Category Archives: Immediate Reactions

The Best Two … One Remains

9/8/2010 Estimated Alaska North Slope Netback Values

Market Bbl MMBtu
Oil $67.48/BOE $11.63/MMBtu
Gas  (AGIA) Negative $2.52/BOE Negative $0.43/MMBtu
Gas (Valdez LNG) Negative $2.07/BOE Negative $0.36/MMBtu
Gas (Bullet Line) $.17/BOE $.03/MMBtu

These prices represent estimated values, netted back to the field level, for Alaska North Slope (ANS) oil and gas marketed through various options, based on closing prices for the relevant markets on the indicated day.  For an explanation of the basis for all of the estimated netback values, see “Basis for Estimates of Alaska North Slope Netback Oil & Gas Values (rev. Sept. , Sept. 6, 2010),” (Sept. 6, 2010) http://bit.ly/cNqYw5.

Is TransCanada required to provide fuller public disclosure …

Under the regulations of the Federal Energy Regulatory Commission (FERC) governing the Alaska Open Season, the Alaska Pipeline Project (TransCanada) is prohibited from selectively disclosing “non-public transmission function information” to any of its “affiliates” engaged or potentially engaged in the marketing of gas.  18 CFR 358.6.  Under the same set of FERC regulations, “non-public transmission function information” includes information about bids submitted in the Open Season not otherwise made public to all potential shippers.

Because the state has the right to take its royalty gas in kind and separately market it to others, the state is potentially engaged in the marketing of gas.  Because of its authority, under AGIA, to “direct the management policies” of the Alaska Pipeline, the state also appears to meet the definition of an “affiliate” of the project.  18 CFR 358.3(a)(3).   As a result, as with any other marketing affiliate of the project, TransCanada is prohibited from selectively disclosing non-public open season information to the state.

Notwithstanding the FERC’s explicit rule, TransCanada may have selectively disclosed its open season results to the state.  According to an article in the July 30 Alaska Dispatch (“TransCanada touts substantial interest in Alaska gas line“), “Marty Rutherford, who heads the state’s gas line team, said the state was notified about an hour after the bids closed about the results. ‘It is extremely good news and it is what we hoped,’ she said.” Continue reading

Alaska’s Opportunity …

Remaining Life at Various Investment Levels

Testimony dated February 28, 2006:  There remains as much known oil and gas resource on state lands on the North Slope as has been produced since the start of flow from Prudhoe (p. 10).  If investment on the North Slope increases from the then-current level of $1 – 1.5 billion per year to $2 – 3 billion per year, the decline rate in TAPS could be slowed from 6% to 3%, the end of life for TAPS lengthened from 2025 to 2050 and ultimate oil recovered increased by nearly an additional 4 billion barrels (p. 9).  At $100 billion of additional investment, the prize could be as much as roughly 14 billion barrels of additional oil and gas production (p. 11).

bp_vp_testimony_2_28_06

The FERC Documents Related to FERC’s Rejection of YPC’s Extension Request

The following are links to the FERC documents related to FERC’s rejection of YPC’s extension request.  The first is YPC’s request for extension; the second is the FERC order rejecting the extension.

Motion of YPC for Extension (Apr 16, 2010)

FERC Order Denying YPC Extension (May 14, 2010)

“Shell Oil: Global Gas Thirst Set to Surge”

Shell’s Malcolm Brinded: “This boom in LNG demand will need to be matched by a similarly rapid increase in supply ….”  http://www.upstreamonline.com/live/article212681.ece

Becoming part of that mix is the prize for Alaska gas. Combining Alaska’s internal and external demands in a single Bullet Line to Cook Inlet, with an LNG plant as the anchor tenant, is the means. Is HB 369 an adequate vehicle, or did the Legislature fall short by not (yet) repealing AGIA?

A Reaction While “The Concerned” Awaits a Reply …

Created by the Alaska Dispatch, “The Concerned” is, to quote the person who channels it, “a fictional, collective persona (based loosely on the Alaskan Zeitgeist) which petitions various people and institutions on behalf of itself. Think Star Trek’s ‘The Borg,’ then add a sense of absurdist humor. The Concerned’s oil and gas petitions, in particular, are based on the idea that Alaska’s simultaneous dependence on and mistrust of the oil industry is a paradox, as are the opposing corporate and government mandates in regard to the resource.”

In that vein, The Concerned recently wrote to the Alaska Oil & Gas Association, suggesting that the state’s oil industry provide “exploration certainty,” in exchange for “fiscal certainty.”  The following is a reaction to give The Concerned something to read, while it stands by the mailbox waiting on a reply.

_________________________________________________________

Dear Concerned:

Your letter of March 18th raises an interesting question.  While I certainly am not the intended recipient – and can only speak for myself on these issues – I thought I would throw in two cents while you stand at the mailbox waiting for the real response.

Your letter suggests that, in exchange for “fiscal certainty” related to the state’s take of oil and gas revenues (presumably, at a level reflecting the pre-ACES levels), the oil companies in Alaska provide “exploration certainty.”

There are several challenges with “exploration certainty,” but one of the most significant is that, in the current environment, it leaves the companies at risk if, after giving “fiscal certainty” a try for awhile, the state again changes its mind, once the additional exploration investment has been made, and reverts to higher taxes the next time oil prices rise. Continue reading

Why AGIA Should Be Terminated

As Senator Stevens has said, AGIA should be terminated and Alaska should begin to focus on developing instate pipeline options.  I agree with that conclusion and participated last night in a discussion on AK Syrin’s talk radio show on the subject.  The following is a link to a replay of the show.

Its About Energy- Katcha KLOO Sunday Show 3/21/2010 – Syrin from Wasilla on Blog Talk Radio

http://bit.ly/bB0oqG

James Carville on Alaska, “Its the oil, stupid”

That’s my guess, anyway, if he looked at Alaska politics today. The following article quotes Alaska Revenue Commissioner Pat Galvin, as saying “A large-capacity natural gas pipeline is the single-most important project to the economic future of Alaska.” Even the State’s own numbers show that gas doesn’t replace oil as a state revenue source. While the Commissioner is off fiddling with the State’s increasingly long shot bet on AGIA, oil production is declining at an increasingly rapid rate due to ACES. It would seem a significantly better use of the Commissioner’s (and the state’s) resources to think about what is going wrong with oil, and fixing that while the opportunity exists. That is what is truly “the single-most important project to the economic future of Alaska.”

From: http://ping.fm/2qkct