News of the Day:
Alaska By the Numbers – FY 20 Totals
Ed King, King Economics Group, August 3, 2020
- Down 40,000 Jobs
- Oil prices averaged $52.12 in FY 20
- North Slope production averaged 481,856 barrels per day
OIL
Alaska doesn’t make money on taxing oil; it makes money on producing oil
Sam Moore, The Anchorage Press, July 28, 2020
In the July 17th edition of the Anchorage Press, Anchorage attorney Megan Rowe wrote a column working to explain how Alaska makes money as an oil-producing state. She wrote, “The state of Alaska makes money from oil by taxing it.” This really could not be further from the truth.
Alaska makes money from oil by producing it. Since Alaska itself owns the subsurface mineral rights and we as citizens own them in common, we make money from leasing the opportunity to produce and explore to the oil companies, and by the royalties we earn for every barrel produced. Royalties are negotiated between the state and producers and they make up the most, by far, of oil revenue to the state. What can get confusing is when we start talking about production taxes. What Alaska citizens need to keep in mind is that our tax structure is designed to both incentivize exploration, and to incentivize production… so that we can generate more royalty revenue for the state.
Our Take: In 2019, total petroleum revenue to the state of Alaska was just over $2b; of that, 1,074b came from royalties. Click here for the state’s Spring 2020 forecast to get a good look at where the state’s money comes from.
GAS
How climate and business woes are sinking a natural-gas project
Amy Harder, Axios, August 3, 2020
The Trump administration recently touted its approval of America’s first terminal on the West Coast to export liquefied natural gas. There’s just one problem: It probably won’t be built. Why it matters: The project in southern Oregon faces political and business hurdles serious enough that those who are following it say it will be shelved. Its problems embody the struggles facing a once-promising sector that’s now struggling under the weight of the pandemic and more. What they’re saying: “It’s not going to be built,” Sen. Jeff Merkley (D-Ore.) told Axios in a recent interview. “I’ve talked to a whole number of folks — several people who have been deeply involved in international finance of energy projects — and they don’t believe that the company can lock down the sales needed to justify the $6 billion investment.”
MINING
Revisiting the Illinois Creek gold mine
Shane Lasley, North of 60 Mining News, August 1, 2020
As the price of gold reaches historic highs and silver tops US$24 per ounce, Western Alaska Copper & Gold and Piek Exploration are investigating the potential of restarting operations at the past producing Illinois Creek Mine near the Yukon River about 65 miles southwest of the town of Galena and 120 miles north of the Donlin Gold Mine project. In 2018, Western Alaska Copper & Gold and Piek Exploration formed a joint venture to consolidate the entire Illinois Creek district, this 34,240-acre land package blankets the past producing Illinois Creek gold-silver mine; Round Top, a porphyry copper-molybdenum-silver deposit; and Honker, a high-grade gold target; and Water Pump Creek, a carbonate replacement zinc-lead-silver deposit.
POLITICS
Shock and sadness after state legislator Gary Knopp dies in midair crash
James Brooks, Anchorage Daily News, August 1, 2020
Alaska and American flags will fly at half-staff across Alaska in memory of state Rep. Gary Knopp, who was among the victims of Friday’s midair plane crash above Soldotna. Fellow legislators and public officials reacted with shock, dismay and grief as word of Knopp’s death spread.
“We live in a small, tight community here in the Central Peninsula. When I heard the horrific sounds of a plane crash this morning, which occurred very close to my home, I knew there was a high probability it involved someone we knew well,” Senator Peter Micciche said in a statement.
“I’m devastated and shocked to learn of the crash that claimed Gary Knopp’s life,” House Speaker Bryce Edgmon, of Dillingham, said in a statement. “Gary was a one-of-a-kind leader and a true Alaskan who worked tirelessly for his district in the Legislature. He will be missed by many.”