Headlamp – Two jobs for every resume…in North Dakota. 

March 22, 2018 | Posted in : News

Two jobs for every resume. Oiltown is big, and getting bigger, if Williston-area job postings are any indication. Williston’s Job ServicesND office lists 1,326 job openings this month, an increase of 367 job postings over last month. The state agency represents a fraction of actual job postings, as not all companies use the free service. Cindy Sanford is the Williston Job ServicesND office manager. “We’ve got two jobs listed for every resume on our website,” she said. “People need to get their resumes up online. We had two get interviews just off the website.”

Senator Giessel works to pay state’s debt while Reps Tarr and Josephson work to raise taxes – again.  Bills to raise oil taxes and pay off the state’s $800 million refundable tax credit obligation have stalled for weeks but legislators say both could be part of what is sure to be a strenuous lift at the end of a session in which the festering $2.5 billion annual deficits are coming to a head. House Resources Committee Co-Chair Rep. Andy Josephson, D-Anchorage, said during a Majority Coalition press briefing that House Bill 288, which would raise the minimum production tax, could be part of a package of legislation to settle end-of-session negotiations with the Republican Senate. Josephson held several hearings on HB 288 early in the session and took unfavorable industry testimony over raising taxes, but it hasn’t been addressed formally since Jan. 29. Sponsored by Resources Co-Chair Rep. Geran Tarr, D-Anchorage, it would raise the gross minimum production tax rate from 4 percent to 7 percent and generate up to about $250 million in additional revenue at current prices, according to the Revenue Department. Tarr and others in the Democrat-led Majority have said they felt the need to propose an oil tax increase as some sort of additional revenue measure after the Senate wholly rejected income and payroll taxes last year.

A blank check for AGDC? Gov. Bill Walker’s administration is not asking for more state funding to advance the $43 billion Alaska LNG Project, but some legislators are concerned allowing the gasline developers to accept outside money could sign away much of their remaining control over the project. Included in the governor’s 2019 fiscal year budget proposal is language giving the Alaska Gasline Development Corp. the authority to accept third-party funds from potential Alaska LNG investors. The provision would cover the remaining months of fiscal year 2018, which ends June 30, and fiscal year 2019. Resources Committee chair Sen. Cathy Giessel, R-Anchorage, said legislators generally like to guard their appropriation authority, which is one of the most fundamental powers they are granted by the state constitution. “Receipt authority is a lot like giving a blank check,” she said.

From today’s Washington Examiner, Daily on Energy:

BIPARTISAN BILL WOULD ADDRESS FUTURE OF COAL: Congress is pushing for legislation to shore up coal plants and make them competitive in a carbon-constrained world. A new bipartisan bill will be introduced by John Barrasso, R-Wyo., the chairman of the Environment and Public Works Committee, and Sheldon Whitehouse, D-R.I., the committee’s most ardent supporter of tackling climate change. The bill would support carbon capture technology that helps to limit the amount of greenhouse gas emissions from coal plants. The bill would build on the incentives passed under the previous funding bill. The bill is expected to be released early Thursday afternoon.

First Reads:

Annual job fair to have a double date
Williston Herald, Renée Jean, March 13, 2018

Oil legislation could come off the back burner in a budget deal
Alaska Journal of Commerce, Elwood Brehmer, March 21, 2018

Legislators on all sides concerned about receipt authority for AGDC
Alaska Journal of Commerce, Elwood Brehmer, March 21, 2018

 

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Headlamp – $124 MILLION IN BIDS IN LARGEST OFFSHORE LEASE SALE

March 21, 2018 | Posted in : News

Blue Bayou link between Texas and Louisiana. According to a recent report from the International Energy Agency (IEA), the United States is poised to play a major role in supplying oil demand growth around the globe. U.S. oil production growth is projected to meet more than half of global oil demand growth during the next five years. At a time of increasing international uncertainty, the United States’ growing energy production capabilities could not be more opportune. U.S. energy supplies, particularly oil and natural gas, can make a preeminent contribution to global energy security. At the same time, steady investments in our nation’s energy infrastructure are required to ensure that those resources are able to reach end markets safely and efficiently. Projects of this scale and the companies undertaking them rely on a consistent regulatory review process to maintain timely construction and operation schedules. So, when that process is upended, it harms not only U.S. companies but also their customers and consumers around the world. Recent developments regarding the Bayou Bridge Pipeline provide a case in point.

Who drew the lines for the Arctic? The exact origin of the expression “to draw a line in the sand” is unknown. Some say it stems from the invasion of Egypt in 168 BC by Antiochus IV Epiphanes of Syria whereas others argue that it is associated with the Battle of the Alamo. One of the most popular origin stories is that it is derived from John 8:6 in which Jesus draws a line on the ground while addressing those eager to stone a woman accused of adultery. That the expression moved from the more tangible “ground” in the Bible to the more ephemeral “sand” in current use, is perhaps fitting. While humans have a tendency to fix firm boundaries and expect no one to cross them, the historical record is testament to just how fickle and fleeting such lines in the sand can be. Inherently dynamic and temporally limited, the capricious nature of lines is noticeable in any discussion of the Arctic. As the circumpolar north has increasingly come to the fore of international relations, such discussions have taken many tones. Will conflict break out over unsettled boundaries? Will a revisionist power seek to change existing delimitations? While definitive answers to these questions are not found in the past, examining how we got to the present can provide insight into long-term trends.

From today’s Washington Examiner, Daily on Energy:

$124 MILLION IN BIDS IN LARGEST OFFSHORE LEASE SALE: The largest oil and natural gas lease sale in U.S. history brought in $124 million in bids, the Interior Department announced Wednesday. The sale, held Wednesday morning, covered all available unleased areas in federal waters in the Gulf of Mexico. The sale, held in New Orleans, offered 14,776 blocks covering 77 million acres off the coasts of Texas, Louisiana, Mississippi, Alabama and Florida. The Bureau of Ocean and Energy Management said the government received 159 bids from 33 companies. Bidders includes Chevron, Shell and BP.

‘Bellwether’ event:  Interior Secretary Ryan Zinke recently called the sale a “bellwether” for industry interest in the Gulf, as offshore is overshadowed by onshore opportunities from the shale revolution. Brazil and Mexico are also competing for business in their offshore areas. Oil and gas production in the Western and Central Gulf of Mexico, 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. The Bureau of Ocean Energy Management estimates that offshore resources in the Gulf contain more than 48 billion barrels of oil and 141 trillion cubic feet of natural gas.

Sale part of old plan: The sale is part of the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022, a five-year program whose terms were established by the Obama administration.

First Reads:

The Bayou Bridge Pipeline and the Global Energy Picture
Real Clear Energy, Guy Caruso, March 21, 2018

A Brief History of Lines in the Arctic
The Arctic Institute, Greg Sharp, March 20, 2018

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Headlamp – Something fishy here – Fairbanks Chamber waves a red flag

March 20, 2018 | Posted in : News

Fairbanks Chamber waves a red flag. The Greater Fairbanks Chamber of Commerce represents our members by advocating for the best possible business environment; promoting economic strength and growth for Interior Alaska; and developing the resources and networks enterprising people use to share knowledge. Our job also requires that we wave a red flag when policies or ideas threaten economic growth and opportunities in our community. That is why the Fairbanks chamber officially has joined the Stand for Alaska coalition — the group organized to oppose the so-called “Stand for Salmon” initiative. Why is the Fairbanks chamber — a group that focuses on promoting a positive business climate — getting involved in something that sounds like a fish habitat issue? If passed, this defective initiative undeniably would hurt our state and local economies. When you dig into the ballot measure’s complex and convoluted language, it becomes apparent that the real outcome is either a slowing or a full-stop of community development projects, transportation infrastructure projects and resource development right here in Interior Alaska and across Alaska. For the Fairbanks chamber, it was an easy decision for us to oppose this measure. Road construction projects would be challenged if this ballot measure passes. Why? Because the ballot measure directs the state to treat every river, stream, rivulet and groundwater as fish-bearing until proven otherwise. The reality is that proving otherwise requires every project — from large scale mines to a typical culvert — to pay for an expensive and time intensive scientific study. In Fairbanks, that means the Chena Flood Control project could be jeopardized, a critical project for our city. We need quality roads in the Interior to stay connected to the rest of the state and to keep commerce moving. This ballot measure will slow and/or stop these construction projects.

The colder the better. The warmest winter on record in Arctic Alaska has hit local oil production, said officials from the U.S. state, as temperatures hampered industrial machinery designed to optimize output when conditions are most frigid. Production of the North Slope grade of crude oil has averaged about 518,000 barrels per day (bpd) through the current fiscal year, down from the approximately 533,000 bpd predicted last fall, state Revenue Commissioner Sheldon Fisher told state lawmakers on Monday.  Warmer temperatures are largely to blame for that drop, Fisher said. “Overall the weather has been warmer in this winter,” Fisher told the state Senate’s finance committee. “We actually do better when the winter is colder. The equipment operates better and they’re able to accomplish more with colder weather.” Temperature-related declines in production were most pronounced at the giant Prudhoe Bay field, which is particularly sensitive to temperature changes, Dan Stickel, chief economist for the state’s Department of Revenue, told the committee. This winter’s warmth on the North Slope has shattered records, which has continued through this month, said Rick Thoman, climate science and services manager for the National Weather Service in Alaska.

Who owns the data? A battle for big data is brewing in the oil patch. The service companies that map underground pockets of oil, drill the wells and lift crude from miles below are generating vast new amounts of data they never before realized could be valuable. But their exploration customers are essentially saying hands off to anything coming out of their wells, including the streams of zeros and 1s. “There’s no doubt to me, we are producing two resources: the oil and gas, and the data,” said Philippe Herve, a Schlumberger Ltd. veteran who now helps oil companies use artificial intelligence at SparkCognition. “The oil and gas is very clear: it belongs to the operator. But who owns the data?” Answering that question will mean real money for a global industry climbing out of the worst crude crash in a generation. An industry that only uses about 1 percent of the data it generates, according to Baker Hughes, is trying to harness it to see where to pump more oil faster for less money. Transforming to a digital oil field could add almost $1 trillion to the world’s economy by 2025, according to a 2015 study by Oxford Economics and Cisco Consulting Services.

First Reads:

Warmer temperatures hit oil output in Arctic Alaska: officials
Reuters, Yereth Rosen, March 19, 2018

‘Netflix for Oil’ Setting Stage for $1 Trillion Battle Over Data
Bloomberg Technology, David Wethe, March 19, 2018

Fairbanks chamber stands for Alaska
Fairbanks Daily News-Miner, Marisa Sharrah, March 17, 2018

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Headlamp – Governor’s veto really hurt Alaska’s service industry. 

March 19, 2018 | Posted in : News

More money, more spending.   A new forecast of state revenue says higher oil prices will help slice a big chunk from Alaska’s budget gap, though it didn’t seem to change lawmakers’ disagreement about how to fix the deficit. The new forecast, released Friday by Gov. Bill Walker’s administration, says the state will bring in $2.34 billion in unrestricted revenue in the current fiscal year, which is $250 million higher than the previous forecast of $2.08 billion. Revenue in 2019 is projected at $2.26 billion, up $210 million from the $2.05 billion in the previous forecast. Oil prices are projected to average $61 a barrel for the current fiscal year, compared to the $56 in the previous forecast, and $63 for next year, compared to $57. If the projections hold true, the state will have to spend less cash this year and next from its primary savings account, the Constitutional Budget Reserve. The account should hold about $2.4 billion at the end of the 2018 fiscal year, June 30, according to the Legislature’s budget analysts — down from $13 billion four years ago.

Governor’s veto really hurt Alaska’s service industry. In 2015, Gov. Bill Walker vetoed hundreds of millions of dollars in owed oil exploration tax credits. This not only negatively affected many oil companies, but also many oilfield service companies in Alaska. When an oil company explores, they hire service companies to provide hundreds of services and products. These service companies are often small, Alaska-owned companies. They are directly affected by these decisions. These companies don’t directly receive the tax credits, but they depend on the companies that do. These service companies provide drilling contract services, casing and tubing running services, welding and fabrication, wireline and slickline services, remote camps and catering, OCTG pipe and products, downhole jewelry, communication support, ice road construction, perforation and stimulation work, roustabout labor, trucking, chemicals, fuel and much more. These services account for thousands of jobs and payroll dollars for Alaskans. No one is disputing these credits are owed. The oil companies who engaged in exploration did so on the full faith and credit of the state of Alaska. They spent or borrowed money to explore for oil based on a system of credits that the state created. By vetoing these credits and not fully funding the credit payments, many have lost faith in the state of Alaska. This kind of uncertainty is bad for business.

Who got the money? The state has released the list of companies it reimbursed for oil and gas exploration and development work last year. These cash-for-credits recipients used to be kept confidential, but a law passed in 2016 now requires that the state report them. According to the Department of Revenue, the state spent just over $75 million last year, paying down a debt it owes under the now-defunct program. The total debt has ballooned up to about $900million this year. The state is making minimum payments on that debt — it’s not scheduled to pay them off fully until about 2025. A company doing work on the North Slope, Repsol, got the highest payment, at nearly $18million. Despite getting payments totaling about $28 million, several companies like BlueCrest Energy, Caelus and Great Bear Petroleum have slowed or halted work in the state. Company leadership has consistently cited slow reimbursement from the state under the program as a reason for the delays.

AGDC asks Kenai to keep talking. The public comment period for the extension of the proposed Kenai Spur Highway realignment alternatives has been extended through March 30. The Alaska Gasline Development Corporation (“AGDC”) extended the public comment period at the request of the Kenai Peninsula Borough. The public comment period follows a community meeting in Nikiski, on February 12, where AGDC presented two proposed Kenai Spur Highway realignment alternatives (“West Alternative” and “East Alternative”) between milepost 18 and milepost 21. Nikiski is the site of AGDC’s planned Alaska LNG liquefaction plant and export terminal that will be supplied by Alaska’s long-awaited gasline from the North Slope. The facility will produce and export up to 20 million tonnes of LNG annually to customers across the Asia-Pacific region and provide LNG for intrastate distribution. The gasline will have additional capacity to supply more than double the entire existing gas demand in Alaska. AGDC is incorporating public comments into the Kenai Spur Highway Realignment Alternatives report. AGDC will present the revised report and preferred alternative to Nikiski residents in a community meeting planned for the end of the second quarter 2018.

From today’s Washington Examiner, Daily on Energy:

COMMERCE DEPARTMENT SPECIFIES HOW TO BE EXCLUDED FROM STEEL TARIFFS: The Commerce Department provided details Monday morning on how companies can apply for exemptions to the steel and aluminum tariffs imposed by Trump this month. Many sectors of the energy industry that use steel in their products have said they plan to apply for an exemption because they depend on steel from overseas.

Trump gives: Recognizing the outcry from various industries, Trump’s tariff proclamation outlines a mechanism for applying for exclusion of specific products based on “demand that is unmet by domestic production or on specific national security considerations.” Commerce Secretary Wilbur Ross can decide to give an exemption after consulting with other Cabinet secretaries. “An exclusion will only be granted if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration,” the Commerce Department said Monday morning in a filing to the Federal Register.

Who can apply: Individuals or organizations using steel in their business or supplying steel to users in the U.S. may apply for an exemption, Commerce said.

The hurdles: The administration says applicants must make separate exemption requests for each product. An exclusion granted by the Commerce Department applies only to the applicant unless the agency decides to approve a “broader application of the product-based exclusion to apply to additional importers.” Individuals or organizations that want to submit an exclusion request that Commerce already granted are allowed to do so. Individuals or companies may file objections to those seeking exclusions.

The timeline: Commerce says it will decide on an exclusion request within 90 days.

First Reads:

New forecast of Alaska oil revenue takes chunk out of state’s deficit
Anchorage Daily News, Nathaniel Herz, March 18, 2018

Owed tax credits aren’t just about oil companies. Service companies depend on them as well.
Anchorage Daily News, Jim Wohlers and Jeff Landfield, March 18, 2018

State puts out list of companies that got $75 million in cashable tax credits last year
KTOO Public Media, Rashah McChesney, March 16, 2018

Alaska LNG Kenai Spur Highway Public Comment Period Extended
KSRM Radio Group, Jennifer Williams, March 16, 2018

 

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Headlamp – FEMA says “goodbye” to climate change; Endangered species rules endangered

March 16, 2018 | Posted in : News

FEMA says “goodbye” to climate change. The Federal Emergency Management Agency, responsible for dealing with the effects of disasters like hurricanes and floods, has stripped the words “climate change” from the document meant to guide its actions over the next four years. FEMA on Thursday released its strategic plan for 2018-2022. It replaces a version issued under former President Barack Obama that repeatedly cited the challenges caused by a changing climate, and the need for FEMA to incorporate those risks into its long-term plans. By contrast, the new document doesn’t mention climate, global warming, sea-level rise, extreme weather, or any other terminology associated with scientific predictions of rising surface temperatures and their effects. “Disaster costs are expected to continue to increase due to rising natural hazard risk, decaying critical infrastructure, and economic pressures that limit investments in risk resilience,” the plan states, without saying what might be causing that natural hazard risk to rise. In a statement, the agency said that its plan “fully incorporates future risks from all hazards regardless of cause. Building upon the foundation established by FEMA’s previous two Strategic Plans, this plan commits the agency, and the nation, to taking proactive steps to increasing pre-disaster investments in preparedness and mitigation.”

Endangered species rules endangered.  The Trump administration will rewrite rules governing how to choose areas considered critical to endangered species to settle a lawsuit brought by 20 states and four trade groups, according to state attorneys general. The endangered species director for an environmental nonprofit says that’s terrible news. Noah Greenwald of the Center for Biological Diversity says the administration has “shown nothing but hostility toward endangered species.” The attorneys general for Alabama and Louisiana said in news releases Thursday that the administration made the agreement Thursday to settle a lawsuit brought by 20 states and four national trade groups, challenging two changes made in 2016. According to the lawsuit, the rules are now so vague that the U.S. Fish and Wildlife Service and National Marine Fisheries Service “could declare desert land as critical habitat for a fish and then prevent the construction of a highway through those desert lands, under the theory that it would prevent the future formation of a stream that might one day support the species.” A spokeswoman for Fish and Wildlife referred a request for comment to the U.S. Justice Department, which did not immediately respond to phoned and emailed queries. A NOAA Fisheries spokeswoman did not immediately respond Thursday. “We are encouraged that the Trump administration has agreed to revisit these rules, which threaten property owners’ rights to use any land that the federal government could dream that an endangered species might ever inhabit,” Alabama Attorney General Steve Marshall said in his news release. “These Obama-era rules were not only wildly unreasonable, but contrary to both the spirit and the letter of the Endangered Species Act.

Say “No” to Yes for Salmon. Two ballot initiatives were certified this week for Alaskans’ ballots later this year. A ballot initiative about salmon habitat was certified for the 2018 statewide ballot Thursday, according to a release from its backers. The “Yes for Salmon” initiative gathered nearly 42,000 signatures and aims to update a state law governing development in salmon habitat. Just six months ago, Lt. Gov. Byron Mallott would not certify the ballot initiative, saying it made an unconstitutional appropriation of a state asset – anadromous fish and wildlife habitat – by initiative, which is prohibited by the state’s constitution. The decision was recommended by the State Department of Law. In October, an Alaska Superior Court judge disagreed, and ruled that the proposition was legal. The ruling ordered the Lt. Gov’s office to produce petition booklets for certification. The proposition’s supporters say signatures were gathered in all 40 legislative districts and surpassed the number of required signatures in all districts. The state is appealing that decision to the Alaska Supreme Court, which will hear the case on April 26 at 1:30 p.m. Tuesday, an initiative on Integrity was also approved for the ballot. The initiative, if passed, would limit lawmakers per diem when they do not pass a budget on time, restrict lobbyist gifts to politicians, protect state elections from foreign influences, and strengthen conflict of interest rules, its backers say. The two ballot measures will appear on the primary ballot if the legislature adjourns on time, or the general ballot, if the legislature goes into overtime.

Alaska ground zero for national reorganization. Interior Secretary Ryan Zinke is looking to Alaska as he launches plans for a major national reorganization that aims for greater integration of the department’s agencies and processes. “What we’re proposing … to redo our regions based on science and unify them so at least Department of Interior — Fish and Wildlife, Bureau of Reclamation, all our departments — have unified regions and can talk to each other,” Zinke said Thursday at a House Natural Resources Committee hearing. Those regions would be based on watersheds, trail systems and wildlife ecology, rather than political boundaries, he said. As part of that process, the department is looking to Alaska as a pilot. “The current idea is to launch the concept in Alaska first, since it is a large geographic area, most bureaus are active there, all existing regional offices are already in the same city, and there is only one state government with which to interact,” the department said in a fact sheet posted online. The Interior Department oversees more than half the land in Alaska in a variety of roles — in parks, on refuges, through the Bureau of Indian Affairs and for drilling on federal lands and waters. There are 2,500 to 3,500 Interior employees in Alaska, depending on the season, said Steve Wackowski, the agency’s Anchorage-based senior adviser for Alaska affairs. There are 70,000 Interior Department employees nationwide. Streamlining doesn’t mean layoffs, or even major workforce changes, Wackowski said.

First Reads:

FEMA Strips Mention of ‘Climate Change’ From Its Strategic Plan
Bloomberg Politics, Christopher Flavelle, March 15, 2018

States: US government to rewrite 2 endangered species rules
AP News, Janet McConnaughey, March 16, 2018

Salmon, Integrity ballot initiatives approved for election
KTUU, Kortnie Horazdovsky, March 15, 2018

The Interior Department is preparing for a massive overhaul — and Alaska is its model
Anchorage Daily News, Erica Martinson, March 15, 2018

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Headlamp – “a bunch of dead companies lying around”; Bat Cave fights off 22 million attacks/day

March 15, 2018 | Posted in : News

“They’ll just see a bunch of dead companies lying around…” A proposal to issue bonds to pay off about $900 million in tax credit debt to oil and gas companies hasn’t gained much traction in the Legislature. Gov. Bill Walker included it in his budget in December. Since then, the bill has had no hearings in the House and just one in mid-February in the Senate. Walker said Tuesday that he’s still hopeful that it will make it through this session. “Well, I actually have heard some fairly positive things about that from various legislators, once they understand it,” Walker said. “I think there was some confusion initially and so we spent some time with them and so I think there’s some interest in that.” Most of the credits are owed under a now-defunct cashable credit program that was designed to entice new companies to explore and produce oil and gas in the state. The bill would allow companies to opt into a program that would pay credits now, but at a discount. The cost of borrowing the bonds would be built in to the discounted rate, so the state won’t lose money.

Bat Cave fights off 22 million attacks a day. The symbol of a well-known caped crusader is taped to the door of a secure room at Alyeska Pipeline Service Company’s Anchorage headquarters. The sign reads: “THE BAT CAVE.” My guides don’t know why the sign’s there. Maybe it’s the lack of windows. Or maybe it’s because the people who work in this room see themselves as undercover crime-fighters, like Batman — because they sort of are. This is the office of Alyeska’s cybersecurity team. The trans-Alaska pipeline has dealt with its share of problems — earthquakes, declining oil flow, even gunfire. But today, the pipeline is facing another, more modern threat: cyberattacks. Energy infrastructure is a tempting target for hackers, and the trans-Alaska pipeline is no exception. Alyeska, which operates the pipeline, now ranks cyberattacks as one of its top three risks. In the room where part of the pipeline’s cybersecurity team is stationed, Alyeska’s Bill Rosetti points at a wall of data flowing down three giant screens hanging above the cubicles. It’s all totally incomprehensible to a layperson. But for Rosetti and his staff, weird activity on one of the colorful charts rippling across the screens could indicate something serious. “The idea here is that we are looking for things to be normal,” Rosetti explained. “And anything that’s not normal is something that needs to be investigated.” Rosetti is Alyeska’s chief information officer. He’s in charge of keeping cyberattackers at bay. Rosetti takes that job seriously, because the trans-Alaska pipeline is getting hit by cyberattacks all the time — and not just a few. “We see about 22 million attacks a day,” Rosetti said.

China on China in Alaska. The U.S. northwestern state of Alaska is getting one step closer for Chinese investment in its ambitious energy program after U.S. energy regulators set assessment in motion for a planned liquefied natural gas (LNG) project in the state. The Federal Energy Regulatory Commission has set December 2019 as the deadline for the Alaskan LNG project to receive its final environmental impact statement, which Alaska Governor Bill Walker said has cleared a hurdle for investments in the project, local media reported Wednesday. “This is a major step forward that establishes clarity and predictability in the federal permitting process, which is critical for investors,” Walker said in a statement. The LNG project in the design phase in Alaska would connect a natural gas reservoir in Prudhoe Bay in northern Alaska through 800 miles (about 1,280 km) of pipe with a liquefaction plant on the southcentral Alaskan coast. The project, upon completion, will have an annual design capacity of 3.9 billion standard cubic feet (100 billion cubic meter) per day peak capacity of natural gas. Alaska has been aggressively seeking foreign funds, particularly Chinese investment, for its energy program. The U.S. state signed an agreement with Chinese energy company China Petrochemical Corp., or Sinopec, last November on the latter’s purchase of its LNG resources. Sinopec said it was interested in the possibility of LNG purchase on a stable basis from Alaska state.

Exemption, please? U.S. energy pipeline developers say they intend to pursue exemptions to the Trump Administration’s proposed steel tariffs, as concerns grow for those companies and from key exporters to the United States like South Korea. “We have a number of pipeline projects that would be impacted significantly by this cost increase,” said Adam Bedard, chief executive of Arb Midstream, an energy transportation and marketing company. If exemptions become available, “we’d certainly try and qualify for it.” He was referring to the U.S. Commerce Department’s effort to devise a procedure for companies to apply to avoid paying a 25 percent tariff on imported steel or 10 percent on imported aluminum. Commerce has 10 days to come up with the procedure to apply for exemptions from the steel and aluminum tariff declaration issued last week. There is a national security exemption for U.S. companies to buy steel items that domestic manufacturers do not produce in the volumes or quality required. The president also said exemptions would be available to certain countries. Imports account for 77 percent of the steel used in U.S. pipelines, according to a 2017 study conducted for the pipeline industry. Some manufacturers already have customers waiting two years for pipeline to construct lines to carry shale oil and gas from West Texas fields to U.S. Gulf Coast export hubs.

From today’s Washington Examiner, Daily on Energy:

TRUMP TO GET AN EARFUL FROM BIG OIL: President Trump is scheduled to sit down Thursday afternoon with a group of large oil companies to discuss a “laundry list” of issues.

The American Petroleum Institute’s executive board has made meeting with Trump a priority given a number of pressing issues including steel tariffs, NAFTA negotiations, offshore drilling and the ethanol mandate.

Laundry list: Sources tracking the meeting say the “laundry list” likely will include: offshore drilling, Renewable Fuel Standard reform, regulatory reform, pipeline construction, natural gas drilling and methane rules, North American Free Trade Agreement renegotiation, and Trump’s inclination to impose tariffs. API opposes the steel and aluminum tariffs Trump imposed on those imports last week, saying it would disrupt energy infrastructure development.

Gerard not pleased with tariffs: API President and CEO Jack Gerard recently said in an interview on the sidelines of CERAWeek in Houston this month that he was hopeful he could meet with the White House to persuade the president against imposing a broad tariff. The tariff decision does carve out a process for industries to petition for exemptions on steel products.

Still, Gerard said he was disappointed that Trump moved forward with the steel tariffs.

Pence joins meeting: Vice President Mike Pence is scheduled to attend the meeting, too. Others tracking the meeting say that Pence’s presence suggests the ethanol mandate will come up. He was supposed to meet with large ethanol producers on Monday, but the meeting was scrapped because of a scheduling conflict. Pence’s home state of Indiana is a big corn producer and has a major stake in the Renewable Fuel Standard.

 

 

First Reads:

Walker hopeful plan to pay off oil tax credit debt with bonds will pass this session
KTOO Public Media, Rashah McChesney, March 14, 2018

The trans-Alaska pipeline fights off 22 million cyber attacks. Daily.
Alaska Public Media, Elizabeth Harball, March 14, 2018

U.S. state of Alaska one step closer for Chinese investment in energy
Xinhaunet, Liangyu, March 15, 2018

U.S. energy pipeline developers to seek exemptions to steel tariff
Reuters, Liz Hampton, March 14, 2018

 

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Headlamp – Murkowski and Zinke charting a path to energy security.

March 14, 2018 | Posted in : News

Project online by 2025. The federal agency responsible for studying the environmental impact of the Alaska LNG project has released a timeline for completing its review. The Federal Energy Regulatory Commission announced Tuesday that it plans to release a draft of the final Environmental Impact Statement in a year, Alaska’s Energy Desk reported. The project could be authorized by March 2020 if the agency sticks to its timeline, although the state was hoping to get through that permitting process and begin construction next year. Alaska Gasline Development Corporation President Keith Meyer said the corporation can still bring the project online by 2025. “We’re just happy that it’s a schedule that we can work with, we can live with and that does not adversely impact the project,” Meyer said.

Promises made to rural Alaska. Alaska’s senior Sen. Lisa Murkowski used her plum position atop the Senate’s energy committee Tuesday to advance rural Alaska issues with Interior Secretary Ryan Zinke. Murkowski quizzed Zinke on permitting for the controversial Ambler Road project and land management concerns for miners in Interior Alaska. Her efforts to secure favorable outcomes comes after a string of “wins” for the Alaska delegation with the department, including opening part of the Arctic National Wildlife Refuge to potential oil drilling and beginning the process of building a road through the Izembek National Wildlife Refuge. “You and I have worked closely to chart a path to energy security which you have noted runs right through the state of Alaska,” Murkowski said, thanking Zinke for his actions over the last year. Murkowski questioned Zinke on the status of the department’s involvement in a resource management plan for Interior Alaska, in the 40 Mile District, that was released during the final days of the Obama administration.

“Royalty owners indicated that, when they asked for any type of follow-up on this, they get really vague and ambiguous statements,.” The Legislature’s Administrative Rules Committee approved a new set of oil and gas rules Monday, but regulations that add transparency to royalty statements won’t take effect until July 2019. The new rules require oil companies to clearly identify the amount and purpose of each deduction taken from royalty payments. Bruce Hicks, assistant director for the North Dakota Oil and Gas Division, said regulators heard from royalty owners who are frustrated about deductions taken from their payments and the lack of information explaining them. “Royalty owners indicated that, when they asked for any type of followup on this, they get really vague and ambiguous statements,” Hicks said. The rules require any deductions taken from oil and gas royalties to be labeled under categories of transportation, processing, compression and administrative costs.

From today’s Washington Examiner, Daily on Energy:

EPA STREAMLINES POLLUTION CONTROL PROGRAM TO BOOST PLANT EXPANSIONS: The EPA moved Tuesday to relax requirements for power plants and other industrial facilities in a way that will allow them to expand operations without the fear of being punished.

New guidance, New Sources: Pruitt said the new guidance affects New Source Review rules that have been difficult for industrial facilities to navigate when considering adding more plant capacity or making upgrades.

Removing barriers: EPA’s air chief, Bill Wehrum, said the new guidance outlines a “common-sense interpretation of NSR rules,” and said the result is the removal of “unnecessary administrative barriers to the construction of cleaner and more efficient facilities.”

The industry has long seen New Source Review as a tricky regulation that should be avoided when possible. The EPA program attempts to determine if, by modifying a power plant, or building a new manufacturing plant, for example, a significant new source of pollution is being created.


First Reads:

Timeline set for environmental study of Alaska LNG project
AP News, March 14, 2018

Interior secretary promises action on rural Alaska issues
Anchorage Daily News, Erica Martinson, March 14, 2018

Rules adding transparency to oil royalty statements get final OK
The Bismarck Tribune, Amy Dalrymple, March 12, 2018

 

 

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Headlamp – Critics attack Trump for streamlining tool for leasing.

March 13, 2018 | Posted in : News

Trump move to reduce duplicative studies angers ENGO’s. The Trump administration’s latest efforts to streamline oil and gas development have drawn sharp criticism from environmentalists who say the policies shortcut federal law. At issue are new guidelines unveiled last month by the Bureau of Land Management that aim to avoid long, drawn-out National Environmental Policy Act reviews whenever possible. One feature of the February memo is an emphasis on the use of “determinations of NEPA adequacy” for oil and gas leasing. The approach, known as a DNA, allows the agency to forgo fresh environmental review when it already has studies that cover a new proposal. DNAs are unique to BLM. The term does not appear in the NEPA statute or related regulations; BLM created the tool to avoid conducting costly analysis that repeats previous work. Supporters say the approach makes perfect sense: Why spend resources to study something the agency already studied? BLM officials used them during the Obama and George W. Bush administrations, too. But critics see DNAs as vulnerable to misuse. They fear the Trump administration is setting up for a major escalation that would bypass targeted environmental analysis for hundreds of thousands of acres of newly leased lands.

“We need to persuade global financial leaders that the North American Arctic is the world’s safest emerging market,” Last summer, the icebreaker Xue Long (Snow Dragon) became China’s first vessel to transit the Northwest Passage, travelling from the Pacific Ocean to the Atlantic through the Arctic Ocean archipelago. Then, in January, China officially included the Arctic region in its massive Belt and Road Initiative, making Northern Canada, Alaska and Greenland eligible for Chinese investment in railways, roads, pipelines and utility grids. China understands the Arctic will be part of a new global trade infrastructure system. Does North America? According to the U.S. investment firm Guggenheim Partners, the Arctic will require close to US$1-trillion of infrastructure investment over the next decade, including transportation, telecommunications and social services to support a new era of economic opportunity from energy, fishing and mining, to defense and tourism. With fewer than one million residents, the North American Arctic has no choice but to seek outside capital for its enormous strategic and economic opportunities. We recently convened an international forum at the University of Toronto to help North American players come to grips with what’s at stake in their far north. Here’s what was suggested.

Tillerson out – Pompeo in. President Donald Trump said Tuesday he was replacing Rex Tillerson as secretary of state, just over a year into the former Exxon Mobil CEO’s tenure. “Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job!” Trump wrote on Twitter. “Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so chosen. Congratulations to all!” The news follows what had been a difficult tenure for Tillerson, who fought to keep pace with a president who liked to conduct foreign affairs through his Twitter account and struggled to get key positions within the State Department filled.

From today’s Washington Examiner, Daily on Energy:

FERC GIVING PIPELINE APPROVALS A FRESH LOOK: The Federal Energy Regulatory Commission is reviewing its nearly 20-year-old policy for approving pipeline projects as the agency evaluates how to best manage the transport of bountiful shale natural gas to market, while balancing environmental and climate change concerns.

FERC has been characteristically tight-lipped since it announced in December its plan to take an open-ended “fresh look” at its 1999 policy statement governing how it issues permits for pipelines.

Different expectations: With no clear expectation of what could happen, experts and advocates are anticipating what FERC may do.

“I would be very surprised if this particular FERC made it even more difficult to get pipelines built, given the emphasis this administration has on energy infrastructure issues,” said Tony Clark, a Republican who served as a FERC commissioner from 2001 to 2012, noting President Trump appointed four of the five current commission members. Industry satisfied: Pipeline backers say the current policy works fine.

If anything, they are angling for fewer hurdles to development because they say the shale industry is already facing pipeline bottlenecks that could stop it from delivering on forecasts predicting U.S. oil production will top 11 million barrels a day by November.

Greens tire of ‘outdated’ policy: Pipeline opponents, meanwhile, say FERC’s pipeline policy is outdated, created when climate change concerns were less dominant and the shale boom was unanticipated.

They say FERC has become a “rubber stamp” for pipeline approvals because the policy statement encourages the committee to lean too heavily on economic considerations when making decisions.

 

First Reads:

North America must seize its Arctic opportunity – or risk being left out in the cold
The Globe and Mail, Clint Davis, Jessica Shadian and Mead Treadwell, March 11, 2018

Former Exxon CEO Tillerson out as secretary of state
Chron, James Osborne, March 13, 2018

Critics pounce on NEPA streamlining tool for leasing
E&E News, Ellen M. Gilmer, March 13, 2018

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Headlamp – MURKOWSKI SAYS STEEL TARIFFS COULD RAISE COST OF ALASKA NATURAL GAS PROJECT

March 12, 2018 | Posted in : News

United Steelworkers file suit. The United Steelworkers filed suit against BP last week, arguing that the oil giant violated an agreement with the union when it outsourced work to a Prudhoe Bay contractor in 2016. Five union-represented workers lost their positions in the outsourcing. The union wants BP to restore the workers’ jobs and cancel the contract with NANA Management Services to run a sewage treatment facility, according to a union grievance report included in the lawsuit, filed in U.S. District Court in Anchorage. The complaint comes after BP made other contractual changes over the last year that are expected to reduce union workforces, as BP seeks to save money amid low oil prices. Union workers typically earn more than their non-union counterparts, studies show.

Unanswered questions or unquestioned answers? Alaska Gasline Development Corp. officials will meet with U.S. Federal Regulatory Commission staff in Washington, D.C. March 22 to clarify the Commission’s request for information on a number of issues on the proposed Alaska LNG Project. Among those is a reevaluation FERC has requested of Port MacKenzie, in the Matanuska Susitna Borough, as the site of a large natural gas liquefaction plant and terminus of a large-diameter gas pipeline from the North Slope. Nikiski, on the Kenai Peninsula, is currently the proposed site of the LNG plant and pipeline terminus. Dave Cruz, Chair of AGDC’s Board, said he does not believe the federal regulators derail the proposed Liquid Natural Gas Pipeline.

From today’s Washington Examiner, Daily on Energy:

MURKOWSKI SAYS STEEL TARIFFS COULD RAISE COST OF ALASKA NATURAL GAS PROJECT: Sen. Lisa MurkowskI, chairwoman of the Senate Energy and Natural Resources Committee, said Friday that Trump’s tariffs on imported steel could add $500 million to the cost of a major natural gas export terminal planned in her home state of Alaska.

“The back of the envelope numbers with these tariffs, we might be in a situation where it might be as much as half a billion dollars added on the most expensive infrastructure projects that we have seen with this country,” the Alaska Republican said at the CERAWeek energy conference in Houston.

Exporting to China: Alaska in November struck a $43 billion joint development deal with China on an 800-mile pipeline to bring natural gas from the North Slope to Asia.

‘Confusing message’: Murkowski also said the tariffs complicate relationships with countries that are importing more U.S. oil and natural gas, such as South Korea. “It sends a confusing message,” she said.

First Reads:

United Steelworkers sue BP after it cut union-represented positions on North Slope
Anchorage Daily News, Alex DeMarban, March 11, 2018

AGDC to meet with FERC March 22 to discuss LNG Project
Mat-Su Valley Frontiersman, Don Mateer, March 10, 2018

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Headlamp – We need your help!

March 9, 2018 | Posted in : News

Help us stand up for Alaskans by submitting your comments. The Bureau of Ocean Energy Management (BOEM) has issued a call for public comments on a new draft five-year Outer Continental Shelf (OCS) oil and gas leasing plan that would replace the current program that was crafted by the Obama administration and excluded most of the Alaska OCS, including the Arctic, from future exploration.

The Trump administration’s Draft Proposed Program (DPP) calls for 19 of 47 lease sales in federal waters off Alaska coasts beginning in 2019 and ending in 2024.

President Obama had removed 94 percent of the acreage that had been available for offshore leasing and this DPP proposes to do the opposite.

Action Requested: Please submit comments supporting the proposed lease sales in the Arctic and Cook Inlet. Including at this stage the most prospective areas of the OCS for potential oil and gas discovery is consistent with advancing the goal of moving America from simply aspiring for energy independence to attaining energy dominance.

Click here to submit comments online!

Points to consider for your comments:

  • The potential oil and gas resources that may be made available as a result of this DPP are fundamental to America’s energy security in the coming decades. The 2019-2024 OCS Oil and Gas Leasing Plan will provide the foundation for the nation’s energy supply into the middle of this century.
  • Alaska’s Beaufort and Chukchi seas form one of the most prospective basins in the world. Together, these areas are estimated to hold over 24 billion barrels of oil and 133 trillion cubic feet of natural gas.
  • Despite a surge in U.S. oil production in recent years, the U.S. still imported nearly eight million barrels per day last year to meet domestic needs.
  • Offshore development would serve to help maintain the integrity of the Trans-Alaska Pipeline System (TAPS), a critical link to America’s energy distribution. TAPS has safely transported more than 17 billion barrels of oil since it came online over 40 years ago.
  • Twenty-eight years ago, North Slope oil production exceeded two million barrels a day, which accounted for a quarter of domestic crude oil production.  However, TAPS throughput has now declined to approximately 528,000 barrels per day. Given the vast resources available in the Arctic OCS, future production could stem the decline, allowing for TAPS to remain viable for decades.
  • Excluding the Alaska Arctic from future lease sales would severely compromise the long-term energy and economic security of Alaska and the nation.
  • The Arctic’s untapped resources are of critical importance to both Alaska and the United States. Oil and gas development in the Arctic OCS is predicted to produce an annual average of 35,000 direct and indirect jobs over the next half century for Alaska alone. Those jobs would represent a total payroll of over $70 billion.
  • From an economic standpoint alone, promoting and fostering Arctic OCS development would represent a windfall for the national economy.  Revenues generated from Arctic OCS oil and natural gas production could amount to $200 billion to federal, state and local governments.
  • Industry has shown that impacts to marine mammal subsistence activity can be avoided and mitigated through close cooperation and communication with primary subsistence users. Newly instituted technologies will further ensure that development and environmental protection can coexist in the Arctic.
  • Leasing and subsequent Arctic OCS exploration and development would bring much-needed infrastructure to the region and would also provide additional response capabilities in an area where shipping and other activities are increasing.
  • Major investments in research in the Arctic OCS over decades by industry, government, and academia will provide a strong platform for responsible development that minimizes risks to other resources.
  • Over 72% of Alaskans have supported offshore development.(Consumer Energy Alliance poll, October 2014)
  • BOEM lease sales provide some level of predictability and certainty for industry to engage in long-term strategies to develop the Arctic’s vast resources.
  • Oil and gas development in the Arctic OCS could ultimately prove indispensable, given forecasts that predict this nation’s energy demands increasing over ten percent in the next quarter century. Even with dramatic increases in alternative energy sources, the majority of these growing energy demands will continue to be satisfied through use of fossil fuels.

First Reads:

ACTION ALERT: New Five-Year OCS Lease Sale Draft Plan
Resource Development Council

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