Alaska Politics

 

This changes everything: LNG imports ahead for Kenai

 NOT PART OF WALKER GASLINE PLAN
Andeavor (the company formerly known as Tesoro) purchased the Kenai Liquefied Natural Gas facility from ConocoPhillips. The Nikiski plant, which had previously operated as an LNG export facility since the late 1960s, came at an attractive price: $10 million. This is the believed transaction price for what is a massive waterfront property with potential to make substantial sums of money — an enterprise with a view. Andeavor said it would strengthen the “integrated value chain” and “provide low-cost fuel for our refinery to produce the fuels that consumers in Alaska need to keep their lives moving.” Where would Andeavor be getting this low-cost fuel? One hint is that the company allowed an important export license to expire, because Cook Inlet natural gas is not competitive for export. That can only mean one thing: Andeavor plans to import LNG to bring down the cost of its refinery operations, not export it as the plant has traditionally done. At a time when Gov. Bill Walker has pinned his legacy on building the largest infrastructure project in North American history, the AK-LNG project, Andeavor has quietly done what the private sector does best: optimize. Andeavor found a way to lower the cost of operations at its refinery by responding to market conditions. Clearly, they see it as a risk worth taking.

WHY DID CONOCOPHILLIPS SELL?
ConocoPhillips scaled back operations in 2015 and started looking for a buyer for the Kenai LNG plant in 2016. The operation was transferred to Andeavor on Jan. 31, 2018, allowing ConocoPhillips to exit its footprint in Cook Inlet and direct all of its efforts to the more profitable North Slope oil fields, where it has been investing heavily. The Kenai LNG plant began operations in 1969 but has been in “warm shutdown” mode since 2015. It can liquefy 0.2 bcc per day of gas, or 1.5 million m/t per year of LNG.

WHAT WILL ANDEAVOR DO WITH IT?
That 1.5 million m/t of gas can be used to operate Andeavor’s refinery, which produces 62,700 barrels of product a day — jet fuel, diesel, gas, butane, and propane, for example. In fact, Andeavor makes nearly all of the fuel used in Alaska except in Southeast. The natural gas likely will be purchased on the international spot market and stored in tanks at Nikiski. The company will also have the ability to sell imported natural gas to customers from the Kenai to Fairbanks. It would be a small operation in the global scheme of things, but in fact Andeavor could make a tidy profit selling gas on the side. “We are still considering our options,” a spokesman for Andeavor told Platts, an energy publication.

WHAT ABOUT WALKER’S AK-LNG PROJECT?
The AK-LNG project envisioned by Gov. Bill Walker is, many experts agree, at least a decade away. That project has three major components: A gas treatment plant on the North Slope An 800-mile gas pipeline A liquefaction facility in Nikiski on the Kenai Peninsula, along with docks and an export facility for shipping to Asian markets. The AK-LNG project filed with the Federal Energy Regulatory Commission to start the permitting process last April, but has been rebuffed by FERC, which sent a scolding letter in January to AGDC, Alaska’s publicly owned corporation, saying its application falls well short of acceptable.  In effect, FERC gave it a classroom grade of “Incomplete”. AGDC wants to be on a schedule to get gas to the market by 2025 and would like to start construction next year. But things are dicey now with FERC. The governor and AGDC President Keith Meyer have been conspicuously silent since receiving the letter from FERC. All last year, Walker and Meyer worked to establish a relationship with China. They desperately need a buyer for the large of Alaska North Slope natural gas, and even more urgently they need money to build the project. The AK-LNG project is the platform Gov. Walker ran on in his bid for governor in 2010 and was again the center of his platform in 2014 when he won office. He felt the companies were going too slowly. He sold himself as the leader who would get the AK-LNG project done soonest and most certainly. “The State needs to ensure completion of a large volume gas line to tidewater at Cook Inlet for shipment of LNG to Asia. No company should be able to halt progress while demanding concessions from the state,” he wrote in 2014. Once he actually took office, Walker pushed the private sector out and made it a State-owned and State-managed enterprise that has since spent hundreds of millions of dollars to develop the $45+ billion project. Since the private sector partners exited, AK-LNG has struggled to gain traction on any front, ranging from markets to permit applications. Gov. Walker, with support from his well stacked AGDC board, recently made agreements in principle with China to take over major components of the project, and last month, Walker’s supplemental budget included language to cut out the Legislature as the appropriator for the project, consolidating his authority over it as he goes to his new funding source: China. However, these agreements with Chinese state enterprises are not binding and are most accurately seen as a willingness to discuss certain ideas further. [Read: Storm clouds gather for AGDC]

COMPETITION FOR THE WALKER GASLINE?
Long-term state project aspirations aside, a company like Andeavor is stuck in the present with Cook Inlet prices for natural gas, and those are just not competitive due to the high cost of operating in Cook Inlet. While Andeavor may not want to upset the Walker Administration’s gasline efforts by importing gas to Alaska, it’s simply cheaper to get it from elsewhere, and the Kenai plant can be up and running in just two years. That would mean Andeavor could provide more affordable fuel to Alaskans and also to the air carriers that stop over at Ted Stevens International Airport to refuel. The cargo jet refueling capacity at Ted Stevens represents a major part of the Alaska economy that must remain competitive, and Andeavor is likely aware that it needs to be nimble with its jet fuel prices, or air carriers will look elsewhere. LNG coming into Alaska could also allow the fertilizer plant in Nikiski to restart and bring back dozens of jobs on the Peninsula, which urgently needs them. Agrium, the fertilizer company that is now called Nutrien, cannot manufacture fertilizer without economical access to the raw material — natural gas. It’s been in shutdown mode for years, as a result. And then there’s Fairbanks: A source of natural gas coming on line in the next two years is going to be of great interest to the Interior Energy Project (IEP), where tens of miles of gas delivery lines have been laid around the Fairbanks business core but, as of yet, stand devoid of actual gas. They built it, but the gas has yet to come. But with Andeavor’s LNG plant acquisition and apparent business plans, that could conceivably change. Construction of the new LNG storage tanks in Fairbanks could be fast-tracked and come online by 2020, which would allow the IEP to get $15 million in state tax credits that would help cover some of the facility’s cost. With its own storage capacity, Andeavor will likely be able to sell its excess natural gas to these and other projects. All it has to do is bid on cargo that is floating around the Pacific looking for a home. The recently growing spot market for LNG has given Andeavor a new possible line of business and a leg up as an energy provider in Alaska. Hilcorp, you’ve got company.

SPOT MARKET CHANGE EVERYTHING
The LNG spot market started originally in the late 1990s as new projects came online and old contracts expired. LNG began to be sold on an as-needed/as-available basis. If winter was less severe somewhere, for example, the excess LNG is sold at a cheaper price elsewhere. That market has grown exponentially in recent years with the emergence of a gas glut in the Pacific Basin. As a result, long-term contracts are not in fashion in the LNG market in this era, with so many competing LNG projects coming online.
MARCH 6, 2018 AUTHOR: SUZANNE DOWNING

Mayor Berkowitz caught pushing sanctuary city tactics

Suzanne Downing Published on Mar 17, 2018
Anchorage Mayor Ethan Berkowitz at the Conference of Mayors looking for idea about how to not only sign onto lawsuits as an amicus, but to take proactive steps to keep illegal immigrants safe from federal immigration authorities.

OUTRAGE OF THE WEEK: CHINESE INFLUENCING ACADEMIA

   The CIA issued a report detailing China's far-reaching influence campaign in the United States, which includes financial incentives for American colleges and universities.
  In an unclassified page of the report obtained by the Washington Free Beacon, the CIA cautions against efforts by the Chinese Communist Party to provide funding to universities and policy institutes in exchange for academic censorship.
  "The CCP provides ‘strings-attached' funding to academic institutions and think tanks to deter research that casts it in a negative light," the report says. "It has used this tactic to reward pro-China viewpoints and coerce Western academic publications and conferences to self-censor. The CCP often denies visas to academics who criticize the regime, encouraging many China scholars to preemptively self-censor so they can maintain access to the country on which their research depends."
  Last week, Gov. Bill Walker of Alaska announced an academic exchange program with China that includes the Chinese government paying for Alaska students to study in Communist China.
  FBI Director Christopher Wray told the Senate Intelligence Committee last month that dozens of Confucius Institutes, which are Chinese-backed language and cultural centers at American universities, have ties, financing and contractual agreements with the Chinese government that are largely unknown.

Our very own UAA has a Confucius Institute.

Republicans send ‘reject letter’ to LeDoux, Stutes, Seaton

If it was not already clear by former statements and letters, Republican Party Chairman Tuckerman Babcock sent a “rejection letter” to three House members who, although elected with Republican support, abandoned their party to join Democrats and overthrow the Republican House leadership.

Tens of thousands of Republican dollars went into the campaigns of Rep. Gabrielle LeDoux of Anchorage, Paul Seaton of Homer, and Louise Stutes of Kodiak.

But as soon as the election was certified in November, 2016, the three joined the Democrats to create a majority that took over the Alaska House of Representatives. Since that happened, the Legislature has been in session for nearly half of 2017, and the House has been a scene of chaos, including having a serious sexual assault scandal.

The letter sent by Babcock, in full:

Dear Representatives LeDoux, Seaton and Stutes,

Pursuant to Article I, Section 4(f)(4) of the Rules of the Alaska Republican Party (ARP), and confirmed by a vote of the State Central Committee of the ARP, you are hereby notified of the following: You are not eligible for any financial or other support from the ARP, its affiliates, or subordinates and we do not recognize you as a legitimate Republican primary candidate in 2018.

The ARP, its affiliates and subordinates are authorized to recruit candidates for the office you now hold and to campaign actively for your defeat.

You have engaged in actions detrimental to the ARP values and goals. Specifically, by forming a coalition in which Democrats hold the majority when a Republican majority has been elected.

Alaskans elected 21 Republicans to the State House – a majority. You abandoned that Republican majority and created a Democrat majority organization.

We respectfully insist that if you run for reelection, have the dignity and honesty to do so as a representative of some entity other than the Alaska Republican Party.

The ARP sees no legitimate reason you should seek to cling to identification as a “Republican” during your reelection after you have chosen to place the Democrats in command of the agenda of the State House.


We do not begrudge you your freedom to align with the Democrats and the goals and political objectives of that Party. We all recognize this is America, the “Land of the Free and the Home of the Brave.” While you have every right to abandon your old team and align with another political party, your old team has every right to abandon you and align with another candidate.

We wish you well in the path you have chosen.

Sincerely,

Tuckerman Babcock

Chairman Alaska Republican Party

Took a knee? Four House reps refuse moment of silence

DRUMMOND, TARR, SPOHNHOLZ, GUTTENBERG SAT IT OUT

SC

Rep. David Eastman asked for a moment of silence for all the babies who had lost their lives to abortion since the passage of Roe vs. Wade 45 years ago.

He made the request during the “special orders” part of the House floor session on Monday, labeling his remarks “On the Topic of Sanctity.” He spoke about the 60 million abortions under Roe vs. Wade, and the sanctity of human life.

Almost all House members stood in recognition — even left-leaning Rep. Scott Kawasaki. Most bowed their heads.

However, Rep. Geran Tarr, Harriet Drummond, and Ivy Spohnholz — the urban women of the far Left — sat unmoved. Rep. David Guttenberg of Fairbanks also sat. Although Rep. Louise Stutes appeared to be encouraging Tarr to be polite, she waved her off.

The moment of silence lasted a full five seconds.

Later, many Republican members of the House and Senate gathered in front of the Capitol for a rally for life, an annual event marking National Sanctity of Human Life Day. Non-aligned Jason Grenn and Daniel Ortiz were not in attendance, while Democrats Rep. Matt Claman and Kawasaki slipped out the side door of the Capitol, so as not to be associated with the group. They headed down the hill for lunch. Neither the governor nor lieutenant governor attended, and did not send anyone in their place.

While Toni Mallott, married to Lt. Gov. Byron Mallott, spoke at the women’s rally on Saturday, she did not attend the life rally on Monday, nor did First Lady Donna Walker.

Walker creates climate change team

ADOPTING PARIS AGREEMENT BY DECREE

OCTOBER 30, 2017 AUTHOR: SUZANNE DOWNING

Gov. Bill Walker this morning signed an administrative order this week establishing the Alaska Climate Change Strategy and the Climate Action for Alaska Leadership Team (Leadership Team), which will be charged with taking actions to address climate change.

The State will engage with national and international partners to support the goals of the United Nations 2015 Paris Agreement and the UN Sustainable Development Goal #13, “Climate Action.”

This fall, Walker hired a top climate change adviser who is commuting to work from Seattle to Juneau by jet to serve in his cabinet. Nikoosh Carlo will be the cabinet’s point person for the climate change team.

According to the draft order obtained by Must Read Alaska, the Alaska Climate Change Strategy “should encourage community input and collaborate with local and regional governments, indigenous organizations, private sector entities, nonprofit organizations, and educational and academic institutions. Climate solutions should provide equitable support to communities impacted most by climate change. In addition, State leadership should ensure that Alaskan communities and businesses have the support necessary to benefit from the educational and economic opportunities created by the global response to climate change.”

The leadership team will address:

• Mitigation: Actions to reduce, sequester, and offset greenhouse gas emissions to decrease our carbon footprint.

• Adaptation: Actions to evaluate risks and adopt measures to address or reduce the vulnerability of Alaska’s citizens, environment, and infrastructure to climate change impacts.

• Research: Actions to support and bolster monitoring, observing, modeling, scientific analysis, data sharing, planning, innovation, and public outreach and education related to climate change and mitigation and adaptation strategies.

• Response: Actions to plan and train for timely and robust responses to protect and address near-term threats to Alaska’s communities and regions from current consequences and impacts of climate change, including, but not limited to, ocean acidification, coastal erosion, storm impacts, oil and other toxic spills, and infrastructure damage.

Further, the Leadership Team may consider these and other themes in the context of climate change:

Renewable energy and energy efficiency
Social, health, and economic assessment
Economic opportunity and technological innovation
Infrastructure and the built environment
Increasing collaboration and information sharing
Risk communication and planning
Human capacity building
Community engagement and resilience
Emergency response and immediate action
The Leadership Team shall identify measures to attract financial and human resources to the state, the University of Alaska, nonprofit organizations, and other organizations working to address climate change in Alaska with the aim to meet and expand the goals of this strategy.

The Team will present Walker a preliminary plan of action before Sept. 1, 2018 and an annual report in subsequent years.

The order directs State agencies to “prioritize, develop, implement and recommend actions that further the purpose of this Order including regulatory and statutory changes as may be timely and appropriate.”

The team will be made up of 15 public members, as well as a representative from the University of Alaska, a representative from the Alaska Energy Authority, and the Commissioner of the Department of Commerce, Community and Economic Development and the Commissioner of the Department of Environmental Conservation; each commissioner may designate a representative. The Governor may appoint commissioners of other departments as members of the Leadership Team.

The Leadership Team will meet at the call of the Governor or the chair, as may be required. The chair may invite non-members, create and dissolve committees of non-member subject matter experts, and otherwise facilitate the work of the Leadership Team.

The governor’s administrative order repeals Gov. Sarah Palin’s Climate Change subcabinet as detailed in Administrative Order 238.

The governor signed the order in Juneau this morning at an unpublicized press conference.


 Amid low crude prices, tax policy matters more than ever 

Dr. Margo Thorning Guest commentary http://www.alaskajournal.com
 Wed, 09/27/2017

   This summer, observers across the nation watched as lawmakers in the state of Alaska pulled together a buzzer-beating compromise that prevented a potentially catastrophic budget shutdown and kept the government funded through the coming fiscal year.
  For countless Alaskans who simply wanted their government to continue to operate, the compromise is a win. The alternative — an unprecedented shutdown — would have been untenable, resulting in significant upheaval for Alaskans seeking to utilize programs ranging from fishery permitting to cruise ship oversight to early education and Head Start services.
  For political and policy junkies, it was a budget showdown that checked nearly every box, complete with flaring tempers, bruised egos, high stakes, and the discussion of policy shifts that could send ripples through the economic landscape for years to come.  
  This is particularly true in the case of the oil and gas industry, a sector that is looking at increased taxes in the eye in Alaska while simultaneously facing extremely challenging market conditions across the nation and around the world.
  On the heels of a massive surge in domestic production driven by advances in extraction technology and finds from the Bakken to the Marcellus, fortunes have changed somewhat for the American oil and gas sector.
  Prices have fallen steadily in recent years, hovering around $47 per barrel, and analysts expect the price to remain in the $40 to $60 range for the next five years. The cost of producing a barrel of oil is also increasing alongside advances in extraction technology, with companies pursuing projects that are riskier, more difficult to access, and ultimately more expensive.
  The oil and gas industry is strong, and no one will mistake it for a struggling mom-and-pop operation. But these are no longer the boom times of the early 2010s – margins are thinner, profits are lower, and the challenges on the horizon are greater than they have been in some time.
  As the fight continues in Alaska, it’s essential that lawmakers keep these facts about the energy market landscape in mind as they debate their course of action, and that they focus squarely on reducing government spending in ways that won’t cut the legs out from under the state’s economy over the long term.
  The compromise measure includes language convening a special task force of legislators and advisors charged with consideration of additional changes to the overall tax system. The panel, once appointed, will make recommendations for additional tax changes in the coming legislative session. For oil and gas companies still struggling to adjust to a tax structure that has shifted significantly on a nearly annual basis in recent years, the prospect of even more change — and more uncertainty — is troubling and would represent an added hurdle for companies seeking to limit the risk inherent to the capital-intensive business of oil and gas development.
  This should be a source of serious concern for Alaskans, because the oil and gas industry’s outlook is extremely important to the state. No other industry is more heavily integrated into the state’s economy, with 35 percent of all wages and well over 100,000 jobs tied up in the oil business in 2016, according to a McDowell Group report. The sector also poured $2.1 billion into the state government via taxes and royalties in 2016.
  Higher taxes, like those under debate in Alaska, would only add to the challenges the industry faces.
  Such changes may sound insignificant, but the fact of the matter is that tax policy — and policy uncertainty in general — matters a great deal to companies choosing where to explore or where to invest their billions. Caelus delayed a major Alaska project this summer, for instance, citing tax uncertainty among the motivating pressures that led them away from their development schedule.
  In a state where the latest jobs report showed 7,500 lost jobs in the last year, with the deepest losses concentrated in the oil business, this should raise red flags.
  If Alaska continues to focus its policy efforts not on spending cuts and instead on harmful oil tax hikes, more companies like Caelus will rethink their investments. And if other states or jurisdictions consider similarly harmful policy in this market environment, the industry will likely be forced to contract there, too.
  Even amid low crude oil prices and a difficult market, the oil industry employs 10 million Americans and serves as a pivotal engine for economic growth. We simply can’t afford to let bad policy — in Alaska or anywhere else — add to the challenges faced by one of our nation’s most important job creators.
  Dr. Margo Thorning is the senior economic policy advisor with the American Council for Capital Formation in Washington, D.C.

Supremes rule on Dividend cut:
Legal to veto unless enshrined in constitution

Suzanne Downing August 25, 2017 Alaska News
  The Alaska Permanent Fund Dividend has been calculated in a nonpolitical formula by tradition since the first checks were cut in 1982. The amount of dividends was always tied to the actual performance of the Permanent Fund.
   But when Gov. Bill Walker sliced the dividend in half in 2016, he changed the course of Alaska history. The Permanent Fund Dividend can now be used as a blunt political instrument.
   The Alaska Supreme Court on Friday upheld Walker’s right to veto the dividend. In a unanimous decision, the court discarded the arguments made by Democrat Sen. Bill Wielechowski, and former Republican Sens. Rick Halford and Clem Tillion, who had sued the governor.
   The judges said that the dividend is like any other appropriation in the budget, which makes it subject to veto. Walker set last year’s dividend at $1022, when normally Alaskans would have received more than $2,050, due to the strength of the fund, which is now worth over $60 billion.
   The cut took $650 million out of Alaskans’ wallets in 2016 but the dividend was close to the historical average for dividends, which is $1,150.
This year the Legislature did the cut for him, by setting the amount at $1,100. Alaskans who qualify will receive their checks the first week of October.
The argument made by Wielechowski, Halford, and Tillion was that the 1976 constitutional amendment creating the Permanent Fund gave lawmakers constitutional authority to pass laws dedicating use of fund’s income without need for annual appropriations. Therefore, because the dividend is unlike other appropriations, it is not subject to a gubernatorial veto.
   But judges said that even if the constitutional amendment gave the legislature dedication powers over the dividend, the matter is part of the normal appropriation and veto processes that govern the budget.
   “We conclude that Governor Walker validly exercised his constitutional veto authority when reducing the transfer amount from the earnings reserve to the dividend fund,” the judges wrote.

THE DANGER WITH THE DECISION

   Amy Demboski, who hosts a conservative talk show on KVNT, cautioned, “Well, there you have it. Your PFD will forever more be subject to the political whim of the Legislature and governor. The only way to protect it is a constitutional amendment.”
   Sen. Mike Dunleavy, a Republican candidate for governor, has been calling for a constitutional amendment for a while, and he left the Senate Republican majority caucus earlier this because he disagreed with his fellow Republicans over their decision to set the dividend lower than it would be if calculated in the traditional method.
  “We need to constitutionalize the Permanent Fund Dividend, sooner, rather than later,” he said today. “That was overlooked when they constitutionalized the Permanent Fund. If we don’t do this, the politicians will spend all that money in the blink of an eye. This coming session, like-minded people will need to work together to protect the dividend for future generations.”
The court decision is here.

 

How about a say on tax, Permanent Fund?

Added by Editor on August 18, 2017.
Saved under Editorial

Here is a refreshing notion: Alaskans should have a say in whether they will consent to an income tax or the state monkeying around with the Alaska Permanent Fund.

That audacious idea comes from Republican Sen. Mike Dunleavy of Wasilla, who says both questions should go to a public advisory vote.

A gubernatorial candidate, Dunleavy told the Associated Press he thinks such a vote would reveal Alaskans do not believe government spending has not been cut enough and that they are not ready to allow government into their wallets and purses.

He could not, in our view, be more right.

“What I’m concerned about is that, right now, the discussion is how do I take a dollar out of your pocket and give it to your neighbor’s pocket as opposed to creating brand new money, brand new wealth, brand new jobs,” Dunleavy told the AP.

During the last, contentious legislative session, Dunleavy – a supporter of deeper budget cuts – was among those who floated the ballot idea, but it went nowhere as the debate raged over using the fund’s earnings and imposing an income tax. In the end, the Permanent Fund dividends were cut, but no tax or plan to use fund earnings was implemented.

There, indeed, should be a vote of the people on whether they will pay an income tax or allow the Permanent Fund to be used in some way to bridge the state’s chronic multibillion-dollar budget gap. The last time the state asked, the answer was a resounding “no.”

Dunleavy is right, too, that such a vote likely would again rock those who believe Alaskans are anxious to have government take their money while refusing to downsize.

Whether Dunleavy’s proposal gains traction will say a lot about whether state government in the future will work for Alaskans or vice versa. Having such a vote is a good idea. The only reason to oppose it is fear of the answer.

 

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