Morning Headlamp – “A monkey fight inside a clown car driving into a dumpster fire.”

June 22, 2017 | Posted in : News

Destroying a village to save it. Hats off to Andrew Jensen at the Alaska Journal of Commerce for another practical look at what’s really happening in Juneau. If you read one story this morning, make it his.

Budget deal “imminent.“ Alaska House and Senate leaders took a major step Wednesday toward averting a July 1 government shutdown by agreeing to an $8 million cut to the state university system — a move members said brings them close to a budget deal. “We still don’t have a deal. But I think a deal is imminent,” said Bethel Sen. Lyman Hoffman, co-chairman of the Senate Finance Committee and the sole Democratic member of his chamber’s Republican-led majority.

Headlamp will be watching the conference committee at 10am today to see how the final key details are handled: education funding, draws from the Earnings Reserve Account and Constitutional Budget Reserve and the Oil and Gas Tax Credit Capitalization Fund. 

Stormy Weather. Tropical storm Cindy  has shut one-sixth of the oil production in the Gulf of Mexico, halted vessel unloadings at a major oil-import terminal and triggered a force majeure on a system that collects natural gas from offshore platforms. Once Cindy makes landfall, it could threaten to disrupt even more energy operations in a region that accounts for about half of the nation’s oil-refining capacity. “The biggest impact would be on shipping activity which will remain suspended through Friday,” said Andy Lipow, president of Lipow Oil Associates in Houston. “Storm sets off high winds and waves that will impact ability of ships to go through open water.”

Pigs in the Pipeline. June 30 is a big anniversary for one of the most famous pipeline systems in the world. The Trans-Alaska Pipeline is 40-years-old. Alyeska engineers are working to make sure more anniversaries are celebrated. Hats off to Admiral Barrett and the team at Alyeska for dedicating their careers to protecting and maintaining the lifeblood of Alaska. Headlamp wishes you all a very Happy Birthday! 

Here comes the judge. Oil will continue to flow through the Dakota Access Pipeline through the summer while authorities conduct additional review of the environmental impact, after a judge on Wednesday ordered more hearings in coming months. Last week, U.S. District Court Judge James Boasberg in Washington ruled in favor of Standing Rock Sioux and Cheyenne River Sioux tribes, who said more environmental analysis of the Dakota Access line should have been carried out.

How do you like 10% unemployment? Kristina Andrew greets Nick Harvey as he steps into the Sustaining Bristol Bay Fisheries booth at the Dillingham harbor. He’s hoping to buy a “No Pebble Mine” flag for his boat to fly. Andrew, the director of Sustaining Bristol Bay Fisheries, is out of flags, but Harvey agrees to sign a letter to the Environmental Protection Agency instead. The letter is addressed to Environmental Protection Agency administrator Scott Pruitt. It expresses disappointment that the EPA and Pebble Limited Partnership recently reached a settlement that will allow the Pebble project to proceed into a normal permitting process. Headlamp is thrilled that that Pruitt is following the law and allowing a project to proceed through the established process. 10% unemployment in Dillingham won’t be reduced without responsible resource development. But we sure appreciate Nick Harvey’s interest in keeping responsible resource development out of the Bristol Bay area; his willingness to deny the region economic freedom as long as he can fish there is interesting. Headlamp notes Harvey lives in SEATTLE. 

Softer Blow to UA System. The state Legislature’s conference committee cut $8 million from the University of Alaska’s budget on Wednesday, a softer blow than the nearly $22 million reduction proposed by the state Senate. The six-member committee approved the UA budget without discussion at the meeting early Wednesday evening. Under the approved UA operating budget, the university system will receive $317 million in state funding for 2017-18, down from the $325 million it got in the current fiscal year.

Hilcorp Doubles Down On Cook Inlet. Hilcorp spent over $3 million for exploration rights to 14 federal offshore leases covering about 76,615 acres in Cook Inlet. Hilcorp, the dominant Cook Inlet oil producer, was the only company bidding in the U.S. Bureau of Ocean Energy Management’s lease sale held Wednesday. It was also the only company bidding in a state Cook Inlet lease sale held earlier Wednesday, picking up six tracts for a total $922,392.30 in bids, according to the Alaska Division of Oil and Gas. “This lease sale is good news for the future of affordable energy in southcentral Alaska, and a good sign for our ability to develop more of the prolific resources in Alaska’s OCS,” Senator Lisa Murkowski said. “I appreciate the new administration’s decision to move forward with this sale, and hope it marks the return of regular sales that restore access to more of our federal waters.”

 

First Reads

Alaska Senate leader: Budget deal to avert shutdown ‘imminent’
Alaska Dispatch News, Nathaniel Herz, June 22, 2017

University of Alaska budget cut by $8 million in legislative compromise
Alaska Dispatch News, Tegan Hanlon, June 22, 2017

Hilcorp makes industry’s first move in decades into federal waters of Cook Inlet
Alaska Dispatch News, Yereth Rosen, June 22, 2017

Storm Cindy Bears Down on Gulf Coast After Curbing Oil, Gas
Bloomberg, Brian K Sullivan, June 21, 2017

Oil to keep flowing in Dakota line while legal battle continues
Reuters, Pete Schroeder, June 22, 2017

AJOC EDITORIAL: Democrats destroying the village to save it
Alaska Journal of Commerce, Andrew Jensen, June 21, 2017

Advocates opposed to mining in Bristol Bay region ramp up summer outreach
Alaska Public Media, Avery Lill, June 21, 2017

Alyeska Pipeline is trying to engineer their way out of low oil flow in TAPS
KTVA, Emily Carlson, June 21, 2017

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Morning Headlamp: Federal Budget Reductions Defended; House Majority Budget and a Downgrade

June 21, 2017 | Posted in : News

 AK Supreme Court hears case on PFD payouts. The Alaska Supreme Court heard arguments on Tuesday in a lawsuit over whether Gov. Bill Walker had the authority to veto part of the 2016 Alaska Permanent Fund dividend, an action he took last year in the face of a large budget deficit. The veto halved dividends to just over $1,000, causing divisions across the state over whether the governor took the right approach to dealing with Alaska’s fiscal crisis.

Headlamp watched the hearing and noted the justices took issue with Senator Wielechowski’s lack of delineation between “proceeds” and “income” as they related to the dedication clause and with his continued referral to voter and legislative intent. The state’s attorney compared the PFD veto to former Governor Frank Murkowski’s veto of the longevity bonus. 

Downgrade Again? S&P put Alaska’s AA+ credit rating on Credit Watch with Negative Implications. “(W)ithout structural fiscal reform in the 2017 legislative session, we would likely lower the state debt ratings,” S&P said, adding that it expects lawmakers to enact a budget for the 2018 fiscal year in the next 90 days. If the state adopts “a balanced budget with fiscal reforms that does not significantly rely on reserves,” the agency said it may remove the state’s ratings from the credit watch without a downgrade. The ratings agency indicated that the state finances have been essentially running on reserves the last several years.

Note to House Majority: you passed an 89 page amendment at the 11th hour containing a $5 billion draw from the earnings reserve to fund your unicorn budget. THAT would be considered to be “significantly relying on reserves.” 

 Zinke defends budget cuts. Interior Secretary Ryan Zinke on Tuesday defended the $1.6 billion funding cuts President Donald Trump has proposed for his department, telling a Senate hearing that “this is what a balanced budget looks like. I support the president’s budget,” Zinke said, tough decisions and all. “It does not favor oil and gas and coal over any other strategy.” Committee Chairwoman Lisa Murkowski, R-Alaska, supported Trump’s effort to seek revenue from gas exploration in her state, which she said has the nation’s highest unemployment rate. According to Murkowski, developing “one-ten-thousandth” of Arctic refuge would generate tens of millions of dollars and create much needed jobs.

Deep in the heart of Texas. Hydraulic fracturing hasn’t contaminated groundwater in Texas, isn’t an earthquake hazard, and has been a boon for the state’s economy, according to a study released Monday.  The new study’s conclusions on drinking water are in line with multiple other studies of hydraulic fracturing, popularly known as fracking.

The Vikings. Norway offered a record number of blocks for oil and gas exploration in the Arctic Barents Sea on Wednesday, brushing off concerns about the risks of drilling in the remote, icy environment.

The oil ministry proposed 102 blocks, comprising 93 in the Barents Sea and nine in the Norwegian Sea.

The application deadline for Norway’s 24th Arctic licensing round is Nov. 30 and the aim is to announce awards during the first half of 2018, the ministry said.

Alaskan to head Fisheries Management for NOAA. Congratulations to Chris Oliver of Anchorage on his recent appointment to manage fisheries nationally for the National Oceanic and Atmospheric Administration! Oliver has since 2000 led the North Pacific Fisheries Management Council, for which he has worked for 27 years. He gained broad support for the position from fisheries groups and members of Alaska’s congressional delegation. The agency is responsible for managing sustainable U.S. fisheries under the Department of Commerce, as well as recovery and protection of species of whales, sea turtles and corals. “I can’t think of a more qualified or capable individual to manage America’s fisheries than Chris Oliver – the first Alaskan ever to permanently hold this important role,” said Alaska Sen. Dan Sullivan.

 

First Reads

Did Gov. Walker have veto power over PFD payouts? Alaska Supreme Court hears the case.

Alaska Dispatch News, Jeanette Lee Falsey, June 21, 2017

S&P warns Alaska again of possible credit downgrade, citing need for fiscal reform

Alaska Dispatch News, Annie Zak, June 21, 2017

Alaskan appointed to head U.S. fisheries management for NOAA

Alaska Dispatch News, Erica Martinson, June 21, 2017

Study Finds Fracking Doesn’t Harm Drinking Water in Texas
The Daily Signal, Fred Lucas, June 19, 2017

Norway offers record number of blocks for Arctic oil exploration
Reuters, Nerijus Adomaitis and Alister Doyle, June 21, 2017

Zinke defends Trump’s sharp cuts at Interior. ‘This is what a balanced budget looks like.’
The Washington Post, Darryl Fears, June 20, 2017 

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Morning Headlamp Doyon makes a Discovery and Hilcorp Increases Production.

June 20, 2017 | Posted in : News

How low can you go? Oil prices fell about 1 percent on Monday to a seven-month low as market players saw more signs that rising crude production in the United States, Libya and Nigeria undercut OPEC-led efforts to support the market with output curbs. OPEC supplies jumped in May as output recovered in Libya and Nigeria, two countries exempt from the production cut agreement. Libya’s oil production has risen more than 50,000 bpd after the state oil company settled a dispute with Germany’s Wintershall, a Libyan source told Reuters.

Oil in Middle Earth would be a win for everyone. An Alaska Native corporation’s third exploration well discovered remnants of crude oil that may have oozed through the area, raising hopes oil can be found elsewhere in large quantities in the Nenana Basin west of Fairbanks. Doyon has said a big gas discovery could lower energy costs for its Alaska Native shareholders. A large discovery of oil or gas could also boost incomes, through new jobs and shareholder dividends related to sales revenue. Oil, far move valuable a commodity than gas, would help Doyon’s bottom line.  Headlamp notes that exploration tax credits have helped Doyon in their efforts. 

Hilcorp sets sights on increased production. With the discovery of an overlooked pocket of offshore oil, Hilcorp’s Cook Inlet production is growing again. The so-called M28 well produced more than 1,000 barrels barrels daily, or about 10 percent of production in the aging basin. Scores of other Inlet wells produce a fraction of that amount, on average. Finding hidden gems is part of Hilcorp’s business plan. The privately held, Houston, Texas-based company rejuvenates old fields after oil and gas production has plummeted. Today, Hilcorp is the Inlet’s dominant producer, owning 15 of 17 offshore platforms in a region where oil and gas production peaked long ago. Hilcorp also elbowed its way onto the Slope, acquiring BP properties in 2014 to become Alaska’s fourth largest producer.

Fairbanks smoke ban requires waivers for burns. Under new smoke bans adopted by the Fairbanks North Star Borough Assembly, to burn wood when the air is bad will require a $100 waiver. “Things are going to have to get more mandatory as we move forward,” Borough Assemblyman John Davies said. Assemblymen Lance Roberts and Guy Sattley were opposed to the new rules. “Registration isn’t helping us solve the problem. This is paperwork,” Roberts said. Previously, burners who knew they had good stoves and dry wood could more or less ignore burn bans so long as their chimneys weren’t puffing out too much smoke. This winter, only those with a waiver will be allowed to burn during a Stage 1 ban. During a Stage 2 burn ban, no wood or coal burning will be allowed in the Air Quality Control Zone, which encompasses large portions of Fairbanks and North Pole. The borough is under pressure from the U.S. Environmental Protection Agency to reduce smoke pollution on winter days when the air is stagnant.

 

First Reads

Recovering from Cook Inlet leaks, Hilcorp targets increased production in Alaska

Alaska Dispatch News, Alex DeMarban, June 19, 2017

New smoke pollution rules make it harder to ignore burn bans

Fairbanks Daily News Miner, Amanda Bohman, June 20, 2017

Oil falls to seven-month low on more signs of growing crude glut
Reuters, Scott DiSavino, June 19, 2017

Evidence of oil pushes Doyon drilling campaign forward
Alaska Dispatch News, Alex DeMarban, June 19, 2017

Exxon Mobil lends support to a carbon tax proposal
New York Times, John Schwartz, June 20, 2017

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Morning Headlamp – Will raising oil taxes fix the problem with Alaska’s finances?

June 19, 2017 | Posted in : News

Special Session Part 2. Unresolved as of Friday, the state’s budget gap lingers as Governor Walker called legislators back for a second special session. The Republican-led state Senate gaveled out Friday morning, rejecting a plan from the House which would have taken $5 billion dollars out of the earnings reserve account of the Permanent Fund. Four minutes after the Senate’s adjournment, Walker signed his proclamation convening the next special session, which began at 1 p.m. Walker, at a hastily called news conference in his third-floor Capitol office, said he remains committed to getting new revenue bills — like taxes — through the Legislature, adding that the state’s huge deficit will ultimately force their adoption. But he cited lobbying from “businesses, and business people” that convinced him that averting a shutdown should now be the Legislature’s sole focus.

How did we get here? With the Alaska Legislature unable to pass an appropriations bill and budget five months after it started work this year, a state government shutdown is looming on July 1. Their second special session began Friday. The operating budget is the only thing that the Legislature absolutely has to do and it is the only topic for this special session so far. If lawmakers don’t pass a budget by July 1, all but the most essential state government services will shut down.

Headlamp would note this line from the article “the goal is to fix the structural problem with Alaska’s finances caused by the crash in oil prices and long-term decline in production on the North Slope.”

If this is the “goal,” shouldn’t the House Majority explain whether hiking oil taxes will accomplish it?  Not to mention the impact a tax increase would have in the middle of a massive multiyear layoff? Just sayin’…

First Reads

What’s the holdup? The Alaska Legislature’s budget standoff, explained

Alaska Dispatch News, Nathaniel Herz, June 17, 2017

Walker calls 2nd special session to avert a state government shutdown, puts fiscal measures aside

Alaska Dispatch News, Nathaniel Herz, June 17, 2017

 

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Morning Headlamp –Speaker of the House Admits Failure as House Majority goes Nuclear

June 16, 2017 | Posted in : News

WHAT. JUST. HAPPENED? In a rare move, the House Majority turned their back on compromise discussions, inserted their version of the operating budget as an 89 page amendment to SB 23 (the capital budget), passed the bill and adjourned. The action took $5 billion dollars out of the earnings reserve account of the Permanent Fund. This move will lead to either another special session or a government shutdown. 

#drainandpray

Here’s what others are saying about their actions: 

“It was a stunning night for the Alaska House of Representatives, and for all the damage it’s done it won’t accomplish a thing.” Matt Buxton, The Midnight Sun

“The move, on what would be the second-to-last day of the special session, appears to be more of a restatement of the largely Democratic House majority coalition’s priorities than a negotiated agreement with the Republican-led Senate to avert a government shutdown July 1.”  Nat Herz, Alaska Dispatch News

“The House’s do-or-die move Thursday night was extraordinarily rare, but not unprecedented in the annals of the Legislature. In 1993, according to Legislative records, the House passed a drop-dead bill onto the Senate, which rejected it. If history is any guide, however, there’s room for optimism. A few days after the Senate rejected the bill, the two sides reached a compromise.” James Brooks, Juneau Empire

“House Speaker Bryce Edgmon told reporters it was not an ideal way to end the session and fell short in achieving his House majority coalition’s goal of getting in place a plan to address the state’s multibillion-dollar deficit.”  Becky Boohrer, AP

“We were surprised by the House Majority’s actions tonight. They did not get the job done for Alaska. A compromise is required to protect Alaskans and put the state on a stable fiscal path.” Gov. Bill Walker

“Tonight’s House floor action was a betrayal of many conversations between the two bodies in an attempt to compromise.” Senator Pete Kelly

 

First Reads

Alaska’s House passes a budget and adjourns, leaving the Senate to take it — or await another special session
Alaska Dispatch News, Nathaniel Herz, June 16, 2017

It’s ‘open season’ for those interested in buying or selling gas as part of Alaska LNG project
Alaska Dispatch News, Alex DeMarban, June 16, 2017

$50 million in federal funds headed to Alaska for fish and wildlife services
Alaska Dispatch News, Erica Martinson, June 16, 2017

The Senate and Walker swiftly reject the House Majority’s nuclear option budget
Midnight Sun, Matt Buxton, June 15, 2017

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Morning Headlamp – Two Minds without a Single Thought; FILL THE PIPELINE WITH NEW DISCOVERIES

June 15, 2017 | Posted in : News

Two minds without a single thought. Speaker of the House Bryce Edgmon and House Rules Chair Gabrielle LeDoux threw their commitment to a fiscal plan out the window yesterday. The Alaska House passed a modified capital budget with a surprise, bipartisan amendment to inflate Permanent Fund dividends to more than $2,000 this year, nearly double what they had been prior to Wednesday. But the vote may have the effect of prolonging budget negotiations in the face of a government shutdown – all this after the majority claimed they were designing a bill to avoid a conference committee.  Headlamp supposes shutting down the government by increasing the deficit to almost $4 billion dollars does avoid a conference committee…

Thumbs Up to Representatives Gara, Grenn, Josephson, Kito, Kreiss-Tomkins and Ortiz for voting against their caucus on such a significant policy reversal. Thumbs Down for their vote to pass the bloated capital budget anyway, adding close to a billion dollars to the deficit.     

Thumbs Down to Representatives Eastman, Johnson, Millett, Neuman, Rauscher, Reinbold, Saddler, Sullivan-Leonard, Talerico, Tilton and Wilson for casting a vote that doesn’t get them any closer to restoring the PFD, but gives the House Majority a pandering win with the public. 

Two Thumbs Up to Representatives Birch, Chenault, Johnston, Knopp, Kopp, Pruitt and Thompson for holding the line and voting no on the amendment to double the PFD. 

FILL THE PIPELINE. By 2030, Wood Mackenzie predicts that 40% of oil production from the North Slope will be from fields not yet in production. Source: Wood Mackenzie. The discoveries come at a critical time for the North Slope, whose link to export markets has been the Trans-Alaska Pipeline System. Without the volumes from these fields coming on line in the next decade, the flow through the aging line was expected to drop below the level needed to justify the cost of keeping it operating. “We will see what happens,” said Alison Wolters, a research analyst for Wood Mackenzie adding, “It could be difficult to plan development and secure capital when there is so much volatility in the fiscal environment.”

America can see Russia from Norway…Spy toys abound for the US in Norway in response to President Vladimir Putin of Russia strengthening his country’s military and economic role in the Arctic. He has vowed to make Russia the dominant player in the high north as climate change opens up new shipping routes from Asia to Europe, new gas and oil prospects and a new arena for great power rivalry. The bedrock of Russia’s Arctic ambitions, said Katarzyna Zysk, an associate professor at the Norwegian Institute of Defense Studies, is the role of the region in Russia’s nuclear deterrence and naval strategies. At the center of these is the Borei submarine, a new generation of strategic weaponry that can carry at least 12 ballistic missiles, each armed with multiple nuclear warheads.

Educated into imbecility. Controversy now a “scientific” consideration in resource development? US District Judge James Boasberg on Wednesday instructed the US Army Corps of Engineers to conduct a new environmental review of the Dakota Access Pipeline but did not suspend the pipeline’s operations. He ruled that the US Army Corps’ review “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”

Business group runs ads against income tax proposal. Prosperity Alaska spent over $10,000 on anti-income tax advertisements that ran in Anchorage on Wednesday. The ads, from Prosperity Alaska, hit KTUU’s airwaves Tuesday and KTVA’s on Wednesday, according to filings with the Federal Communications Commission. The 30-second commercial features Scott Hawkins, the chair of the group’s board, petting a dog in a kitchen, where he argues “big-spending House liberals are crying wolf. But there is no wolf. Alaska has plenty of money to fund essential state services and pay a healthy dividend,” Hawkins says in the commercial. House majority members want to raise $700 million for the state budget with an income tax, which would ask higher income Alaskans to pay higher rates.

ReadlID extension. Alaskans will receive another extension on the Readl ID Act to allow access to military bases and federal facilities through early October. Leslie Ridle, deputy commissioner of the Alaska Department of Administration, said the state received news Wednesday that Homeland Secretary John Kelly would sign off on the extension. That extends the grace period for non-compliant Alaska IDs through Oct. 10, 2017.

Legislative action imperative for energy industry in Alaska. HuffPost contributor John Burnett called for lawmakers to arrive at a budget solution in order to “avoid cutting the legs out from under a sector that has, for generations, served as the lifeblood of Alaska’s economy.” At the heart of resolving differences, a fair and optimized tax structure that addresses the realities of today’s market but is not driven by cyclical price dynamics. The House bill, HB 111, represents a significant tax hike on the oil industry that would darken the future of the sector in Alaska with a “massively significant” change to the way that taxes are assessed. By 2026, the tax hike will amount to nearly $500 million, and the bill will increase the cost of producing oil in Alaska by $7 per barrel. If it’s not cutting off the legs, at minimum it would be hamstringing any hope for recovery.

 

First Reads

Alaska business-backed group spends more than $10,000 on last-minute anti-income tax television ads
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Alaskans get another extension as state prepares to implement Real ID
Alaska Dispatch News, Suzanna Caldwell, June 15, 2017

Budget standoff continues as House votes to double Permanent Fund dividends
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Encouraging American Energy Independence
Huffington Post, John Burnett, June 15, 2017

On a tiny Norwegian island, America keeps an eye on Russia
The New York Times, Andrew Higgins, June 13, 2017

Judge: Dakota Access Pipeline needs further environmental review
The Hill, Devin Henry, June 14, 2017

Major Alaskan Discoveries Promote Great Expectations
Journal of Petroleum Technology, Stephen Rassenfoss, April 21, 2017

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Morning Headlamp – Partnership between Pebble and ASRC; More tax criticism

June 14, 2017 | Posted in : News

Oil tax impasse. HB111 remains at the heart of the tax legislation sitting before the House – Senate Conference Committee. The dispute centers on whether to increase companies’ effective tax rates while scaling back deductions — steps favored by the House but opposed by the Senate. Soldotna Republican Sen. Peter Micciche, the majority leader, suggested in an interview Tuesday that the differences between the two chambers could sink the whole bill, in spite of the agreement that the cash payments should stop. “I think it would be a shame at this point to continue offering cash credits because of the extras that the House chooses to tag onto the bill. We would really like to end that program this year,” Micciche said. Headlamp agrees with Senator Micciche. The Governor, the Senate and the House all started the session by saying that cashable credits had to go. The Senate version of the bill accomplishes that. 

Pebble teams up with ASRC Energy Services. The Pebble project developer has teamed up with an Alaska Native corporation from the North Slope, drawing sharp opposition from project opponents in Bristol Bay who say the Pebble partner, an Arctic Slope Regional Corp. subsidiary, should stick to projects in its own backyard. The Pebble Partnership announced Tuesday that it has contracted with ASRC Energy Services Alaska, an ASRC subsidiary, to increase contracting opportunities for Alaska Native village corporations with land holdings near the project. Myrtle Anelon, a longtime board member with the village corporation from Iliamna, population 110, said Tuesday that she supports Pebble’s effort to involve local corporations, “Our young people don’t have jobs. They don’t have training. They need to have something.”

House tax plan draws ire from Outside. In a piece for TownHall, columnist Brian McNicoll criticized the Democrat-led plan in the House to close Alaska’s multibillion dollar budget gap through tax and regulation on the energy sector. According to McNicoll, “if Alaska wants to be an economic tiger again, it needs to make the hard choices on state spending now. It needs to get off the top of the dependency indices and get its residents back to work.” Energy has been, is right now, and will be where the jobs lie. A tax structure that penalizes producers will only hurt Alaska in the long run.

The House plan also drew criticism from columnist Seton Motley, who calls the plan to tax Alaska’s largest job producers both needless and pointless – especially as the House refuses to cut back on recent government spending increases.

 

First Reads

Pebble and Native corporation team up, frustrating mine opponents

Alaska Dispatch News, Alex DeMarban, June 14, 2017

Alaska Legislature’s impasse over oil taxes is jeopardizing a bipartisan consensus

Alaska Dispatch News, Nathaniel Herz, June 11, 2017

Not a Good Time to Go Soft on Spending, Alaska

TownHall, Brian McNicoll, June 14, 2017

The Power To (Over)Tax – Is The Power To Destroy

Red State, Seton Motley, June 14, 2017

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Morning Headlamp – Who blinks first? Budget Reductions or an Income Tax?

June 13, 2017 | Posted in : News

Comprehensive fiscal reform no longer in sight. As the Alaska Legislature continues to stumble toward the final days of the special legislative session with no resolution to budget woes in sight, long term plans for fiscal stability are also slipping away. “Political realities may not allow for a comprehensive plan. It may be that we just have to continue working piecemeal toward a plan over a long period of time,” said Mike Navarre, the Kenai Peninsula Borough mayor who’s been lobbying for long-term fiscal reforms. The legislative impasse has dragged on for nearly five months, with Gov. Walker’s administration last week warning of a huge array of impacts if lawmakers can’t agree on a budget by July 1 and the state government shuts down.

A silver lining in the cloud of low oil prices…Eni US Operating Co. has filed a plan of operations amendment with Alaska’s Division of Oil and Gas proposing the drilling of two extended reach exploration wells from Spy Island into the Nikaitchuq North prospect. The well location is situated in the federal outer continental shelf of the Beaufort Sea. The proposed well site lies immediately north of the operating Nikaitchuq field. The drilling would take place from an existing Nikaitchuq field pad on Spy Island. Headlamp would jump for joy if it could. Drill rigs bring jobs – high paying jobs! 

Will the Governor like us for $50 million? The House Majority has decided that giving $5O million back to AGDC may curry favor with the Governor – which is more important to them than troopers, prosecutors and road maintenance. Sunday, members of the House’s finance committee approved a capital construction budget that reverses a Senate move to divert funding from the pipeline to other state needs, including the hiring of more Alaska State Troopers. The committee kept the money with the pipeline after Gene Therriault of the Alaska Gasline Development Corporation told its members that “the loss of that funding for the effort would be severely detrimental to moving forward.”

Who will blink first? Both the House and Senate must pass a budget compromise, but, the House wants new revenues first — like oil tax legislation and a broad-based tax. Meanwhile, the Senate wants deeper cuts, and to use some of the Permanent Fund’s earnings — as outlined in a percentage of market value plan (POMV) for state funding. Senate Majority leader Peter Micciche says the Senate is now willing to give up some of those key pieces if it could just get the one cornerstone of the puzzle — a budget. “At this point, the Senate has retracted to passing and funding a budget, which includes the POMV, right, from the earnings reserve, which has never been done before. The Senate is not asking for anything else,” Micciche said. The Senate has rejected the idea of a broad-based tax, which is where crafting a compromise gets tricky.

All plugged up? State inspectors are launching efforts to require oil and gas companies to properly close hundreds of unused wells scattered across Alaska that stopped producing long ago. Cathy Foerster, the Alaska Oil and Gas Conservation Commission chairwoman, acknowledged that the agency has sometimes been lax about requiring operators to permanently shut down the old wells, some of which date back to the 1960s. But the agency is initiating a two-part effort that is expected to lead to the permanent shutdown of some wells and requirements for bigger surety bonds to protect the state if the wells aren’t properly plugged with cement before they’re abandoned.

 

First Reads

Hope for a comprehensive fiscal plan for Alaska appears to be slipping away

Alaska Dispatch News, Nathaniel Herz, June 13, 2017

Uber and Lyft are coming to Alaska, but they won’t be coming to Juneau’s most popular tourist destination

Juneau Empire, James Brooks, June 11, 2017

Hundreds of unused oil and gas wells dot Alaska. The state wants many closed.
Alaska Dispatch News, Alex DeMarban, June 12, 2017 

House committee reverses Senate, plans to keep natural gas pipeline funded

Juneau Empire, James Brooks, June 13, 2017

Alaska lawmakers optimistic about passing budget by Friday
KTVA, Liz Raines, June 12, 2017

Italian giant Eni proposes two extended reach wells in Alaska
Oil Pro, Oil Pro Staff, June 13, 2017

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Morning Headlamp – House says “NO” to more troopers, prosecutors, road maintenance and snow plowing

June 12, 2017 | Posted in : News

Here to stay. Hilcorp Energy has big plans for Alaska that include drilling on the North Slope and in the Cook Inlet. They see  Alaska as a “great place of opportunity,” a place where the company anticipates operating for many years, David Wilkins, senior vice president of Hilcorp Alaska LLC, told the Alaska Oil and Gas Association’s annual conference on May 31.

Foster fostering fairness? Rep. Neal Foster, Nome and co-chair of House Finance seems to believe there is a deal to be made on the capital budget with the following among the House Finance Committee’s major changes to the Senate’s version of the proposal: Setting aside $40 million for cash incentives claimed by oil companies, a sharp reduction from the $288 million proposed by the Senate (the cash incentives, even though unpaid, would still be owed to the companies); rejecting a Senate plan to send $50 million from a natural gas pipeline project account to pay for more troopers, prosecutors, road maintenance and snowplowing;Top of Form setting aside $7 million to replace Kivalina’s school, which Foster said would uphold the terms of a state legal settlement over rural schools; taking away half of the money lawmakers had set aside in previous years for two megaprojects that have since stalled amid the state’s budget crisis — the road out of Juneau and the bridge from Anchorage that would span Knik Arm. Headlamp is intrigued by the double speak from the House Majority – as they pontificate about the need for more troopers, prosecutors and road maintenance, they reduce the funding for them. 

Breaking down barriers. The Trump administration may enforce restrictions on the length of environmental reviews as part of an effort to streamline the project approval process in his $1 trillion infrastructure package. Transportation Secretary Elaine Chao, speaking at a Competitive Enterprise Institute dinner Wednesday evening, outlined some of the broad details of Trump’s rebuilding proposal.
The plan is expected to roll back regulations that can slow down transportation projects and streamline the lengthy construction approval and permitting process, with the goal of bringing the timeline from as long as 10 years down to two years.

Budget Battles and Incident Command. The state ferry system, Division of Motor Vehicles, and the 2.5 million fish housed at state hatcheries could be among the casualties if the Legislature fails to prevent a state government shutdown July 1st. Governor Walker, in a news conference, told reporters that his administration doesn’t have the “luxury” of counting on a deal to emerge. He announced he would set up an “incident command structure,” headed by Attorney General Jahna Lindemuth, to make sure the state is prepared for a shutdown. Without a budget and its appropriations, Walker said the Alaska Constitution allows his administration to continue to spend money on programs to ensure life, health and safety — but no others. Other impacts include state park rangers and visitor centers, payment of unemployment insurance claims, summer road construction, and state museum operations.

 

First Reads

Gov. Walker’s administration tells Alaskans what they can expect in a state government shutdown
Alaska Dispatch News, Nathaniel Herz, June 10, 2017

As budgets shrink, private management of Alaska state park sites grows
Alaska Dispatch News, Annie Zak, June 11, 2017

Saudi investors eye Russian Arctic LNG
The Independent Barents Observer, Atle Staalesen< June 12, 2017

Here for the long haul
Petroleum News, June 11, 2017

House panel holds back cash subsidies for oil companies to fund other projects
Alaska Dispatch News, Nathanial Herz, June 12, 2017

Trump may restrict length of environmental reviews under infrastructure plan
The Hill, Melanie Zanona, June 7, 2017

Support the Senate Version of HB 111
Peninsula Clarion, Gail Phillips & Harry McDonald, June 11, 2017

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Morning Headlamp – More money being invested in energy; will Alaska see any?

June 9, 2017 | Posted in : News

$40B for energy in the first three months. Bank lending that nourished drillers in the nation’s first surge of shale oil has picked up again as oil prices and profits recover, but is likely to remain well below the go-go days of the last boom even as hundreds of drilling rigs and thousands of workers pour into West Texas and Oklahoma. Headlamp would like to think Alaska could stay competitive enough to have some of these funds flow our direction.

Zinke defends Trump’s Budget. Members of a House Appropriations Committee subcommittee raised a handful of complaints about the $10.6 billion budget request for the Interior Department. The budget proposal is $1.6 billion, or 13 percent, lower than current levels, and it slashes funding from programs members said Thursday they support. Among the items of concern, the President’s interest in opening ANWR.

Gov. Walker’s Administration Tells Alaskans What to Expect in a State Government Shutdown. If Legislature fails to halt a state government shutdown on July 1, then the 2.5 million salmon housed at state hatcheries, Alaska ferries and the Division of Motor vehicles would likely be among the principle casualties, according to the latest released on Thursday by Gov. Walker’s administration. Though three weeks away, conversations are underway on state budget deals and broader fiscal strategies to remedy Alaska’s $2.5 billion deficit.

State Shutdown Would Affect Every Man, Woman and Child in Alaska – Including the Dead. Should lawmakers fail to pass a budget July 1, then “Alaska’s impending government shutdown will have a tsunami of effects across the state, government leaders said on Thursday, with implications for every man, woman and child in the state.”

Gov. Walker’s “Compromise” Offer Moves State Lawmakers No Closer to Budget Deal. After Gov. Walker’s efforts to forge a financial deal fell flat, Alaska legislators are working hard ahead of the looming threat of government shutdown in three weeks. However, three weeks into Walker’s special session, “lawmakers have made almost zero progress in public on the state budget and a broader fiscal plan.”

10 Ways a State Government Shutdown Would Impact Alaskans. There are ranging impacts that a State government shutdown could have on Alaskans, across what Gov. Bill Walker has emphasized on “life, health and safety.” The economic impacts are variegated, but the fisheries would be significantly impacted and the “economic impacts of a complete shutdown would be devastating for countless fishing towns and commercial fishermen, and the countless people across the state who rely on salmon to get through the winter may not legally be allowed to fish.” The Department of Natural Resources would also need to curtail several operations, including state park functions and DNR authorizations.

Shutdown Puts Salmon Fisheries at Risk. Alaskan state policies threaten to derail a multimillion dollar fisheries industry. If the government shuts down on July 1, then the salmon hatcheries, ADF&G’s response to wildlife encounters, issuance of drawing and subsistence permits, operations of emergency resource conservation situations, and general commercial salmon harvest would be negatively impacted.

Reality Deniers. Alaska’s employment and economy are ranked “dead last” in the U.S. and “oil prices were the trigger.” Legislature in Alaska has fluctuated recently between those advocating relative “reality in denial” and those who “realized that to continue the same course of only budget cuts was insanity.”

First Reads

Adjusting to smaller role, banks lending again to U.S. drillers

Houston Chronicle, Collin Eaton, June 8, 2017

Lawmakers take aim at Trump’s Interior budget

The Hill, Devin Henry, June 8, 2017

Gov. Walker’s Administration Tells Alaskans What to Expect in a State Government Shutdown

Alaska Dispatch News, June 9, 2017

State Shutdown Would Affect Every Man, Woman and Child in Alaska – Including the Dead

Juneau Empire, June 8, 2017

Gov. Walker’s “Compromise” Offer Moves State Lawmakers No Closer to Budget Deal

Alaska Dispatch News, June 8, 2017

10 Ways a State Government Shutdown Would Impact Alaskans

KTUU, June 8, 2017

Shutdown Puts Salmon Fisheries at Risk

Juneau Empire, June 8, 2017

Reality Deniers

Daily News-Mine, June 9, 2017

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