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Morning Headlamp - December 16, 2016

Walker budget plan, fracking facts, ANWR, hedging contracts


According to the Fairbanks Daily News Miner, Gov. Bill Walker has proposed cutting 795 more state positions as part of a budget plan that includes the use of earnings from Alaska's oil-wealth nest egg and ultimately tripling state motor fuels taxes. In a statement Thursday, Walker said the state has already slashed its budget and will look for more ways to reduce costs. But he said Alaska can't cut its way to prosperity and a critical discussion is needed on raising new revenue. Cutting positions or laying off employees? A big difference that the Walker administration has been unable to grasp or explain clearly. 


Heading into this year's regular session, Walker proposed various industry tax increases, oil and gas tax credit changes and use of Alaska Permanent Fund earnings to help pay for state government. Lawmakers, whose work extended into two special sessions, agreed to credit changes focused largely on Cook Inlet, but other major pieces pushed by Walker faltered.


Frack facts. The Alaska Oil and Gas Conservation Commission will decide the fate of hydraulic fracking in Alaska following a recent report released from the U.S. Environmental Protection Agency. This week the EPA released a report concluding that operations using hydraulic fracturing "can impact drinking water resources under some circumstances." National industry groups blasted the EPA's report saying the technique is largely safe and that the report "distorts the science." Bob Shavelson leads Cook Inletkeeper, the organization asking the commission to allow public comment when a company wants to frack a well. After the hearing, Shavelson said it's all about transparency. "I think it's just basic good governance for Alaskans to have the ability to look at a permit, to read it, to try to understand it and to submit a comment," Shavelson said. "I don't see the big cost or burden or delay that comes with that." Headlamp would note that fracking has been done responsibly for years in Alaska already.  


Back in the ring. In Washington, DC, the decades-long quest to open the 1.5 million-acre coastal plain to drilling has been elusive for Alaska politicians. However, the fight is back, thanks to the presidential election victory of Donald Trump, who will preside over a Republican-controlled Congress. It now takes on new urgency as the state economy is shaken by low oil prices and a steep decline in crude flowing through the Trans-Alaska Pipeline.


Texas driller Pioneer Natural Resources Co. has locked in future sales through hedging contracts for about 85 percent of its oil and natural gas output next year, Chief Operating Officer Tim Dove said in an interview. The company hasn't hedged much for 2018, as it bets that prices have room to run beyond their jump in the past two weeks, he said.


First Reads

Trump's choices of Cabinet renew debate over opening Alaska's Arctic refuge to oil drilling
Fox News, Andrew O'Reilly, December 15, 2016

Fracking in Alaska: Who should weigh in?
KTOO, Elizabeth Harball, December 15, 2016

Walker proposes slashing 795 state jobs to cut budget
Fairbanks Daily News Miner, Becky Bohrer, December 16, 2016

Pioneer Sees Oil Reaching $70 in 2018 as Global Glut Burns Off
Bloomberg, Alix Steel and Alex Nussbaum, December 15, 2016

Battle over drilling in Arctic refuge expected to heat up in next Congress
Alaska Dispatch News, Hal Bernton, December 15, 2016

Seeking fast track to export, LNG industry likes sound of Energy Secretary Perry
SNL Beta, Rachel Adams-Heard, December 15, 2016

Energy producers with eye on public land find ally in Trump's Interior pick
SNL Beta, Christopher Coats & Molly Christian, December 15, 2016

AK Headlamp
A project of the Alaska Support Industry Alliance
3301 C Street
Anchorage, AK 99503


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