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Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to suggest others existing before 2001.

 

3-13-14 Is Alaska Flirting With The Last Gas Pipe Straw?

14 March 2014 2:59am

Is Alaska Flirting With The Last Gas Pipe Straw?

Competition Perspectives: Part IV (Part IPart IIPart III)

by 

Dave Harbour

​(Read More)


John Hofmeister, energy policy, Shell, Oxford Club, Photo by Dave Harbour

Our friend, John Hofmeister (NGP Photo), former Shell President, offered this "quotable quote" on the energy situation during his interview with the Oxford Club's Energy and Infrastructure Strategist Dave Fessler:

 

Please Consider Testifying TodayFriday, March 14 on HB 77: Improve Alaska's Permitting Efficiency (We at NGP believe this is one rather small but important way citizens can improve Alaska's investment climate--rather than our usual challenge to fight off additional investment climate attacks!  -dh)

Our friends at the Fairbanks Chamber of Commerce are encouraging citizens to testify in support of  House Bill 77 during the Senate Resources Committee meeting tomorrow. The Chamber's Board of Directors has adopted, as one of the Chamber's 2014 legislative priorities, to increase responsible resource development through the permitting process.  (Read More Here)

"...if we keep the current level of government, where we have the executive branch with 13 agencies governing energy, plus the White House, 26 Congressional committees and subcommittees in Congress, both the Senate and the House, 800 federal judges, 50 states, 50 state governors, 50 state legislatures, 50 state court systems. Then you get to the municipalities and the counties of the country. You have thousands and thousands of governmental units that are fragmenting what it is that the energy industry is trying to do to bring molecules and electrons to the American people for their use. And that governance is so fragmented it can't work."


Is Alaska Flirting With The Last Gas Pipe Straw?

Competition Perspectives: Part IV (Part IPart IIPart III)

by 

Dave Harbour

Earlier this week, the folks at Alaska Public Media reminded us that the republican-led Legislature is dealing with another dimension of gas pipeline competition, an added cost: legislated labor rates.

More coming...!

 


Please Consider Testifying TODAY, Friday, March 14 on HB 77: Improve Alaska's Permitting Efficiency (We at NGP believe this is one rather small but important way citizens can improve Alaska's investment climate--rather than our usual challenge to fight off additional investment climate attacks!  -dh)

Our friends at the Fairbanks Chamber of Commerce are encouraging citizens to testify in support of  House Bill 77 during the Senate Resources Committee meeting tomorrow. The Chamber's Board of Directors has adopted, as one of the Chamber's 2014 legislative priorities, to increase responsible resource development through the permitting process.

Friday, March 14

Senate Resources - 3:30pm

CSHB 77 - Land Use/Disp/Exchanges; Water Rights 

PUBLIC TESTIMONY

Fairbanks Legislative Information Office
1292 Sadler Way, Suite 308
*You must go to your local LIO to testify
 
Comments will be limited to 2 minutes. 
 
You can also send your comments to Senator Cathy Giessel, Chair of the Senate Resources Committee. 
 
OVERVIEW: CSHB 77 is an omnibus bill that seeks to improve the Department of Natural Resources (DNR) timeliness and efficiency in issuing land and water use authorizations. The bill focuses on agency process and does not seek changes in environmental standards or laws protecting fish and wildlife habitat. Nor does the bill make changes to the law governing water rights.

The CS includes changes that limit DNR's authority to issue a general permit, define the process for issuing a general permit to include public comment, allows individuals, tribes and others to be able to apply for water reservations, but clarifies that the certificate will be issued to an appropriate state agency rather than a person. In times of declining budgets, general permits are an appropriate tool to efficiently authorize routine activities such as mooring buoys. 

The bill allows "persons" to apply for instream flow reservations, but if granted the in stream flow certificates are held by a State agency. CSHB 77 solves the problems with the current system, which focuses on who gets paperwork in first. For large projects that are multiple years in the planning, the decision on how to withdraw water, protect the fish, and promote economic development should be made with all the data, and with an understanding of all the environmental and social effects. It should not be based on who gets their paperwork in first. But, recent court decisions and environmental groups' legal claims are making it a paperwork race.

DNR has received over 300 applications for an instream flow reservation. The vast majority are from public agencies. In contrast to the almost 300 agency applications, the state has received 34 applications from other groups. Of the 34 applications, over 85% were from groups opposed to a development project. Their purpose is at least partially to use the application to change or stop the agency permitting process.

Decisions about these projects should be made by Alaskans through their government - not by environmental groups, nor even by individual Alaskans. CSHB 77 solves the problem with the current instream flow permitting system with minimal changes, and does not affect public notice or any other part of the process.

Talking Points to Consider in your Testimony: 

  • This bill will help cut the red tape and put Alaskans back to work.    
  • The bill improves efficiencies in the issuance of General Permits, diminishes the chronic backlog in permitting, results in cost savings to the state, while protecting the environment.    
  • CSHB77 diminishes the ability of ENGOs to abuse the system and stop projects.  
  • This bill will help cut the red tape and put Alaskans back to work.   
  • CSHB77 implements changes that will provide certainty and timely response to Alaskans that obtain permits, while maintaining efficiently run state agencies.  In these times of trimming the state budget, ensuring that state agencies are able to efficiently issue and manage permits, thus keeping down the cost and time expended, is crucial    
  • CSHB77 provides for the issuance of general permits, so that minor projects can be permitted practically.  Section 1 of HB77 makes it clear there is a requirement for public notice and provides opportunity for public input on any general permit.  General permits would cover activities that are already authorized for permit under existing statute.  General permits are not unprecedented; in fact, they are widely used by federal agencies.    
  • CSHB77 requires that appeals to sales, leases, and land disposals can be done only by those who are directly and negatively impacted by the decision.  This brings accountability to the appeals process, ensuring that appeals must be brought only when a directly involved stakeholder is adversely affected by a decision, rather than a special interest attempting to block permits    
  • Thanks to special appropriations by the legislature, DNR is making positive progress on a tremendous permit application backlog.  Extra funding helps address the backlog symptom, but efficiency measures in CSHB77 help address the cause of the backlog.
  • CSHB77 ensures that Alaska's water resources are managed by those who are best equipped to do so - agency staff with science-based expertise.

Additional Information & Talking Points:  

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3-13-14

13 March 2014 6:45am

Alaska Public Media by Alexandra Gutierrez.  The latest version of a bill advancing a natural gas megaproject restores language concerning collective bargaining.  The Senate Finance Co-Chair Pete Kelly announced on Tuesday evening that the committee will scrap the less specific language they had planned to use when dealing with labor terms.


Commentary: The following post by the Pebble Project precisely reflects the editorial position we have taken for several years.  

We would add that the White House has no business lecturing Russia and other nations on the importance of respecting "rule of law" when it has taken large steps in the last five years to diminish the American "rule of law" set forth by our founders.

Other examples of Obama Administration of "rule of law" violations include "Fast and Furious", "Uninforced immigration laws", "Unpunished IRS illegal targeting", "Uninforced voter intimidation", "Unpunished Violation of 1st Amendment (i.e. Fox News and AP)", "Illegal changes by fiat in Affordable Care Act to delay deadlines and exempt special interests from enforcement", etc.  

Even if we did not 'support' the Pebble Project, we should be both offended and fearful that EPA's violation of the First Amendment to the Constitution and to the permitting process in this case allows EPA and its environmental activist allies to stop any project anywhere at any time without regard to due process.  

Is this the America we were brought up to love, respect and defend with our lives, fortunes and sacred honor?  -dh

___________________________________

On February 28, EPA Administrator Gina McCarthy short-circuited the established National Environmental Permitting Act (NEPA) process rather than allowing the Pebble Partnership to design and submit an actual mine development proposal and have it fairly and objectively evaluated. EPA is potentially preparing to preclude Pebble development without ever seeing a proposed mine plan.

The NEPA process has been sufficient to evaluate and advance major Alaska resource development initiatives since its inception in 1970. Alaskans are familiar with NEPA and are confident that it works. The possibility of EPA preemptively vetoing projects before they’re even presented has many Alaskans thinking and talking about it:

David Wight, past president of the Alyeska Pipeline Service Co, is frank in his ADN editorial: “EPA choose wrong process to vet Pebble.”

Lorene Anelon, president of Iliamna Natives Limited, argues in favor of a return to NEPA in theBristol Bay Times, stating that “EPA action on Pebble fails to consider people of region.”

And the editorial staff of the Fairbanks Daily News-Miner calls it a clear case of the agency overreaching, declaring “EPA goes too far on Pebble mine.”

 

There’s still time

EPA hasn’t issued any regulatory decision about the Pebble Project yet. The process announced by EPA Administrator McCarthy late last month began a series of steps that is still being sorted out. Alaskans who favor a predictable, reliable permitting process—one that allows responsible resource development to continue serving as a major driver of Alaska’s economy—should read these and other editorial perspectives, and stay tuned for ways to make their voices heard.

 

Related Websites

 
 

Other Resources

 

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3-12-14

12 March 2014 5:51am

Becky Booher, Associated Press: Draft Gas Pipeline/LNG Bill Proposes Changes To AGDC/Taxes


Advice To Those Who Want A Vibrant Economy And Who Elect Politicians

Competition Perspectives: Part III (Part I, Part II)

by

Dave Harbour

Yesterday we finally finished a commentary on how important it is for a sovereign to pay attention to its competitive position as an investment climate.  

​​Links from the Alaska Gas Pipeline Office of The Federal Coordinator:

No sooner had we turned off the laptop (from our perch this month high in the Ecuadorian Andes) than we received relevant news from Dan Healing, Calgary Herald.  MGM is giving up on its effort to produce gas and shale oil in the Northwest Territories due to the excruciatingly long and prohibitively expensive regulatory process.  (Note the sense of optimism in N.W.T. in 2012, even after struggling for success since 2007.  Alaskan companies are doing their best to navigate the dangerous shoals appearing and disappearing among the flood of regulations, delays, laws, taxes and political campaigns on their side of the border.  Citizens might want to note that in MGM's case over in the N.W.T., all signs were that projects were moving ahead--until the day of an unexpected press announcement.)

The Herald reported MGM President Henry Sykes as saying that, "licensing a horizontal oil well in N.W.T. takes longer than a year and costs millions of dollars. If an environmental assessment is ordered, the process stretches out for years and is no longer economic for a small company."  But Healing reported that even a large company like Royal Dutch Shell found the process infeasible.  (Read more)

We believe evidence is ample now that local political leaders --- whether they be Alaskan, Canadian or Argentinean -- better build into their tax and regulatory calculus how their very own policy changes affect their competitive positions as investment climates.  

Political leaders ignore their own self-imposed development obstacles at the peril of jobs, education, economic opportunity and even social and cultural amenities that depend upon a vibrant place to live an work.  (Misc. Note: ...which is irrelevant if their real goal is to cripple the economy so that a an executive might find it easier to amass power amid chaos and even nationalize industries and socialize the economy.)

STATE OWNERSHIP OF ENERGY INDUSTRIES

Under the category of, "Other Observations", we received this email from one of our Australian readers, in light of the Putin/Ukraine tension:

"How welcome would Putin's best mates in Rosneft be in Alaska right now if/when they exercise their option to come into Point Thomson?!

"Maybe the advocates of an 'Alaskan NOC' would welcome another State owned oil company in the State?

"Unfortunately the decision by the State {Alaska} to take direct equity ownership in aspects of the LNG project allows others to advocate further State ownership in the oil industry.

"I must admit that if I had a taxing power that gave me money for no capital outlay, I wouldn't be bothering with ownership....but it's not uncommon for developing nations to want to do this (even Britain had a national oil company until 1982 when Mrs. Thatcher sold it off).

"I do a bit of business in Mongolia (where per capita GDP is probably less than 1/20th of that in Alaska) and the Government is currently trying to promote the private sector as it retreats from mistakes brought about by over-exuberant desires for State ownership of key assets, etc.

Cycles go around everywhere!"          -N.Y.

Bottom line: those who elect politicians should begin paying more attention to long term economic realities than to short term, special interest gains.  -dh


Today's Energy In Depth Links:

 NATIONAL

Hydro-fracking complaints are not supported by scienceThe Tennessean, Op-Ed. Former governor and U.S. Secretary of the Interior Ken Salazar says, “The science is here. Hydro-fracking is safe, and it’s important that the information gets out to the public.” He is right.
 
Study: officials view HF positivelyNorwalk Reflector. Shawn Bennett, field director for Energy In Depth, said the survey results show that the economic benefits of shale development extend beyond just the oil and gas industry. "Local residents are getting jobs. They're spending more money," he said. "There's overwhelming support regarding the oil and gas industry in east Ohio," Bennett added.
 
TAEP urges US LNG exportsLNG Industry. In a letter to President Obama, the Texas Alliance of Energy Producers (TAEP) has asked for the pending export permits of liquefied natural gas (LNG) from the US to be quickly approved. The TAEP also urge Obama to support legislation in the Congress that also would allow exports of LNG.
 
Ohio Looks at Whether HF Led to 2 QuakesNew York Times. Mark Bruce, a spokesman for the department, said it was too early to determine whether drilling operations induced the earthquakes. “What we’re focusing on now is getting all the data from the company,” he said. “We’ll examine it first and decide next steps after that.”
 
Industry Group Says HF Could Help UkraineRoll Call. As Congress prepares to take up legislation in response to Russian intervention in Ukraine, a group representing American companies that rely on inexpensive gas is advocating an alternative approach. Instead of exporting natural gas, the Industrial Energy Consumers of America says the U.S. should export the hydraulic fracturing expertise that will let Ukraine — and other European countries — develop their own gas reserves.

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3-11-14 Competition Is Not Only About Markets...A Sovereign Ignores A Competitive Investment Climate At Its Peril

11 March 2014 2:42am

The Human Temptation To Ignore The Value Of  A Competitive Investment Climate

Competition Perspectives: Part II (Part I, Part III)

by

Dave Harbour

The North American platter is heavy with energy sustenance, now manifested by the boom in oil and gas shale productivity.

Last week, the office of the Federal Coordinator for the Alaska gas pipeline project summarized current and developing trends in Liquefied Natural Gas (LNG) competition for markets.

Earlier, we commented on the same subject.

Over the Weekend, we hear from British Columbia that a new taxing regime on LNG exports will produce billions of dollars of new revenue for the coastal province, and that concerns investors.

We shall refer to these pieces in today's commentary.  -dh 

Suddenly, the fundamentals have changed as the US works toward becoming as big a producer of energy as it is a user, and Canada seeks to expand energy wealth from Alberta to British Columbia.

But, this challenge of plenty, as Alaska and Alberta have found over the last several decades, is almost and maybe more difficult than challenges of shortage...as during the late 1980s when oil prices and oil patch economies bottomed.

You would think that as jobs increase and city/state treasuries grow with additional income, property and sales taxes, the people and politicians alike would be celebrating prosperity.

History in Alberta and Alaska has taught that a growing private sector doesn't buy too much political capital.  No, taking more of the income stream -- even at the cost of private jobs and prosperity -- buys politicians votes in his/her voting districts.  Supporting status quo prosperity is oh, so boring.

Alberta learned during the last decade that it must moderate its royalty take to bring back jobs and economic growth--and it worked.

Alaska took longer to learn the lesson; it was loathe to give up its death grip on the flow of confiscatory production taxes, even if keeping a tight grip meant a loss of private jobs, dangerously low and diminishing throughput of the Trans Alaska Pipeline System (TAPS) and economic suicide (i.e. since over a third of Alaska's economy and 90% of its government operating budget is based on that diminishing tax base, put into place during the Palin Administration).

But slow as it was to understand the economic reality that its repulsive investor tax policies had pushed Texas, North Dakota and, now, even California ahead of the so-called "Pioneering State" in annual oil production.

Yet act, Alaska finally did.  In the latter days of last Spring's legislative session, a majority of the House and Senate joined the Governor to reform the Palin production tax increase.  

But lest those hoping for a more competitive investment climate in Alaska would find breathing easier, some minority leaders in the Legislature joined with anti-business environmental and social activists to advocate a voters referendum immediately after the session ended.  That referendum would, if passed, repeal the tax reform bill passed not even a year ago.

You can imagine how someone poised to make new investments in Alaska last spring must feel now; "let's give it a good go and if tax reform is withdrawn by a vote of the people, we'll have to reevaluate our project plans."

In the box above, the Federal Coordinator Office analysis of market competition reveals that there are too many LNG projects chasing too little demand.

This means that LNG project investors will be carefully choosing the investment venues more likely to produce a reliable return on and of their capital.

The pending Alaska vote this coming August, at best, does not improve Alaska's reliability or attractiveness as an investment climate.  In 2014, with Alaska's governor, legislature and large producers pretty much find themselves under aligned stars; it would seem that this could be a watershed moment in history for an Alaska LNG project.

Similarly, with British Columbia announcing new taxes that they proudly proclaim could bring billions of dollars in tax revenues, one can only wonder how that changes the metrics of current LNG investor plans--especially if it takes a final 'net profits' format.  Net profit approaches, like the reformed Alaska production tax, cause immediate tension between tax authority and taxpayer.  One will always be refusing expense deductions and the other will always be defending them -- at great cost of time and relationships.

Meanwhile, virtually every oil producing state in America is increasing production--except Alaska.  The giant Alaska ​oil producer lies strapped Gulliver-like to the ground by a thousand strands of Alaska political strife, federal opposition to every kind of Alaska development and a growing competition from other producing areas.

Alaska seems to not realize that its resources can be properly developed and reasonably taxed in a way that brings not just maximum benefits to one greedy generation, but maximum benefits to many generations of thankful, employed Alaskans.

BC seems to be less interested -- from the perch of a foreign observer, in facilitating LNG projects that can provide generations of good jobs and economic development than in separating gas transporters from their hard earned money as soon as possible regardless of how that treatment may affect long term jobs and prosperity.

With more LNG projects underway than there are markets to satisfy, some will not be built.

We think it logical that jurisdictions treating the new LNG export opportunity as a money tree will find themselves losing competition to those who place greater value on long term industry relationships that foster long term jobs, community support and economic prosperity.

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3-10-14

10 March 2014 11:25am

Fairbanks News Miner/AP.  Allowing municipalities in on natural gas pipeline negotiations would be as “impracticable as having 60 legislators sitting at the table,” Gov. Sean Parnell (NGP Photo) wrote to four local governments concerned about property tax deals the state could cut with producers.  Municipalities, including the Fairbanks North Star Borough, have raised concerns about agreements the state penned with North Slope producers and TransCanada that could allow the gasline to make payments based on throughput in lieu of traditional property taxes.

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3-9-14

09 March 2014 3:32pm

Petroleum News.  Faced with rising costs and uncertain about the impact of a proposed tax, some of the biggest LNG players in British Columbia are on the hunt for partners as they voice concern about the province’s ability to compete with other export countries. 

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