Optimism for 2018 and Beyond in Alaska’s Resource Development Community
By Rebecca Logan
On January 20, 2017, the day that President Donald Trump was inaugurated, AK Headlamp, a blog published by the Alliance, posted:
“Republicans push to allow oil exploration in ANWR buoyed by Donald Trump’s election to the Presidency. Prospects for the industry look better than they have in recent years with Republican control of the White House and of the Congress.”
One year later, and that optimism is still prevalent in the oil and gas industry and has overflowed to include many other projects and issues beyond ANWR.
With the help of the Congressional Review Act resolution and original sponsors and co-sponsors US Senator Lisa Murkowski and US Representative Don Young, Trump didn’t waste any time rolling back Obama-era regulations that hindered progress for the industry. This focus, at the federal level, on breaking down barriers to responsible resource development led many Alaskans to believe that we can finally begin to develop our world-class resources.
The Pebble Project has gotten new life, drilling in ANWR was approved in a very short amount of time, lease sales in the NPR-A have been held, and Italian giant Eni received approval to drill offshore. With all of these wins in such a short amount of time, its hard not to see Alaska’s glass as half—heck—three-quarters full.
For the members of the Alaska Support Industry Alliance, who have laid off more than 3,000 workers since early 2015, the promise is real.
Meeting Words with Actions
We haven’t yet crossed the finish line. At the state level, there are still many elected officials who believe that it is the beginning of the end for Alaska’s oil industry; that an LNG project without the private sector will be commercially viable, and that Alaska’s mining industry should be taxed more.
Recently, while testifying before the Senate Committee on Energy and Natural Resources, Governor Walker said, “Alaska’s economic future should not be a partisan issue. Nine in ten of Alaska’s legislators—on both sides of the aisle—support oil and gas exploration and development of the 1002.”
In the same hearing, Lieutenant Governor Mallott, a Tlingit clan leader, added his support for responsible resource development. “We live in a petroleum era, that is reality,” he said, and, “The oil must come from somewhere; why not here, in the United States, where we control the environmental rules?”
The US Secretary of the Interior, Ryan Zinke, has said many times, “Alaska is key to the nation’s energy dominance.”
If Alaska’s elected officials want to put our state on the path to prosperity, while dealing with the largest fiscal crisis in our state’s history, they must take actions that support the picture they are painting with their words.
Creating a favorable business climate for responsible resource development can be done while the state works its way out a fiscal crisis, but it won’t be done without the private sector and it can’t be done with a punitive tax policy directed at the industries that need to grow.
Don’t Confuse Activity with Results
The oil, gas, and mining work for 2018 is already pretty much set in terms of committed project work and drilling. The long-term success, beyond 2018, will be framed by three major factors for Alaska:
- How the state deals with, and hopefully resolves, tax credit payments to junior explorers.
- How quickly the US Department of the Interior can turn around or modify Obama-era restrictions on development and permitting within NPR-A and ANWR.
- How successful the newly-announced deal is between Alaska LNG and China.
When Governor Walker vetoed $200 million of tax credits in 2015, he sent a chill through the investment community and that chill started a domino effect. It was the beginning of a recession here in Alaska, ignited by low oil prices. With the stroke of a pen, Governor Walker stopped activity in the Cook Inlet and on the North Slope, kept Alaska contractors from being paid, and put more oil industry workers out of jobs. Companies such as Caelus, BlueCrest, and Furie had no choice but to stop their exploration and development programs. If Governor Walker can develop and carry out a plan to pay what is owed in tax credits, a number of projects in Cook Inlet and the North Slope will get new life—that means jobs for Alaskans and tax revenue for the state.
The US Department of the Interior has set a brisk pace repealing or modifying restrictions on development and permitting in NPR-A and ANWR. If this pace continues, development for Greater Mooses Tooth 2, Willow, Nanushuk, and Smith Bay could move forward without significant delay.
The new deal between China and the Alaska LNG project has been met with both hope and fear. If Sinopec and the Bank of China become engaged and move quickly, the gasline could move to FEED (front end engineering and design) in 2018.
There are many “ifs” still in the way of a rosy, long-term view of resource development in Alaska. The good news? The federal government is on our side, many of Alaska’s elected officials recognize the need to continue developing our resources, and groups like the Alliance, the Resource Development Council, the Alaska Chamber, and the Alaska Miners Association dedicate all of their time advocating for resource development and jobs for Alaskans.
The future is bright. Let’s make sure it stays that way!
Rebecca Logan is CEO of The Alaska Support Industry Alliance. Logan has a long resume of leadership in the Anchorage community, including an upcoming 2018 mayoral run. Prior to working for the Alliance, Logan served as President of Associated Builders and Contractors of Alaska. She also owned and operated restaurants in the Anchorage area for ten years. Logan served two terms on the Chugach Electric Association Board of Directors, leading the board as chairman for two terms.