by wp_sysadmin | Aug 29, 2019 | Home, News
Hilcorp sale will cost state $30 million annually in lost revenue, former tax officials say
James Brooks, Anchorage Daily News, August 28, 2019
Two former directors of Alaska’s tax division and a former state legislator say a gap in Alaska’s corporate income tax system could cost the state millions in lost revenue once a new multibillion-dollar deal between Hilcorp and BP is finalized. The loss could be more than $30 million per year, said Ken Alper, director of the state’s tax division under former Gov. Bill Walker. Alper’s estimate of a $30 million annual loss is based upon information released Tuesday by BP, which said it currently produces 75,000 barrels of oil per day, or about 15% of North Slope production. The share of the state’s corporate income tax levied on oil producers is forecast by the Alaska Department of Revenue to generate $210 million in the fiscal year that started July 1. Fifteen percent of $210 million is $31.5 million. Dickinson said that estimate makes sense but cautioned that “there’s a lot of volatility there” when it comes to income tax revenue. In the state’s 2016 and 2017 fiscal years, tax revenue was negative; by 2018, it was above $65 million per year.
Our Take: The difference between “will” as stated in the headline and “could” as stated by those interviewed is HUGE. Also missing from this story? Any discussion about the potential for MORE production tax revenue for the state. Hilcorp’s specialty is getting more from aging fields.
Here’s a question you should ask about every climate change plan
Bill Gates, Gates Notes, August 27, 2019
I get to learn about lots of different plans for dealing with climate change. It’s part of my job—climate change is the focus of my work with the investment fund Breakthrough Energy Ventures—but it’s just as likely to come up over dinner with friends or at a backyard barbecue. (In Seattle, we get outside as often as we can during the summer, since we know how often it’ll be raining once fall comes.) Whenever I hear an idea for what we can do to keep global warming in check—whether it’s over a conference table or a cheeseburger—I always ask this question: “What’s your plan for steel?” I know it sounds like an odd thing to say, but it opens the door to an important subject that deserves a lot more attention in any conversation about climate change. Making steel and other materials—such as cement, plastic, glass, aluminum, and paper—is the third biggest contributor of greenhouse gases, behind agriculture and making electricity. It’s responsible for a fifth of all emissions. And these emissions will be some of the hardest to get rid of these materials are everywhere in our lives, and we don’t yet have any proven breakthroughs that will give us affordable zero-carbon versions of them. If we’re going to get to zero carbon emissions overall, we have a lot of inventing to do.
Don’t be so quick to write off natural gas
William F. Shugart, II, Washington Examiner, August 28th, 2019
Earlier this month, as temperatures topped 100 degrees and homeowners and businesses cranked up their air conditioning, Texas’ grid struggled to cope with the record demand for electricity. The heat wave was compounded by a loss of power from thousands of wind turbines that couldn’t function on days when not so much as a breeze was blowing. Predictably, energy costs skyrocketed in the Lone Star State. In Houston, as peak electricity demand climbed to record levels, wholesale power prices spiked virtually overnight by an astounding 49,000% (to $9,000 per megawatt-hour). The operator of the electric grid, the Electric Reliability Council of Texas (ERCOT), warned that reserve margins were so dangerously low that it might have to institute rolling blackouts. ERCOT called for the construction of more gas-powered generating plants. Yet, a number of states, most notably California, want to push natural gas out of the picture, putting residents on a collision course with reality. No one should think that the days of burning natural gas for electricity production are numbered, or that gas has been overtaken by solar and wind. America’s vast gas reserves and the development of combined-cycle power plants, using gas and a steam turbine to generate 50% more electricity than traditional gas plants, together with advanced designs and better efficiency will keep natural gas in the energy picture for decades to come.
Our Take: California, slow your roll to ban natural gas…
by wp_sysadmin | Aug 28, 2019 | Home, News
The BP Sale To Hilcorp Looks Like A Win For Everyone
David Blackmon, Forbes, August 28, 2019
In a deal that will no doubt be characterized as surprising by some, but really should come as no surprise to anyone, BP announced on Tuesday that it has agreed to sell all of its remaining Alaskan operations to Houston-based independent producer Hilcorp. The deal, worth $5.6 billion, will result in BP’s exit from the state of Alaska after 60 continuous years of operations there. The deal will make Hilcorp the second-largest producer in Alaska behind ConocoPhillips and includes all of BP’s Prudhoe Bay assets as well as its midstream assets in the state. Attaining the status of a major player in a state is nothing new for Hilcorp, which already ranked as the nation’s largest privately held upstream company and the operator of more wells than any other company in the lower 48 states.
Reactions to the sale:
Senator Murkowski
Congressman Don Young
Alaska Senate President Cathy Giessel
Alaska Non-Profits
From the Washington Examiner, Daily on Energy:
BP’S ALASKA EXIT NOT A GOOD SIGN FOR ANWR DRILLING: BP’s exit from producing oil and gas in Alaska should dampen expectations for the level of industry interest in drilling in the Arctic National Wildlife Refuge.
At least that’s the argument some Democrats were making in reaction to BP selling all of its Alaska assets to privately held Hilcorp Energy for $5.6 billion after the British oil giant had operated for 60 years in the state.
“If BP thought it could have squeezed a nickel out of drilling in the Arctic Refuge, it wouldn’t have hesitated to annihilate it,” Senator Ed Markey of Massachusetts tweeted Tuesday. “Their exit is further evidence that there is absolutely no reason to turn the Refuge over to the oil and gas industry. All risk, no reward.”
ANWR lease sale is coming soon: Republicans are closer than ever to achieving their goal of drilling in the long-off limits Arctic National Wildlife Refuge, known as ANWR, after Congress as part of the GOP tax cut bill of 2017 voted to allow energy exploration in a 1.5 million-acre section of the refuge, known as the “1002 area,” where billions of barrels of oil are believed to lie beneath the coastal plain.
However, it has been an open question on how interested energy companies would be in the opportunity, with oil prices hovering at low levels in the mid- $50s per barrel and competition steep from in the nation’s lower 48 shale regions.
“ANWR could be a big find, and big finds imply fat margins, but this is not a time of oil scarcity,” Kevin Book, managing director for research at ClearView Energy, told me. “Companies may not want to tie up capital on 10-year megaprojects if there’s a faster cash turn waiting onshore. Plus, nobody wants to drill the next multi-billion-dollar duster at $55 per barrel.”
The Interior Department is expected any day to release an environmental impact statement assessing the risks of drilling in ANWR, a necessary step before the agency conducts a lease sale, which the Trump administration is planning for this year.
Any actual drilling wouldn’t happen for 10 to 15 years. But Democrats and environmental groups have accused the Trump administration of rushing the environmental review and leasing process before the 2020 election, when a Democrat could win the White House and block the planned sales.
Will industry come? The level of interest won’t be known until the lease sale happens, and it’s unclear if BP would have participated, industry allies are quick to point out.
“Shut up and let the sale happen,” said Robert Dillon, an energy consultant and former senior staffer for Republican Senator Lisa Murkowski of Alaska, who led the push in Congress for opening ANWR to drilling. “If nobody shows up you’ve got your answer.”
BP was part of a group of big oil companies that helped drill an exploratory well in ANWR in the mid-1980s, the only well ever drilled in the refuge.
Alaska oil production trends: BP’s exit from Alaska more broadly shows the trend of declining production in the frontier oil producing state, and how major companies are moving on to chase opportunities in shale.
Oil production in Alaska has fallen from more than 2 million barrels per day in 1988 — more than any other state — to 464 barrels per day in 2018, according to the Department of Energy, an amount less than four shale producing states.
“This will not be the last deal in the region,” Wood Mackenzie analyst Rowena Gunn said in a note to reporters Tuesday. “ExxonMobil may be next to follow BP, Anadarko, Pioneer and Marathon in the list of companies having sold out of Alaska.”
David Hayes, a former deputy secretary of the Clinton administration’s Interior Department, told me BP’s exit is “consistent with two realities” of oil exploration and production in the Alaskan Arctic.
Oil and gas operating costs in the Alaskan Arctic are higher than in other fossil fuel producing areas in the U.S., and many of the current oil fields in Alaska are becoming mature.
Expanding opportunities into long-protected and remote areas like ANWR could be a risky bet given those realities, and the added scrutiny major companies are facing over their contribution to climate change.
“I suspect that both of these factors played into BP’s thinking,” said Hayes, who now the State Energy & Environmental Impact Center at New York University School of Law.
Jumping the gun? Alaska-based industry groups, however, say it would be wrong to interpret BP’s move out of the state as a bad sign for ANWR.
Rebecca Logan, executive director of the Alaska Support Industry Alliance, told me it’s not surprising to see smaller companies like Hilcorp take over the aging oil fields in the state, because they are more willing to invest in drilling for oil that is harder to get.
“It’s shocking to people to have a company that’s been here for 60 years leave,” Logan said. “But it’s a leap to say what this means for ANWR. The lease sale will show us the level of interest. Regardless of sales and acquisitions, companies will make that decision based on other factors.”
by wp_sysadmin | Aug 27, 2019 | Home, News
Dunleavy sends letter encouraging potential Pebble investor
Liz Ruskin, Alaska Public Media, August 26, 2019
Officially, Gov. Mike Dunleavy is neutral on the Pebble mine. But a letter he wrote to a potential investor in the controversial project calls his neutrality into question. “It’s like a PR letter from Pebble,” mine opponent Norm Van Vactor said after reading a July 30 letter Dunleavy sent to the CEO of a Canadian company called Wheaton Precious Metals. Alaska Public Media obtained the letter in response to a public records request. In it, Dunleavy said he’d seen a letter Wheaton received from the Natural Resources Defense Council. The environmental group, along with Bristol Bay tribal leaders and commercial fishermen, pressed Wheaton not to invest in Pebble, which would be built at the headwaters of rivers that flow into the bay. In his own letter to Wheaton Precious Metals, Dunleavy said the state has a keen interest in the project, as the land owner. “I want to assure you the state will stand by those who invest in Alaska,” he wrote. Once the appropriate permits are granted, the governor wrote, “I am equally committed to removing obstacles that would hinder immediate construction.”
Our take: What’s wrong with an “open for business” Governor letting potential investors know that, “once the appropriate permits are granted”, the state will work to remove obstacles that would stop progress? Nothing. Absolutely nothing. Unless you are the mainstream media, suffering from Dunleavy Derangement Syndrome (DDS). Calling the Governor’s neutrality into question shows that the media can’t (or won’t) differentiate between process and project. An elected official promising to let the process work, and once the legal process is completed, defend the results of the process isn’t really newsworthy – unless you wake up everyday with DDS.
ExxonMobil, Mosaic Eye New CCS Tech
Natural Gas News, August 27, 2019
US major ExxonMobil and Mosaic Materials have agreed to explore new technology for removing carbon dioxide from emissions sources, they said August 26. Mosaic Materials has progressed research on a unique process that uses porous solids, known as metal-organic frameworks, to separate carbon dioxide from air or flue gas. The agreement with ExxonMobil will enable further discussion between the two companies to evaluate opportunities for industrial-scale use of the technology. “New technologies in carbon capture will be critical enablers for us to meet growing energy demands, while reducing emissions,” said ExxonMobil. “Our agreement with Mosaic expands our carbon capture technology research portfolio, which is evaluating multiple pathways – including evaluation of carbonate fuel cells and direct air capture – to reduce costs and enable large-scale deployment. Adding Mosaic’s approach will allow us to build on their work to evaluate the potential for this technology to have a meaningful impact in reducing carbon dioxide emissions.”
Our Take: Private sector projects like this will do more to reduce carbon dioxide emissions than any government mandate can. Metal-organic frameworks (MOFs) are a hot topic among academic and private research groups internationally. Utilizing MOFs for emissions storage is a huge market. Markets, not mandates.
U.S. Glut in Natural-Gas Supply Goes Global
Ryan Dezember, The Wall Street Journal, August 27, 2019
More shale gas than ever is leaving U.S. shores. Unfortunately for the country’s beleaguered natural-gas producers, global prices for the fuel have never been lower. Natural-gas prices in Europe and Asia have plummeted this year to historic lows in the midst of reduced demand, the trade dispute with China and brimming storage facilities in Europe. The biggest driver of falling prices, though, has been the U.S. gas that is spilling into global markets. “It was inevitable,” said Ira Joseph, head of global gas and power analytics at S&P Global Platts. “There is simply too much supply coming into the market at one time.” The price decline has eliminated some of the allure involved in liquefying cheap U.S. gas and shipping it abroad, where it typically fetches much higher prices.
by wp_sysadmin | Aug 26, 2019 | Home, News
Feds take step to advance big ConocoPhillips prospect
Alex DeMarban, Anchorage Daily News, August 25, 2019
The Trump administration has chosen a preferred development plan for a big ConocoPhillips project that could significantly boost Alaska oil production, according to an environmental report unveiled Friday for public comment. The Willow project in the northeastern National Petroleum Reserve-Alaska could produce up to 130,000 barrels of oil daily, if developed, according to a draft environmental report released by the Bureau of Land Management. Alaska oil production is averaging about 500,000 barrels of oil daily this year.
Related: Proposed Willow Development Plan Available for Public Comment
Why climate change is so hard to tackle: Our stubborn energy system
Amy Harder, Axios, August 26, 2019
To adequately address climate change on the level scientists say we must, the world would need to slash its use of oil, natural gas and coal within 30 years, a Herculean task given our deep dependence. Driving the news: Democrats on the presidential campaign trail and international leaders preparing for a United Nations summit next month say urgent action is needed, but few actually have viable plans for how and when to cut our fossil-fuel use. The big picture: In 1987, 81% of our world’s energy consumption came from oil, natural gas and coal. Thirty years later, it is still 81% — despite the incredible increase in wind and solar energy, according to the International Energy Agency.
Related: Trump, on climate, says he won’t jeopardize U.S. wealth on ‘dreams’
From the Washington Examiner, Daily on Energy:
OIL INDUSTRY FRETS OVER NEW CHINA TARIFFS, WARNS TRUMP TO END TRADE WAR: The American Petroleum Institute warned Trump Friday that his trade war with China is harming the oil and gas industry, and poised to cause more damage.
The oil and gas industry trade group issued an unusually aggressive statement after China announced another round of retaliatory tariffs on $75 billion worth of U.S. goods, including U.S. crude oil and several other petroleum products.
China had already imposed a 25% retaliatory tariffs on U.S. liquified natural gas, just as the country is poised to be a top consumer of the fuel.
“This escalation of the U.S.- China trade war is another step in the wrong direction, the consequences of which will be felt by American businesses and families,” said Kyle Isakower, API’s vice president of regulatory and economic policy. “In addition to the impacts on the U.S. economy and jobs, U.S. energy leadership and global competitiveness are threatened as U.S. natural gas and oil exports continue to serve as targets for retaliation.”
Already feeling the damage: Even before China’s retaliation against U.S. crude exports, API said the trade war has harmed the oil and gas industry.
From October 2017 to June 2018, China had imported 22% of all U.S. crude oil, but that number has dropped to 3%.
by wp_sysadmin | Aug 23, 2019 | General
Love the Smell of Gasoline? It’s Now at a Museum in Stockholm
Lars Paulsson, Bloomberg, August 23, 2019
From the roar of a combustion engine to the sensation of filling up a gas-guzzling car — these are experiences immortalized at the world’s first museum for fossil fuels in Stockholm “At The Museum of Fossil Fuels, you will be able to experience the sounds, smells, culture and phenomena that will have disappeared,” said Susanna Hurtig, Nordic Head of E-Mobility at Vattenfall AB, the Swedish utility that came up with the idea.
Our Take: We love the idea – even if we disagree that the “phenomena” of fossil fuels will disappear.
Keystone XL Pipeline gets nod from Nebraska Supreme Court
Miranda Green and Rebecca Klar, The Hill, August 23, 2019
The Keystone XL Pipeline is a step closer to beginning construction after Nebraska’s highest court approved plans through the state. The decision filed Friday by the Nebraska Supreme Court ruled that “after months of careful consideration” the court found evidence that showed the plans were in the “public interest,” and that the state’s Public Service Commission acted appropriately when it approved the path for the pipeline through Nebraska. The decision paves the way for construction to begin on the heavily stalled gas pipeline project.
Our Take: A good step forward, however, this pipeline has been in commission for NINE years and still faces multiple lawsuits before construction can begin. Environmentalists and their delay tactics hurt every American and the American economy – money wasted, jobs lost, lack of affordable energy.
Related:
Trump’s path to ‘energy dominance’ in Alaska has a key opponent: lawyers
Oil Slides as Latest China Tariffs Reignite Demand Fears
Amrith Ramkumar, The Wall Street Journal, August 23, 2019
Oil prices fell Friday after China said it would impose tariffs on $75 billion worth of additional U.S. products including crude imports and President Trump said he would respond, the latest trade developments that investors fear could crimp fuel consumption. U.S. crude futures fell 3.1% to $53.63 a barrel on the New York Mercantile Exchange following the announcement, the newest salvo in the U.S.-China trade spat that has swung markets in recent months. Oil is about 19% below its April peak with analysts wary that softening demand and steady supply will result in a glut. Brent crude, the global gauge of prices, declined 2% to $58.70 a barrel on the Intercontinental Exchange.
Related:
U.S. Natural Gas and Oil – Still No. 1
