Alaskanomics, by Caroline Huntley

Governor Walker proposes reduced state capital budget amid falling oil prices

Posted: 16 Dec 2014 08:39 AM PST

Another Payment to the Administration's Environmental Supporters?

Sen. Murkowski Responds to Obama's Withdrawal of North Aleutian Basin from Five-Year Leasing Plan

Senator Lisa Murkowski, Energy, Congress, North Aleutian, Bristol Bay, lease sale, Obama, Jewel, Photo by Dave HarbourWASHINGTON, D.C. – U.S. Sen. Lisa Murkowski (NGP Photo), today commented on President Obama’s decision to withdraw Alaska’s North Aleutian Basin from potential oil and natural gas activity.

“Given the lack of interest by industry and the public divide over allowing oil and gas exploration in this area, I am not objecting to this decision at this time,” Murkowski said. “I think we all recognize that these are some of our state’s richest fishing waters.  What I do not understand is why this decision could not be made within the context of the administration’s upcoming plan for offshore leasing – or at least announced at the same time.”

Interior Secretary Sally Jewell on Tuesday announced the administration was withdrawing the federal waters of the North Aleutian Basin, located off the Alaska Peninsula, from consideration for oil and gas leasing for an indeterminate period of time. The prohibition will remain in place until lifted by the Obama administration or a future administration.

Murkowski also expressed her strong concerns that the Obama Administration is still dramatically out of step with Alaska’s most pressing needs. 

“It is incredibly frustrating that this administration looks at Alaska – with oil production at a fraction of the level it could be at, and with low oil prices about to force steep across-the-board budget cuts – and decides that conservation is our most pressing need,” Murkowski said. “We are not asking to produce everywhere – but right now, we are not being allowed to produce anywhere.  Despite strong support, we are seeing development blocked in the Chukchi, the Beaufort, in NPR-A, and on the Coastal Plain. What we need are decisions to open lands and waters in Alaska, not the familiar and frustrating pattern of shutting everything down.”

The withdrawal will prevent the federal waters of Bristol Bay from being offered for oil and gas leasing under the Interior Department’s next five-year plan for development of the Outer Continental Shelf, which is expected to be released in a matter of weeks. The Interior Department said its prohibition does not affect commercial fishing or other potential economic activity in the region. Interior previously dropped the North Aleutian Basin from its 2012-2017 plan, so today’s announcement largely represents the continuation of an existing policy.

“I also believe the Interior Department must continue to invest in baseline environmental research to determine the health of fishery and crab resources in the region so that future administrations can make informed decisions,” Murkowski said.

Governor Bill Walker, Alaska, Budget cuts, oil tax, sales tax, personal income tax, Photo by Dave HarbourtGovernor Bill Walker (NGP Photo) discussed his FY2016 (July 1, 2015 – June 30, 2016) budget proposal at yesterday’s Anchorage Chamber of Commerce luncheon.  Having been in the office only two weeks, Governor Walker submitted a $5.3 billion operating budget developed by his predecessor, former Governor Sean Parnell. Walker has not endorsed this budget and his administration is working on its own version. The Walker administration did announce a capital budget of $106 million, pared down from the $220 million capital budget Parnell submitted. With oil prices lower than expected, Walker hopes the decrease in the capital budget will help stretch the state’s dollar and weather a projected $3.5 billion budget deficit for FY2015. Even with the lower capital budget, the state is looking at a similar budget deficit for FY2016, assuming oil prices remain low. Walker, however, pointed out oil prices do swing and is optimistic about the future of Alaska and the opportunities ahead. “We live in one of the most resource-rich states and one of the wealthiest countries in the world,” said Walker. “We don’t have a resource problem. We have a distribution problem. We need a distribution system in place to get our resources to Alaskans and the world market.”

Governor Walker’s team will spend the next few weeks reviewing all capital projects and the operating budget before submitting its final revisions by February 18. At the luncheon, Walker requested the public’s involvement during the budget process. The administration plans to solicit public input on ways to prioritize spending, cut waste and address any inefficiencies as it puts budget plans together.

“I’m confident that together, we Alaskans can manage our way through it,” Governor Walker said. “We need to develop a smart plan so that our children and grandchildren can have stability 30 years from now. We want a plan in place that will not just get us over the hump now, but provide a strong future for decades to come.”

Writing for the Alaska Dispatch, Lisa Deemer writes, "President Obama on Tuesday declared Bristol Bay “a beautiful natural wonder” and designated its salmon-rich waters indefinitely off limits for oil and gas leasing.

"Environmentalists say the move provides significant protection not just for the iconic Bristol Bay sockeye salmon, but for crab, herring, halibut and groundfish, including the lucrative pollock fishery. And salmon returning to the Yukon and Kuskokwim rivers pass through the waters that had been considered for drilling."

We would only add that this is yet another long term pay off to the administration's environmental constituencies.  -dh

Oil & Gas Online  

Significant growth in the global middle class, expansion of emerging economies and an additional 2 billion people in the world will contribute to a 35 percent increase in energy demand by 2040, according to a new report released today by ExxonMobil.

As demand increases, the world will continue to become more efficient in its energy use, according to the 2015Outlook for Energy: A View to 2040. Without efficiency gains across economies worldwide, energy demand from 2010 to 2040 would be headed toward a 140 percent increase instead of the 35 percent forecast in the report.

ExxonMobil’s Outlook for Energy projects that carbon-based fuels will continue to meet about three quarters of global energy needs through 2040, which is consistent with all credible projections, including those made by the International Energy Agency.