The Morning Headlamp—Gov. Walker’s budget misstep

“You haven’t cut the budget, Governor.” Yesterday on Kenai radio station KSRM’s Tall, Dark and Handsome Show hosted by Duane Bannock, Governor Bill Walker called in to discuss his administration’s recently released budget. In the interview the Governor seemed to admit that spending cuts he has touted as part of the budget do not actually exist. In his discussion with the Governor, Bannock contended the state operating budget has in fact not been cut, but rather has been increased by 9.3%. In the clip posted below the two have a back and forth over the role of oil tax credits in the budget that concludes with Bannock saying: “You haven’t cut the budget, Governor. The budget’s gone up!” To which Governor Walker replies: “Ya…..we have…I understand your point Duane.” Headlamp is happy to know that Alaskans are paying attention to what the real details of the budget are and hopes Alaskan lawmakers will work to achieve a sustainable budget level of $4.5 billion for FY17.

 “Poster child” for Alaska exploration. In early February, a stretch of Arctic coastline will come alive with industrial activity as Caelus Energy LLC begins drilling its first exploration well on Alaska state lands in Smith Bay, a remote inlet located 60 miles southeast of Barrow. The company has owned the Smith Bay lands only since June, when it acquired a 75 percent working interest in the 117,000 acres from NordAq Energy Inc. The company’s top officials formed Caelus in 2011 after successful careers in oil exploration and development around the globe. “Our owner, Jim Musselman, likes to say that we’re the poster child for S.B. 21,” said Casey Sullivan, state public affairs director for Caelus. Sullivan asserted that the company has “invested a great deal of energy and capital in the state, and now the rug is being tugged underneath our feet a little bit.” The governor’s budget plan, he said, “causes a lot of uncertainty for our investor group. When you try to make plans for next year and thereafter and you just don’t know what the state program will look like, it’s a problem.”

Congress’ just-released “omnibus” spending bill and companion tax package have Alaska fingerprints all over themincluding provisions to lift a 40-year ban on crude oil exports, protect the fishing industry and support military spending in the state. The omnibus spending bill essentially rolls up 12 appropriations bills — all passed out of their home committees — into one, a final deal negotiated behind closed doors by a select few. As chair of the Senate appropriations subcommittee that funds agencies of the Interior and Environment departments, Alaska Sen. Lisa Murkowski had a strong hand in that part of the legislation. Murkowski touted the provision as a win for energy and national security, arguing that it will spur new jobs and revenue. And given terrorist threats, “oil exports are needed now more than ever to reduce volatility and provide our allies, and the world, a stable and secure source of energy,” Murkowski said Wednesday.

Oh what a year. The Alaska Journal of Commerce released two “Year in Review” pieces, highlighting a year in oil production and Alaskan politics. The former, focused on the year’s five biggest energy developments: ConocoPhillips’ various projects, Caelus’ Nuna project, Point Thomson, Hilcorp’s plan for Liberty offshore, and Furie’s completion of the first Inlet platform in 30 years. The latter focused on the ongoing freefall of oil prices, the AKLNG project, Walker’s Medicaid expansion, Shell’s departure from the Arctic, AIEDA expansion, and President Obama’s visit to Alaska among other stories.  As we move into 2016, it is important to remember that two of the highlighted energy development projects are being threatened by Governor Walker’s proposed budget and the elimination of tax credits.   Lawmakers return to Juneau next month and Headlamp hopes that they are ready to get back to work.


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First Reads

In Interview Governor Admits His Plan Doesn’t Cut Budget
The Midnight Sun, December 16, 2015

Alaska budget plan shows deficit for next year
Associated Press, Becky Bohrer, December 17, 2015

Gov. Walker’s administration misses financial reporting deadline
Alaska Dispatch News, Nathaniel Herz, December 16, 2015

Gov’s budget plan scrutinized by legislators on both sides
Alaska Journal of Commerce, Elwood Brehmer, December 16, 2015

Another offshore driller gets ready for exploration in Alaska
Energywire, Margaret Kriz Hobson, December 17, 2015

YEAR IN REVIEW: New production by ConocoPhillips highlights ‘15
Alaska Journal of Commerce, Tim Bradner, December 16, 2015

YEAR IN REVIEW: Budget battles, special sessions, plunging prices
Alaska Journal of Commerce, December 16, 2015

Alaska municipalities debate how gas line wealth should be shared
KTVA, Liz Raines, December 16, 2015


Alaska Energy News

Interior Energy Project loses GVEA business to Petro Star
Alaska Public Radio News, Dan Bross, December 16, 2015