CEOs Of The State, The Trans Alaska Pipeline System and North Slope Borough Have Much In Common – Halcro Adds Wisdom To The Debate

Relevant Note from the Calgary Herald: A subsidiary of TransCanada Corp. declared a force majeure Thursday after shutting down its six-month-old Bison natural gas pipeline the night before over a rupture in central Wyoming.  (It can happen.  -dh)

CEOs Of The Trans Alaska Pipeline System, the State of Alaska and North Slope Borough Share A Challenge (Come to think of it, we all share this major challenge–directly and indirectly)

by

Dave Harbour (Note opposing opinion in comment below)

Night before last in Anchorage, former North Slope Borough Mayor George Ahmaogak (NGP Photo with NANA External Affairs Vice President Joe Mathis) told an Anchorage audience at the Petroleum Club that continuing investments by the oil and support industries on the North Slope are critical to the future of citizens there.  

He emphasized the importance of exploring for and finding new oil reserves to supplement throughput of the Trans Alaska Pipeline System (TAPS).   We have long encouraged rural leaders to support general industry investment, leasing and tax policy out of enlightened self interest, so dependent are they for a cherished subsistence way of life on the success of Alaska’s oil industry.  That doesn’t mean citizens have to agree with tax paying companies on every issue.  Ahmaogak repeated a statement he made in a recent Arctic Sounder Op-Ed: "We don’t always agree on everything – and we don’t have to. Over the years, I have also seen that when we do disagree, we have always figured out a way to move productively forward."

Alaska’s Governor Sean Parnell (NGP Photo) and Natural Resources Commissioner Dan Sullivan (NGP Photo) held a National Press Club briefing a month ago in support of a goal to boost the daily flow of oil through the Trans Alaska Pipeline System (TAPS) to 1 million barrels within a decade.  Parnell knows how critically dependent the state is on oil flow for almost 90% of the operating budget and well over a third of the entire economy.  It certainly is enlightened self interest on his part not to preside over a state that reverts overnight to a pre-pipeline population — just as Ahmaogak’s enlightened self interest recognizes the near total dependency of the North Slope Borough on state sanctioned assessments of oil industry property within the Borough–along with state provided services.  If TAPS ceases to exist for lack of throughput, the sitting Borough mayor would be remembered in history for presiding over the decimation of a culture…unless dependency on oil could overnight be converted to dependency on Federal largess.

Yesterday, TAPS president Tom Barrett (NGP Photo) addressed the Resource Development Council for Alaska saying that the pipeline’s "engine dipstick level" is below the "add oil" line.  He reminded the audience that at peak throughput, over 2 million barrels per day traversed the line, meaning that each barrel of the warm oil made it through the insulated pipe from the North Slope to Valdez in only a few days.  Warm, fast flowing oil keeps pipeline corrosion down and deters wax buildup on the inside wall of the pipe.  Current production of about 630,000 barrels per day takes several times as long for a barrel to make it to Valdez, resulting in much less line friction and lower pipeline oil temperatures.  He said that faster permitting is needed to provide the pipeline with new sources of throughput, giving federal delays in NPR-A permitting of ConocoPhillips’ CD-5 project as an example.  He said "urgent pipeline challenges" include a more rapid decline in throughput than had been projected and increased risk of pipeline failure because of low throughput.

Comment:  Andrew Halcro (NGP Photo) often produces some of the most clear headed commentary in Alaska; elected officials would do well to carefully digest his wisdom.  -dh

Alaska Dispatch Op-Ed by Andrew Halcro:  Since Senator Bill Wielechowski (NGP Photo) and friends have already dealt with taxes by joyfully raising them through the roof, and have refused to discuss resource extraction terms like fiscal certainty, it’s safe to say he won’t have to worry about permitting a natural gas pipeline anytime in the near future.  As a state lawmaker, Wielechowski should know that the state has only two ways to impact the construction of a natural gas pipeline; taxes and permitting.   (Comment: Actually, we can think of a third way the state can impact investment:  elected leaders can demonize investors, using their bully pulpets, day after day, until those with discretionary capital decide that there are more attractive places in the world to invest — where those in power actually appreciate the investment. -dh)