Archive for the ‘oil’ Tag

Third Time’s the Charm?   Leave a comment

Image result for image of Alaska legislatureAlaska legislators have called themselves back into a third special session to address the state capital budget. Governor Bill Walker called the previous two special sessions after the Legislature utterly failed to get anything done during the 90-day regular session. He expressed reluctance to call legislators back into session (which is extremely expensive) until they were in substantial agreement on the capital budget, but a tentative deal has been struck on the measure that appropriates funds mainly for state construction.

The House-Senate conference committee on the capital budget is set for 1 p.m with only one item listed on the agenda, though others items could be added. Both the House and Senate passed different versions of SB 23 but reconciliation between
the two must be agreed on, enacted and signed by the governor. The bill should have been in effect July 1, which is the start of Alaska’s fiscal year, and some road and facilities projects have affected by delays of state money to match federal funds. The Legislature must act quickly to minimize those losses.

However, disagreement on key areas in SB 23 are focused on issues not related to construction. One is over funds appropriated for payments on past oil tax credit liability, which totals over $700 million. The Senate approved $288 million for this and the House $57 million.

Another disagreement is over money for the state gas corporation, Alaska Gasline Development Corp., which is now leading the big Alaska LNG Project. In its version of the capital budget the Senate cut $50 million from AGDC’s available funds, which now total about $80 million. In its version of the capital budget the House left AGDC’s funding intact. AGDC, a critical and long-term project for the state, will like be dinged in the final compromise although a $50 million cut seems unlikely. If too much money is taken out the corporation’s ability to continue the Federal Energy Regulatory Commission (FERC) license application process will be in jeopardy. There has been a huge investment
in this project to date and keeping the regulatory process on track is necessary to retain that value. The LNG pipeline project is a big priority for the governor and the lower cost fuel is critical for Interior communities, but the Senate is very skeptical of the near-term viability of any large LNG export project, though aware that a smaller in-state-only line will not lower heating and electrical generation costs for Interior residents.

The final potential area of uncertainty is the language in the House version of SB 23
that would fund an extra $750 million for Permanent Fund dividends. Lawmakers have already approved $750 million in the operating budget, which has been signed by the governor and is now in effect. This is sufficient for a $1,100 PFD check this year. The House proposes adding $750 million to that through the capital budget, to bring the PFD up to about $2,000. The House added the extra money late in its own capital budget version and it was connected to political maneuvering, so the lower figure is likely to prevail. There is broad consensus and unpopular consensus in both the House and Senate that the PFD does need to be capped. This not being an election year, Legislators appear to be gambling that Alaskans won’t punish them in the polls next year.
Image result for image of alaska oil wellHB 111 basically finished what HB 247 attempted to do last year in winding
down the state’s costly oil exploration and development tax credit program. HB 247 set up a three-year phase-out, but did not deal with how Net Operating Losses, or NOLs,
were treated for tax purposes. HB 111 put curbs on the NOLs, totally ending the cash payments and restricting NOLs to deductions against future production income with 10 percent annual reductions beginning in seven years for losses on producing properties and 10 years for losses on non-producing properties. It would take several years before the allowable deductions are reduced to zero.

Significantly, the bill prevents NOLs from being taken so as to allow the required minimum tax to be taken below 3 percent of gross value. This would represent an immediate tax increase for companies with NOLs that are also producers (mainly Caelus Energy and possibly Eni) but the extent depends on the company’s tax situation, which is confidential. ExxonMobil and BP may have a tax exposure because these companies might have large past-year NOLs because of their massive Point
Thomson investments. Major producers are not otherwise affected.

Which is my whole reason for posting this article. The major producers are large multinational corporations and yet this bill does nothing to reduce the tax welfare that Alaska pays to these companies. Iraq pays $2 a barrel to BP in production credits. Alaska will still be paying 10 times that much. But, the Legislature spent the entire regular session fighting about whether to impose an income tax on Alaska residents while giving money to huge corporations for producing our oil. At one point last year, the State was paying more in production credits than it was receiving in revenue. Thank goodness for savings.

So the outcome of HB 111 is that the tax burden on the more competitive smaller companies will increase, but the major producers will be held harmless. This is why I hate government, because it will always side with whomever can line its pockets best regardless of whether that company is producing (like Caelus Energy) or sitting on leases (like BP). When will we get around to rewarding actual production? That’s right … never because that’s not what the Legislature is all about. It’s about maintaining a relationship with multinationals who have no intentions of producing those leases until the State is completely desperate and willing to give away the moon to get a trickle of income.

Remember this next year, folks! Remember and vote them all out. Don’t replace them with someone of the same party because that just keeps the established relationships inheritable. No, instead, vote third party and send a message that we are no longer playing the same stupid games that we’ve played for 40 years. The libertarians don’t owe any oil companies because, not having been in power, the oil companies haven’t gotten around to bribing them yet, and being by and large business people, they might actually have some understanding of economics so that they will think to reward the producers and put the non-producers (those sitting on leases) on notice that they’d better get busy or get lost.

Crude Alaska story   Leave a comment

Image result for image of northslope oilA leaking, Alaska oil well that sprayed some crude and then spewed gas for days on the North Slope of the Brooks Range has been shut down, and the world can rest easy.Aside from generating some more bad press for London-based British Petroleum, this accident will likely slide into history as just one of the thousands of minor spills and leaks in the U.S. this year.Given that the amount of oil was small – the Alaska Department of Environmental Conservation describes it as  “an initial spray of crude oil that impacted the well pad” – it will disappear into time once the catastrophe of this happening in the pristine wilds of that great American national park called Alaska passes.Welcome to America’s odd relationship with oil, and the even stranger world of 21st Century news where certain narratives are expected to be followed, agendas color so much, and the easy often trumps the important.First and foremost, an oil spill is easy. It is the car crash of environmental news. Of nightly television news, it was once said “if it bleeds, it leads.” Of internet news today, it might be said that “if its spill, it kills.”Or at least that is the case if the spill happens to be in pristine Alaska. Elsewhere? Who cares.

But in Alaska, hostile yet vulnerable Alaska, the place in which every true environmentalist knows oil should never have been tapped to begin with….Ugly messesThe oil spill at BPXA Drill Site 2, Well 3, shouldn’t have happened. No oil spill should. Not this one. Not any one of the 20 or so that can be expected somewhere else in the American oil patch today.  Not the one involving some kid changing oil in his car in the driveway of a home in middle America, or the fisherman doing the same in an Alaska port and spilling some overboard.Few if any of the latter spills, however, make the news, or if they do it is only in passing. No journalists consider those stories worthy of the spotlight.Even a gas blowout with a spray of oil that, as the Alaska Environmental Conservation reports,”did not leave the pad” would fail to make much news in the California, Louisiana, North Dakota, Texas, Oklahoma or other oil patches.When Propublica took a look at North Dakota’s Bakken oil field in 2012, it found “more than 1,000 accidental releases of oil, drilling wastewater or other fluids in 2011….Many more illicit releases went unreported, state regulators acknowledge, when companies dumped truckloads of toxic fluid along the road or drained waste pits illegally.“State officials say most of the releases are small. But in several cases, spills turned out to be far larger than initially thought, totaling millions of gallons. Releases of brine, which is often laced with carcinogenic chemicals and heavy metals, have wiped out aquatic life in streams and wetlands and sterilized farmland. The effects on land can last for years, or even decades.”Almost none of these spills had been reported by the media. The extent of leaks and spills, in fact, went unknown to the public until Propublica started poking around.Alaska’s Arctic, thankfully, does not have this problem. That is the upside of keeping even small spills in the spotlight in Alaska. The downside is that suggestion of another disaster in that hostile polar region where humans really don’t belong reinforces the misperception that operating in Alaska is somehow more difficult and more dangerous than operating elsewhere in the world.The reality is Alaska has a pretty good record for producing oil while minimizing oil spillage. It is a record good enough that the state didn’t even warrant a dot on the National Resources Defense Council’s “Spill Tracker” in 2015.Nonetheless, the BPXA blowout made news around the world. Spills in Alaska are simply treated differently than those of the rest of the world.“BP Struggles to Control Damaged Well in Alaskan Arctic,” the New York Times headlined, predictably pointing out the frigid temperatures and noting that the well was leaking “methane gas, a powerful greenhouse gas linked to climate change.

”Danger versus danger

Read the rest of the article at Crude Alaska story

They Care Now!   Leave a comment

A cousin who lives in North Dakota sent me a bunch of information on the Dakota Access Pipeline and asked me if I would blog on it. I’ve previously said I deplore the violence of the protests and that I don’t really get what they’re so exercised about, but I haven’t really looked deeply into it until now.

Living in Alaska, I know a lot more about pipelines than the average American. I know they can be done safely and I recognize that pipeline transportation of both oil and natural gas is much safer than truck or tankcar transportation. So you sort of know what side I would be on if asked.

Image result for image of dakota access pipelineThe Dakota Access Pipeline’s route is 99% on private land, so the federal government really couldn’t say much about it, except for in the immediate area where the pipeline crosses navigable waterways.

Dakota Access Services is the company behind this $3.7 billion project that would move almost 500,000 barrels of oil daily from the Bakken oil field in North Dakot to an Illinois refinery. The company jumped through all the appropriate US Army Corps of Engineers hoops to be permitted to construct the pipeline under a damned portion of the Missouri River about a half mile north of the Standing Rock Sioux reservation.

That permit conferred a property right to DAS. The Standing Rock Sioux challenged the permit in court. The Department of Justice argued that the Corps had acted legally in conferring a permit to the company and in September, the government won a major component of the case when a federal district court judge refused to halt pipeline construction.

Up through winning in court last September, the government’s conduct was unobjectionable. The U.S. Army Corps of Engineers followed all required procedures in issuing the permit, and the Justice Department successfully defended the Army Corps actions in court. As a result, the company could proceed with construction of the pipeline.

Then the Obama administration did something very common for the Obama administration. Only minutes after the district court announced that construction could proceed, the Department of Justice, Department of the Army, and Department of the Interior issued a joint statement announcing that the federal agencies will halt any additional permitting and reconsider its past permits of the project.

To capital-intensive infrastructure projects like the DAP, time is money. The construction company went to great lengths to comply with all applicable federal statutues so it could gain authorization to build on the 1% of the pipeline subject to federal jurisdiction. The product of all that labor was a permit or property right. A court ruled that the company had a right to build. Then the President — acting like a dictator — simply overturned the court’s order. The administration is now stalling while the construction company losses money each and every day that the construction is delayed.

I don’t believe President Obama, despite what he is claiming, is acting out of genuine concern for relations between the federal government and Native Americans. If that were even on his radar, he would have prevented the EPA from closing down the Navajo Nation’s coal-fired power plants, which cost them increased electrical costs and job losses.

Obama unilaterally overturned a court order in order to appease the green special interests that helped him get elected and who are cynically leveraging the Dakota Access Pipeline affair to pursue their own narrow interests.


Just think about this a moment. Why is Earth Justice, an environmental special interester group litigating a statute that deals with preserving Native American history when the pipeline doesn’t run on reservation land?

As Alaskans know well, green organizations will use any means available to achieve their goal of keeping oil in the ground. Their support for the Standing Rock Sioux is a sham pretense for their real purpose: misusing the law to advance their climate agenda.

What I found interesting is that not all Standing Rock Sioux oppose the pipeline. CNN reported the following in early November:


[Robert Fool Bear Sr., district chairman of Cannon Ball] has had it with the protesters. He says that more than two years ago, when members of the Standing Rock Sioux Tribe could have attended hearings to make their concerns known, they didn’t care. Now, suddenly, the crowds are out of control, and he fears it’s just a matter of time before someone gets seriously hurt.

This is so familiar to me as an Alaska because Arctic Village was similarly manipulated by green organizations opposed to development of ANWR.

The central legal issue is whether the U.S. Army Corps of Engineers fulfilled its responsibility under the National Historic Preservation Act to consult with tribes “that attach religious or cultural significance to property” affected by the Army Corps’s permitting decisions. In line with Robert Fool Bear Sr.’s comments above, the record clearly demonstrates that the Army Corps’s good faith efforts at consultation were ignored by the Standing Rock Sioux. The Corps sent files on the planned pipeline route to the Standing Rock Sioux for review back in September 2014 and received no response. On October 2, 2014, the Standing Sioux Rock backed out of the first scheduled meeting with the Corps on the project. The Corps rescheduled the meeting for November 6, 2014, but tribal officials were a no-show. On December 19, 2014, the Corps again reached out to the Standing Rock Sioux to schedule a meeting without receiving a response.

The Standing Rock Sioux refused to cooperate with the federal government for two years, despite the best efforts of the U.S. Army Corps of Engineers.According to Greenwire, the Standing Rock Sioux were also invited to three public hearings held by North Dakota state regulators. The tribe was a no-show at each one.

Yeah! The Standing Rock Sioux refused to cooperate with the federal government for two years and only got involved to any serious extent at the very end of the process, when they abruptly demanded that the Army Corps of Engineers review possible impact of the whole pipeline. Remember, that is impossible because the federal government only has jurisdiction over 1% of the pipeline, where it goes under the Missouri River.

“More than two years ago, when members of the Standing Rock Sioux Tribe could have attended hearings to make their concerns known, they didn’t care.” Robert Food Bear, Sr.

Image result for image of dakota access pipelineDespite the tribe’s refusal to act in good faith, both the company and the U.S. Army Corps of Engineers went to great lengths to accommodate the tribe’s interests. The company devised a route to account for and avoid sites that had been identified as potentially eligible for or listed on the National Register of Historic Places. The company bought rights to a 400-foot corridor along the preliminary route to conduct cultural surveys by professionally licensed archeologists, who inventoried, delineated, & assessed historic sites. Having identified 91 stone features of religious significance to Native Americans, the company then rerouted the pipeline around all of them.

Ultimately, the company surveyed twice as many miles as the 357 miles planned for the pipeline and the route was modified more than 140 times in the process. And, where the pipeline crosses the Missouri, which is the whole focus of this fight, it is 100% adjacent to an existing natural gas pipeline.

So, I still don’t see what the fuss it about. Do we as a nation just like to be dependent upon the Saudis for our oil?

Posted November 26, 2016 by aurorawatcherak in Environmentalism

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My Turn: Alaska Wilderness League disregards Alaskans   Leave a comment


When it comes to Arctic policy and developing Alaska’s offshore resources, the Alaska Native perspective has been overwhelmingly ignored in favor of outside voices that aim to utilize our resources — and enshrine our land and wildlife — to propagate an image of the Arctic that furthers their own agendas. These outside voices disregard the needs and priorities of the local people, the true stakeholders, who will ultimately live with the economic, social and environmental implications of decisions made regarding offshore exploration and development.

This fact was glaringly obvious while watching a forum on Arctic offshore investment recently, hosted by Roll Call, to discuss the Department of Interior’s proposed five-year Outer Continental Shelf oil and gas leasing plan — which currently calls for lease sales in the Chukchi and Beaufort Seas.

Source: My Turn: Alaska Wilderness League disregards Alaskans

Posted July 28, 2016 by aurorawatcherak in economics

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CEG Looks Back: The Alaska Pipeline Cuts Through the Last Frontier | Story ID: 25334 | Construction Equipment Guide   3 comments

This is actually an older article (it referenced Gov. Murkowski, who left office in 2006), but it does a great job of describing the TAPS.

CEG Looks Back: The Alaska Pipeline Cuts Through the Last Frontier | Story ID: 25334 | Construction Equipment Guide.

Because of continuing decline in throughput, the State of Alaska is now headed toward a possible shutdown of state government, which affects every aspect of Alaskan lives because that’s how the oil revenue reaches the people. Having weathered the ongoing Recession of 2008, if our legislature and government cannot come to a compromise in the next few weeks, we will be facing mass layoffs of about 40% of the state’s working population.

Or not.

I’m starting a new series about oil in Alaska and life in a resource state.

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