Headlamp – Climate change solution will create a climate change problem?

January 23, 2018 | Posted in : News

U.S. Supreme Court “seals” the deal. Bearded seals dwelling in the icy waters between Alaska and Russia will remain protected under the Endangered Species Act after the U.S. Supreme Court rejected an attempt to reverse that status Monday. The United States’ highest court announced that it will not hear an appeal filed by oil industry advocates, the state of Alaska, the North Slope Borough and others seeking to overturn the threatened listing granted to bearded seals in 2012. The threatened listing, which applies to bearded seals in the Beringian region and in Russia’s Sea of Okhotsk, had been initially overturned in 2014 by U.S. District Court Judge Ralph Beistline in Alaska as “arbitrary and capricious,” but was reinstated in 2016 by the 9th Circuit Court of Appeals. The legal path for the threatened listing started in 2008 as a result of a lawsuit by the Center for Biological Diversity and Greenpeace seeking Endangered Species Act protections for another ice-dependent seal species, the ribbon seal. In a settlement, NOAA agreed to review the status of all four species of seals that use ice in Arctic waters off Alaska. Ultimately, the ribbon seal did not get Endangered Species Act listing, though it was designated by NOAA as a “species of concern.” Bearded, ringed and spotted seals did get threatened designations, though for spotted seals the designation was only for a distinct population segment outside of U.S. waters.

Climate change solution will create a climate change problem? Widespread use of a futuristic energy technology to remove carbon dioxide from the atmosphere would create severe environmental problems, scientists argue in a new critique, casting doubt on one potential method of helping humanity escape the worst effects of climate change. The technology, known as bioenergy with carbon capture and storage (BECCS), comes in many variations. But the core idea is burning trees or other plants for energy while pulling in the resulting carbon dioxide and storing it below ground. When the plants grow back again, they would pull more carbon dioxide from the air, resulting in a net removal of the greenhouse gas from the atmosphere. BECCS has been used only rarely thus far, but many had hoped widespread use of the technology would provide large amounts of energy while helping to fight climate change. It would be particularly important if the world misses its targets for reducing greenhouse gas emissions. In that scenario, greenhouse gases concentrations would pass the maximum levels climatologists say could avoid bringing about extreme consequences of climate change, and hitting the targets would require “negative emissions” technologies that lower concentrations.

Good news for LNG industry – China cuts back on coal. China is replacing coal with gas, sucking up global supplies of the fuel and pushing up the price of liquefied natural gas to a three-year high. The world’s No. 2 economy is cutting back on coal after President Xi Jinping made a cleaner environment a key priority at last Fall’s Communist Party Congress. That has left large swathes of industry in China struggling with limited gas, including giants like German chemical company BASF SE and local producer Yunnan Yuntianhua Co., as supplies are diverted to households that had previously relied on coal for heating. China’s smog levels are still well in excess of World Health Organization standards, and analysts see no letup in the country’s move out of coal, which releases more greenhouse gas emissions than gas.

Alaska earthquake gets US west coast refiners attention. A 7.9 magnitude earthquake early Tuesday in the Gulf of Alaska has prompted a tsunami warning issued for the coast, which could threaten shipments of Alaska North Slope crude from the Port of Valdez. According to the Alaska Earthquake Center, the quake occurred 166 miles southeast of Kodiak. The Port of Valdez is the southern terminus of the trans-Alaska oil pipeline, through with 548,293 b/d of crude was transported in December, according to the Alyeska Pipeline service company. Neither the Port of Valdez nor Alyeska Pipeline could be reached for comment. ANS crude is consumed largely by US West Coast refiners, and at times has been exported to Asia. The closure of the Port of Valdez or the trans-Alaska pipeline for an extended period would push USWC refiners to seek alternative waterborne exports. Headlamp wonders if lower 48 or international reporters are aware that we do have phones and email here?  The TAPS design is solid  and the TAPS support teams follow great protocols.  Exhibit 1:  It survived the Denali fault quake and nothing happened last night…

Talerico, Tarr and Taxes in House Resources. The House Resources Committee kicked off its first hearing this legislative session with predictable discussion: oil taxes. House Resources Co-chair Geran Tarr (D-Anchorage) wants to increase the minimum rate from 4 percent to 7 percent when prices are above $25 a barrel. If passed by both chambers, the bill could be worth as much as $255 million to the state’s coffers annually, according to a Department of Revenue analysis. For example, when the market price for North Slope oil hits $60 per barrel, the state receives about $2 per barrel. Under Tarr’s proposal – HB 288 – a $60 per barrel market price would generate $3.55 a barrel for the state. According to a Department of Revenue December report, petroleum revenue was responsible for 65 percent of the state’s unrestricted revenue during the 2017 fiscal year, which ended June 30, 2017. Current prices for North Slope oil have been inching closer to $70 a barrel in recent weeks. On Friday, closed at $68.70. Tarr told the panel her bill falls into a bigger picture plan toward closing the $2.5 billion budget gap and is “a conversation starter”. “I hope (it’s) something we’ll think about as we try to address our fiscal challenges and this deficit,” Tarr said. Tarr’s offering quickly generated pushback from minority Republicans questioning whether the bill will have a chilling effect on long-term investment. David Talerico (R-Healey) said he’ll continue to ask how any tax bill affects production volume, future exploration, and overall future investment. He also wants to make sure there are no “creative amendments” that could send the bill down a path away from its original intent. Headlamp finds this intriguing as Speaker Bryce Edgmon told attendees at an RDC breakfast the week prior that the House would not be focusing on oil and gas taxes this session.

Better to buy washing machines and solar panels locally…. President Donald Trump slapped steep tariffs on imported washing machines and solar panels on Monday, giving a boost to Whirlpool Corp and dealing a setback to the renewable energy industry in the first of several potential trade restrictions. The decisions in the two “Section 201” safeguard cases followed findings by the U.S. International Trade Commission that both imported products “are a substantial cause of serious injury to domestic manufacturers,” U.S. Trade Representative Robert Lighthizer said in a statement. The washer tariffs exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for. The restrictions aim to help domestic manufacturers but drew complaints that consumer costs for new washers and solar installations will rise.

First Reads:

US Supreme Court won’t hear case to remove bearded seals from endangered list
Arctic Now, Yereth Rosen, January 22, 2018

It’s the big new idea for stopping climate change — but it has huge environmental problems of its own
The Washington Post, Chris Mooney, January 22, 2018

China Sucks Gas Out of Global Market Amid Shift From Coal
The Wall Street Journal, Sarah McFarlane and Nathaniel Taplin, January 23, 2018

Alaska earthquake could threaten over 500,000 b/d of ANS crude oil shipments
S&P Global Platts, Jeff Mower, January 23, 2018

House bill reignites longstanding oil tax debate
KTVA, Steve Quinn, January 22, 2018

Trump slaps steep U.S. tariffs on imported washers, solar panels
Reuters, David Lawder & Nichola Groom, January 22, 2018

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Headlamp – When less is more. Walker’s decrease is really a $1.1 billion increase.

January 22, 2018 | Posted in : News

And the winner is…Congratulations to Hecla Greens Creek Mine and Lynden Air Cargo for receiving the 2017 North Star Awards for International Excellence. The award is given to companies that engage in successful international business and activities and connect our state to the rest of the world.

Oil industry focus on efficiency, not price. The rebound in the price of crude oil in recent months that has helped producers will be temporary, and the industry must prepare for competition from energy sources elsewhere, the head of the Alaska operations of BP Plc said at an industry conference on Friday. “We might be enjoying prices today that are over $70 a barrel. But when you look at the fundamentals, at BP anyway, we still think lower for even longer. And staying competitive is very important,” Janet Weiss, president of BP Exploration (Alaska) Inc., said in a speech to the Alaska Support Industry Alliance. “When you look at the fundamentals – and you take a look at supply and demand out in time and what is going on with renewables and what is going on with electric cars – and yes, there’s a demand for oil, but there’s a whole lot more of it out there,” she said. “So, it’s the low-cost basins that will get to produce. Not all the barrels in Alaska are going to be produced if we don’t make them competitive.”

From today’s Washington Examiner Daily on Energy:

ZINKE ANNOUNCES LAND SWAP DEAL FOR ROAD THROUGH ALASKA WILDLIFE REFUGE: Zinke on Monday morning signed a land swap deal to allow a tiny Alaska village to build a long-sought road through the federally protected Izembek National Wildlife Refuge, which residents say will provide a route for medical evacuations to the closest regional airport. Zinke, Alaska Gov. Bill Walker and members of the state’s congressional delegation plan to announce the deal in a ceremony Monday morning in the office of Sen. Lisa Murkowski, R-Alaska, the chairwoman of the Senate Energy and Natural Resource Committee. Serving medical needs: King Cove, a village with roughly 925 residents, has lobbied the Interior Department for decades to build the 12-mile, single-lane gravel road to connect to the neighboring town of Cold Bay. King Cove is in the Aleutian Islands between two massive volcanoes on the edge of a bay off the Pacific Ocean. There are no roads connecting King Cove to any other Alaskan city, and the nearest medical facilities are in Anchorage, about 625 miles northeast. That means King Cove residents with medical emergencies must fly to Cold Bay and then to Anchorage for treatment. Flights can be delayed hours or even days by bad weather.

When less is more. Governor Walker’s “decrease” is really a $1.1 billion increase. As the 30th Alaska Legislature begins its second session to approve 2019 operating and capital budgets, we can review state revenues and expenditures well by reading the Empire. In the Dec. 12 Empire, Sen. Shelley Hughes, R-Parmer, carefully explained that claims of double-digit reductions in state spending are false. Changes in operational spending amounted to a 3 percent reduction over the past three years — hardly a reduction at all. Claims of a 44 percent reduction over five years and 27 percent over three years were made by Gov. Bill Walker’s OMB Director and Revenue Commissioner in the Dec. 14 Empire, accompanied by plenty of abjuration. To show later years as having less spending they included earlier year oil tax credits with expenditures. Changing income from General Fund to fee increases and other sources allowed claiming reductions without reducing spending. Scheduled debt service reduction was claimed as reduced operations and supplementals became a shell game. Counting both spending of bond proceeds and debt service is double-counting of earlier expenditures. Counting departures from the PFD formula is not reducing the cost of state government. Adjusting for these misstatements affirms the Senator Hughes numbers. In its Dec. 15 review of the 2019 budget released that day, the Empire reported that Walker proposed a $400 million increase over the current year and a simultaneous, retroactive increase of $700 million for the current year, a total of $1.1 billion. Increasing current year spending now, at the end of the fiscal year, is dishonest in two ways. It humbugs the claims that the 2018 spending was a decrease, and it hides a huge part of the 2019 increase.

Market Constraints and Unpaid Tax Credits = Default. A Cook Inlet natural gas extractor that relied heavily on state tax credits — and which partially blamed undrilled wells over the past two years on the state’s lack of funding for those credits — is now in default of its state lease for its failures to drill. In a default notice to Furie Operating Alaska on Dec. 26, 2017, Alaska Department of Natural Resources Commissioner Andrew Mack wrote that Furie’s operation of Cook Inlet’s largest state lease area — the 83,394-acre offshore Kitchen Lights Unit — “reflects a history of committing to drilling activities, but then delaying or changing those work commitments.”

First Reads:

Alaska oil producers focus on efficiencies, not $70 oil
Reuters, Yereth Rosen, January 19, 2018

Walker recession is longest in Alaska history
Juneau Empire, Tomas Boutin, January 19, 2018

Lack of drilling leads to lease default for Furie
Peninsula Clarion, Ben Boettger, January 21, 2018

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Headlamp – Logic and dictionaries needed in Juneau; Read my lips…

January 17, 2018 | Posted in : News

Headlamp presents the following first order logic problem:

  1. Premise: The House Majority introduced HB 288 – an increase to oil taxes.
  2. Premise: Their reasoning: “Stability in oil taxes ensures that present and future Alaskans can share in the benefits of Alaska’s natural resource wealth”
  3. Premise: Alaskans already share in Alaska’s natural resource wealth with the PFD and oil taxes that pay the majority of the state budget.
  4. Premise: The definition of stability from Merriam Webster dictionary: the quality or state of something that is not easily changed or likely to change.
  5. Premise: This would be the 8th change to oil taxes in 12 years.
  6. Conclusion: Logic and dictionaries were missing from this effort.

Knowles goes and takes everyone with him. Former Alaska Gov. Tony Knowles led a mass resignation this week from the advisory board of the National Park System. He’s served on the board since 2010. As first reported by The Washington Post, Knowles submitted a resignation letter Monday to Interior Secretary Ryan Zinke. It’s also signed by eight others on the 12-member board. Knowles says he’s concerned the Department of Interior is undoing much of the progress made in recent years, without even listening to the merits. “The department showed no interest in learning about or continuing to use the forward-thinking agenda of science, the effect of climate change, protections of the ecosystems, education,” Knowles said in a phone interview. “And it has rescinded NPS regulations of resource stewardship concerning those very things: biodiversity loss, pollution and climate change.”

Read my lips…The second session of the 30th Alaska Legislature is officially underway. Despite last year’s extended sessions that brought the state to the brink of a government shutdown, Senate leadership appears optimistic that the session may end within the first 90 days. The budget is a top priority for legislators this session, with the state’s annual budget deficit reaching $2.7 billion. “Any second session is somewhat a continuation of the session before because all of the bills are still live,” Fairbanks Republican and Senate President Pete Kelly said Tuesday. “The Senate is motivated and committed to continue downward pressure on the budget.” While closing the budget gap has been identified as a central focus of this session for the Senate, implementing a tax is still not an option.

Hilcorp pours money into the Kenai. Hilcorp is planning to spend about $285 million in Alaska during 2018, the oil and gas company’s Operations Manager Chad Helgeson told audiences at the Jan. 10 Kenai Peninsula Industry Outlook Forum. This investment will be “holding pretty flat to where we were last year,” Helgeson said. Of the $285 million, $83 million will be spent on new drilling, $96 million will go to operating expenses, taxes, and salaries, while the largest portion of the planned investment — $106 million — will be spent on infrastructure upgrades, such as replacing compressor control systems in Hilcorp’s pipeline network with modern digital controllers.

Job killing ballot initiative moves forward. The Stand for Salmon ballot initiative submitted more than 40,000 signatures to the state Division of Elections in Anchorage, which is enough to qualify as a ballot initiative for Alaska voters in November. The Stand for Salmon initiative would restrict interference with salmon habitats during a development project, like the proposed Pebble Mine. According to the Stand for Salmon website, the initiative would formally define characteristics of a healthy river in state law, update state listings of waters which support salmon, requires the state to notify the public of projects which could affect salmon and create salmon-protection standards developers must meet before their projects can move forward. Voters will determine if the Alaska law governing development in salmon habitat should be updated, something not done since statehood in 1959. Alaska state law requires that the Division of Elections has to certify that 10 percent of the people who voted in the state’s last general election signed the salmon proposal. If enough of the signatures are verified, roughly 32,000 people, then the initiative will be on the ballot for the November 6 general election.

Alaska take note: Policy enables, discoveries, activity, employment… At the same time as the petro-skeptical Liberal Party joins the ruling government coalition, the country’s oil minister announces a record number of new offshore drilling licenses. “Access to new, prospective exploration acreage is a central pillar in the Government’s petroleum policy,” Terje Søviknes, Norwegian Minister of Petroleum and Energy said as he this week announced the new round of so-called Awards in Pre-Defined Areas. It is the biggest number of new licenses ever issued as part of an APA-round. Of the 74 new licenses, 45 are in the North Sea, 22 in the Norwegian Sea and 8 in the Barents Sea. Statoil is the big winner with a total of 17 operatorships. Company AkerBP gets 14 operatorships, while Lundin gets six, half of them in the Barents Sea. American company ConocoPhillips is represented with four licenses. There are no Russian companies on the list. But OMV and Wintershall, two companies with Russian owner interests, both get license operator responsibility, and DEA, the company owned by Mikhail Fridman’s LetterOne, gets shares in several licenses. The two northernmost licenses in the round are located on 73 degrees north. They will be operated by Statoil and Spirit respectively, both in partnership with AkerBP. “Our licensing policy enables the oil companies in making the discoveries we need to create future activity and employment opportunities, achieve effective resource management, high value creation and the financing of the welfare state,” Søviknes says.

From today’s Washington Examiner, Daily on Energy:

CEO OF TOP OIL GROUP TO STEP DOWN: Jack Gerard, president and CEO of the American Petroleum Institute and the oil industry’s top lobbyist in Washington, will step down in August when his contract expires.

API, the main trade group representing the oil and natural gas industry, announced Gerard’s departure Wednesday morning after he spent a decade as CEO.

Industry man: Gerard, 60, has been a prominent energy lobbyist in Washington for decades, leading top fossil fuel industry trade associations from coal to chemicals to natural gas and oil. He joined API after leading the National Mining Association and American Chemistry Council.

‘Historical time:’ “Serving the oil and natural gas industry during this historic time, when an American energy renaissance has made the U.S. the world’s leading producer and refiner of oil and natural gas, has been among the most fulfilling professional experiences of my career,” Gerard said. “We have accomplished what few would have imagined: important public policy victories at all levels of government, and a revitalized association that has expanded globally and added significant strength to its advocacy capabilities.”

Gerard last week delivered API’s “State of American Energy” address, in which he touted his group’s role in achieving U.S. “energy abundance” while contributing to reductions in greenhouse gas emissions.

First Reads:

Knowles quits National Parks panel, says new administration won’t listen
Alaska Public Media, Liz Ruskin, January 16, 2018

Alaska Senate majority stands against tax
Fairbanks Daily News Miner, Erin Granger, January 17, 2018

Hilcorp plans $285 million Alaska investment in 2018
The Peninsula Clarion, Ben Boettger, January 16, 2018

Salmon Initiative Is One Step Closer To Going To The Voters
KSRM Radio Group, Jennifer Williams, January 16, 2018

Norway issues 75 new offshore oil and gas drilling licenses
Arctic Now, Atle Staalesen, January 17, 2018

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Headlamp – New Olympic Sport Announced – AKLNG TUG-OF-WAR; Today in Juneau

January 16, 2018 | Posted in : News

New Olympic Sport Announced – AKLNG TUG-OF-WAR. The Matanuska-Susitna Borough alleges the Alaska LNG project and federal regulators may have violated the National Environmental Policy Act and federal Clean Water Act by “improperly and intentionally excluding” the borough’s Port MacKenzie as a “reasonable alternative” for the proposed liquefied natural gas plant. The project leadership team more than four years ago selected Nikiski as the preferred site for the LNG plant and marine terminal after analyzing more than two dozen possible locations in Southcentral Alaska. The state-led Alaska LNG project is waiting for the Federal Energy Regulatory Commission (FERC) to set a timeline for its environmental impact statement (EIS), which will include analysis of project alternatives including LNG plant sites, pipeline routings and river crossings. One of the jobs of an EIS is to determine the least environmentally damaging practicable alternative. The Matanuska-Susitna Borough, in its Jan. 9 filing with FERC, asks that the EIS include an accurate assessment of Port MacKenzie, which the borough says is lacking from the project’s application and, if done properly, would determine that the port is the best option among the LNG site alternatives. The borough alleged in its 52-page filing that the Alaska LNG teams analyzed Point MacKenzie, not Port MacKenzie. The borough port property is 3 miles south of Point MacKenzie on the southeastern edge of the Matanuska-Susitna Borough, across Knik Arm from Anchorage. The borough said the port site, with deeper water and more developable land, is far superior to Point MacKenzie. The Mat-Su Borough included with its filing to FERC a December 2017 report it commissioned by Millcreek Engineering Co., of Salt Lake City. “Based on this review,” the company’s report said, “it is our recommendation that Port Mackenzie be considered as a viable and possible preferred site.” Millcreek also worked on a 2016 update of the borough’s master plan for Port MacKenzie.

Economic impacts of soaring US output are breathtaking. Surging shale production is poised to push U.S. oil output to more than 10 million barrels per day – toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago. And this new record, expected within days, likely won’t last long. The U.S. government forecasts that the nation’s production will climb to 11 million barrels a day by late 2019, a level that would rival Russia, the world’s top producer. The economic and political impacts of soaring U.S. output are breathtaking, cutting the nation’s oil imports by a fifth over a decade, providing high-paying jobs in rural communities and lowering consumer prices for domestic gasoline by 37 percent from a 2008 peak. Fears of dire energy shortages that gripped the country in the 1970s have been replaced by a presidential policy of global “energy dominance.”

From today’s Washington Examiner, Daily on Energy:

U.S. IS THE ‘UNDISPUTED’ OIL AND GAS LEADER, BUT …: The head of the International Energy Agency said the shale revolution has made the U.S. the “undisputed” oil and natural gas leader, as he visited Capitol Hill Tuesday Morning to discuss how the world energy system is changing. “We think that this growth is unprecedented” in both “size” and “pace,” IEA chief Fatih Birol told the Senate Energy and Resources Committee. He said it reminded him of Saudi Arabia’s rise decades ago. The U.S. will be the “largest” exporter of liquefied natural gas in the world in the 2020s. It is “good news” for the U.S. economy, and “this leadership … will continue,” he said



Senate LABOR & COMMERCE Standing Committee  

Jan 16 Tuesday 1:30PM – Watch live by clicking this link and the committee name:


How Can We Create More Jobs? TELECONFERENCED

   Dept. of Labor & Workforce Development

Presentation: Alaska Employment Forecast for 2018

Paloma Harbour, Administrative Services Director

   Panel Discussion:

   Mouhcine Guettabi, PhD, Institute of Social and

   Economic Research

   Robert Venables, Southeast Conference

   Nolan Klouda, Certified Economic Developer from

   Center for Economic Development

   Brian Holst, Juneau Economic Development Council

   Doug Ward, Vigor Alaska

First Reads:

Mat-Su Borough challenges Nikiski selection for LNG plant site
Oil and gas news briefs, Larry Persily, January 15, 2018

U.S. oil industry set to break record, upend global trade
Reuters, Liz Hampton, January 15, 2018

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Headlamp – Offshore Energy Development Safer than Ever. Be careful what you ask for.

January 15, 2018 | Posted in : News

Today we honor the memory of Dr. Martin Luther King:

“Intelligence plus character – that is the goal of true education.”

Offshore Energy Development Safer than Ever
. The United States is one of the only Atlantic nations that is not actively exploring for energy in the Atlantic Ocean. Canada, Brazil, Cuba, the Bahamas, Nigeria – near and far, nations with less coastline and less resource promise are moving forward to reap the benefits of their offshore natural gas and oil resources. With the Trump administration’s new proposal to open additional offshore areas to energy exploration, we could soon join them. Government estimates indicate 90 billion barrels of oil and 327 trillion cubic feet of natural gas could still be awaiting discovery on the U.S. outer continental shelf (OCS). That’s a resource base that could strengthen U.S. energy security and national security for decades to come – and the Interior Department’s plan to allow lease sales in the Atlantic, Pacific, Eastern Gulf of Mexico and Arctic is the key to unlocking our offshore potential, along with the opportunity to generate hundreds of thousands of jobs. The announcement comes at a time when offshore energy development is safer than ever. The same technological innovations that have made the United States the world’s leading producer of natural gas and oil in the past decade have generated advances in safety, as well. In addition to technological advances, collaborative efforts by the industry and regulators have also produced great strides in enhancing safety systems and standards. That process and progress is the backdrop for the Trump administration’s offshore expansion, as well as its proposed revisions to a handful of offshore regulations.

Don’t get used to $70 oil just yet…Oil hovered near a three-year high of $70 a barrel on Monday on signs that production cuts by OPEC and Russia are tightening supplies, but analysts warned of “red flags” due to surging U.S. production. International benchmark Brent crude futures LCOc1 were trading 3 cents lower at $69.84 by 1522 GMT, having risen above $70 earlier in the session. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 22 cents at $64.52 a barrel. Trading was relatively slow due to a national holiday in the United States. A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong tailwind to oil prices, with both benchmarks last week hitting levels not seen since December 2014. Growing signs of a tightening market after a three-year rout have bolstered confidence among traders and analysts that prices can be sustained near current levels.

Be careful what you ask for? The Trump administration recently proposed a vast expansion of federal waters available for oil development. Many U.S. states were not pleased — states like California, Oregon and Florida don’t want oil development off their coastlines. Alaska is a different story. Alaska’s leaders got what they wanted in the plan — and then some. Now the question is: will Alaska ask the Trump administration to cut back? Interior Secretary Ryan Zinke’s offshore oil leasing proposal has quickly evolved into a political hot-potato. Only five days after Zinke proposed making over 90 percent of federal waters available for oil leasing, he removed Florida from the plan, following objections from its Republican governor, Rick Scott. Then came the political firestorm, from Democratic leaders of states like Virginia and Oregon, who also want to be excluded. Among other things, critics accused Zinke of political favoritism. Now, the Interior Secretary says he’ll meet with every governor — Republican and Democrat — before making a final decision. So — where does Alaska fit in? Of course, Alaska wants offshore development. The Walker administration wants the Beaufort and Chukchi seas opened to drilling. But Zinke also proposed allowing drilling off all of Alaska’s other shores, too, except for the region around Bristol Bay. That sparked outrage from environmental groups and concerns from the fishing industry and tribes across the Bering Strait region. When asked if the state requested all federal areas but the North Aleutian Basin to be opened for offshore oil development, Alaska Department of Natural Resources Commissioner Andy Mack said, “No, we didn’t make the request.”

A stop in Juneau on the way to London. BP chief executive Bob Dudley recently met with Gov. Bill Walker and discussed the company’s “potential involvement” in the $43 billion Alaska LNG project, according to an Axios news article Walker promoted on his Twitter page Friday afternoon. Also, in a tweet Friday, Walker said he and his team recently hosted three chief executives of North Slope producers in Juneau to discuss “benefits of and gas supply to” the project. Walker did not name the producers. BP, ExxonMobil and ConocoPhillips are the major North Slope gas owners that could supply the project. But the North Slope has other producers, including Hilcorp Alaska, a partner with BP at some fields. Axios did not describe the nature of BP’s “potential involvement.” “It’s a large resource, and the world is going to need natural gas, particularly Asia,” Dudley said, according to Axios. “We’re exploring with the state ways to make that resource find a market.” Axios said it interviewed Dudley on Tuesday in BP’s Washington office. Dudley had stopped there on his way to London, after visiting Alaska and meeting with Walker “to discuss BP taking part in the project,” the news site said.

Alaska Petroleum Academy returns to Kenai. The Kenai Peninsula Borough School District has received a $20,000 grant that will help in the school district’s goal to extend their broadened approach past traditional classrooms. The grant, awarded at the end of 2017, was one of seven new grants from the Vocational Fund for Alaska’s Future grant programs under the umbrella of the Alaska Community Foundation and the Kenai Peninsula Foundation. The funds are being used by the district to offer classes at the Alaska Petroleum Academy in Kenai to high school students. “What that means is that our students are able to earn industry level certifications,” said Superintendent Sean Dusek during last week’s Kenai Peninsula Industry Outlook Forum’s Workforce Panel. “Hazwoper, Confined Space Entry certifications — those type of things that are very pertinent to kids working in those particular industries. We’re really re-amping up those efforts in anticipation of the gas line.” Dusek said that, as projects such as the Alaska gasline LNG further develop employers grow, it’s important to focus “quite a bit” on career and technical education.

First Reads:

Offshore energy development is safer than ever, let’s reap its benefits
The Hill, Erik Milito, January 11, 2018

Oil hovers below $70 highs, clouded by rise in U.S. output
Reuters, Ron Bousso, January 14, 2018

Alaska’s leaders got more than they bargained for from Interior’s offshore drilling proposal
Alaska Public Media, Elizabeth Harball, January 12, 2018

BP considers joining Alaska gasline project, report says, after oil CEOs met with governor
Anchorage Daily News, Alex DeMarban, January 13, 2018

Grant allows district to reinstate petroleum career program
Peninsula Clarion, Kat Sorensen, January 13, 2018

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Headlamp – A thorn in OPEC’s side; Waiting is not a costless option.

January 12, 2018 | Posted in : News

A thorn in OPEC’s side. For U.S. shale drillers who have seen prices climb almost 50 percent in six months, it’s been largely a rig-less recovery, a conundrum for traders seeking to forecast the future. Normally, you’d expect the rigs to return to the field in significant numbers as producers flush with added cash looked to boost output. But the weekly Baker Hughes tally has stayed remarkably still. The reason: explorers are doing more with less, forcing traders to use a bigger toolbox of stats, metrics and gauges to track U.S. production that’s expected to top 10 million barrels a day as the year progresses. That includes everything from producer spending surveys to oilfield hiring reports, and even demand for the tiny grains of sand that prop open oil-bearing cracks. “A well that comes online in U.S. onshore today is dramatically different than one that came on five or 10 years ago,” Leo Mariani, an analyst who covers explorers and producers at NatAlliance Securities, said in a phone interview. “It’s just a different animal.” For the market, that means the country that’s become the world’s swing producer and a thorn in OPEC’s side is becoming a whole lot harder to read.

The price of oil has hit $70 a barrel for the first time since December 2014. Brent crude climbed after members of OPEC, the cartel of 14 oil-producing nations that accounts for 40% of the world’s output, said it would continue to limit supplies. The RAC, the motoring group, has warned that rising oil prices could lead to higher forecourt costs for motorists. However, the AA said that drivers would benefit if supermarkets resumed their petrol price war. Suhail al-Mazrouei, the UAE oil minister and OPEC president, said it was committed to limiting output until the end of the year. Last year, OPEC and other nations including Russia said they would extend a deal to cut production to help support oil prices that had fallen below $50 a barrel when the agreement was struck in 2016.

Waiting is not a costless option. Due to the decline in oil prices, the state has had to rely on savings to fund government for the last few years. The legislature has, however, not decided how it intends to fund government activity going forward. Given the size of the deficit and the paucity of non-oil sources, it seems that a draw from the Permanent fund is necessary. While understanding the potential short term effects from the imposition of taxes or government cuts seems to be fairly well understood, we try to quantify the potential investment losses stemming from delaying a decision that provides fiscal stability.

From today’s Washington Examiner, Daily on Energy:

HOUSE MAY NOT BE AS READY AS SENATE FOR BIG ENERGY BILL DEBATE: Murkowski also said she wants to reintroduce comprehensive energy legislation that ended up dying in 2016, but convincing the House to join the effort may take some work. “We’ve got to encourage our friends [in the House] that it’s time to do it,” Murkowski said. She said she thinks the leadership in the lower chamber recognizes that a bill needs to be passed, and she’s had conversations with Energy and Commerce Committee Chairman Greg Walden, R-Ore., and Natural Resources Committee Chairman Rob Bishop, R-Utah. Bishop is retiring in 2020 and maybe “kind of looking at how we shape some things then,” Murkowski said. “Not to say he wasn’t willing to do that before, but I think it does help to kind of crystallize some things and say, ‘OK, what do we want to be able to advance out of here?’” Murkowski failed to move a bill in 2016 when Bishop and then chairman of the energy committee, John Upton, R-Mich., decided to pull out of a conference committee on the big energy bill, saying they thought they could get better legislation under

First Reads:

Why Oil Is Up But Rig Count Is Not
Bloomberg Markets, David Wethe, January‎ ‎11‎, ‎2018‎ ‎

Oil prices rise to hit four-year high of $70 a barrel
BBC News, January 11, 2018

Alaskanomics’s Blog: How Much is Uncertainty Costing the State of Alaska?
Alaska Business, Mouhcine Guettabi, January 9, 2018

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Headlamp – Doyon + CIRI = millions invested in Alaska.  

January 11, 2018 | Posted in : News

Doyon + CIRI = $20-$30 million invested in Alaska. Two regional Native corporations are teaming up for another shot at unlocking oil and gas in Interior Alaska in what could be a $25 million drilling effort. Anchorage-based Cook Inlet Region Inc. announced Monday it will join Doyon Ltd. as a partner on a second oil and gas exploration well in the little-explored Nenana basin west of Doyon’s Fairbanks headquarters. Doyon, Alaska’s largest private landowner, has drilled three wells but has yet to find commercial discoveries of oil and gas in the region, in an effort dating back more than a decade. Petroleum exploration is high risk, but with potentially huge rewards if a big discovery is made, said Ethan Schutt, CIRI senior vice president of land and energy development. CIRI is the largest private landowner in Southcentral Alaska. The project is expected to cost $20 million to $30 million, Schutt said Tuesday.

Who’s to blame – the state or Furie? Department of Natural Resources officials issued a notice of default to Furie Operating Alaska Dec. 26 for failing to make good on its drilling commitments in the Kitchen Lights Unit the company operates. In a letter to the company’s Alaska leaders, DNR Commissioner Andy Mack recalled the drilling plans the company submitted to the agency since 2015 that went unmet. “Operation of the KLU previously and up through the present reflects a history of committing to drilling activities, but then delaying or changing those work commitments,” Mack wrote. The Kitchen Lights Unit is a large natural gas producing unit in the central part of Cook Inlet north of Nikiski and east of Trading Bay. Mack continued to note that Furie said it would drill two development wells in its 2015 plan of exploration, but in August that year proposed deferring that work until 2016. The change was approved by the Division of Oil and Gas. “Although the Randolph Yost jack-up rig was 100 percent staffed to commence drilling operations in April of this year, Furie was forced to delay its 2017 drilling plans — including purchasing tangible items with substantial lead times — until additional funding for the purchase of tax credits was approved by the Legislature and the governor,” Furie’s 2018 Kitchen Lights development plan states.

Don’t slow your mustang down. Positive results from a well test have helped give a small independent oil company another shot at finally developing its North Slope prospect. Anchorage-based Brooks Range Petroleum Corp. announced Jan. 8 that a late November flow test of the North Tarn 1-A at its Mustang oil project produced peak flows averaging 1,292 barrels per day with only small amounts of water. The test confirms the company’s prior assumptions and Brooks Range expects the results will lead to accelerated development of the Mustang project, according to a press release. “This recent success is very encouraging and highlights the dedicated and persistent support invested by the working interest owners, state agencies and the contracting community. These results confirm we are on the right track with our development plans,” Brooks Range CEO Bart Armfield said in the release.

Blah, Blah de Blasio…. New York City is suing five oil companies over climate change. The city is suing BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell, according to The Associated Press. New York alleges the five major oil companies have played a role in global warming, the AP reported and is seeking to recoup billions of dollars spent preparing for climate change. The city previously said it was going to divest its five pension funds from fossil fuel companies, according to the AP. In a statement about plans to divest, de Blasio said New York City is “standing up for future generations by becoming the first major US city to divest our pension funds from fossil fuels.”

From today’s Washington Examiner, Daily on Energy:

OIL GROUP BLASTS ‘PREMATURE’ DECISION TO BLOCK EASTERN GULF DRILLING: The American Petroleum Institute criticized the Trump administration Wednesday for its “premature” decision to remove the eastern Gulf of Mexico from its offshore drilling plan. “This announcement is premature,” said CEO Jack Gerard. “Americans support increased domestic energy production, and the administration and policymakers should follow the established process before making any decisions or conclusions that would undermine our nation’s energy security.” Lost opportunity: API, the largest trade group for the oil and natural gas industry, and others in the energy industry had been excited about drilling in the eastern Gulf, more so than any other area proposed by the Trump administration. That’s because it is close to existing pipelines and processing facilities in the western Gulf as well as refineries in Texas and Louisiana. Oil and gas production in the western Gulf, which accounts for almost all current U.S. offshore production, is expected to hit a record high in 2018, after suffering three years of losses.

First Reads:

Native corporations team up again in hunt for oil and gas in Interior Alaska
Anchorage Daily News, Alex DeMarban, January 10, 2018

DNR issues default to Furie for failure to drill
Alaska Journal of Commerce, Elwood Brehmer, January 10, 2018

Regulators hopeful well test can jumpstart Mustang oil project
Alaska Journal of Commerce, Elwood Brehmer, January 10, 2018

New York City suing major oil companies over global warming
The Hill, Rebecca Savransky, January 10, 2018

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Headlamp – Sturgeon case back in court; Florida doesn’t want offshore drilling.

January 10, 2018 | Posted in : News

Sturgeon continues the fight. John Sturgeon’s lawsuit against the National Park Service now has broad ramifications for American federalism and the basic rules of land and water ownership both inside and outside of Alaska, his attorneys argue in a petition for the U.S. Supreme court to take the case for a second time. Sturgeon’s struggle with the Park Service dates back more than 10 years and has cost him and his supporters about $800,000 as it’s moved through the federal courts, including a previous stop at the Supreme Court in 2016. On Jan. 2, law firms representing Sturgeon in Arlington, Virginia and Anchorage, filed a 138-page petition for a writ of certiorari, a document that asks the U.S. Supreme Court to review an appeals court ruling.

Legislators keep their pay. An independent commission reversed itself Tuesday and decided not to advance a plan to cut Alaska legislators’ $50,400 salaries by 10 percent. The State Officers Compensation Commission voted 2-2 on the proposal, which would have sliced legislative salaries to $45,360; the recently appointed fifth member of the commission, Mike Miller of North Pole, was absent. The tie vote means the proposal will not move forward, said Kate Sheehan, who works with the commission in her job as state personnel director. The commission, in October, initially proposed to slash both legislators’ compensation and their daily expense checks, known as per diem. The commission’s original plan could have cost each legislator more than $20,000 a year.

Energy infrastructure for everyone! Jack Gerard, president of the American Petroleum Institute, urged President Donald Trump Tuesday not to forget about the energy sector when it comes to fixing the nation’s infrastructure. “Too often, the infrastructure conversation is limited to highways, roads and bridges – which rely heavily on government funding,” he said in a prepared speech at an API event in Washington. “By expanding our focus beyond traditional infrastructure and considering the great opportunity of energy infrastructure investments, we could potentially double the economic benefits of infrastructure in this country.”

From the Washington Examiner’s Daily on Energy:

WHITE HOUSE, SENATORS MEET TO DISCUSS INFRASTRUCTURE: Sen. John Barrasso, chairman of the Senate Environment and Public Works Committee, met with Trump administration officials Tuesday to discuss a major infrastructure bill, which the president wants to see move ahead after the successful passage of the tax reform law.

Bipartisan briefing: Top administration officials on infrastructure attended the meeting, including Transportation Secretary Elaine Chao, National Economic Council Director Gary Cohn and senators from the EPW committee.

“The meeting gave senators the chance to have a direct back-and-forth with administration leadership on their priorities,” Barrasso said. “Today’s meeting was a great opportunity to discuss the Trump administration’s plans for upgrading America’s aging highways, bridges, ports, and dams.”

Crucial committee: Barrasso’s committee will be crucial to any major infrastructure push in the Senate. His committee has jurisdiction over all public works projects as well as the Environmental Protection Agency. Any bill is expected to include a way to streamline EPA and other agencies’ permitting requirement to speed up project approvals.

Florida gets a bye. President Donald Trump’s administration has abruptly withdrawn offshore acreage around Florida from its proposal to open more federal waters to oil and gas leasing, dealing a blow to industry hopes to develop the area. US interior secretary Ryan Zinke said today he decided to remove Florida from a draft offshore leasing plan after talking today to Florida governor Rick Scott (R). The offshore acreage near Florida includes the eastern Gulf of Mexico, an area thought to hold 3.6bn bl of oil that industry officials say would be easier to develop because it is close to existing oil and gas infrastructure. “I support the governor’s position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver,” Zinke said. “As a result, I am removing Florida from consideration for any new oil and gas platforms.”

First Reads:

In second high court bid, Sturgeon says hovercraft case has national importance
Fairbanks Daily News-Miner, Sam Friedman, January 9, 2018

Commission backtracks, says no to pay cut for Alaska legislators
Anchorage Dispatch News, Nathaniel Herz, January 9, 2018

API president to Trump: Don’t forget energy infrastructure
Houston Chronicle, James Osborne, January 9, 2018

US drops Florida from offshore leasing plan: Update 2
Argus, January 10, 2018

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Headlamp – EPA down nearly 1000, porcupine caribou up 40,000!

January 9, 2018 | Posted in : News

“Honey I shrunk the EPA!” The Environmental Protection Agency’s (EPA) staffing is now lower than it was in former President Reagan’s final year in office. An EPA spokeswoman said Tuesday that, as of Jan. 3, the agency had 14,162 employees, down from about 15,000 at the beginning of last year. That’s even lower than the 14,400 employees the agency had in fiscal year 1988, Reagan’s final year. The figures come after President Trump and EPA Administrator Scott Pruitt’s pledges to shrink the size of the federal government as part of their efforts to demonstrate that they are saving money and reducing regulatory burdens. “We’re proud to report that we’re reducing the size of government, protecting taxpayer dollars and staying true to our core mission of protecting the environment,” Pruitt said in a statement.

Let’s put it to a vote. Bills introduced ahead of the new legislative session could complicate Gov. Bill Walker’s plans to address Alaska’s budget and tackle infrastructure projects. Two new Senate proposals — from Republican Bert Stedman and Democrat Tom Begich — seek to enshrine a dividend from the Alaska Permanent Fund into the state constitution. Similar measures were introduced last year but pushed aside as legislators delayed action on a plan that would use fund earnings to help pay for state government and change how dividends are calculated.

Is it time for the pendulum to swing? Oil prices rallied in the first week of 2018, supported by increased geopolitical risk and severely cold weather in the eastern U.S., but the ‘perfect storm’ that pushed oil prices higher also raises the risk of a correction and of heightened herd mentality in trade, analysts reckon. Protests in Iran, possible new U.S. sanctions against Tehran, and Venezuela’s economic collapse could be the main geopolitical risks that could drive oil prices up early this year. Oil prices made their strongest start to a year in four years, with both Brent and WTI starting trading in 2018 above $60 a barrel for the first time since January 2014.

From the Washington Examiner’s Daily on Energy:

TRUMP CELEBRATES REPEAL OF WOTUS DURING SPEECH TO FARMERS: President Trump, during a speech to farmers Monday, celebrated the reversal of the Obama administration’s Waters of the United States (WOTUS) rule, which many rural landowners had opposed.

“We are streamlining regulations that have blocked cutting-edge biotechnology, setting free our farmers to innovate, thrive, and grow,” he said at the American Farm Bureau Federation’s annual convention in Nashville. “Oh, you are so happy you voted for me. You are so lucky I gave you that privilege.”

“It sounds so nice,” Trump said of WOTUS. “It sounds so innocent. And it was a disaster.”

However, WOTUS has not been changed yet. The Trump EPA is still working through redefining what constitutes a U.S. waterway under the Clean Water Act.

The Obama administration rule defined drainage ditches and watering holes the same as rivers and streams under EPA’s enforcement authority. That made farmers and ranchers subject to large fines and federal oversight.

Climate change = disease? How will climate change affect health in Alaska? Dangerous travel conditions could cause more accidents, warmer temperatures could spread new diseases and the topsy-turvy weather could worsen mental health. Those are some conclusions from a new state report, released Monday. The report, from the Alaska Division of Public Health, tries to predict the health impacts if current climate change forecasts hold true. (It’s based on the predictions for Alaska in the 2014 National Climate Assessment.) Sarah Yoder is the lead author. She said she was a little taken aback by what they found. “The surprise was just how broad, exactly, all these potential health impacts are,” Yoder said.

Following the herd. The Porcupine caribou herd has a record high number of animals. That’s according to a photo census compiled last summer by the Alaska Department of Fish and Game. The herd has been growing at a rate of about 3 to 4 percent annually since 2010, Northeast Alaska Assistant Area Biologist Jason Caikoski said last week. As of this year, the herd reached an estimated 218,000 animals. That’s nearly 40,000 more caribou than were present during the herd’s last population peak in 1989. However, recent advances in photo census technology have also made estimating the herd’s numbers more accurate over the years. 

First Reads:

EPA staffing falls to Reagan-era levels
The Hill, Timothy Cama, January 9, 2018

Dividend, tax vote bills could complicate governor’s budget
Fairbanks Daily News-Miner, Becky Bohrer, January 8, 2018

Is An Oil Price Correction Overdue?
OilPrice.com, Tsvetana Paraskova, January 8, 2018

State report details potential health impacts of climate change
Alaska Public Media, Rachel Waldholz, January 8, 2018

Porcupine Caribou Herd reaches record high population
Arctic Sounder, Shady Grove Oliver, January 8, 2018

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Headlamp – King of the Road; Dunleavy leaves Senate to campaign full time

January 8, 2018 | Posted in : News

The end of the road to build a road. The city of King Cove says it has reached a deal with the Trump administration to build a road through the Izembek National Wildlife Refuge. King Cove residents argue they need the road to access the all-weather airport in Cold Bay. But environmental groups believe it will ruin critical wildlife habitat. Now, city administrator Gary Hennigh says they have reached an agreement with the Interior Department for a land swap — between the King Cove Corporation and the federal government. He expects the deal to be signed January 22nd in Washington D.C. “The whole community is excited because after 30 years we do believe this can now happen,” Hennigh said. King Cove residents say they need the road because bad weather can leave people stranded during medical emergencies. But the 12 mile gravel road would pass through what now is designated wilderness — the highest level of conservation given to federal lands.

No budget fix in 2018. Gov. Bill Walker is an optimist, but even he thinks Alaska’s multibillion-dollar budget deficit won’t be resolved this year. Walker spoke to the Empire in an interview Friday, a little over one week before the start of the 2018 Alaska Legislature. “I don’t anticipate we’ll completely close the gap this year,” Walker said. In the budget proposal he released to lawmakers in December, Walker plans to use a portion of the Alaska Permanent Fund’s investment earnings to pay for government services and reduce the deficit. Accountants from the Legislature and the state Office of Management and Budget each expect the deficit to stand at $2.7 billion when the state’s new fiscal year starts July 1. That could be reduced to about $700 million, if lawmakers pass a law tapping the Permanent Fund.

Governor’s race getting real – Dunleavy steps down from Senate. Mike Dunleavy, R-Wasilla, plans to announce Monday that he will resign from the Senate to run for governor, according to Republican Party Chairman Tuckerman Babcock. The senator, who represents a large district that stretches from Talkeetna to Valdez and Whittier, informed his local districts early Saturday and told his colleagues Saturday night at a fundraiser in Anchorage, Babcock said. “He let people know that he would like to focus entirely on the race for governor,” Babcock said. It makes strategic sense for Dunleavy to resign now, because legislators are prohibited from fundraising during the legislative session that begins Jan. 16, Babcock said. Walker has also been apt to call special sessions, which would further limit Dunleavy’s fundraising opportunities if he didn’t step down.

Three-year high for oil prices. Oil prices rose on Monday, coming close to three-year highs on a slight decline in the number of U.S. rigs drilling for new production and sustained OPEC output cuts. U.S. West Texas Intermediate (WTI) crude futures had risen to $61.67 a barrel by midday in London, 23 cents above their last settlement. WTI last week reached $62.21, the highest since May 2015. Brent crude futures were at $67.78 a barrel, 16 cents above their last close. Brent hit $68.27 last week, the highest since May 2015. Traders said the gains were due to a slight decline in the number of U.S. rigs drilling for new production. The rig count eased by five in the week to Jan. 5 to 742, according to data from oil services firm Baker Hughes. Despite this, U.S. production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers. Only Russia and Saudi Arabia produce more. “The U.S. oil price is now into a range that is anticipated to attract increased shale oil production,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

From today’s Washington Examiner Daily on Energy:

SUPREME COURT WON’T HEAR CASE FOR COAL JOBS: The high court on Monday refused to hear a case brought by Trump supporter and coal magnate Bob Murray of Murray Energy. Murray had petitioned the Supreme Court last year to take up a lower court ruling that the Environmental Protection Agency did not need to report how its regulations would affect coal jobs and the industry. Monday’s decision means the 4th Circuit Court’s decision stands.

Pebble proceeds. The U.S. Army Corps of Engineers (USACE) has published a notification that the permit application submitted by the Pebble Limited Partnership (PLP) has been accepted. This formally begins the permitting process under the rigorous National Environmental Policy Act (NEPA) review process and other permitting efforts associated with the project. PLP’s application incorporates more than a decade of extensive third-party environmental research. The application and supporting documentation can be viewed via the USACE website. To read the press release in its entirety, click here.

First Reads:

Interior Department reaches deal with King Cove for controversial road
Alaska Public Media, Zoe Sobel, January 7, 2018

Governor says Alaska’s deficit will not be fixed in 2018
Juneau Empire, James Brooks, January 7, 2018

Wasilla state Sen. Mike Dunleavy to resign from Senate and run for governor
Anchorage Daily News, Julia O’Malley, January 7, 2018

Price of crude oil rebounds to near 2015 highs, but can it stay there?
Anchorage Daily News/Reuters, January 8, 2018

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