Friday, September 4, 2009

Parnell and coming Alaska Recession

Alaska has thus far avoided the immediacy of the impact of the recession arising from the outrageous mismanagement of our financial sector. The reason for this is that most of the money in this State from oil revenues goes to the State, and then is trickled down to the communities through welfare and public works projects. A process where the governor and the Legislature compete for dwindling funds to promote their respective reelections through oil revenue largess to their constituency.

In his endorsement of offshore drilling, Gov. Sean Parnell mentioned that he wanted the ‘billions’ in wages and services for Alaska’s economy that would be generated by private sector companies which would be supporting companies like Shell in pursuing offshore oil and gas deposits. This is a radical departure from the ‘it must all come to the State first’ approach of the post TAPS construction era: 1978-present.

The question during the Jay Hammond Administration was ‘how best to benefit Alaskans from the oil wealth from the royalties and taxes’ on the North Slope development. It was decided that to give Alaskans the most benefit, the mechanism of a Permanent Fund was created. This fund was to accomplish two goals. One was to distribute a benefit to Alaskans from the oil wealth through the mechanism of the earnings of the Permanent Fund through a dividend program paid out yearly based upon a percentage of the earnings of the Permanent Fund. The Permanent Fund itself was established to provide for a time when revenues from oil production fell to such a level that State and local government would need help in meeting services. The PF was a rainy day fund.

The revenues that did not go into the Permanent Fund were used to fuel a State government that quickly demonstrated that it was incapable of restraining itself when it came to overspending. This tendency was adopted by local governments.

Former Gov. Jay Hammond and the Legislature at the time never intended for the Permanent Fund Dividend checks to individual Alaskans to go on forever. It was intended that the program would be terminated when revenue from oil fell to such a level that ending the PFD program would be necessary. The alternative was to tax the PFD so that government gave and then recouped that benefit through taxes.

Since Hammond’s administration in the late 1970s, the largess from oil revenues fuel a growth of State and local government that is unparalleled elsewhere, given the low population of the State of Alaska—approximately 650,000.

With this program, revenues were no longer generated at the local level; everything came from the State to the communities. This new super welfare state mentality soon extended itself beyond oil and gas into the mining sector.

The Mining Law of 1872 provided for a requirement for $200 in development and exploration to be accomplished on the mining claims, state or federal, each year. Congress and the State amended the law in the mid-1980s to allow a payment per acre in lieu of the development work. The $200 was something spent directly to the benefit of many Alaska communities for services and labor. Now, a company or individual with mining claims pays $2 per acre per year for each mining claim directly to the State without having to do anything as far as developing or “proving’ the claims as being viable. This has led to big companies coming into Alaska and simply claiming all around a promising prospect and eventually, through water rights issues, and other mechanisms freezing out the small claimholder.

Payment directly to the State bypassed the community benefit and is slowly eliminating the little guy in Alaska’s mining industry.

The picture is now of a State government from which all monies from resource development flows downward to the localities from the State. Yearly state budgets are upwards of $8 billion with federal sharing funds.

What are the indicators of any recession in Alaska?

For the last 5 years, residential and commercial construction have slowed by as much as 30% per year for new construction starts.

Alaska’s entry into the recession has been relatively slow compared to other States, because of our oil revenues. Oil production is declining, however, and sooner or later even high oil prices will not produce the revenue that was once enjoyed by the State government from North Slope oil development.

Parnell’s speaking of direct benefits from wages and business reflects an awareness of the potential impact of oil and gas offshore exploration and development to Alaska’s economy and communities. Obviously, the communities closest to the development will benefit the most. It is these Alaska coastal communities that are in need of such development. One only has to look to Kotzebue and its relationship with the Red Dog mine to see potential benefit.

It is even possible that Alaska might see a rise in oil field support businesses to support increased oil and gas exploration offshore. This gives Alaska the opportunity to benefit in much the same manner as have the western Canadian provinces from the oil and gas development there. Alaska would be in the position to redevelop a bottom up economy, reducing the focus on the current top down, mother state.

What is it that can accelerate Alaska’s descent into an economic depression, the likes of which has not been seen since the post TAPS construction ended? Alaska’s tax structure on the oil industry.

With the completion of TAPS back in late 1977, people working on the project left. Property values plummeted. Unemployment in the Matanuska Valley where I grew up peaked at 26%.

Most of our Legislators are post that experience and lack the perspective that those of us where there and experienced this time possess. Hence, they act as if there is not derogative to Alaska’s economy with their oil and gas tax policies.

The harbinger of what’s to come is British Petroleum’s very recent announcement of serious cutbacks on the North Slope amounting to a major slow down of activity for this company. It has reported that the decrease in spending by BP is going to be $100,000,000 or greater this year. BP has given notice to its subcontractors that they will have to reduce their contract costs or risk losing their work.

Gov. Sean Parnell needs to change the paradigm of taxing the oil companies in Alaska, if there is to be any real “black gold rush” for Alaska’s offshore potential. To do that, he needs to give the Legislature a reality check that the good old days of 1.2 million barrels per day flowing down the Trans Alaska Pipeline to market are gone forever if something does not change and change quickly.

Parnell has the lesson to be learned from Albert, Saskatchewan, and British Columbia with respect to envigorating Alaska’s oil and gas development.

Parnell has a valuable tool in the Alaska Natural Gas Development Authority. Hopefully, he will not let his predecessor’s rhetoric and open hostility towards the oil companies in Alaska guide his policy decision. Otherwise, Alaska’s economy will “tank” and make post TAPS look like a picnic by comparison.

Thursday, September 3, 2009

Shell and Sean Parnell--oil and gas development offshore

Governor Sean Parnell announced today that his administration will seek to expand oil and gas exploration and development offshore on Alaska’s coastal continental shelf.

This announcement follows the August 28th 9th Circuit Court of Appeals’ decision that the 2007 oil and gas lease sale in the Beaufort Sea did not violate environmental laws.

In testimony given on August 20th to Sen. Lisa Murkowski, Gov. Parnell outlined areas in which Alaska can play a major role in helping the U.S. obtain energy independence and security for Arctic resources. I’ve included the text of his testimony to the Senator.

“Introduction
Thank you, Senator Murkowski, for this opportunity to address the Homeland Security Subcommittee of the Senate Appropriations Committee on one of the greatest challenges facing the Nation and the State of Alaska – the changing Arctic and the national policies necessary for its understanding, its protection, and its responsible development.
Before I begin my remarks, Madam Chair, I would like to take a few moments to recognize and thank Admiral Thad Allen, Commandant of the United States Coast Guard, and all the members of the Coast Guard for their bravery and hard work in Alaska.
Just this week, the Coast Guard helped save the lives of nine people in Alaska. A Coast Guard helicopter found two missing adults and a child near Ketchikan. With help from Alaska State Troopers, family and friends, the Coast Guard rescued another six people when a 20-foot pleasure boat overturned at Tee Harbor near Juneau. Unfortunately, one person lost their life in that incident. My thoughts and prayers are with his family, and we deeply appreciate the men and women who keep America’s coastlines safe and secure.
As you know Senator Murkowski, Alaska is America’s Arctic – it’s our home, our history, our heritage, and our future. And Alaska is the only national link to the Arctic and the only state that shares a border with two other Arctic nations. Arctic policies affect every state and every citizen – Alaskans most of all, not just because of our strategic location on the globe, but because of what we have to offer. The Arctic’s abundant resources – human and natural – and our strategic location for national security demand our attention. The people of Alaska understand and eagerly accept our role in the examination and development of national Arctic policy.
We worked closely with the previous Administration on national and homeland security directives outlining broad policies on the Arctic. We hope to continue that collaboration with this Administration and Congress.
Today, I present Alaska’s view of U.S. Arctic policies in five areas: resources, national and homeland security, science, and foreign policy. In the Arctic, these policies are inextricably linked. And, while I describe these issues individually, it is vital that this committee and the Administration understand and act on them jointly. Domestic energy supplies support national and homeland security. Security enables development and protects the environment. Foreign policy enables international participation in scientific research. This must all be discussed in the context of climate change and how Alaska is adapting in light of Arctic policy.

Resources
Let me begin by focusing on Alaska’s resources – most of all, our human resources: Alaska’s people. Make no mistake, Alaskans have been adapting for years. Changes in the Arctic affect us directly, every day. No one is more vested in Arctic policy than the people who subsist from the land – hunting, fishing and gathering, not just for food, but for the survival of their culture. Collaboration with our Arctic residents and local governments is a must. Alaskans understand the need for balance.
Any conversation about the Arctic must also include Alaska’s natural resources – coal, gold, zinc, silver, copper, natural gas and oil. These resources make the Arctic vital to American energy security. Alaska is America’s Arctic energy breadbasket. We have traditional and renewable sources of energy in staggering volumes here. Alaska can play an even greater role in reducing the amount of oil and gas we import from abroad. And we can be America’s test-bed for renewable and alternative energy sources.
The onshore Arctic areas, such as the NPR-A and the coastal plain of ANWR, hold great promise.
Alaska is home to the Trans Alaska Pipeline System, which carries 685,000 barrels of oil a day to the lower 48 states. This major supply of oil is key to our national energy security.
Offshore Alaska … the Beaufort and Chukchi Seas can be explored safely in the near-term, producing oil and gas for decades. Without these known, traditional sources of energy, we risk higher cost energy, higher taxes, and greater dependence on foreign oil. We can do this on our own soil. Let us not be led down the easy path to investing America’s foreign aid dollars in exploration abroad. Let’s keep it here – where Americans can get the jobs, and where environmental laws safeguard our land, seas, and wildlife.
Putting the brakes on domestic energy production does not prevent global warming or end threats to species. Instead, delaying responsible exploration and development increases the problem by shifting resource extraction to less environmentally preferred fuels and locations.
Turning to cleaner fuels, the State of Alaska is also pursuing the construction of a pipeline to bring the North Slope's abundant, clean natural gas to American markets. We have two competing private sector groups working diligently to permit a natural gas pipeline that can deliver 4.5 billion cubic feet of natural gas a day to the continental United States. Again, if we can turn on the supply of clean, American natural gas – from Alaska – we will reduce our dependence on imports and bring less expensive energy to homes across America.
Unfortunately, current language in proposed climate change legislation would likely make the project uneconomic and would lead to the use of higher cost fuel sources before technology catches up.
Alaska remains fully committed to alternative and renewable energy, as well. This is the place to field test every alternative. From wind turbines to hydro-electric, to chip-fired systems that burn wood for fuel – Alaska is America’s alternative energy center.
I am confident that together we can bring traditional, renewable and alternative energy to market and increase Alaska’s contribution toward our nation’s energy independence for years to come.
Homeland Security Alaska is America’s Arctic Guardian. Our strategic location, resources and people compel strong funding for homeland security. The Department of Homeland Security and its agencies have been strong partners in providing for the safety and security of Alaskans and our economy.
Melting sea ice and increased military and commercial activity require a greater Coast Guard presence. The Coast Guard needs to move north and improve its capability — our heavy ice-class icebreakers are on their last legs. To provide homeland security the Coast Guard must have new Arctic-class icebreakers equipped for search and rescue missions, border protection, law enforcement, fisheries enforcement, infrastructure and environmental protection.

Support for funding for those icebreakers is up to this committee. We need to fund a new Coast Guard duty station or port on Alaska’s coast between Nome and Barrow to meet the new challenges of the Arctic.
The Coast Guard needs to keep the promise of the Oil Pollution Act of 1990 and establish a research program for the Arctic. With information in hand, we can continue to work with the Coast Guard to improve our ability to prevent and respond to oil spills in the region.
In addition, the Department of Homeland Security and the Federal Emergency Management Agency must have authority to act on disasters we can predict, not just those looming around the corner or the one we currently face. In western and northern Alaska, the sea ice no longer shields the coast from fall storms. The resulting erosion threatens the sustainability of some communities. The federal law was not written with such hazards in mind and does not provide the large-scale response these small communities need.
Exploration and development will bring more coastal and maritime infrastructure, such as ports, repair facilities, fuel depots, pipelines, and transportation. These assets will need effective, enforceable security buffer zones to ensure continuity under all hazards.
National Security As the summer ice retreats, opportunities for commerce, tourism and transportation advance. Already we see more mineral, oil and gas exploration – more vessel traffic and science missions. As we have seen throughout the world’s oceans, increased maritime traffic elevates both risks and threats. Currently, the North Slope Borough and oil and gas producers on the slope fill much of that void. We need the federal government to step in. We can no longer assume that the threat from the north to our oil production fields is not real. We can no longer assume that the Arctic is an impenetrable barrier.
The United States must increase national focus on the Arctic, add resources to collect scientific data, and increase Coast Guard presence to address these new challenges and opportunities. This will provide the ability to develop the American Arctic’s vast natural resources and is critical for the protection of strategic national infrastructure and assets.
Alaska’s strategic position as the northern crossroads also places us squarely in line between potential adversaries and the rest of the United States. I urge the Congress to support the ground-based missile defense system in Alaska and reconsider the proposal to scale back the placement of interceptors at Fort Greely. We play a critical role in national security and in the security of American allies.
Science Despite centuries of exploration and study, much about the Arctic remains a mystery. Standard weather and climate models are not sufficient for understanding and predicting trends and patterns. New models require fresh data and up-to-date research.
The State of Alaska strongly supports the National Oceanic and Atmospheric Administration and its initiatives to improve its observations and research across the Arctic and to develop innovative forecasting models for next week’s weather and next century’s climate.
I encourage scientific collaboration among the academic world, the Arctic nations, and non-governmental organizations to improve our understanding of fisheries, marine mammals, land animals and vegetation in the Arctic ecosystem. This research must be open and rigorous.
The State continues its support of the use of unmanned aerial systems for Arctic operations and research. The Alaska Aerospace Development Corporation and NOAA are working on a plan for how best to make that happen. The technology exists; the stakeholders are ready; but the current regulations are inflexible and outdated.
And the Arctic, literally, needs to be put on the map. Scientific research and economic exploration are set back by low-quality, decades-old mapping data. There is no accurate baseline to measure change, to

identify trends and patterns, or to predict potential outcomes. We need high-quality maps of the Arctic – both land and sea. Funding for such priorities should not be based on population density, but instead on current and future strategic economic and environmental values.
Foreign Policy For much of its history, the Arctic has been both ungoverned and ungovernable. Even as the eight Arctic nations have increased economic activity, the Arctic climate has impeded economic and social development, transportation, and research. That era must end.
I strongly urge the Senate to ratify the United Nations Convention on the Law of the Sea. Once ratified, the treaty will allow us to claim jurisdiction over the offshore continental shelf behind the 200-mile limit. U.S. boundaries could grow into areas that may hold large deposits of oil, natural gas and other resources. Russia, Canada, Denmark, and Norway have claims to Arctic territory under the auspices of the Law of the Sea. Without ratification, the U.S. cannot fully participate in adjudication of these claims.
Climate change Alaskans have extremely close ties to the land and the sea and are sensitive to their subtleties and variability. The changes in the Arctic ice – their timing, extent, and nature – give us cause for concern.
To define and address these concerns, Governor Palin formed the Climate Change Subcabinet to respond to immediate needs in rural villages, plan for the long term and determine research needs. The subcabinet has turned recommendation into action. We’re now working on coastline stabilization, emergency and evacuation planning, hazard mitigation planning, training and exercises for the communities most in need.
The climate change strategy is in the final stages and will be presented to me this fall. We’ve had noteworthy partnerships with several federal agencies in this process, and we look forward to continued work with the federal government as we address climate change.
Conclusion In conclusion, I applaud you, Senator Murkowski, on bringing to Alaska this hearing on the strategic importance of the Arctic in U.S. policy. These policies, whether long-standing or emerging, will have a profound effect on the nation and on Alaska for generations. We must take a balanced approach to protect our food sources, thousands of jobs and the energy security provided by Alaska’s oil and mineral development.
Alaska and the U.S. government share a policy that is balanced and recognizes the diversity the Arctic offers. And it highlights the Arctic’s unique characteristics and consequent need for unique treatment.
I urge the Congress and the federal Administration to continue the good work on Arctic policies and encourage the development of a National Arctic Doctrine that includes all stakeholders in the future of the Arctic. Alaska will participate and Alaska will contribute. We are eager to work with Congress to manage all our resources.
On taking office last month, I asked Alaskans and myself several questions: In the next 50 years, will Alaska move forward, or will time pass us by? Will each of us be a vital player, or will we stay on the bench? Will we just survive, or will we choose to thrive?
Today Alaskans join me in stating that our state – and our nation – must not be idle and passive; that we must not drift; that we must choose our destiny and work hard to achieve it.
The Arctic is our future. We choose to move forward, and we choose to thrive.
Thank you for your leadership and your service to our great State and to our Nation.
“

Commentary:
This is a good policy statement reflecting Alaska’s role in the energy future of the U.S. and emphasizing the importance of Alaska in the looming rush to the Arctic for resources by those nations bordering the Arctic. The request for a Coast Guard presence in Western Alaska is long overdue.

The Russians have been very aggressive over the last several years in establishing a military and geographical basis for their claims to resources under the Arctic Sea. It is imperative that the U.S. establish its claims and moves to develop off shore oil and gas opportunities before others do so.

Unfortunately, Parnell’s words will fall on deaf ears in Washington, as we have a President set on the path to appeasement and apology, and a Congress sold to the environmental lobby. I doubt there is anyone with a strategic vision in the Obama cabinet. Plenty of idealogues, but few with vision with respect to protecting the strategic interests of the U.S. in the Arctic.

I have written on Governor Palin’s Climate Change Strategy Sub-Cabinet before, and the fact that Parnell continues to give lip service to this waste of money, not to mention federal incursion into the State’s domain, is not good. However, in his favor, Parnell is in a situation of slowly divorcing himself from Sarah’s lack of governance. If he makes a break too soon, he admits to any potential competition for the governor’s job that the Palin Administration was a failed administration, and that he supported failure. As it is, there are now 4 candidates who have announced for governor. Unfortunately, Parnell will have to defend the previous administration before he can put his stamp on policies he can call his own. This testimony is a good start for his administration.

In announcing his administration’s support for offshore drilling, he will now endure the storm of the environmental lobby’s wrath, both in Juneau and in Washington. It will not be long before the ads start on TV and the radio decrying the damage to the environment.

BP just completed a 7 MILE (35,000 ft) well offshore for Mexico. The estimated reserves are greater than 3 billion barrels. If BP can drill successfully at that that depth, safely, and without harm to the environment, then drilling in Alaska’s relatively shallow coastal waters should be a piece of cake.

I spent 5 months in Canada working on an oil field services related R&D project. I have seen the impact of energy development on the communities in Alberta to B.C. Alaska is pathetic when it comes to energy development policy. Gov. Parnell’s move to support offshore drilling is progress in reversing the adversarial position of most of Alaska’s administrations to oil and gas development, including that of former Governor Sarah Palin.

Tuesday, September 1, 2009

Blackouts in South Central this winter!

It was very recently reported in the Frontiersman that Matanuska Electric Association is now warning of the high probability of rolling blackouts this winter.

With 35tcf of NG reserves, known and estimated, the most populous region in the State is now facing a third world power crisis in the dead of winter?

Why?

The primary issue is not so much a lack of natural gas in Cook Inlet, but the lack of infrastructure to deliver the gas in Cook Inlet to market and to store the excess for use during peak periods. Lacking is the storage infrastructure and the pipelines necessary to move the gas from the well to a storage facility. The storage facility may be above ground tanks or old gas wells. Lacking also are the needed storage facilities.

This lack of infrastructure is a travesty. This situation is the result of a serious lack of planning on the part of our leaders, and industry. However, industry cannot build the facilities needed without the permits to do so. The Regulatory Commission of Alaska (RCA) allegedly has been a major impediment to this process, not a facilitator.

Where was the leadership on the part of our government to prevent a crisis that has been building for many years, now?

For at least the last 10 years, this situation has been talked about, debated, pooh-poohed, and largely ignored. In the last gubernatorial election, it was a topic of concern, and a topic all admitted was serious, and if not addressed soon, would result in power interruptions at the very least.

Sarah gave lip service during the campaign, but did nothing to promote a solution. Knowles and Murkowski largely ignored the situation. Mark Begich and his predecessors complained of the looming situation, but did nothing other than the occasional public pronouncement..

The harbinger of this situation? The shutdown of Agrium’s ammonium nitrate plant at Nikkiski, resulting in the loss of over 60 jobs and the money they brought to businesses in the area.

Recently, the Regulatory Commission of Alaska held a public session in which the power utilities were castigated for not having any plans for such a contingency. Yet, this august body was the primary focus of a complaint by Marathon Oil regarding a lack of exploration and production permits during the last 10 years, having a great bearing on the short fall in available natural gas that will very likely result in your lights going out this winter.

The choice will be your lights or heat. Heat wins every time.

We voted to create the Alaska Natural Gas Development Authority to insure we had gas for use in Alaska and to get our North Slope gas to market. Yet, since its creation, ANGDA has been hindered, impeded, and stifled in effecting its voter created mandate. Both Sarah Palin and Frank Murkowski restricted ANGDA’s funding to the detriment of our natural gas development priorities.

An aloof Legislature has not aided in providing some modicum of a solution in the absence of the governors’ indifference, either through legislation making it easier for the oil companies to construct the needed infrastructure.

I just spent 5 months in Canada on an oil field services related project in British Columbia and Alberta. You can bet that what is going to happen this winter in Alaska cannot happen there. Socialist governments, with B.C. being the most restrictive, somehow manage comprehensive oil and gas development. Pipeline construction is ongoing.

Yet, south central Alaska is now facing the specter of rolling blackouts. Our North Slope natural gas still remains stranded. The Canadians rapidly move forward with a LNG port at Kittimat, B.C. to export natural gas to Asia. Meanwhile Alaska’s Rep. Jay Ramras says the coming Open Season will be a bust—meaning no forward progress on any pipeline proposal.

Alaska’s leadership has a terminal case of “can’t”.

There needs to be a serious shift in paradigms on the part of our Legislature, DNR and the Governor’s office regarding support for new oil and gas development here. Failing same, we need to replace one and all in the coming elections.

Keep sending the same tired faces back to do nothing, results in nothing being accomplished, except to spend money we no longer have.

Maybe, a few blackouts this winter will result in some needed change in Juneau?

Saturday, August 15, 2009

Palin’s appointment is going to haunt Parnell

Last year, Sarah Palin appointed a pipeline czar. Harry Noah, who was Executive Director of Mental Health Trust Lands, was appointed by Sarah to the newly created position of natural gas pipeline czar. The position was charged with overseeing the development of natural gas pipelines and moving Alaska’s gas to market. Harry is a miner without oil and gas experience, but is someone who has ties to Dep. Commissioner Marty Rutherford, Dept. of Natural Resources (DNR).

Rutherford was a former lobbyist for TransCanada. She has worked for the State in one capacity or another from the Knowles Administration through the Palin Administration, and now is one of Parnell’s upper echelon DNR staff. This individual, like Noah, has no oil and gas experience, but has been continually put in positions to influence oil and gas decisions.

The problem for Parnell is, that Noah’s post duplicates the voter created Alaska Natural Gas Development Authority’s (ANGDA) portfolio. ANGDA was created with the approval of Proposition 3 by 62% of Alaskans voting in the 2002 election.

What was ANGDA’s mandate?

To develop and market Alaska’s natural gas resources both in-state and for export, including the building of a natural gas pipeline to Valdez.
Then Gov. Frank Murkowski, who had campaigned on his own pipe dream, did not support ANGDA. Gov. Murkowski tried to give ANGDA the cold shoulder. He initially refused to fund ANGDA. Murkowski was finally forced to give the voter created authority an office and a meager budget to begin the job of getting Alaska’s gas to market. Murkowski then proceeded to continue to ignore ANGDA for the rest of his tenure as governor.
ANGDA remained in the shadow of the Murkowski pipeline to nowhere dream for the rest of the Murkowski Administration.

Sarah Palin, running against Murkowski in 2006, supported both an all-Alaska pipeline route down TAPS to Valdez and ANGDA as the vehicle to get our gas to market and to build the pipeline. During the gubernatorial campaign, Sarah criticized Murkowski’s pipe dream. ANGDA was mentioned prominently in many of her speeches on natural gas issues.

The looming Cook Inlet natural gas shortage was also a topic spoken of by our former Governor as an example of ignoring the obvious.

Once in office, Sarah Palin did a Frank Murkowski with her AGIA plan, which became the third such plan to build a large capacity (>4bcf/day) pipeline through Canada. This plan, like those of her predecessors, served to increase Canadian job opportunity, both in Alaska and Canada.

Earlier this year, Sarah appointed Harry Noah as her pipeline czar. Shortly thereafter, ANGDA’s funding was cut by the Palin Administration.

Since, the ongoing row between ANGDA and Noah has become more obstructionist on Noah’s part.

In creating the pipeline czar position, Gov. Sarah Palin did exactly what she campaigned against: duplication of mission, and an unnecessary growth of government.

As reported in the Copper Center Record in April of 2009, ANGDA has evolved into a highly respected professional organization with innovative ideas to get Alaska’s gas to market and to make use of the abundant propane that is part of our natural gas deposits for home and business heating in the Bush.

The core of ANGDA’s strategy has been to engage the private sector’s participation in its plans. The propane initiative has a commitment for propane production from the North Slope producers. Private companies will transport, distribute and sell the propane. ANGDA is conducting seminars so that electric utilities will be able to bid intelligently on natural gas supplies during the upcoming open season.

ANGDA has completed both the rights of way and economic studies for the Glenn-Richardson highway route for a 24 inch natural gas line to Palmer’s Enstar Hub. This route will take off from either the AGIA pipe at Big Delta or from an all-Alaska pipe to Valdez at Glennallen.
The economics of gas delivery are tied to volume. Taking off of either proposed big pipeline projects gives south central Alaska gas customers the best pricing for delivery. The cost of our gas will be included in the transport of the larger volume, thereby reducing the cost of any gas delivered to south central.

Pipeline Czar Harry Noah wants a 24 inch pipeline from the North Slope down the Parks Highway to Anchorage. The low volume of approximately 500 million cubic feet per day in comparison to the rates for transporting 2.5 bcf per day through an all-Alaska pipeline to Valdez will result in south central gas customers paying double or more on their gas rates to provide Fairbanks with essentially, the cheapest gas in the State. This is because Fairbanks gas would have the least cost for transport. Those of us in south central and on the Kenai would pay more because of the distance transported.

ANGDA’s position is that if the Open Seasons in 2010 for the Alaska-Canada pipe projects (AGIA and Denali) are a bust, then an in-State "bullet line" from the North Slope through Fairbanks down into south central Alaska should be considered. Until then, it makes the most economic sense to bring a spur line down the Richardson and Glenn highways off of any of the proposed large diameter pipeline projects to the gas hub at Palmer.

Presently, projects under consideration are Conoco-Phillips Denali project and AGIA (TransCanada and Exxon).

TransCanada and Exxon have recently expressed interest in an all-Alaska pipeline to Valdez and LNG terminal option, given the Canadian LNG terminal project at Kittimat, B.C. (This is what the Alaska voters created ANGDA to do in 2002.)

ANGDA has already completed much of the work in evaluating the Parks route. ANGDA’s work with that of the U.S DOE in 2005, private oil industry in the mid- 1990's, and the 1988 Federal Environmental Impact Study completed by the former Yukon Pacific Company (YPC) all concluded that while the Parks Highway route and the Richardson/Glenn are about equal in cost of construction, the Parks route has permitting and engineering hurdles yet to be addressed.

The Parks Highway route would require rights of way through State and federal parks and wildlife refuges, including major salmon tributaries. This route would be a lawsuit magnet by the environmental anti-development groups. Further, the route presents major engineering challenges along the route near Cantwell, Denali, and at Hurricane Gulch that have yet to be addressed.

The only route that will get natural gas to south central in a timely manner is the ANGDA route down the Richardson/Glenn Highway corridors. This route has none of the Federal or State environmental or engineering impediments. This route uses the existing TAPS oil corridor to Glennallen. The last 150 miles from Glennallen to Palmer is the only segment not in the TAPS right of way. In 2005, ANGDA acquired the State of Alaska Conditional Right of Way for last 150 miles to Palmer from Glennallen . Therefore, the route proposed by ANGDA has none of the impediments of the Parks Highway route. Both routes use the TAPS corridor right of way north of Fairbanks.

The ANGDA preferred route will provide the cheapest gas to Alaskans.

Pipeline Czar Harry Noah now intends to duplicate the work on the Parks Route with additional studies at additional State expense. Baker Engineering is contracted to repeat much of what has already been accomplished by ANGDA, the feds and YPC.

Playing against all of this is the looming shortfall in Cook Inlet natural gas supplies. The specter of rolling brown outs and blackouts during peak winter months are being publically discussed for the first time. The lack of sufficient supplies of Cook Inlet natural gas to fuel both homes and Chugach’s gas turbines at Beluga Point was openly and harshly discussed at a recent Regulatory Commission of Alaska (RCA) meeting reported by the Petroleum News. The power utilities were criticized for not having any contingency plans for such an eventuality.

Yet, the reality is, this is a looming situation known for years. It is the result of the politics of oil in Alaska, and a lack of concern by Alaska’s Legislature and governors, including Sarah Palin.

As previously reported, Marthon Oil complained to the Anchorage Chamber of Commerce earlier this year about declining gas supplies and the intransigence of the Regulatory Commission of Alaska (RCA) in issuing new drilling permits for exploration, making it difficult for the oil company to plan and allocate drilling resources. Just 7 new wells were drilled in Cook Inlet last year.

Over 10,000 new wells were drilled in Alberta alone last year. That volume of new wells is considered a bad year for oil and gas in Alberta. Down from 13,000 the year before and 18,000 the year before that.

ANGDA was created by the voters in 2002 to do what Harry Noah was charged with under the Palin Administration. Gov. Sean Parnell is continuing that mistake.
Sarah Palin’s Harry Noah may be the albatross impeding the Parnell Administration’s attempt to get Alaska back on the oil and gas development map.

The voters knew what they wanted in creating ANGDA. We wanted an all-Alaska natural gas pipeline. However, three governors and the Legislatures of those years all failed us.

The Canadians are moving swiftly to tie up Asian gas markets for their LNG facility under construction at Kittimat, B.C.

Funny, the Canadians can export natural gas to Asia cheaply, but Alaska cannot.

Why?

Both Sarah Palin and Frank Murkowski attempted to thwart the will of the people by impeding ANGDA’s mission.

The specter of rolling brownouts and blackouts in the middle of winter in Alaska’s most populated region is real.

Parnell needs to eliminate the position of pipeline czar, and let ANGDA do its job. If he continues to allow Noah to create conflicts with ANGDA and to further delay the opportunity to put Alaska’s North Slope gas to best use, Parnell may very well have to answer to the people in 2010.

Tuesday, July 28, 2009

Sarah is a quitter . . .

Sarah Palin came upon Alaska’s state political stage with her run for Lt. Gov. in 2002. She proved an able opponent, much to the chagrin of Sen. Loren Leman, a well respected member of the Alaska Senate. Sarah came within a hairs breadth of defeating him for the Lt. Gov.’s seat.
Newly elected Governor Frank Murkowski gave justice to Sarah’s showing by giving Sarah a responsibility reserved for the political elite: a seat on the Oil and Gas Commission. A pricey salary of $105,000 per year went with it.
Randy Ruedrich was also appointed to that commission. Ruedrich, out of the people appointed at least had experience in the industry he was overseeing. However, as the Alaska Republican Party Chair, Ruedrich’s appointment raised some concern. This was an appointment fraught with potential conflict of interest.
What happened next, made Alaska political history, and created the Palin legend of standing for integrity and principle.
Palin and Ruedrich did not get along. Palin called Randy down for using State computers to conduct party business. Gov. Frank Murkowski initially chose to ignore the issue, and Palin resigned from the AOGC, setting the stage for the greatest political upset in Alaska history and an early end to the Murkowski Administration.
Ruedrich was fined $12,000 by the Alaska Public Offices Commission for his breach of ethics.
With her resignation, Sarah Palin established herself to Alaskans as a moral person of integrity and principle. Joan of Arc of Alaska is what I called her.
It was too bad that Frank Murkowski was demonized so heavily over the Ruedrich mess. Murkowski’s Administration was addressing some vital issues to Alaska, including the novel idea of actually building roads to gain access to Alaska’s potential mineral and potential oil wealth beyond the North Slope development.
From the beginning of the race against Murkowski for the governor’s mansion, the Palin campaign was belittled by the competition. “Little princess”, “cheerleader” and “little girl” were terms used liberally during the Primary. Demeaning, and denigrating rhetoric on the part of the pundits and the Murkowski faithful was the order of the day. This harsh and demeaning rhetoric was constant.
No one took Sarah seriously amongst the old guard in the Republican Party of Alaska . . . until her poll numbers starting going up.
The harsher the criticism, the higher the poll numbers went.
Ruedrich’s breach of ethics became a battle cry and a rallying point for the Palin faithful. Her resignation from the Alaska Oil and Gas Commission became the stuff of legend.
Murkowski was the ideal “straight man” to Sarah’s presence and “Alaska First!” theme. Big and usually polite, Murkowski rarely went where Palin’s critics went with their remarks.
I can remember only one demeaning comment on Murkowski’s part; otherwise he played the gentleman opponent to Palin’s Joan of Arc.
Then came the Primary election. This was an incredible rout for Murkowski and the Republican old corps Murkowski supporters.
These rubber stamp it as long as it is Republican, except Sarah Palin, party faithful were those whose blind faith enabled a breach of ethics on the part of elected representatives to Alaska’s Legislature unprecedented in Alaska history that comprised the reputation of the Republican Party in Alaska. This disaffection of integrity from the ranks of ‘conservative’ legislators led to gains in the Legislature, thereby eliminating a Republican majority that owned the House and Senate.
The General Election where Sarah ran against former Gov. Tony Knowles was more low key, in terms of attacks from the Democrats. The Democrat election machine had the Murkowski Republicans and alleged conservative pundits to do their dirty work. Even after the Primary election, these alleged conservatives continued the attacks against Palin, unabated by the fact that the benefactor was the Democrat opposition!
Former Gov. Tony Knowles, like Murkowski, kept to the high ground where criticism of Sarah was concerned. Unfortunately for Tony, Tony was just out of date and no match for Sarah’s increasing popularity. The Palin Revolution was well under way and Tony and the dems were blown away at the polls.
Sarah’s most critical naysayers were those who supported Murkowski. They just could not get over Sarah’s one ups-man-ship over their hero. Since, it has been more of the same.
Was that criticism justified?
Sarah campaigned on a fiscal conservatism, smaller government is better, pro-development, get rid of activist judges, pro-family, traditional value, pro-life largely conservative platform.
Once in office, she made up to Randy Ruedrich, and forgot what she sold us during the campaign for governor.
Her administration started off by reappointing most of Murkowski’s cabinet, along with a few retreads from past Democrat administrations. The end result was confusion, a lack of direction, and dissent within the governor’s office about who was in charge. Sarah fired her legislative liaison, John Bitney, one of the ardent insiders during the campaign. She eventually fired two of her Chief of Staffs, keeping the last.
Sarah’s record is one of contradictions.
Sarah campaigned on a platform of fiscal conservatism. She then promoted the largest budget in State history in the face of declining oil production. She added $200 to the Alaska Permanent Fund dividend check as a freebie for fuel costs. Sarah grew government, failing to address the bloated, horribly expensive State bureaucracy for which she criticized Murkowski and Knowles.
Once in office, Sarah forgot the all Alaska pipeline route that even she admitted she had voted for and supported during the campaign, through AGIA and a Trans-Canada pipeline.
Sarah raised taxes on the oil companies, resulting in a regulatory morass that has all but eliminated oil and gas exploration Alaska. In Alberta, 10,000 wells drilled last year is considered a bad year. In Alaska, one can count the number of new wells drilled last year on two hands.
Sarah’s cabinet included the addition of a climate change sub-cabinet comprised of those whose job was to promote a fallacy upon Alaskans. There is nothing this cabinet has done that has resulted in any plan or direction that benefits Alaskans. Worse, is the fact that Miss 10th Amendment State’s Rights to the death Sarah put a FED in charge of the cabinet. An EPA employee runs a State of Alaska cabinet department.
Sarah appointed a liberal minded judge to the Alaska Supreme Court that was on the board of directors for Planned Parenthood! So much for her rhetoric about activist judges.
Yet, during the campaign for Governor, pro-life, anti-abortion Sarah Palin decried activist judges and the attack upon parental rights.
Sarah Palin supported the creation by a previous referendum, the same referendum that she supported with her vote, of the Alaska Natural Gas Development Authority. Earlier this year, she cut funding for ANGDA and appointed a natural gas pipeline czar with no experience in natural gas anything. That’s our Sarah.
Sarah Palin entered office with a greater than 80% majority vote in the general election. She massacred the competition. Instead of going to the Legislature with the power of that mandate, she waffled, commiserated, and failed to get her agenda put into effect. Unfortunately, that agenda was not what we who worked, contributed, and supported her during the campaigns thought it was.
We believed her conservative, pro-life, pro-family, fiscal conservative, and ‘Alaska First!’ rhetoric.
Sarah Palin failed as a leader to carry the day. Her few months in office were marked by an ongoing soap opera that was embarrassing to watch while she seemingly ignored the mandate that she had going into office.
Then came the Presidential campaign.
McCain picking Sarah Palin was brilliant, and immediately put his lackluster campaign back into the running. That pick was so “off the wall”, and so out of the political mainstream of rehashed hacks, that McCain’s campaign took on a new life. Unfortunately, his choice for VP became the VP from hell.
Ascendency to national notoriety showed us a Sarah that we all knew.
In September, 2008, I attended a rally in Cedar Rapids, IA, while working a job near there. Sarah’s acceptance was incredible. A very conservative message was given by Sarah Palin and those folks loved it. Sarah received louder cheers and louder calls for her than did McCain. McCain stood there next to the podium and smiled, but he had to wonder whether or not in the form of Sarah Palin he had created a monster that would eclipse him.
I will say this for John McCain. For a man who had the living daylights beat out of him every day for five years in the Hanoi Hilton, he had a very good military bearing. He stood with a straight back.
The campaign soon degenerated into a bash Sarah assault on the part of the media that almost worked to the detriment of those bashing her. Her poll numbers rose instead of falling. Had it not been for the revelations regarding the economy, McCain would have won and Sarah Palin would be in the V.P.’s office.
The assault on Sarah’s family was the most disgusting and insulting attempt to discredit, defame, and destroy a candidate for high office since the attack on Barry Goldwater when he ran against Lyndon Johnson. There, the press lied, but did not attack his family. What happened with Palin was a travesty and has sullied the press for ever more.
Since returning to office from the VP run, Sarah has not been able to gain any traction. She has been continually hounded by irrelevant and specious ethics complaints. Had she used her mandate, she could have made the Legislature change the law to eliminate many of types of specious and outrageous allegations made against her that were found to be baseless. Sarah took the office of the Governor to new lows in her continued focus on those complaints instead of Alaska’s business.
Sarah Palin plainly spoke at her handover of power that she was resigning to avoid the “lame duck” disadvantage and stigma upon her administration. With 15 months to go in her first term, she was a “lame duck”?
Granted she was rendered ineffectual, but ineffectual by her own conduct and failure to act as would a leader. Murkowski endured many criticisms during his tenure, many from Palin herself. Yet, he did not put his family on public display or put them in the line of fire time and again.
Meg Stapelton told the Anchorage Daily News that Sarah had no plans, nor any designs in place for further political activity after leaving office. Yet the same paper also reported that Sarah was to speak at an event in California on 8 August. Prior to that, Sarah admitted that she is also going to speak in support of other like minded candidates—both Republican and Democrat.
How’s that for not having a position?
Sarah Palin will do whatever she intends to do. She is ambitious and will spin a track on anyone or anything that gets in her way.
Unfortunately for her ambitions, what Sarah says on the public stage is not supported by her record. Sooner or later, people will begin to question the rhetoric and why she quit her job as Governor.
The disgusting soap opera that Sarah Palin’s detractors put her family through, of which no small part belongs to her ego and penchant for mucking it out with her detractors, was disappointing and sad to see.
Sarah Palin is a conservative sound bite, but an all too typical politician. ‘Sarah First’ is her war cry. Those who supported Sarah Palin found out that the self-described ‘pit bull with lipstick’, otherwise known as ‘Sarah Barracuda’, was all hype.
Fame and fortune are Sarah’s bent. Once cannot blame her for going for the gold ring. One can blame her for forsaking her sacred duty to Alaska and Alaskans. She ran for governor, made promises, and, now she quits?
By her resignation as the Governor of the Great State of Alaska, Sarah Palin no longer has the standing to speak for Alaska or Alaskans. To step down as governor, after what she sold us, was an insult of the highest order. She rejected Alaska and Alaskans for ego and money.
Evidently, just being Alaska’s Governor was not “good” enough for Sarah Palin.
Sarah is a quitter and undeserving of any further attention.