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'Without the state tax credit programs, none of this would've happened'

Morning Headlamp, October 7, 2016


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Caelus Energy Alaska CEO Jim Musselman.

Caelus Energy LLC

Caelus this week announced its exploration in the Smith Bay oilfield on the North Slope, northwest of Prudhoe Bay, struck a world-class find that could provide some 200,000 barrels a day into the trans-Alaska Pipeline System. Caelus Energy Alaska CEO Jim Musselman's passion about the intricacies of oil exploration and development shined at the Alaska Support Industry Alliance's Fairbanks update on Thursday. "We think this is going to be very valuable to the state of Alaska," Musselman told the audience. "What it really represents the most is jobs, it's going to be hundreds and hundreds of jobs. ... This is going to make the North Slope like it was in the early '80s." Afterward, Musselman said the biggest challenge to bringing the field online will be the state's shifting oil tax policies.. "… most of the things I worry about are fiscal," he said. "We need certainty from the state how we're to be treated. ... We would like to get that locked down for the long term," Musselman stressed. "If you don't have a legitimate tax regime and you don't have a stable tax regime, it's going to be terribly, terribly difficult to bring that amount of money in," he said.

 

Headlamp is just as thrilled about the Smith Bay find as Caelus is! We hope the State will do everything in its power to make this development become a reality.

 

Bloomberg examined Alaskan policies that have had a negative impact on industry investment, specifically tax credits. "Other states and countries are looking at how we incentivize companies to keep investing," said Kara Moriarty, president of the Alaska Oil and Gas Association, an industry group in Anchorage. "Alaska is looking at just the opposite." With this week's major find from Caelus, tax credits are being brought back into the public discourse. "Without the state tax credit programs, none of this would've happened, and I'm not sure Caelus would've come to explore in Alaska," Jim Musselman, the Dallas-based company's chief executive officer, said in a statement. "We're proof that the credit programs work."

 

ConocoPhillips has ordered a major new drilling rig that will surely crush long-distance drilling records in Alaska while allowing the company to unlock oil from a new field northwest of the Alpine development. The news comes on the heels of an announcement from ConocoPhillips last week that it set a new mark for drilling length in Alaska with a 5-mile well at its CD5 field on the North Slope. Gov. Bill Walker said the drilling unit will have a "multiplier effect" on the economy. He lauded ConocoPhillips and Doyon for efforts to "spur production during fiscally challenging times."  Headlamp salutes Alliance member Doyon Drilling for their success!! 

 

The state paid each qualifying resident a $1,022 oil wealth dividend yesterday, with electronic transfers and paper checks—check your bank account!  The state of Alaska receives a 12.5% royalty from most oil fields – and 25% of that royalty is deposited into the Permanent Fund. Headlamp thanks the companies who pay the royalty that helps the Permanent Fund grow. 

 

Newly ice-free shipping lanes in the Arctic will transform Maine's sleepy ports into bustling gateways to East Asia, they say. Maine ports are situated closer to Asia than others on the Atlantic Seaboard. It's just a matter of waiting for more ice to melt. At this week's Arctic forum in Portland, Maine independent U.S. Sen. Angus King noted the historic journey of the cruise ship Crystal Serenity, which called on Bar Harbor, Maine last month after sailing from Alaska through the Northwest Passage. "The advantage that Maine has — especially in respect to the North Atlantic and the Arctic — is that we are starting now," said John Henshaw, executive director of the Maine Port Authority. "We are becoming engaged with these countries in an active sense today."

 

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First Reads

Caelus Energy CEO gives oil tax presentation
Fairbanks Daily News-Miner, Matt Buxton, October 7, 2016

Oil Clout Ebbs in Alaska as Billions in Tax Credits Are Cut
Bloomberg, Alex Nussbaum, October 7, 2016

ConocoPhillips orders monster rig to set new drilling standard and tap new field in Alaska
Alaska Dispatch News, Alex DeMarban, October 6, 2016

Check your bank accounts, Alaska -- you might be $1,022 richer
Alaska Dispatch News, Nathaniel Herz, October 6, 2016

How Maine is turning itself into an Arctic player
Alaska Dispatch News, Tom Bell, October 6, 2016

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

 

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