Extra Edition – There are Two Sides to Every Story

May 3, 2017 | Posted in : News

The Kenai Peninsula Borough under the leadership of Mayor Mike Navarre, has done an excellent job of providing project updates on AKLNG to the public.

Enter Larry Persily. Persily was Federal Coordinator of the Alaska Natural Gas Transportation Projects from 2010-2015 and now serves the Kenai Peninsula Borough Mayor’s Office as an oil and gas adviser.

He is widely recognized as the local expert on the project and is the author of the project updates.

His latest update comes on the heels of recent presentations by the Alaska Gasline Development Corporation (AGDC) about the project’s status and their optimistic timeline.

Click here to read Larry’s detailed, practical analysis of the project and the reality of the Federal Energy Regulatory Commissions (FERC) timeline.

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Morning Headlamp – 15 wells in the Arctic Ocean; Less regulation, More mines

May 3, 2017 | Posted in : News

Way up North. With the oil industry barely recovering from its most brutal slump in decades, you might expect the Arctic Ocean to be the last place explorers would hunt for new discoveries. The Barents Sea off Norway’s northern tip is different. Norwegian authorities expect companies including Lundin Petroleum AB and OMV AGto drill a record 15 wells in the Barents this year.

If it can’t be grown, it must be mined. Making changes to the City and Borough of Juneau’s mining ordinance would take a long time and a great deal of effort to do, and the city is looking into it. The conversation of amending the ordinance originated from a proposal from five businessmen who approached the Assembly members recently to discuss eliminating parts of the mining ordinance to make it easier for investors to open a mine in Juneau or to reopen the Alaska-Juneau Mine.

ConocoPhillips Leaves Pt. Thomson – Improves Q1 Earnings. ConocoPhillips reported Tuesday it has given up its small stake in the Point Thomson gas field, and said it earned $99 million in Alaska in the first quarter of 2017, not counting the Point Thomson transaction. In reporting its first-quarter income, ConocoPhillips, like Alaska’s other major oil producers, said higher oil prices have boosted its global income. The company held about 5 percent of the Point Thomson field. Conoco’s share went to the other owners, primarily Exxon Mobil Corp. and BP. ConocoPhillips on Tuesday reported $174 million “impairment” associated with the relinquishment at Point Thomson. Before our detractors hold this up as evidence the state is not getting “our fair share,” Headlamp would remind our readers that when oil companies make profits, the state gets more revenue. In fact, the state always gets more!

Legislature Stuck In Neutral on Uber Bill. Senate Bill 14, which would pave the way into Alaska for Uber and other “transportation network companies,” and Senate Bill 63, the smoking ban, passed the Republican-led Senate 14-5 and 15-5, respectively, earlier this year. But as the legislative session drags on past its 90-day deadline, both bills have stalled in the House. Currently SB14 is awaiting action from House Rules Chairwoman Rep. Gabrille LeDoux to send the legislation to the House floor. The sponsor of the House’s version of the transportation legislation, Fairbanks Democratic Rep. Adam Wool, acknowledged that the Senate bill is snarled in end-of-session wrangling between the two chambers — even though, he said, it has more than the 21 votes needed to pass. “It’s held up in rules for political reasons,” said Wool.

Alaska Airlines Posts Profits In Q1. The Seattle-based parent to Alaska Airlines, regional carrier Horizon Air and now Virgin America reported quarterly net income of $130 million excluding merger and fuel hedging costs, according to an earnings report released April 26. By comparison, Alaska Air Group earned $184 million in profits in the first quarter of 2016, just before announcing the deal to purchase San Francisco-based competitor Virgin America in a deal that totaled approximately $4 billion in cash and assumed debt.

First Reads

Earnings improve for ConocoPhillips, which says it has left the Point Thomson gas field

Alaska Dispatch News, Alex DeMarban, May 4, 2017

As lawmakers fight through fiscal crisis, anti-smoking, Uber bills remain stuck

Alaska Dispatch News, Alex DeMarban, May 4, 2017

Alaska Air Group posts $130M profit in first quarter

Alaska Journal of Commerce, Elwood Brehmer, May 2, 2017

Where the Arctic Oil Industry Is Booming

Bloomberg, Mikael Holter, May 3, 2017 

Assembly wants time to consider changing mining ordinance
Juneau Empire, Alex McCarthy, April 30, 17

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Morning Headlamp – A new 5-year plan on the horizon and EPA continues to rain down on Fairbanks

May 2, 2017 | Posted in : News

Federal Spending Bill Could Resolve SE Alaska Logging Dispute. The proposed federal spending bill — on page 904 of 1,665 pages — incorporates Senate Bill 131, a separate piece of legislation from Republican U.S. Sen. Lisa Murkowski that would trade land between the U.S. Forest Service and the Alaska Mental Health Trust Authority. The Authority — a state entity governed by its own board of trustees — had drawn local opposition from Ketchikan and Petersburg residents last year when it advanced plans to log nearby parcels. The Authority uses its vast land holdings to raise money for programs for Alaskans with mental illnesses and disabilities. Murkowski’s proposal, if approved, would include the Ketchikan and Petersburg parcels as part of an exchange. The Petersburg and Ketchikan properties would be added to the Tongass National Forest, while the trust would get parcels that could be logged on Prince of Wales Island, the home of Southeast Alaska’s largest remaining sawmill.

And we’re off…Interior Secretary Ryan Zinke officially began the process Monday to expand offshore drilling for oil and natural gas. At an industry conference in Houston, Zinke signed a secretarial order for the Bureau of Ocean Energy Management (BOEM) to start formulating a new five-year plan for drilling rights sales. Headlamp again applauds Sec. Zinke and the Trump administration for quickly moving forward with their efforts to help the U.S. responsibly develop our natural resources and put Americans to work!

Buy America? Not so fast. A directive requiring U.S. pipeline companies to use American steel and iron in their projects is testing President Donald Trump’s ability to keep his promises to two industries on opposing sides of the issue. In comments to the U.S. Department of Commerce, which is crafting the so-called “Buy American” plan, pipeline companies and their trade groups argued the change would increase costs and disrupt operations. Steel companies, meanwhile, embraced the policy as an opportunity to take advantage of the country’s surging oil and gas production. And Trump has vowed to support both.

Movin’ on up…Governor Bill Walker will be one of 10 Governors serving on a council that focuses on military issues and defense spending. According to the White House President Donald Trump intends to appoint Walker to the 10-member council.

EPA Standards Aim To Control Fairbanks Pollution. The decision by the Environmental Protection Agency downgrades Fairbanks’ status for continuing to violate pollution limits for fine-particle emissions. The agency is boosting the region’s “non-attainment” designation from moderate to serious. A “serious” designation means, for example, that the state must create a new plan by year-end that will seek to employ “the best” technology, such as new, EPA-certified wood stoves that produce less smoke than older stoves, said Suzanne Skadowski, a regional spokeswoman from the EPA in Seattle. The designation means the Alaska Department of Environmental Conservation and Fairbanks North Star Borough, working together on the plan, must review some 160 “best practices” that have been put in place elsewhere around the country, said borough Mayor Karl Kassel.

Polar Bear Habitat Challenge Will Not Be Heard By Supreme Court. The Supreme Court declined Monday to hear a case appealing the federal government’s decision to designate more than 187,000 square miles in Alaska as critical habitat for threatened polar bears. The state of Alaska and the Alaska Oil and Gas Association — joined by Native corporations and local governments — brought lawsuits against the Interior Department to overturn the regulation. But the Supreme Court said it would not accept the case. That means an appeals court ruling backing the U.S. Fish and Wildlife Service’s designation will stand. Headlamp is disappointed in this decision and looks forward to the ninth circuit court going away. Far, far away. 

 

First Reads

New federal spending bill would defuse Southeast Alaska logging controversy

Alaska Dispatch News, Nathaniel Herz, May 1, 2017

EPA sets stricter standards to control Fairbanks air pollution

Alaska Dispatch News, Alex DeMarban, May 1, 2017

Supreme Court rejects case challenging feds over polar bear habitat in Alaska

Alaska Dispatch News, Erica Martinson, May 1, 2017

Interior secretary starts process for offshore drilling expansion plan
The Hill, Timothy Cama, May 1, 2017

Pipeline Companies Push Back Against Trump’s ‘Buy American’ Rule
Bloomberg, Meenal Vamburkar, May 1, 2017

President Trump appoints Gov. Walker to The Council of Governors

KTUU, Ashleigh Ebert, May 1, 2017

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Morning Headlamp – Secretary of State Visits Alaska and AGDC sets sights on 2019 for construction.

May 1, 2017 | Posted in : News

Our cup runneth over – New Projects Could Add Over 100K Barrels by 2021. Since mid-2015, oil explorers have announced three large discoveries on the North Slope that together, if peak estimates are correct, could add 420,000 barrels of oil daily to TAPS. But some of the projects are not expected to be developed for at least five years. Referring to the big discoveries, Paul Decker of the Alaska Division of Oil and Gas said the division feels “pretty solid” about the production estimates at Pikka, a project involving Armstrong Oil and Gas of Denver and Spanish oil company Repsol. In January, ConocoPhillips heralded its Willow discovery in the National Petroleum Reserve-Alaska, saying the field could produce up to 100,000 barrels daily. In addition to those and other long-term prospects, Decker also highlighted about 10 prospects with shorter timelines to production. Those projects could begin producing oil within four years, although some are currently on hold as company profits suffer during the oil-price rout. Two projects that haven’t been postponed, with first production estimated between 2018 and 2021, are Greater Mooses Tooth 1 and 2 on federal land. The two ConocoPhillips prospects could yield between 55,000 and 60,000 barrels of crude daily. Headlamp remains hopeful that Alaska will help bring these projects online with the one thing we can control: a stable tax structure.

Tillerson in the House! United States Secretary of State Rex Tillerson will be in Fairbanks next month during the Week of the Arctic. The Week of the Arctic is a series of events, workshops, and presentations tied to the Arctic Council, an international body representing eight circumpolar nations. The United States is concluding its chairmanship of the council and, following tradition, will host a meeting as the next country takes over. That meeting is scheduled for Fairbanks the week of May 8. Finland is taking over the chairmanship.

Senate stays strong in opposition to income tax.  Higher oil prices have cut the projected gap between what the state government spends and what it raises. Senate Finance Committee co-chairwoman Anna MacKinnon said the state has time to close its budget gap if it passes Senate Bill 26 this year. The measure draws money from Permanent Fund earnings to pay for state government, and limits Permanent Fund dividends. “It is short-sighted to be thinking about an income tax at this point in time,” MacKinnon said.

Mining brings Money to Alaskans.  For the next ten years, the North West Arctic Borough will receive annual payments from Teck Alaska based on a fixed asset value of Red Dog mine. The payments are estimated to be between $14 and $18 million per year. Previous payments were $11.6 million annually. Wayne Hall, superintendent for environment and community relations with Teck Alaska, explains the annual payments to NAB have increased since the previous agreement.

If I had a hammer…Representatives of the Alaska Gasline Development Corporation were in Nikiski on Wednesday evening to present a state-led pipeline mega-project with a different economic approach but few technical changes from its previous incarnation, and few answers to questions of how the project could affect Nikiski. Fritz Krusen, Vice President of AGDC’s Alaska LNG project, said the project aspires to start construction by Jan. 21, 2019.

 

First Reads

New projects could add 100K barrels by 2021, but some are questionable

Alaska Dispatch News, Alex DeMarban, April 30, 2017

Oil prices shrink budget gap, but lawmakers remain far apart

Alaska Public Media, Andrew Kitchenman, April 28, 2017

Northwest Arctic Borough to receive almost $200 million over 10 years from Red Dog Mine
Alaska Public Media, Davis Hovey, April 28, 2017

AGDC shares new plans for LNG pipeline
Peninsula Clarion, Ben Boettger, April 29, 2017

Secretary Tillerson to attend Arctic Council meeting in Fairbanks
Alaska Public Media, Robert Hannon, April 28, 2017

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Extra Edition – Thumbs Up, Thumbs Down for Juneau

April 28, 2017 | Posted in : News

Thumbs Up: Senate majority for refusing to consider an income tax as part of their fiscal plan, choosing to reduce the size and scope of government before taxing Alaskans.

Thumbs Up: Governor Walker for achieving one of the goals from his “New Sustainable Alaska Plan” – oil and gas tax credit reform. The House, Senate and Governor all agree on this and the Senate revised the House bill to eliminate ALL of these credits.

Thumbs Down: Rep. Adam Wool, who said “to hope that production is going to go up is a fallacy” the day after the Department of Natural Resources presented their forecast for more than 100,000 new barrels a day over the next four years – if we don’t price ourselves out of the market.

Thumbs Down: Rep. Les Gara for saying “if you were born with great privilege, you have a moral obligation to chip in…” as a reason why he supports an income tax for the small number of Alaskan workers who would pay it. Headlamp is certain Rep. Gara doesn’t personally know all 100,000 Alaskans he was talking about and therefore must categorize this statement as either hyperbole or a misunderstanding of how hard people work to be successful.  You make the call.

Thumbs Down: Rep. Gabrielle LeDoux for her behavior in the House Rules committee she chairs, for refusing to allow other members to offer amendments, which is SOP, and for forcing her caucus to rein her in and do the right thing. So that’s actually three Thumbs Down.

Thumbs Down: The Office of Management and Budget for releasing a “study” to explain why our state is at the top of the chart below:

The irony of this is OMB has been unable to provide any accurate numbers about state employees for the last several years.   #wedonottrustanynumbersfromOMB

Thumbs Up: Gavel to Gavel for playing the theme music from Game of Thrones at the most opportune times during this session. Headlamp enjoys matching Game of Thrones characters to Legislative personalities.
#musictomatchourmadness

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Morning Headlamp – Investment, Income Tax, Icebreakers.

April 28, 2017 | Posted in : News

Trump reverses Obama on offshore drilling. President Donald Trump has signed an executive order to rollback Obama-era mandates and revise a five-year schedule for auctioning offshore drilling rights with the aim of potentially including territory that was previously deemed off-limits. Trump’s order also seeks to reverse a potentially more enduring decision by Obama to indefinitely withdraw most U.S. Arctic waters and some Atlantic Ocean areas from leasing forever. “It is better to produce energy here under reasonable regulations than to have it produced overseas with no regulations,” Interior Secretary Ryan Zinke told reporters at a White House briefing to describe the order Trump is slated to sign Friday.

Show me the money. Summer promises to be a busy construction season for the Interior due to a series of projects at the region’s two Air Force installations. The projects will inject more than $1.5 billion into the area’s economy. Work is just getting under way on a $22 million building at Eielson Air Force Base that will enable pilots of the new F-35 fighters that are coming here to train in a computer-simulated environment.

The British are coming. Quaterra Resources, Inc. announced that it had signed an agreement with Chuchuna Minerals Co., which is owned by village corporation Kijik Corp. and Alaska Earth Sciences. The agreement gives Quaterra the option to buy a 90 percent interest in the 40,000-acre Groundhog copper prospect, located not far from the embattled Pebble mine prospect.

Mailers target House Majority members who supported Income Tax. An anonymous anti-income tax mailer was delivered across the state this week to the districts of at least four Alaska House members who voted earlier this month to reimpose the state’s income tax. Several campaigns have attacked the income tax proposal, but none of the people or groups behind them took responsibility for the mailers this week. Another income tax opponent, Anchorage investor Bob Gillam, has already run newspaper and online advertisements attacking the proposal, and they’ve included a disclosure identifying Gillam.

Lawmakers meet and adjourn without confirmation votes. The Alaska House and Senate convened together Thursday to take confirmation votes on Gov. Bill Walker’s appointees to lead state departments, boards and commissions — then left without voting. The bizarre development in the House chambers came after the Senate canceled an earlier set of votes on appointees scheduled for April 13, saying they’d take up the nominations later. Walker then issued a formal proclamation Wednesday ordering lawmakers into a joint session Thursday to act on his appointments.

Absolute power corrupts? There are more signs of friction in Juneau this week. The latest example came between two House members, when a seemingly non-controversial committee meeting became anything but. It ended with one lawmaker calling for a reprimand of the House Rules Committee chair, Rep. Gabrielle LeDoux.

US behind in Icebreaker race. Almost a year after the Russian Ministry of Defense announced its plans to acquire a new class of icebreaking Arctic patrol vessels, the keel of the first “Project 23550” multipurpose Arctic patrol ship has been laid.

 

First Reads

Trump to Expand Offshore Drilling, Review Post-Spill Rules

Bloomberg, Jennifer Dlouhy, April 28, 2017

Anonymous mailers target Alaska House members who backed income tax

Alaska Dispatch News, Nathaniel Herz, April 28, 2017

Trump, reversing Obama, will push to expand drilling in Arctic, Atlantic oceans

Alaska Dispatch News, Juliet Eilperin, Brady Dennis – Washington Post, April 28, 2017

Alaska lawmakers meet for confirmation votes on governor’s appointees but leave without voting

Alaska Dispatch News, Nathaniel Herz, April 28, 2017

Construction at area’s Air Force installations to inject $1.5 billion into Interior economy

Alaska Public Media, Tim Ellis, April 27, 2017

British Columbia mining company to fund exploration at Alaska copper prospect

Alaska Dispatch News, Annie Zak , April 27, 2017

Eastman calls for reprimand after LeDoux blocks committee debate

KTVA, Liz Raines, April 27, 2017

Construction begins on Russian Navy’s first Arctic patrol ship
Arctic Now from High North News, Ryan Uljua, April 28, 2017

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Morning Headlamp – Let’s deal in Reality; Trump’s shout out to Alaska

April 27, 2017 | Posted in : News

Actual results beat theory every day of the week. Andrew Jensen’s latest editorial hits the nail on the head: The oft-cited ISER study ties not a single direct job in the state to the payment of PFDs. Rather it relies on the economic multiplier effect for measuring impacts of using Fund earnings or collecting an income tax. The only scenario in which it can estimate job losses directly is from budget cuts to the state government. Everything else is theory, although it would be nice to know how many small business owners will be hit by the income tax and how that will affect their ability to hire and grow in the name of preserving an artificial PFD level.”

The sky is the limit. President Donald Trump plans to sign yet another executive order instructing Interior Department Secretary Ryan Zinke to review and in all likelihood throw out President Barack Obama‘s plans for federally administered waters. The reversal will not come overnight. Bureaucrats must grind through a multiyear process to overturn Obama’s plans, and the executive action tees up a widely anticipated legal battle over executive authority. There are three paths Trump can take — and challenges to each.

Undoing the damage that was done. As expected, President Donald Trump signed an executive order Wednesday directing Interior Secretary Zinke to review the designation of dozens of national monuments on federal lands, as he singled out “a massive federal land grab” by the Obama administration.

Headlamp loves the shout out to Alaska from the President! During the press conference President Trump turned to Senator Murkowski and said “we’re going to take care of Alaska…” 

ADN uses fear tactics instead of facts…again. Russian Arctic policy is often characterized as “threatening” to its neighbors and the regional status quo. This tone can be seen in commentary such as the Alaska Dispatch News feature on Feb. 3, “Putin’s call to arms,” in which Russia is “on the march” and making its “biggest Arctic military push” since the collapse of the Soviet Union. This military-centric theme also runs through a number of recent position papers which emphasize growing Russian “Arctic aggression.”  But this is tactical mirror-imagining of Russian intent which mischaracterizes and obscures Russia’s true geopolitical objectives. This is true for both U.S. strategic policy and Alaska’s own subset of issues.

Alaska Reveals Oil and Gas Credit Recipients. Alaska ended years of silence about its oil and gas tax credits this week by announcing the names of companies that collected $73 million in 2016 in state cash incentives designed to spur exploration and production. The 2016 payments to 12 companies and municipal governments generally covered work done in 2015. Large oil producers, such as BP, Exxon Mobil, ConocoPhillips and Hilcorp, were not on Tuesday’s list. Producing more than 50,000 barrels of oil equivalent daily, they are not eligible for the cash credits, though they receive other benefits under the state’s tax system. Also, they can purchase the cash-credit certificates to offset production taxes they pay to the state. Cornucopia Oil and Gas Co., owned by a German holding company, received the largest payout at $39.9 million. Cornucopia is the majority working interest owner in the Kitchen Lights field in Cook Inlet and owns Furie Operating Alaska. After Cornucopia, the second-largest recipient was Renaissance Umiat, at $11.2 million. Apache Alaska Corp. received $10.5 million from the state last year.

Repeal Effort For SB26 Underway. Senate President Clem Tillion is getting financial commitments now to back a petition to repeal Senate Bill 26 on the assumption it will eventually pass, he said in an interview. He declined to specify how much he has raised, or who has committed, but said the group will form a nonprofit to manage the funds and the petition movement shortly after the governor signs the bill. Tillion, who was in the state Senate in 1976 when the constitutional amendment establishing the Fund was approved, said Walker, current legislators and others who insist it was intended as a “rainy day” government fund are misguided in their view. “Taxes belong to the government,” said Tillion, who was the lone vote against repealing the state income tax in 1980. “The Permanent Fund is the people’s money. We set up a system where the Legislature was not involved. This is the people’s Permanent Fund.”

 

First Reads

An income tax would hurt most Alaskans less than a PFD cut. So why do most Republicans oppose a tax?

Alaska Dispatch News, Nathaniel Herz, April 27, 2017

For first time, state reveals recipients of cash credits for oil and gas activity

Alaska Dispatch News, Alex DeMarban, April 27, 2017

Referendum effort looms over plan to use Fund earnings

Alaska Journal of Commerce, Elwood Brehmer, April 27, 2017

The Russians are not coming, at least not to Alaska

Arctic Now, Jon Skinner, April 27, 2017

Trump aims to lift Obama’s offshore drilling limits. This is how he could do it

CNBC, Tom DiChristopher, April 26, 2017

Trump: National monuments a “massive federal land grab”

Associated Press, Darlene Superville & Jill Colvin, April 26, 2017

AJOC Editorial: Real jobs beat theoretical jobs

Alaska Journal of Commerce, Andrew Jensen, April 26, 2017

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Morning Headlamp – Airships on the Kenai, Burn Ban in Fairbanks, and Seafood Settlement in Dutch Harbor.

April 26, 2017 | Posted in : News

Gas Delivery Airship Ready For Delivery In 2019. PRL Logistics first announced plans to base an airship at its facility along the Kenai River last year, and has been working with ExxonMobil to add modular liquefied natural gas tanks on the airship that could be used to deliver North Slope gas to Alaska’s isolated communities. The airship can land on snow, ice, gravel and water and has space for 47,000 pounds of cargo. “If the cost of being able to do remote construction and responsible resource development can be reduced through reducing the logistics cost, some projects that might be close to going may actually go,” PRL Logistics Founder and CEO Ron Hyde said. PRL Logistics also plans to build a $10 million hangar in Kenai to house the airship and possibly move its accounting, procurement and technical teams from Anchorage to Kenai.

Not so fast…President Trump is expected to sign an executive order today that will authorize the review of any national monument created since January 1996.  The Antiquities Act has been used in recent years to put “millions of acres” of land and sea off limits to development. “By and large, the Antiquities Act and the monuments that we’ve protected have done a great service to the public,” Interior Secretary Ryan Zinke said, although citizens in western states “would probably say it’s abused. My position is, I’m going to be looking into it and evaluating it on a legal basis.”

EPA – Dutch Harbor Seafood Processor Settle. A Seattle-based seafood processor that operates in Alaska would pay a $1.3 million civil penalty under a proposed settlement of clean air violations. The U.S. Environmental Protection Agency says Westward Seafoods also would be required to spend $1.1 million on air pollution reduction projects and $800,000 on emissions monitoring at Dutch Harbor, Alaska. Westward Seafoods self-reported that three employees turned off air pollution controls from 2009 to 2011 at a processing plant. The three pleaded guilty to falsifying records.

Panel Calls for Wood Burning Ban in Fairbanks. Members of a local Air Pollution Control Commission are asking the Fairbanks North Star Borough to take several steps to address heavily polluted air in the borough, including banning old wood stoves and putting restrictions on wood sales. The commission is recommending old wood stoves be banned in parts of Fairbanks and North Pole and that the borough add new requirements for wood storage. The panel has also asked the borough to consider implementing ultra-low sulfur home heating oil.

 

First Reads

Alaska City to Get Giant Egg-Shaped Aircraft by 2019

AP, April 26, 2017

Seafood Processor, EPA Settle On Alaska Clean Air Violations

KFQD, Toben Shelby, April 26, 2017

Panel Recommends Smoke Control Measures for Alaska Borough

U.S. News & World Report, AP, April 26, 2017

Trump to order broad review of national monuments and parks

The Washington Post, Juliet Eilperin, April 26, 2017

Trump Is Expected to Sign Orders That Could Expand Access to Fossil Fuels

New York Times, Coral Davenport, April 25, 2017

Norway doubles Barents Sea oil and gas estimate, alarms green lobby

Reuters, Nerijus Adomaitis and Alister Doyle, April 25, 2017

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Morning Headlamp – Senate eliminates cash incentives to oil companies.

April 25, 2017 | Posted in : News

Cash Credits are DOA. The Alaska Senate moved ahead Monday with a House bill to eliminate a cash incentive program for oil companies, but it rejected another House idea to raise oil taxes at prices below $100 a barrel. The Senate Resources Committee released its revision to House Bill 111 at a Monday afternoon meeting and advanced it 40 minutes later to the Senate Finance Committee, where it’s scheduled for hearings later in the week. The new proposal from the Senate accepts the House’s plan to eliminate cash incentives for North Slope oil companies and cuts the incentives even more than the House’s bill, because it would also eliminate the program for so-called “Middle Earth” — south of the North Slope and north of Southcentral Alaska, where it’s being used by Alaska Native corporations.

Statoil’s Statistical Probability on Arctic Drilling. Norway’s Statoil on Monday played down concerns that drilling in the Arctic is risky, days before it kick starts its drilling campaign in the Barents Sea, where the country believes around half of its remaining resources could be located. Despite opposition from environmentalists, the company plans to drill five wells in the Norwegian sector of the Barents Sea, including Korpfjell, which will be the world’s northernmost well and in a formerly disputed border area with Russia.

Like a good neighbor…miners are there. A recent poll conducted by Morning Consult shows that the average American does not understand the important and positive role mining companies play in land reclamation and in environmental stewardship. For example, only seven percent of those surveyed knew that U.S. mining companies have paid more than $10 billion to restore mines abandoned before laws requiring their restoration were enacted. These results reinforce the need for the mining industry and its supporters to educate Americans about our industry’s commitment to being good neighbors and responsible operators.

More pipelines = lower electricity rates. The US Chamber of Commerce’s Institute for 21st Century Energy in a report underscored the need for more natural gas pipelines in the Northeast US and slammed environmentalists for challenging new projects. “As a result, residents in the Northeast are paying the highest electricity rates in the continental US, with no relief in sight if infrastructure is not built,” Institute for 21st Century Energy President and CEO Karen Harbert said. Headlamp agrees wholeheartedly with the US Chamber and Alaskans understand the need for infrastructure probably better than anyone else in the United States. Let’s build things!

A little Icewine please? Australian oil firm 88 Energy said today that a well had been spudded on its Icewine asset in Alaska. Perth-based 88 Energy, which owns 77.5% of Icewine, said the Arctic Fox rig started drilling the production test well last night. Production testing remains on schedule for late June or early July, the London-listed firm said. 88 Energy managing director Dave Wall said: “The spud of Icewine#2 represents another milestone for the Company and its shareholders and we now look forward to a safe operation, above all else. It is only a few short weeks before production testing begins, which could unlock the huge resource potential of the HRZ shale play. More exploration leads to more production which leads to more revenue for Alaska. It’s a win-win. Good luck to 88 Energy.

More threats on the way? The Alaska House Rules Committee hasn’t held a hearing on a single bill this year – this is normal for a committee that often only meets during a legislative emergency. But on Wednesday, the committee will meet to consider six uncontroversial bills from the Senate — a move from the committee chair, Anchorage Rep. Gabrielle LeDoux, that has perplexed other lawmakers, legislative staffers and lobbyists. Headlamp would venture a guess that the rules chair is planning to hijack Senate bills in an attempt to force them to do the House’s bidding. Our money is on the Senate. 

 

First Reads

Alaska House leader schedules unusual meeting on batch of bills from state Senate

Alaska Dispatch News, Nathaniel Herz, April 25, 2017

Alaska Senate advances oil tax bill, but leaves out some of the pieces proposed by the House

Alaska Dispatch News, Nathaniel Herz, April 25, 2017

Cook Inlet gas leak shows why Alaska LNG route must end in Valdez, group says

Alaska Dispatch News, Alex DeMarban, April 25, 2017

North Sea Oil Floods to Asia Like Never Before on OPEC Cuts

Bloomberg, Alex Longley, April 25, 2017

Poll Shows Mining’s Environmental Accomplishments Unknown to American Voters

National Mining Association, April 20, 2017

US Chamber sees need for more natural gas pipelines

Argus Media, April 24, 2017

Arctic Fox spuds 88 Energy’s Icewine well in Alaska

Energy Voice, Mark Lammey, April 25, 2017

Norway’s Statoil plays down risks ahead of Arctic drilling
Reuters, Nerijus Adomaitis, April 24, 2017

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Morning Headlamp – Fracking Tests at Prudhoe Bay; Persily sets AGPA straight

April 24, 2017 | Posted in : News

First things first. Accumulate Energy Alaska is launching an effort to determine the production potential of crude oil locked in North Slope shale. The company will begin drilling an exploration well along the Dalton Highway about 40 miles south of Prudhoe Bay. In June, it plans to hydraulically fracture that vertical well, using water, chemicals and sand to crack and hold open rock so oil flows from the shale. A production test to determine how the well oil flows is also expected this summer. Headlamp wishes Accumulate well in their endeavors as more oil in the pipeline benefits all Alaskans. 

Fracking is good business. Schlumberger plans to bring its entire fleet of hydraulic fracturing equipment back into service this year and ramp up hiring as it seeks to capitalize on the renewed shale boom. The company managed to swing back to profitability in the first quarter of the year thanks to its US fracking business.

More offshore drilling, please. President Donald Trump will sign a series of executive orders this week on offshore drilling, cybersecurity, veteran’s affairs and agriculture, according to sources familiar with the administration’s plans. Between the President and Alaska’s congressional delegation, Headlamp is crossing our fingers and hoping to see offshore drilling opportunities back on the horizon soon.

Much ado about nothing. The Alaska Gasline Port Authority told federal regulators Monday that Hilcorp Alaska’s problems over the winter support the argument that it would be a mistake to end the proposed 800-mile pipeline in Nikiski along the inlet. Larry Persily, oil and gas adviser to Mayor Mike Navarre of the Kenai Peninsula Borough said the Authority’s comparison is off-base. Hilcorp’s gas line was installed in the 1960’s. The Alaska LNG project has planned to coat the large gas pipeline with about 6 inches of protective concrete for its Cook Inlet crossing. Headlamp reminds AGPA, just because you want something to be, doesn’t make it so. 

One fish, two fish. Public pushback persuaded Chugach Electric Association to punt on its proposal to build a $500 million-plus hydropower project on the Snow River only four months into a decade long process. The Anchorage electric cooperative announced late Thursday that it is canceling further study of a concept to dam the Snow River near Seward, which is the feeder system to Kenai Lake and the upper reaches of the Kenai watershed.

 

First Reads

Explorer plans first test of oil potential in Prudhoe Bay shale

Alaska Dispatch News, Alex DeMarban, April 24, 2017

Chugach kills Snow River hydropower study

Alaska Journal of Commerce, Elwood Brehmer, April 24, 2017

Cook Inlet gas leak shows why Alaska LNG route must end in Valdez, group says

Alaska Dispatch News, Alex DeMarban, April 24, 2017

Trump to sign executive orders on drilling, cybersecurity and a rural America task force

Politico, Andrew Restuccia, April 23, 2017

For Schlumberger, U.S. fracking business spurs hiring, prices

Fuel Fix, Collin Eaton, April 21, 2017

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