10-16-13 “It’s A Wonderful Life!”

Calgary Herald BY LAUREN KRUGEL, CP​.  “I was not a huge supporter of how actively the federal government was a year or two ago in promoting pipeline projects for its interests and taking on some of the opposers,” Ian Anderson told an Calgary business audience on Wednesday.

​Comment: Alaskans can be proud of the leadership role Governor Sean Parnell has assumed as Chairman of the OCS Governors Coalition–in support of responsible domestic energy exploration and production.  Here are photos of yesterday's meeting in Mississippi.  -dh

 

 

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It's A Wonderful Life"

by

Dave Harbour

At last Friday night's Alaska Support Industry Alliance annual meeting, Helvi Sandvik (NGP Photo) reviewed the, "…history of Alaska's oil industry … like Clarence the Angel did for George Bailey in Frank Capra's classic film, 'It's a Wonderful Life'".  (Other meeting photos.)

Sandvik, President of the multi-national development arm of NANA Regional Corporation operates with over 11,000 employees on four continents, eight countries and all 50 states with a payroll exceeding $ ¾ billion.

With a corporate mission to maximize economic growth and quality of life among other “core principles”, NANA is squarely in the business of supporting efforts of its Alaska Native shareholders to secure “Wonderful Lives” for themselves and future generations. 

She showed that just as Clarence demonstrated how bleak "Potterville" would have been without George's influence, Alaska without the oil industry "definitely would have been a very different place."

Then she cautioned the audience that, "if we do not constantly remind people how blessed we are to have resource development in this State, our future may not be as bright as our past."  To emphasize the point, she referred to declining oil production and the fact that Alaska North Slope (ANS) maintenance work on ageing facilities does not, "…add new barrels to the pipeline".

Earlier, we reported on similar comments from another great Alaska Native leader, Alaska North Slope Borough Mayor Charlotte Brower (NGP Photo).  "I applaud Governor Parnell, and the Alaska Legislature for the courage and confidence they displayed in the passage of Senate Bill 21. Passage of this bill will create and encourage investment in the oil and gas industry," she said.

Then she touched on an issue we have often addressed here: the need for tax reform to create sustainable production and throughput of the Trans Alaska Pipeline System (TAPS).

Last spring the Legislature passed Senate Bill 21, an effort to reform the very predatory production tax which elevated the state to one of the highest taxing regimes in the free world–in one of the highest operating cost environments.

Sandvik said that following passage of tax reform, delayed projects are once again alive, "activity on the slope increased and optimism in our future was budding once again…."

She then warned that the voters' referendum to repeal tax reform has dampened that initial euphoria following passage of SB 21 and challenged her listeners to imagine what the state would be like without oil development.

She said that without oil, "In my view, Alaska Native Corporations would not exist".  She then pointed out that over half of Alaska's largest companies are Alaska Native corporations.

"Since the passage of the Alaska Native Claims Settlement Act," she said, "many Alaska Native Corporations have developed businesses dedicated to serve the oil industry.  For NANA, we consider ourselves to be a resource company at our core."  She said the oil industry has been a good partner.

We have often reminded readers to be sensitive to the subsistence lifestyles of fellow citizens in rural Alaska.  We have also acknowledged that a modern, subsistence lifestyle is supported by many state services funded by a state that receives over 90% of its operating budget from the declining ANS production.

Sandvik concluded with a moving story.  "This summer in my village of Kiana," she recalled, "I was on the beach visiting with a couple of guys I have known all of my life.  When I was still a teenager, both of them had found their way into a job on the North Slope, working two weeks on, two weeks off.  They learned valuable skills.  One of those men worked on the North Slope until he retired two years ago.  The other took the skills he had developed on the North Slope and found a job as a truck driver closer to home, at NANA’s Red Dog Mine.  He retired last year.  Both of them were on the beach, fishing."

She observed that having a good lifestyle, job and income in one's hometown is a "wonderful life" to hope for.

"Like George Bailey," she concluded, "we want to be true to our values.  We want to do right by our families.  We want our communities to prosper.

"With the referendum to un-do tax reform on the table, we have our work cut out for us.  We all need to step up to help Alaskans understand that tax reform is already working, and it holds the key to our future."

We observe that some environmental activists and others supporting repeal of tax reform think a 'wonderful life' may be an Alaska that resembles "Potterville".  They are entitled to that opinion.

We, however, celebrate the courage, insight and initiative of leaders like Sandvik, Brower, responsible industry leaders, legislators and a dedicated Governor.

This united leadership — in the face of a "Potterville" mentality — can assure that Alaska has a sustainable flow of natural resource income to support the "wonderful lives" we all seek for ourselves, our families and the generations following us.

Sandvik ended her inspiring speech, deservedly, to cheers and an appreciative audience's standing ovation.

(See Sandvik's full speech text here.)

Other meeting photos:

"The Changing of the Guard: Outgoing Alliance President Doug Smith passes the gavel to incoming president David Lawer."

Sandra Yi-Fuller and Micky Becker of Shell Oil enjoy the evening.

 

Alliance Board Members Kevin Durling and Matt Melton, with Board Member Emeritus Lynn Johnson in background.

Scott Jepsen (L) of ConocoPhillips and David Lawer, First National Bank of Alaska

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Today's Energy In Depth Links:

NATIONAL

US world’s largest producer of oil in 2013 due to shale: report. Shale Energy Insider. PIRA Energy Group, a NYC-based energy markets consulting firm, reports that the US is the world’s largest producer of oil in 2013, according to data presented at PIRA’s recent Retainer Client Seminar held in New York City.
 
Why Oil & Gas Should (Continue to) Be Regulated By The States. Forbes, EID’s Blackmon. At the end of the day, proper regulation of the oil and gas industry is critical for everyone, including the industry.  But over-regulation of it is counterproductive and only serves to create shortages and increase costs to the consumer. 
 
U.S. shale crippling Russia’s energy empire. The National Interest. The April discovery of a new shale formation in Western Texas is another indication that the shale-gas revolution, which is rapidly changing the way that the world gas market operates, continues to press ahead. Russia is the world’s largest gas exporter, yet some experts believe that President Vladimir Putin and Russia’s energy establishment seem to be ignoring these changes—to their possible detriment.
 
Activists, industry starting to find consensus on shale. Christian Science Monitor. The quality of the debate over whether or how to tap shale gas and oil may have turned a corner this year as more groups and states find consensus-seeking ways to deal with the hard issues.
 
Eastern HF fights make their way out west. National Journal. California is almost 3,000 miles away from Pennsylvania, where anti-fracking activist and Gasland producer Josh Fox first gained his fame. But the fights playing out in the Northeast are now migrating west.
 
Energy among few bright spots on U.S. horizon – analysis. E&E News (sub. req’d). Domestic energy employment is one of a few bright spots on the horizon for the U.S. economy, according to a new analysis from Raymond James & Associates Inc.
 
Oil and gas deals stage comeback in 3rd quarter. E&E News (sub. req’d). Houston-based research firm PLS Inc. said deals reached $41.8 billion in the third quarter, up 59 percent. Analysts attributed the rise to surging activity from state-owned energy companies, including China National Petroleum Corp., which made the biggest deal of the quarter when it bought $5 billion in assets in Kazakhstan from ConocoPhillips Co.
 
Ex-BHP Billiton oil chief to head energy firm. E&E News (sub. req’d). Six months after retiring as chief of BHP Billiton Ltd.'s oil division, Mike Yeager is moving into a new post as chairman and CEO of a Houston oil firm.

INTERNATIONAL
 
Russian Minister says no shale development for now. Wall Street Journal. Russia does not deem it necessary to join the shale gas bandwagon and will not undertake large industrial scale production of shale gas, Alexander Novak, Minister of Energy said at a conference Wednesday.
 
Stormont row on the cards over HF in Northern Ireland. Belfast Telegraph. Environment Minister Mark H Durkan said that fracking would not happen on his watch. But yesterday Trade and Industry Minister Arlene Foster called on Mr Durkan, who recently replaced Alex Attwood on the Executive, to think again.
 
HF decision an 'executive issue'. BBC News. Any decision about fracking should be a matter for the Northern Ireland Executive as a whole, Enterprise Minister Arlene Foster has said.
 
South Africa Says HF Fluids Must Be Disclosed. Bloomberg. South Africa proposed regulations for hydraulic fracturing that would require disclosure of chemicals used and meet standards set by the American Petroleum Institute, a year after lifting a moratorium on the technique.
 
Mexico's Pemex voids $1.8 bil tender to import US shale gas. Platts. Mexican state oil and natural gas monopoly Pemex Tuesday voided what was to have been a $1.8 billion tender for a huge pipeline to bring US shale gas south of the border.
 
Saudi Arabia hopes spending blitz can turn around aging fields. E&E News (sub. req’d). Saudi Arabia's state-owned oil company hopes to boost production capacity by channeling "massive investments" into older fields. Khalid al-Falih, Saudi Aramco's CEO, said yesterday that the energy giant has steadily raised its capital budget over the last 10 years, to $40 billion.

ALASKA

Republican pushes 'energy resurgence' in launch of Alaska Senate bid. E&E News (sub. req’d). Alaska's Senate race heated up yesterday as Dan Sullivan, former head of the state Department of Natural Resources, declared his candidacy for the Republican nomination. At an Anchorage news conference, Sullivan stressed the need to expand Alaska oil and gas development and block "federal overreach" on state issues.

COLORADO

Anadarko VP on Colorado operations, floods, HF. Denver Business Journal, Q&A with Brad Holly. We are investing about $1.7 billion in the basin in 2013. We have 13 drilling rigs running and plan to drill about 400 wells this year. About 40 percent of the company's production comes from the basin, and it’s getting about 40 percent of the company’s capital investment this year.
 
CSU launches study on methane emissions. The Coloradoan. Colorado State University announced on Monday the launch of a “groundbreaking” study that will track natural gas processing facilities’ methane emissions, which environment experts say have a damaging effect on the Earth’s atmosphere.
 
Oil industry spends $250,000 to fight moratorium. The Coloradoan. "On behalf of the 100,000 Colorado families and the businesses across the state that rely on the energy industry, we are financially supporting the local groups who oppose the bans,” said Doug Flanders, director of policy and external affairs for COGA.

MICHIGAN

HF foes may key drive. Livingston Daily. Livingston County opposition to hydraulic fracturing could be instrumental in getting a proposal to ban “fracking” on the November 2014 ballot, the head of the ballot effort said.

NORTH DAKOTA

Road closures, flaring mar Bakken Shale oil growth. E&E News (sub. req’d). The amount of natural gas burned in flares in North Dakota's Bakken Shale oil field rose in August, as the state's rapid production growth continued to strain its infrastructure.
 
NORTHEAST
 
CONSOL ramps up in its gas division. Tribune Today. After selling more gas and coal than it had expected during the recently ended quarter, CONSOL Energy now has signed an agreement for construction of Utica Shale infrastructure in Noble County, the company announced Tuesday.
 
Marcellus gas about to enter NYC, but New England is a tougher sell. E&E News (sub. req’d). A new "superhighway" pipeline opens next month to carry a large batch of natural gas primarily from the Marcellus Shale into New York City and surrounding suburbs, providing another outlet for the bottlenecked Appalachian production. But the road to New England isn't as open.
 
Carroll Co. Wants to Move Forward with HF in Maryland. Westminster Patch. Carroll's representatives say Maryland needs to move ahead with fracking in the state. Senator David Brinkley, R-Carroll, said he thinks Maryland should "move full speed ahead with it."  Delegate Susan Krebs, R-Carroll, agrees, saying that Maryland is losing out on economic benefits by not getting on board. Krux('ns:centro', 'dataprovider.exelate');
 
CONSOL exceeded production and sales expectations for the quarter. The Examiner. "Our gas production growth is beginning to accelerate as we and our Marcellus Shale partner expand the rig count. We now have a record 8 rigs drilling in the Marcellus Shale on our JV acreage. For 2014, we and Noble Energy expect to be operating at least this many rigs," commented J. Brett Harvey, chairman and chief executive officer.
 
WVU Officials Present Findings After Monitoring Drilling Operations. WBOY 12. The West Virginia University Extension Service hosted a forum on Tuesday evening about monitoring Marcellus shale drilling operations. Dr. Michael McCawley with the WVU department of occupational and environmental health sciences gave a presentation on his findings from a study he did.
 
New Hanger ad features ‘Gasland’ residents. StateImpact PA. This week in political ads, Democratic gubernatorial candidate John Hanger has released a new web video positioning himself as a tough regulator of drilling. Hanger served as DEP Secretary under Governor Ed Rendell at the start of Pennsylvania’s natural gas boom.
 
New report highlights negative impacts of HF. Legislative Gazette. A recent report conducted by a New York-based environmental group highlights a slew of consequences hydraulic fracturing could potentially have on the state, including depleting water sources and increasing costs to small communities.

OHIO
 
Why the Utica Shale Might Be the Best Play in the U.S. Daily Finance. It turns out the Utica is just saturated with a vast amount of recoverable natural gas and natural gas liquids. While it doesn't contain the high levels of oil of the Bakken or Eagle Ford, the amount of gas that can be extracted on a barrel of oil equivalent, or BOE, basis per well rivals or exceeds these two oil rich plays.
 
Mansfield Residents Upset About HF Near Their Homes. CBS Local. For two years, residents in one Mansfield neighborhood enjoyed the quiet, clean environment expected of suburbia. But now that Eagleridge Operating has started up its rig drills for natural gas in the area — all that has changed.
 
Ohio utility chief warns of reliance on gas over coal. Dayton Business Journal. Public Utilities Commission of Ohio Chairman Todd Snitchler is not a fan of a “dash-to-gas” mentality that calls for coal-rich states such as Ohio to make a quick switch to natural gas as the preferred fuel for its power plants, according to Columbus Business First.
 
Belmont County: Judge rules in favor of landowners. Farm and Diary.  A Belmont County judge has ruled that one oil and gas company can not hold a lease in perpetuity. The case of Oxford Oil verses the West family is one of many lawsuits in Belmont County courts over oil and gas issues. The West family owns 97 acres in Wayne Township.
 
Group claims Ohio’s becoming ‘waste dump’ for HF companies. Columbus Business First. A soil recycling company has been thrown into the middle of a controversy over the disposal of drill cuttings from oil and natural gas wells, with its owner saying critics of the process are misinformed.

OKLAHOMA

Booming oil towns prepare for bust. Tulsa World. The surge in oil drilling has drawn money and men like a magnet to run-down communities that haven't seen a boom since the 1980s. But leaders and residents here are increasingly mindful that the runaway riches tapped by hydraulic fracturing will eventually run out.

TEXAS
 
So far this year: 3,266 new wells in the Eagle Ford. San Antonio Express-News.  Eagle Ford Shale drillers have started 3,266 new wells so far this year, according to the latest Baker Hughes Well Count.
 
Goodrich will boost 2013 capital budget, including Eagle Ford work. San Antonio Business Journal. Goodrich Petroleum Corp. says its boosting its 2013 capital expenditures to $255 million from a previous estimate of $230 million, including drilling and completion projects in the Eagle Ford Shale.
 
Kinder Morgan to build Gonzales plant. Gonzales Inquirer. Kinder Morgan Energy Partners, L.P. announced Friday it has entered into an agreement with a large Eagle Ford Shale producer to extend the Kinder Morgan Crude and Condensate (KMCC) pipeline farther into the Eagle Ford Shale in South Texas.
 
Sizing up the Permian. Investing Daily. The Permian Basin beneath west Texas and southeastern New Mexico receives a fraction of the press coverage accorded the Bakken and Eagle Ford, but it has more production potential than these two shale formations combined. The reasons it’s often overlooked are that the Permian is not just a shale oil play, nor is it a recently developed basin.

WYOMING

Wyo. oil industry fears effects of prolonged furloughs. E&E News (sub. req’d). Wyoming energy industry leaders worry an extended government shutdown could put a damper on business. The shutdown, which began Oct. 1, halted new production on federal lands — a development that has had little impact on energy companies used to waiting more than a year to secure federal permits from the Bureau of Land Management.