Alaska Is Making Critical Decisions That Affect Its Long Term Investment Climate

Alaska is making critical budget decisions that will affect its investment climate for a generation!

With its unsustainable spending we have long recommended that Alaska decision makers not increase taxes or impose new taxes until significant cuts are made in entitlement programs and employee costs.

As the current legislative session nears an end, we see pressure mounting for new taxes. We see no decisive movement toward containing employee CPI and step wage increases or negotiating more prudent state employee contracts. And, we see no significant effort to cut entitlement programs or significantly decrease state legislative personal and overhead costs.

Increasing taxes or imposing new taxes will, in effect, be curtailing private sector jobs and projects in order to keep government bureaucracies more or less ‘whole’.

Alaska is no longer the “Last Frontier” in spirit as it becomes more well established as an anti-free enterprise, bureaucratically controlled, socialist outpost.

We are confident that, in spite of Alaska’s rich resource potential, future investment decisions will be affected as a result of the state’s irresponsible budgeting and socialist tendencies. -dh

Alaska’s Fiscal Crisis Report brought to us today by the Alaska Support Industry Alliance’s AkHeadlamp:

88 Energy ltd has unveiled a new independent resource estimate which sees some 1.4bn barrels of oil equivalent in the HRZ shale that was encountered in the first Project Icewine well. “We look forward to providing additional information related to the project as we continue to complete the current 2D seismic acquisition and mature plans for the Icewine#2H well,” said 88’s chief executive Dave Wall. The company highlighted that the assumptions used by D&M are largely consistent with the internal view of the project, and the main difference relates to the views of how much of acreage would prove productive in the ‘success case’. Good news from 88 Energy, Headlamp hopes potential tax increases on the oil and gas industry don’t spoil an optimistic future.

No good will come of this. Following HB247 hearings this week, tax credits have emerged as a major budget item for Alaskan lawmakers.According to the Associated Press, a rewrite of Gov. Bill Walker’s oil and gas tax credit bill would phase out the credits for oil produced from newer North Slope fields and tax oil produced from Cook Inlet. Kara Moriarty, with the Alaska Oil and Gas Association, can see no positive elements to the House Finance Committee rewrite. She says it proposes a big shift in Cook Inlet tax policy and would negatively affect production, jobs and investment in Alaska. Headlamp can’t see anything positive either. Numerous companies came to and invested in Alaska because of a favorable long-term climate for business—Alaska is about to see these opportunities fade away.

Tick tock. In an interview with the Peninsula Clarion, Gov. Bill Walker is calling this year’s legislative session the “fix Alaska” session and next year’s the “build Alaska” session. “I’ve always said our plan is in pencil, not pen, and it is,” Walker said. “The part that’s in pen is to get it done now. Sitting back and saying, ‘We’ll get it done the next year or the next year isn’t acceptable to me. One of the biggest challenges we had a year ago…was helping Alaskans understand the magnitude of the situation we are in,” Walker said. “Until you recognize you have a problem, it’s really hard to work on a solution.” Fix Alaska? Headlamp wonders how Governor Walker can fix anything by jeopardizing the state’s most significant income source.

Striving to stay afloat 04/10/2016 (Trouble viewing this article? Click here)
Total revenue generated by Canada’s petroleum industry is forecast at C$74 billion this year, compared with C$149 billion in 2014, according to ARC Financial Corp. And that’s about all anyone needs to know as they watch the tidal wave from thousands of layoffs and billions of dollars in spending cut….

Calgary Herald by Dan Healing.

Veresen Inc. has filed a request for a re-hearing with the U.S. energy regulator, hoping to overturn its denial of permission to build the $5.3-billion Jordan Cove LNG facility in Oregon.

Spokeswoman Dorreen Miller said the filing to the Federal Energy Regulatory Commission was expected to be made Friday, the same day that the Calgary-based firm announced it has signed a second Japanese customer to a preliminary takeaway agreement for 1.5 million tonnes of liquefied natural gas per year for 20 years.

“We understand the FERC has 30 days to respond to our request for re-hearing,” she said. If granted, “they will be looking at all the evidence that we’re submitting.”

Last month, FERC denied both Veresen’s plan to build the LNG export terminal and its joint proposal with Williams Partners LP to construct a pipeline that would supply it. The project has been waiting about three years for regulatory approval. More….

Today’s weekly reports from Petroleum News Alaska:

ISER reports on state’s fiscal options 04/10/2016 (Trouble viewing this article? Click here)
With the price of oil remaining stuck in a deep hole and the state’s oil production continuing to decline, the problem of how to deal with Alaska’s massive government deficit defies any solution that avoids pain or difficulty. But, in the interests of shedding some light on the possible outcome of v….

A new oil resource 04/10/2016(Trouble viewing this article? Click here)
ConocoPhillips has applied to the Alaska Oil and Gas Conservation commission for the approval of pool rules for a new oil development in the Moraine oil pool….

AGDC board member bill advances 04/10/2016 (Trouble viewing this article? Click here)
A bill to include legislators as nonvoting members of the Alaska Gasline Development Corp. board of directors has passed the Senate, been amended in the House and was in House Rules April 6. Different versions of the proposal originated in the House and Senate. The Senate version, Senate Bill 125 s….

Down to the short list 04/10/2016(Trouble viewing this article? Click here)
Amid the seemingly endless shuffling of Canada’s LNG deck to reach the launch point for even a single project, the best bet for a corporate sanctioning decision has narrowed down to Woodfibre LNG….

Drilling down on oil tax credits bill 04/10/2016 (Trouble viewing this article? Click here)
Senate Resources Committee Chairman Cathy Giessel spent most of the interim examining the state’s oil tax credit system with a working group made up of members of the Senate and industry personnel. With less than two weeks remaining in the session, she’s begun working on SB 130, Gov. Bill Walker’s o….

North Slope Borough Mayor Charlotte Brower. NGP File Photo

Voters recall NSB Mayor Brower 04/10/2016 (Trouble viewing this article? Click here)
Residents of the North Slope Borough have voted to recall Mayor Charlotte Brower. Anchorage television station KTUU (http://bit.ly/22cC4GN) reports 62 percent of voters backed Brower’s ouster in a special election April 5. The mayor was not immediately available to comment. Brower came under fire af….

Interior Energy Project preparing plan 04/10/2016 (Trouble viewing this article? Click here)
The Interior Energy Project, a project designed to bring affordable energy to Fairbanks and the surrounding Interior, is still finishing up the various components of a proposal to put to the Alaska Industrial Development and Export Authority board, members of the team told the AIDEA board during its….

Call to Action

The Alaska Support Industry Alliance has adopted a position on HB 247 on behalf of its members. Here is the text and status of HB 247; we urge Alaska readers to review it, develop your own position and consider communicating your position to legislators today or early tomorrow (Saturday). Below is the notice the Alliance distributed today:

The Governor’s oil and gas tax credit legislation, HB 247 is going to be on the House floor tomorrow. House members need to hear from the support industry about the job loss we’re already experiencing and that new taxes will only make the situation worse. Please email the legislators listed below and tell them you don’t support new taxes.