Is this the question everyone would like to ask?
Alaska Governor Bill Walker. NGP Stock Photo by Dave Harbour.
If Alaska’s Governor Bill Walker were not conniving to convert Alaska into a sick, modern version of Hugo Chavez’ socialist utopia, why would he be overspending, demonizing the state’s biggest investors and seeming to move toward a takeover of various oil & gas leases and transportation and distribution systems? -dh
Anchorage Daily Planet Editorial:
Disaster in the making?
A piece on the Must Read Alaska website over the weekend was quite an eye-opener and makes you wonder what the heck is going on.
The article by Suzanne Downing, who edits Must Read Alaska and also is communications director for the Alaska Republican Party, points out Gov. Bill Walker’s administration has asked for information from the North Slope producers’ about the marketing and technical plans for their gas. It has threatened it may refuse to approve the Prudhoe Bay Unit plan of development, due July 1, essentially taking over the field if they do not comply.
The producers for their part are balking, claiming release of marketing plans would violate antitrust statutes.
An Alaska Journal of Commerce article on April 27 details the flap.
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We have suggested before that Walker has a single-minded vision of the state building and owning a gas line to carry gas from the North Slope to tidewater in the south. Then, he would – as has been mentioned in the past – demand the producers provide the state with gas under a duty-to-produce legal theory.
Another article, by Craig Medred at his website, fills in some of the holes and, along with Downing’s piece, is a must-read.
If what Downing and Medred say is accurate, that Walker intends to default a working, producing oil field in pursuit of his gas line obsession, that he has been busy plugging into place his chosen, compliant confidants, it portends disaster for Alaska and its economy.
Walker should call a news conference and tell Alaskans exactly what he plans. The state’s economy already is teetering on the brink and doing something as rash as declaring war on the North Slope oil producers in a quixotic quest for a gas line and tying up the state in court for decades is not a reasonable approach to dealing with fiscal uncertainty.
Alaskans have a right to know whether – and why – their state is about to go off the rails.
Must Read, by Suzanne Downing.
Governor Walker and Craig Richards next play
BLOWING UP PRUDHOE
Prudhoe Bay is the largest oil and gas field in the nation. A delicious find for the energy sector back in the 1960s, at 213,543 acres, it’s among the 20 largest and most productive fields in the world. It was a boon for our young state. Prudhoe Bay, it can be argued, built Alaska.
And it might just be on the verge of going south because of the obsession of a governor.
Prudhoe, the field, is divided into leases; leases are combined into units; and units have operating agreements….
Fiege would not have acted without the direction of the governor. Why, then, has Walker demanded this information?
Why has the Acting Commissioner of DNR decided to leave on the last day of the current lease?
Why did Craig Richards quit his prestigious job as attorney general after only 18 months? Richards is not a quitter. And it has nothing to do with his personal life, which was hinted at in the governor’s press release.
Insiders are saying it’s because Walker intends to default the Prudhoe Bay Unit when it comes due on July 1 and Richards is moving into position on the outside of the administration to eventually assist in litigation.
Marty Rutherford, who has been leading DNR on an acting basis, is reported to want nothing to do with that. Insiders say that she told the governor she was ready to lead DNR, but not ready to default the Prudhoe Bay Units.
Marty Rutherford
Craig Richards, on the other hand, may want everything to do with that, including inheriting the litigation of a lifetime.
NO TECHNICAL BASIS FOR DEFAULT, SO…
Experts say there is no technical basis for defaulting the unit. The technical information has been given over and the field is in production.
The operator BP has done nothing that would harm the unit. If Walker, through his new DNR commissioner Andy Mack, decides to default a working unit, this would be a first. And it has the ability to throw Alaska’s entire economy into the drink.
Further, if Walker decides to default the Prudhoe Bay Unit, it woud be because he intends to nationalize it. At that point, the operator technically has no permission from the owner (Bill Walker) to engage in any activity. What would BP do?
The courts would decide because this would invite a gusher of litigation. And this is where Craig Richards’ latest move is most interesting.
Richards and Walker have made a career of suing oil companies. It was their efforts that stalled the completion of the Point Thomson agreement that former Gov. Sean Parnell helped resolve, which is now in production, giving 10,000 barrels of liquids into the Trans Alaska Pipeline System each day.
What is motivating the governor? It’s the gasline. Amanda Coyne, in her much-missed column by the same name, analyzed Gov. Walker back in 2014, and his desire for the state to own the gasline outright. She wrote: “Walker can be….
State wants gas sale info for Prudhoe plan; owners estimate 20K-60K barrel decline
Editor’s note: BP submitted a letter to the Division of Oil & Gas May 2 correcting its decline estimate from 20,000 to 60,000 barrels per day to 0 to 40,000 barrels per day.
The state Division of Oil and Gas wants significantly more information from Prudhoe Bay field operator BP and its fellow working owners on how a scaled-back work plan for this year could impact prospects for a gasline down the road.
Oil and Gas Director Corri Feige wrote a letter to senior BP Alaska officials April 11 asking more than a dozen technical questions related to a major gas sales project including drilling plans, management of carbon dioxide pulled from Prudhoe natural gas, gas balancing agreements and efforts to market the gas.
…Oil and gas unit annual development plan deadlines are based when the unit was originally formed and therefore do not follow a strict calendar year.
Now-retired Department of Natural Resources Commissioner Mark Myers sent a letter to unit operators across the state in January notifying them that future unit development plans will need to include the additional information.
Myers wrote that DNR is “working proactively to ensure maximum development and monetization of Alaska’s energy resources.” Consequently, the state needs to understand how all hydrocarbons available for offtake are being used, sold within the state or prepped for future sale, according to Myers.
Feige said in an interview that it is the administration’s priority to use that information to determine if there is gas that could be captured for in-state use. Commercially sensitive information would be kept confidential, she added.
Anything learned from Cook Inlet basin natural gas producers could be used to “think outside the box” about how the state can possibly help find or generate new markets for Inlet gas, according to Feige.
Limited demand for Inlet gas has been the primary impediment to increased production from the basin in recent years and led to fears of supply shortages in 2012.
The division is anticipating “pretty broad-brush responses” to set a baseline of information that can be added to each year, she said.
“For the state and certainly for the division it’s about understanding the resource in a unit that may be available, timeframes, maximizing the oil and when do we start looking at and thinking about those future production resources,” Feige said.
The Journal obtained the letters and development plan late April 26 and a BP Alaska spokesperson could not be reached for comment in time for this story.
Regarding marketing, the state asked BP to provide “the identity of the parties with whom the current commercial agreement(s) are being negotiated, or with whom each WIO intends to have substantive discussions regarding the marketing of unit hydrocarbons including unit gas, and the commercial terms under which each WIO is offering to make resources available for long-term sale, including: the estimated volumes to be delivered, the pricing terms, the location at which title to the gas and associated risks of loss will change, and the condition of gas at the time of delivery.”
Feige called specific references in the April 11 letter to marketing efforts for major gas sales an “unintended consequence” of wording, noting that the original state lease forms grant lessees rights for exploration, development, production, process and marketing of oil and gas from the lease area.
DNR and the division attempted to stay consistent with the lease language in their request and are not trying to use regulatory authority to gather information for the state’s role in the Alaska LNG Project.
“The existence of that firewall between the Division of Oil and Gas and the AK LNG project is absolutely rock solid and it has to be,” Feige said. “We are absolutely prohibited from discussing, sharing information, etcetera and we obviously at the division, we’ve got to live hard and fast by that firewall because the work that we do is built on relationships and it’s built on a whole lot of trust.”
The correspondence between the state and BP references “major gas sales” but not a specific project to sell gas.
She said the division has been in contact with unit operators to clear confusion about exactly what information it wants going forward.
“It’s an iterative process and what (BP) submitted the first time just lacked a bunch of that technical information about how do we manage the field to get (to major gas sales)” Feige said.
Prudhoe production drop
The Prudhoe Bay development plan also ….
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