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Arctic Energy Center Weekly Roundup 2/10/17-2/17/17


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This Week on AEC

In the News

Infrastructure group urges Trump to reverse drilling ban. E&E News. The Obama administration's decision to bar oil and gas drilling in most of the American Arctic is likely to have a "chilling effect" on investment in much-needed infrastructure projects along Alaska's coasts, according to a pro-industry advocacy group. A report being released today by the Alliance for Innovation and Infrastructure advocates construction of $6 billion in new icebreakers and nearly $300 million in improvements at three marine facilities along Alaska's western shoreline. Those projects, which the report said could be underwritten through public-private partnerships, "could serve as a cornerstone to future Arctic infrastructure development" in Alaska. But the group warned that private capital could remain sidelined until offshore oil and gas development is permitted. Urging Washington to "prioritize" Arctic offshore energy development, the report described Arctic drilling as "the single biggest issue in determining whether and how extensively the next generation of infrastructure in the U.S. Arctic can be realized." The alliance noted that thinning sea ice conditions in the Arctic are attracting new shipping and tourism along Alaska's shores and heightening the region's importance to U.S. national security and geopolitical interests.
 
Report: Drilling Could Fuel Arctic Infrastructure Boom. Politico Pro Morning Energy. The Alliance for Innovation and Infrastructure is out with a report today concluding Arctic offshore oil and gas activity would generate up to a $6.3 billion infrastructure investment at the Port of Nome, Port Clarence and Cape Blossom, as well as expanded Arctic military and maritime infrastructure.
 
Four Projects Critical to the U.S. Arctic. Maritime Executive . The non-partisan Alliance for Innovation and Infrastructure (Aii) has highlighted four proposed projects which it argues are critical to the U.S. Arctic. Failure to support economic development and fund military priorities in the Arctic could cost Alaska and the Federal Government $6.3 Billion in necessary infrastructure investment, says the organization. Aii’s report, Arctic Promise: Challenges and Opportunities in Realizing the Next Generation of U.S. Arctic Infrastructure is the first attempt to quantify the effects of infrastructure in the region, providing a panoramic appraisal of development in the Arctic to date. Arctic offshore oil and gas activity – if allowed – would bring significant fiscal resource and result in major infrastructure investment, according to the study. Aii’s study emphasizes the vital role that energy development has historically played in the Arctic, highlighting synergies between the industry’s infrastructure needs and other national policy priorities. Noting these, the report argues that the Obama Administration’s moratorium on oil and gas exploration and production in the Beaufort and Chukchi Seas, removes one of the most effective levers to stimulate the creation of the next generation of U.S. Arctic infrastructure.
 
Study examines ban on development offshore the Arctic. Penn Energy. The Alliance for Innovation and Infrastructure (AII) has issued a new report exploring the impact and economic benefits created by infrastructure development in the Arctic. Entitled, “Arctic Promise: Challenges and Opportunities in Realizing the Next Generation of U.S. Arctic Infrastructure,” the report emphasizes the role that the oil and gas industry has historically played in developing the economy of the region. The report concludes by arguing for the importance of the new administration addressing the ban quickly: “The prospects of offshore oil and gas development serving as a catalyst for the creation of new infrastructure in the Arctic in the near term, therefore rests on whether or not the Trump administration, and to a lesser extent the 115th Congress, chooses to prioritize the issue. In response to this report, Lucas Frances, spokesperson for the Arctic Energy Center issued the following statement: “As this report makes abundantly clear, enabling oil and gas development is the most effective means of encouraging private sector investment in America’s Arctic. The infrastructure priorities highlighted in the AII report will be extremely challenging, if not impossible, to deliver without lifting the shackles of the Arctic energy ban.
* Note: This article was also featured in Offshore Magazine.
 
Even with Trump, Arctic policy changes remain more talk than action. Juneau Empire. Mead Treadwell has had a busy month. Last week, Alaska’s former lieutenant governor was in Tokyo. On Tuesday, he was in Germany. By Thursday, he was in Washington, D.C. Everyone, it seems, wants to know about the Arctic. More specifically, everyone wants to know what America might do in the Arctic now that Donald Trump is president. Before becoming lieutenant governor, Treadwell was chairman of the U.S. Arctic Research Commission under President George W. Bush. He now works for a private capital firm devoted to the Arctic and Sen. Dan Sullivan, R-Alaska, said he’s advocating that Treadwell be appointed to a position in the new administration. Treadwell said it’s important to remember that even though the U.S. and Russia might disagree about other portions of the world, they’ve been able to sit across the table peacefully on Arctic issues ranging from fishing to transportation. Before leaving office, President Barack Obama indefinitely banned drilling in portions of the Arctic Ocean north of Alaska. “I’m hopeful the Trump administration will — and we’re working with them to —reverse some of those lock-up orders,” Sullivan said. Even if that happens, drilling and development wouldn’t happen quickly. With global and oil and gas prices low, there’s no incentive for drillers to spend money drilling offshore in the Arctic. Even onshore development in places like the Arctic National Wildlife Refuge (still off-limits, despite the requests of Alaska’s Congressional delegation and the Alaska Legislature) would be a matter of years, not months.
 
What Oil Crisis? Arctic Drilling Off Norway Set for Record. Bloomberg. Explorers look set to drill a record number of wells in Norway’s Arctic waters this year, undeterred by oil prices apparently stuck below $60 a barrel. After making a discovery of as much as 100 million barrels of oil in the Barents Sea, Lundin Petroleum AB said on Monday that it wants to squeeze two more exploration wells into its program this year, even if it means hiring an additional rig. That could push the total number of wells in the area to 16, two more than the record in 2014, according to forecasts from the Norwegian Petroleum Directorate, the industry regulator, and Rystad Energy AS, an Oslo-based consulting firm. The cost of developing fields in the Barents Sea has been inflated by the lack of infrastructure in the remote area. Statoil has delayed its Johan Castberg project several times, but now says it´s reduced the price it needs to break even to $35 a barrel from $80 just a few years ago. It plans a final investment decision on the project at the end of the year. That’s encouraging news for the entire industry at a time where new discoveries are needed to fill a production void from the middle of the next decade, said Petroleum and Energy Minister Terje Soviknes.

Weekly Voices

Keeping the oil industry healthy. (Op-ed by Rick Boyles - Secretary-Treasurer, Teamsters Local 959)Juneau Empire. In Brena’s mind, “fair share” means fixing Alaska’s fiscal mess by jacking up taxes on the oil industry and changing our tax policy for the seventh time in 12 years. Forget that the industry invested more than $5 billion in Alaska at a time they were hemorrhaging dollars. As BP recently testified, “In 2016, we lost over a million dollars each day in Alaska.” Forget the advice of ExxonMobil tax counsel Dan Seckers, who said, “The need for Alaska to maintain a competitive fiscal regime that encourages critical, ongoing and long-term investment is by far one of the most important issues you face.” Forget what companies like Hilcorp have meant for our state. This independent company almost single-handedly doubled oil production in Cook Inlet and turned a natural gas deficit into a surplus. Now they’ve found a formula to develop Liberty, one of the largest potential sources of new light oil production on the North Slope, with an estimated 80 million to 130 million barrels of recoverable oil. Our state is built on oil and is fueled by oil. Why would we declare war? The oil industry supports a third of our economy. We need to keep it healthy, and that, Mr. Brena, is much more complex than your hollow mantra of “fair share.”
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