry as a whole hundreds of millions of dollars, according to a Reuters review of public filings. Dozens of refineries have received the financial hardship waivers from EPA in recent months, meaning they no longer have to earn or purchase blending credits known as RINs. They can also sell any RINs they have on hand into the market, which helps other refiners by cutting market prices.

Our Take: When a federal court tells you that you have been to “stingy” with waivers – you listen. The EPA waiver expansion is a good decision that can help refineries like those in Alaska – Andeavor and Petro Star.

Oil soars after Trump dumps Iran nuclear deal, stocks gain
Reuters, Herbert Lash, May 8, 2018

Crude oil prices rose to 3-1/2-year highs on Wednesday following President Donald Trump’s decision to withdraw the United States from a nuclear deal with Iran, a move that helped lift equity markets as Exxon Mobil, Chevron and other oil majors rallied.

Here’s How the Biggest Oil Buyers Can Tackle Trump’s Iran Action
Bloomberg Markets, Pratish Narayanan, May 8, 2018

For the world’s biggest oil buyers, the imposition of U.S. Sanction on Iran will be a case of déjà vu. Earlier in the decade – before the crude market was rolled by a global glut, before prices were rocked by the biggest crash in a generation, and before American oil began getting shipped all over the world – refiners in Asia had to contend with international financial measures aimed at curbing the Islamic Republic’s nuclear program.

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Headlamp – Higher oil prices don’t relieve the legislature of their duty; Stand for Salmon deception.

May 8, 2018 | Posted in : News, Uncategorized

Why Oil Prices Are Likely To Go Higher
Oil Price.com, Nick Cunningham, May 7, 2018

WTI just hit $70 per barrel for the first time since late 2014. Prices continue to edge higher, pushed along by strong demand and falling inventories. But it is the geopolitical narrative that has really taken hold as of late, with the danger of supply outages looming in the next few weeks. This is the fateful week in which the Trump administration has to decide on what to do with the Iran nuclear deal. All signs point to him attempting to terminate the agreement. The return of sanctions could knock off as much as 400,000 to 500,000 bpd from Iranian supply, a huge volume that would put the oil market in danger of a shortage.

Our Take: A continued increase in the price of oil is obviously good for Alaska, however, the Alaska state legislature should still focus on a long-range fiscal plan that is less dependent on oil tax revenue.

 

GUEST COMMENTARY: The deception of Stand for Salmon
Alaska Journal of Commerce, Curtis Thayer, May 7, 2018

The Alaska Chamber has long been an outspoken voice for pro-business policies that grow our economy and create economic opportunities for Alaskans. For several years, especially during the recent economic slump, we’ve advocated for a state fiscal plan that limits government spending and supports private sector growth. Our annual public opinion survey found that 60 percent of Alaskans rate the state’s economy as poor. It’s a shocking number, and an indicator of how pessimistic Alaskans are about their ability to work and make a living here. Alaska already has the unwanted distinction of having the highest unemployment rate in the country. Getting our economy and our state back on track requires some hard decisions and a vision for the future, but, in the short term, we have some serious obstacles right before us.

Our Take: The threat to Alaska’s economy is real, but this misguided ballot initiative also threatens individual Alaskans and their private property rights.

 

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Headlamp – Let’s Make a Deal – BP & AGDC sign Gas Sales Precedent Agreement.

May 7, 2018 | Posted in : News

HOT OFF THE PRESS: May 7, 2018 (ANCHORAGE) — The Alaska LNG Project reached a historic milestone today as BP Alaska and Alaska Gasline Development Corporation (AGDC) announced the parties have agreed to key terms of a Gas Sales Agreement, including price and volume. The terms are captured in a Gas Sales Precedent Agreement signed May 4, 2018. The parties anticipate finalizing a long-term gas sales agreement in 2018 for AGDC to purchase BP Alaska’s share of 30 trillion cubic feet (TCF) of gas from the Prudhoe Bay and Point Thomson units. BP operates the Prudhoe Bay field – the largest oil and gas field in North America and owns a 26 percent share of Prudhoe Bay as well as a 32 percent share of the nearby Point Thomson field.

Alaska governor to enter Democratic primary in election bid
AP News, May 6, 2018

Alaska’s governor and lieutenant governor are planning to run for re-election by entering the Democratic primary in August. Gov. Bill Walker and Lt. Gov. Byron Mallott had planned to bypass the primary and go directly to the November election by gathering signatures to run as unaffiliated candidates, the Fairbanks Daily News-Miner reported.

Our Take: “In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.” -Warren Buffett

Report says Alaska most profitable region for ConocoPhillips, by far
Anchorage Daily News, Alex DeMarban, May 6, 2018

An Alaska state senator on Friday said generous tax benefits for oil producers must end after a legislative report he requested found Alaska is by far the most profitable region in ConocoPhillips’ global portfolio.

Our Take: Incentives have led to investment and ConocoPhillips is doing well in Alaska. Why would Alaska do anything to change that dynamic? When they do well – Alaska benefits with tax revenue, jobs and a stronger economy.  

Key deal for LNG Canada
Upstream, May 6, 2018

Shell and its partners in the proposed LNG Canada project have moved a step closer to sanctioning the liquefied natural gas scheme in British Columbia after awarding a key contract to a consortium of Fluor and JGC, writes Eoin O’Cinniede. US contractor Fluor confirmed late last week that it and its Japanese partner were handed the engineering, procurement and construction deal for the proposed development at Kitimat.

Our Take: A final investment decision on a large LNG project by our Canadian neighbors is getting closer. Alaskans can learn from the process.

Stand vs. Salmon and Stand for Alaska dig in for long fight
Mat-Su Valley Frontiersman, Tim Bradner, May 5, 2018

The state supreme court has yet to rule on whether the contentious “Stand for Salmon” ballot proposition will make it to the voting booth this year, but groups on both sides of the issue are already in combat. “Stand for Alaska,” the campaign formed to oppose the initiative, already has social media carrying its message that the proposition will cause economic disruption. Stand for Salmon, which supports the proposition, says it has grassroots “people-to-people” efforts underway, and that Alaskans widely support new protections for salmon.

Our Take: We concur with the folks at Stand for Alaska when they say “Alaska is recognized as a world leader in responsible fish and habitat management. Alaska has numerous policies, acts and regulations that have been updated over the years and work together to protect fish habitat. Stand for Alaska believes the ballot measure is a misguided attempt to improve salmon habitat protections that will have serious unintended consequences for Alaska and Alaskans.” Check out their website at www.standforak.com

HB 331: How a “Good Deal” Quickly Becomes a Bad Deal for Alaskans
Thoughts on Alaska Oil & Gas, Brad Keithley, May 6, 2018

Last week on the eve of the House Finance Committee meeting and subsequent House floor debates on HB 331 — the bill authorizing the issuance of state bonds to pay for oil tax credits — a new analysis emerged asserting that the bonds might be a “good deal” for Alaska. Bonding for Tax Credit Purchases may be a Good Deal for Alaska (May 2018).

Our Take: If HB 331 can be used to encourage legislators and the Governor to control spending – we like it even more!

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Headlamp Extra Edition – More money, debts paid, people working. What’s not to like?

May 4, 2018 | Posted in : News

HB 331 passed the Alaska house yesterday and is headed to the senate. Opponents of the bill say it is kicking the can down the road and placing a burden on future Alaskans. Supporters say it is a good, not necessarily the best, solution to a problem that is having a significant, negative impact on our economy.

Ed King, of King Economics Group in Juneau, makes a compelling argument that the bill is a good deal for the state from a cash flow basis.  

Bonding for Tax Credit Purchases may be a Good Deal for Alaska

The Alaska State Legislature is currently considering a bill that would allow the Department of Revenue (DOR) to borrow money to make oil tax credit purchases. The bill is called HB 331 in the House and SB 176 in the Senate. Both bills sit in their respective finance committees but are said to be a part of the final compromise to get done with the session. The entire issue is very touchy and ripe for political rhetoric. I’m not going to get into all that. This quick analysis doesn’t speak to the politics of the issue, or the legal merits that have been raised. The only thing this analysis contemplates is the money. I’ll give you the conclusion up front. If you are committed to purchasing these credits, this bill is a good deal for the State (from a pure cash flow basis). I feel like I need to explain that caveat, so I’ll come back to it at the end.

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