Exxon's conflict of interest--why there will be no Alaska natural gas pipeline.

Governor Sean Parnell and oil company bosses

Exxon and Alaska’s oil and gas

Exxon is Alaska’s bad boy of oil development. Who does not remember the Exxon Valdez spill in Prince William Sound and the aftermath? As a result, Exxon has been cast as the "heavy" in any oil development conspiracies abounding regarding Alaska’s North Slope oil taxes controversy and oil development in general in Alaska. Exxon is the largest oil company in the world and the wealthiest. Exxon is the great white shark of oil development, the rest are remoras or pilot fish who go where the big fish goes and feed off the leavings. In the Book of Five Rings (Go Rin No Sho) by Miyamoto Musashi, a 17^th century Japanese Samurai, he describes five states of military strategy. They are air, fire, water, void and the mountain. Exxon is the mountain. When Exxon speaks, the world oil and gas industry listens.

After the North Slope oil and gas lease sale in 1972 that netted the State of Alaska $900M, the oil companies were not in any hurry to build a pipeline to bring Alaska’s North Slope oil (20,000,000,000 barrels) to market. Then Governor William "Bill" Egan (D) had to take the proverbial bull by the horns. In 1973, after months of wrangling with the oil companies, Egan threatened the oil companies that if they did not announce plans for a pipeline within the week, the State of Alaska was going to build an oil pipeline to Valdez. By the end of the week, the oil companies had announced plans for the Alyeska Pipeline Service Company which would build and operate the Trans Alaska Pipeline System (TAPS). Construction began in April, 1974.

Oil development on the North Slope had been moving forward since the 1960s.

The cost of TAPS, a 48 inch diameter steel casing pipeline 800 miles long was estimated at $900 million. By the end of construction in June, 1977, the cost had risen to $8 billion. The oil companies did have a 30 year tax write off for all expenses associated with the construction and operation of the pipeline. TAPS was allegedly paid for in the first 3 months of operation transporting 2,000,000 barrels of crude per day to Valdez for shipment by U.S. flagged tankers to refineries on the West Coast.

The cost of oil production on the North Slope steadily declined as the cost of construction and infrastructure was recouped over the years. Today, the profit margin for North Slope oil production varies, but using Conoco’s figures 2011 saw a profit of $25 per barrel of oil from North Slope Alaska production. It is this relatively high profit margin for a barrel of oil in relation to other hydrocarbon reservoirs world-wide that is the basis for resistence to any change in the Alaska’s Clear and Equitable Share (ACES) oil production tax.

Like AGIA, ACES was a product of then Gov. Sarah Palin’s Administration.

The North Slope profit margin of $25/barrel is much higher than the $1/barrel profit allowed under the Iraqi oil bids by Exxon in 2009.

In the1980s, a proposal was put forth to the oil companies on the North Slope and the State by Yukon Pacific, a consortium of companies including Sempra Energy, attempted to promote a natural gas pipeline project to Valdez. Yukon’s project was a 2 bcf/da-2.5 bcf/da capacity pipeline to terminus LNG port at Valdez. Meeting stiff resistance from Alaska’s governors who had their own pipe dreams, Yukon failed to make any progress after spending hundreds of millions of dollars on permits. Yukon sold most of its permits to AGPA.

Exxon’s position with respect to building a natural gas pipeline to take Alaska North Slope natural gas to market has aways been to settle the Thompson Point lease controversy with the State, then move forward. Or, to do nothing.

In 2006, Exxon had allegedly reached an agreement with Governor Frank Murkowski along with BP and Conoco to move North Slope gas to market. As was revealed when the "contract" was made public, the pipeline was just a pipe dream on the part of the Murkowski Administration. Exxon and the other North Slope Producers promised nothing, other than to study the issue, and, then at some indefinable point in the future to consider building a pipeline.

Exxon stated to its shareholders and to anyone who would listen during Murkowski’s Administration (2003-2006) that it was Exxon’s position that Alaska North Slope gas would begin flowing to market around 2025, given a construction start estimate of 2018-2020.

In 2009, in a suprise move, Exxon joined with AGIA contractor TransCanada to build a natural gas pipeline under AGIA. However, at that time, the focus was still on bringing Alaska natural gas and the valuable gas liquids to the Alberta Hub. It was suspected that Exxon’s involvement was self-serving, both acting to delay any pipeline decision or to redirect Alaska’s gas for Exxon’s benefit in the recovery of oil from Alberta’s tar sands.

It was demonstrated in 2010 during the Bill Walker for Governor campaign that this route was not profitable, and that Alaska’s natural gas would most likely end up in Ft. MacKenzie being used to recover oil from the massive Alberta tar sands desposits. The price of natural gas at the time was about $5/1,000 cf. The cost of transporting the gas from the North Slope to the Alberta Hub was estimated at $5, leaving no profit for Alaska to tax. The ‘unprofitable’ Alaska gas would then have been transported to Alberta freeing Canadian gas to go to market in the U.S.

The October 30, 2012 letter to Governor Sean Parnell declared Exxon, BP, Conoco and TransCanada were willing to study the feasibility of a pipeline to Valdez for conversion to LNG and transport to Asian markets.

Thompson Point is a massive high pressure gas deposit. By October, 2012, Gov. Sean Parnell’s Administration had reached agreement with Exxon regarding Thompson Point. The way was now clear to move forward with development of the Thompson Point gas field. The development of Thompson Point was considered necessary to produce the volume of natural gas to make any North Slope to tidewater natural gas pipeline project viable.

Exxon’s conflict of interest

Exxon’s 2009 move to join with TransCanada was surprising to most. Previously, in 2008, both BP Alaska and Conoco, the other two major North Slope Producers, had announced their own natural gas pipeline project. The Denali gasline project was another 4.5 bcf/da natural gas pipeline from the North Slope taking gas to the Alberta Hub.

What was paradoxical was that with Exxon’s joining with TransCanada in a competing project, all three Producers were now aligned with competing projects. Yet, all three companies’ gas production was necessary to make any natural gas pipeline viable. Therefore, neither AGIA nor Denali were viable. For whatever reason, neither Governor Sean Parenll nor the Legislature ever figured this out or completely ignored the reality of the situation. Governor Parnell continued to mouth platitudes about the viability of AGIA, Open Season and that AGIA would happen. The Legislature, however, took off on its own down an entirely different route.

Exxon’s conflict of interest where AGIA is concerned is in its foreign natural gas commitments.

In 2011, the first exports from Qatar where Exxon had invested $12B in upgrading the Northern Field LNG train to export LNG to the U.S. were delivered to the U.S., and immediately turned around for transport to Asia. "In cooperation with our partner Qatar Petroleum, ExxonMobil used its experience and knowledge of gas marketing around the world to successfully access traditional LNG markets in Asia, such as Japan and Korea, and develop new opportunities in Europe and the United States. ExxonMobil is proud to have played a role in helping Qatar become the world’s largest exporter of LNG." The shale gas revolution had impacted what was to be a 25 year commitment to bring Qatar LNG into the U.S. domestic gas market. That market no longer exists due to the low price for U.S. domestically produced shale gas.

(https://www.exxonmobil.com/Corporate/energy_production_lng_qatar.aspx)

The August 28, 2012 Platts and the Wall St. Journal reported ExxonMobil and Qatar Petroleum had formed a joint venture named Golden Pass Products which had applied for a domestic U.S. produced shale gas export permit overseas, including Asia. GPP is seeking to export 740 bcf of natural gas yearly from its LNG terminal at Port Arthur, TX. GPP would spend about $10B in upgrading the LNG train for export. The Port Arthur, TX LNG port would be able to export 2 bcf/da of natural gas.

(http://professional.wsj.com/article/SB10000872396390444375104577595760678718068.html?mg=reno64-wsj; http://blogs.platts.com/2012/08/28/worlds-biggest/; http://www.alaskadispatch.com/article/exxon-qatar-petroleum-apply-texas-lng-export-permit )

By contrast, the AGIA or AGPA LNG option to Valdez would ship up to 1,095 bcf of North Slope natural gas to market per year as LNG (3 bcf/da X 365 days).

On October 12, 2012, Bloomberg reported that Exxon, Conoco and TransCanada were estimating the cost of the AGIA natural gas pipeline to Valdez and LNG train to cost at between $45 to $65B and to take up to 10 years to construct.     (http://www.businessweek.com/news/2012-10-04/exxon-bp-estimate-alaska-lng-export-project-at-65-billion )  Exxon is developing the Australian Gorgan gas field located 130 kilometers off shore. Exxon owns a 25% share in the development. The Gorgon gas fields have a recoverable reserve of natural gas of an estimated 40 tcf. The market for Gorgon gas is Australia and Asia. In 2009, Exxon signed a deal worth $41B with PetroChina to provide the PRC with LNG. ( http://www.exxonmobil.com/Australia-English/PA/about_what_wa_gorgon.aspx ; http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1_DE7dmIwE8 )

Exxon is negotiating with with CBM Asia Development to partner in the development of coal bed methane gas deposits in the Barito Baswin, South Kalimantan, Indonesia.
(http://finance.yahoo.com/news/exxon-mobil-cbm-asia-negotiate-133313186.html)

Exxon bought Celtic Exploration, Ltd.’s leases in the Duvernay and Montnay Alberta shale gas formations for $2.86B Canadian. Exxon also has leases in the Horn River British Columbia shale gas formation.
(http://www.bloomberg.com/news/2012-10-30/exxon-favors-gas-over-oil-sands-in-m-a-deals-corporate-canada.html )

　

Does Exxon have a reason to delay any Alaska natural gas development of its North Slope fields, including Thompson Point, given its Pacific basin and Qatar natural gas developments?

Does Exxon have a reason to delay the construction of any natural gas pipeline to move Alaska North Slope gas into a world market where that gas would compete with other foreign sourced gas projects in which Exxon has invested?

Is there any reason why the State of Alaska should not declare a breach of contract under AGIA for conflict of interest on the part of Exxon and TransCanada?

The need for voter ID

Why would the 5th Circuit's recent decision regarding the new Texas voter registration law be declared unconstitutional?  How can it be deemed discrimination and unduly burdensome so as to act to deny the "poor" minorities in Texas their right to vote? 

The reality is, these three judges, two appointed by Pres. Bill Clinton and one appointed by Pres. George W. Bush, acted to create prejudice and hardship where none existed.

The 5th Circuit was wrong in its decision, it placed conjecture above the need of the country to maintain the integrity of its voting system, and in doing so, violated their oaths to preserve and to uphold the Constitution of the United States.  The Texas ID requirements were universal, not specific to any segment of the population, thereby denying any allegation of the requirement being prejudicial, burdensome or otherwise exclusive.  Further, these federal judges seemingly overlooked the fact that this is a country of rule by majority, a republic.

How does one qualify for welfare benefits?  One applies and proves one's need and identity to qualify.

How does one get a driver's license?  In Alaska and other states, one has to present a birth certificate, or other ID, such as a rent receipt or two witnesses who have either state ID cards or driver's licenses to qualify, after passing a written and driving test.

How does one get a state identification card?  A state ID card is all that Texas was requiring to vote--it is a photo ID.  In many states, such ID is free for the asking.  One just has to apply.

How does one qualify for a political caucus of either party?  One shows ID that matches with voter registration for the district.  One can usually register to vote at the party caucus, but you must still show ID to do so.

How does one cash one's social security check, payroll check, or get cash from one's account?  Most banks and credit unions will require proof of one's identity, usually a photo ID.

How about a library card?   Your 13 year old daughter can get an abortion without your permission, but she must have parental permission to get a library card.   Libraries in most cities want proof of your identity so that they have a means to bill you for the book you forget to return.  That means a photo ID.

What is it to be poor in the United States?  The qualifications to be poor in this day and age require an income of $50,000 or less for a family of four.  Yet, one may have a TV, computer, at least one running vehicle, and rent or own the abode in which they live.

Therefore, how is that the judges of the 5th Circuit deciding the Texas case reached the conclusion that a photo identification readily available was somehow unduly burdensome and prejudicial when such is required during the course of one's everyday business?

Businesses make no provision of economic standing with regard for identification requirements imposed upon their customers.

Voter registration drives amongst the homeless, the poor, illegal aliens, and the elderly are the primary means for expanding the democratic party registrations.  Fear is the primary means used by the democrats to preserve  and to expand their voter base.  The "bad" republicans will take away your benefits!  Ignoring that that "bad" democrats had to take away other's money to provide those "benefits".

Voter fraud is a major concern in U.S. elections.  Yet, there is little in the way of an actual demonstration of widespread identity substitution taking place in elections.

There is continuing evidence of many states and localities maintaining voter registration lists with the names of dead voters, people no longer residents in the state, and even the names of pets as valid voters.  Recently, the Voter Integrity Project of North Carolina allegedly found that 30,000 dead residents were still registered to vote in NC.  Therefore, there is a need to audit voter registration lists to eliminate invalid registrations.

The main concern is not so much the idea of someone fraudulently assuming the name of another as it is allowing those not citizens of the United States to vote in national elections.  How can we as Americans maintain our sovereignty if aliens are voting in our national elections?  The influence of those not legal citizens in electing our public officials is a direct threat to our national sovereignty and the supremacy of the Constitution.

Many illegal aliens from Latin America maintain that they are not here for citizenship, but to work, making them illegal migrant workers rather than "illegal immigrants".  Yet, La Raza and other Hispanic activist groups want voting rights for Hispanic illegal aliens to impose their racist political goals upon the states and United States.  The democrats and the 'compassionate' republicans just want their votes, no matter the cost to our sovereignty or to the integrity of the vote.

Muslim activists seek to impose Shari'a law in our cities and states in violation of our Constitution.  Many Muslims are here illegally, and even those here legally, all place Islam over the Constitution.  The goal of Islam in America is to see the U.S. become an Islamic state. 

The liberal democratic party has no scruples regarding the need to maintain the integrity of the vote.  They believe that achieving their political goals and remaining in power exceed the need to preserve the integrity and legitimacy of the voting process.  Their disdain for the Constitution is well established.

It is the integrity of the vote that is important, because without that integrity, the security and sanctity of the republic is at stake.  The vote should be reserved for those who are citizens, only, and who can prove their identity, as they would have to do so during the course of their daily business.