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Morning Headlamp - BLM Slow Rolls ConocoPhillips' GMT-2 Project

Unexpected holdups in securing federal environmental permits


Fighting Father Time. Alyeska Pipeline Service Co. Senior Vice President of Risk and Technical Support Curtis Nuttall said the Trans-Alaska Pipeline System anodes and other systems indicate it was likely built for about a 30-year life. Having pumped oil for 40 years, nearly 17.5 billion barrels of North Slope crude have flowed through Alaska's 800-mile economic artery. Correspondingly, the lone oil field the pipeline was built to support has outlived expectations. Prudhoe Bay has produced well beyond the 9 billion barrels it was supposed to yield in the mid-1970s.


Alyeska Senior Director of Engineering Betsy Haines said the company is perpetually trying to "stay ahead of the curve" to prevent potential issues from ever becoming actual problems. "We're in (research and development). We're in a regime that we've never operated before," Haines said. "We're now instrumenting the actual pipeline better, and in creative ways, to better understand how it actually behaves."


ConocoPhillips Alaska President Joe Marushack said Jan. 13 during a speech at the Alaska Support Industry Alliance's annual Meet Alaska Conference & Tradeshow, that the $1 billion-plus Greater Mooses Tooth-2 project timeline is being strained by unexpected holdups in securing federal environmental permits. ConocoPhillips submitted its proposal to develop GMT-2 to the Bureau of Land Management, the agency that oversees the NPR-A, in August 2015. However, BLM did not publish a notice of intent in the Federal Register to officially restart the environmental impact statement, or EIS, for the project until 11 months later in July of last year.


ConocoPhillips acquired the acreage from independent Brooks Range Petroleum, which held the Tofkat leases for several years but defaulted on them because the small company was never able to drill the exploration wells it said it would. When Dept. of Natural Resources Commissioner Andy Mack approved the action, ConocoPhillips said it would try to drill an exploration well called Putu this winter if it could get the appropriate permits in time. Company spokeswoman Amy Burnett wrote in an email that a decision to hold off on the well until early 2018 was made at the request of Nuiqsut leaders.


Former legislative policy analyst, president of a rural electric utility (GHEA) and City and Borough of Juneau assemblyman Alexander Hoke penned an op-ed in the Fairbanks Daily News Miner on the importance of keeping the Permanent Fund with the Alaskan people. According to Hoke, "Imagine for a moment that the Prudhoe Bay oil era had never existed. Surely, we would now have a very different budget than the one we presently argue over. For 37 years, citizens of Alaska have largely not had to pay for their government services. Legislative budget-making has been a function of how much oil revenue flowed through government coffers each year. Little concern was expressed for how we could afford new programs and policies once the oil money was gone…Current plans ignore former Gov. Jay Hammond's declaration on announcing the dividend program that "oil wealth belonged to Alaskans themselves, not the government." 


The Associated General Contractors of Alaska predicts the total value of "on the street" construction spending this year will be nearly $6.5 billion, down about 10 percent from last year. That's according to AGC's annual construction spending forecast. Unfortunately, oil and gas construction spending is expected to drop 15 percent, to $2.4 billion, compared with 2016. 


First Reads

For the Alyeksa team, it's 40 years down and 40 to go
Alaska Journal of Commerce, Elwood Brehmer, January 26, 2017

Permitting delays put ConocoPhillips' GMT-2 timeline in jeopardy
Alaska Journal of Commerce, Elwood Brehmer, January 26, 2017

Alaska construction spending expected to drop by 10 percent in 2017
Aaska Dispatch News, Annie Zak, January 26, 2017

Fiscal crisis not just a math problem
Fairbanks Daily News Miner, Alexander Hoke, January 26, 2017

Alaska's Budget Shortfall Highlights Peculiarities of State Tax Code
Tax Foundation, Jared Walczak, January 26, 2017

Walker's budget gets mixed reviews from Southeast Alaska law makers
KFSK, Joe Viechinicki, January 26, 2017

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