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The Morning Headlamp - New players in the oil industry

Wildcatting for oil and gas in the state's frontier basins


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New wildcats. Alaska Native regional corporations are wildcatting for oil and gas in the state's frontier basins, eyeing little-explored prospects after dusting off old studies by major oil companies. They aren't seeking the huge petroleum discoveries like those on the North Slope. Instead, they say smaller finds will serve their goals of creating jobs for local residents, while providing affordable energy in villages beset with crippling gasoline and heating oil costs. Native corporations eyeing frontier basins include Ahtna, who's planning to drill a gas well this spring near its headquarters in Glennallen. Further north, NANA wants to conduct seismic surveys not far from its Northwest Alaska headquarters in Kotzebue. The exploratory work is eligible for the state tax credits that some lawmakers want to eliminate to help counter a massive budget deficit caused by sliding oil prices and historically low oil production. A Senate working group that held hearings on the tax credits last fall cited Native corporations' unique role in Alaska as one reason frontier exploration should continue to receive a benefit if the $500 million program is scaled back. Created by the 1971 Alaska Native Claims Settlement Act, the corporations and nine other regional Native corporations are supposed to use their large land holdings to promote "economic health" in their regions, said the summary report from the Senate working group. They also return profits to their Alaska Native shareholders. Headlamp fully supports the new exploratory work being conducted by the Alaska Native corporations. Resource development, no matter the scale, is an ever-important aspect of Alaska's economy. Such development projects should be pursued across all corners of the state to create new jobs, especially in regions with high unemployment rates.

 

Sen. Kevin Meyer, R-Anchorage, has signaled to his majority caucus that it's time to consider finding new revenue to balance the state budget by putting a statewide sales tax on the table. This move follows Gov. Bill Walker's proposal that included a state income tax. When Walker declared his candidacy for governor in April 2013, he told reporters, "Alaska has gone from an owner state to an owned state, and we have no one to blame but ourselves." One thing he was referring to was SB21, the new oil tax law that the Legislature had just passed. He believed it compromised the state's resource development interests. Alaska absolutely needs a bipartisan solution to the fiscal crisis it is facing. That said, Headlamp, and most Alaskans know, that taxing our way out of the hole we're in is not a solution. Headlamp reminds policy makers that every dollar taken out the private sector, which is being hit the hardest in this era of low oil prices, through taxes, to support government, is a dollar that could have been better invested or spent. Increasing taxes will continue to hamper Alaskan businesses and families already plagued by declining oil prices. There are plenty of ways to balance a budget without more taxes. Headlamp hopes that when the legislature reconvenes next week solutions, that inflict the least harm on the private sector and Alaskan families, will be found.

 

The Alaska Dispatch News published a profile of Attorney General Craig Richards. Richards has taken on high-profile lead roles on Walker's plan to fix Alaska's huge budget deficit, and on state efforts to develop a $55 billion natural gas pipeline from the North Slope -- two items at the top of the governor's wish list. Walker recently placed Richards on the board of trustees of the Alaska Permanent Fund Corp., and also appeared in a Fairbanks courtroom last month for the announcement of a settlement that freed the men known as the Fairbanks Four from prison. Richards also has his day job of being in charge of the Alaska's 550-person Department of Law. Randy Hoffbeck, now Alaska's Revenue Commissioner, described Richards as "supremely smart and "confident" based on legal cases in which he was involved prior to Walker's election. Nonetheless, some lawmakers question whether Richards has taken on too much. "He's been delegated a tremendous amount of responsibility in areas that you wouldn't typically expect," said Sen. Bill Wielechowski, an Anchorage Democrat and also an attorney. He added: "It's a little worrisome from a workload perspective, because the attorney general is the top attorney in the state -- now you're putting on top of that the gas line, and now you're putting on top of that the Permanent Fund, basically the crux of the state's fiscal plan." Anchorage Republican Rep. Charisse Millett, the House Majority leader, said some of the animosity toward Richards stems from what she described as "maybe a little bit of an attitude that he's above, that the administration is above the Legislature -- and we're on a need-to-know basis…That's not the way government was designed." Headlamp hopes to see more cooperation and dialogue between the Walker administration and the Legislature in 2016.

 

First Reads

Hometown U: Getting schooled-up on 49th-state economics
Alaska Dispatch News, Kathleen McCoy, January 10, 2016

In hunt for oil, Alaska Native corporations become state's new wildcatters
Alaska Dispatch News, Alex DeMarban, January 10, 2016

Alaska's attorney general: A 'Fairbanks redneck' with the governor's trust
Alaska Dispatch News, Rich Moniak, January 10, 2016

My Turn: We need to be bipartisan owners of Alaska
Juneau Empire, Nathaniel Herz, January 10, 2016

Local commodities provide more than taxes
Fairbanks Daily News Miner, Jomo Stewart, January 9, 2016

 

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

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