Page 1614 – Must Read Alaska

The high price of unpaid tax credits in Cook Inlet

Politics

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November 17, 2017

BLUE CREST WAITING ON $90 MILLION

By ELWOOD BREHMER
ALASKA JOURNAL OF COMMERCE

A pair of small companies working in Cook Inlet are trying to overcome funding shortfalls stemming from the State of Alaska not yet making good on promised tax credit refunds.

Furie Operating Alaska and BlueCrest Energy, both Texas-based independents, had to interrupt their 2017 work plans because expected tax credit repayments from the state did not come through.

BlueCrest CEO Benjamin Johnson said in a prior interview with the Journal that the state owes his company roughly $90 million in tax credits for drilling and development work done at its Cosmopolitan oil project before legislation passed to kill the tax credit program July 1. The state has paid BlueCrest $27 million for its refundable tax credits since the company purchased the “Cosmo” project in 2012, according to Johnson.

BlueCrest is the sole owner and operator of the Cosmo oil project on the edge of the Inlet near Anchor Point on the Kenai Peninsula.

He said in August the company hoped it would have to pause its drilling program only for a month or two after a well was finished in September, if private financing could be secured.

Oil industry backers have roundly criticized Gov. Bill Walker for vetoing $630 million worth of appropriations in 2015 and 2016 to pay the industry tax credits. Walker has been steadfast in his assertion that the state cannot afford to make the large credit payments while still in the midst of $2.5 billion-plus annual budget deficits.

On the other hand, the governor has also insisted he would like to see the state pay down on the obligation as soon as the Legislature passes fiscal reforms to balance the state budget. Walker’s original fiscal plan proposed in early 2016 included $1 billion to pay off the credits entirely.

AGDC asks feds for gasline fast track

Suzanne Downing

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November 17, 2017

10

Details recently released by the Alaska Gasline Development Agency show that China would get 75 percent of the gas from the Alaska LNG gasline, and Asian markets would get the other 25 percent.

The project, originally targeted for startup in 2025, has been hurried ahead by two years since Gov. Bill Walker and AGDC President Keith Meyer visited China earlier this month and signed a “joint development agreement.”

In a Nov. 16 letter, AGDC has urged the Federal Energy Regulatory Commission to fast track the environmental review of the Alaska LNG gas line project, including issuing a schedule for the environmental impact statement process by Dec. 15.

AGDC submitted its application to FERC in April and has been answering myriad questions the federal agency has posed ever since.

Alaska LNG project is an integrated gas infrastructure system with three major components, including a gas treatment plant at Prudhoe Bay, an 800-mile pipeline from the North Slope to Nikiski, and a liquefaction terminal.

Meyer has asked FERC to finish the environmental impact statement by the Dec. 31, 2018, so the state can start exporting LNG by 2023.

Funding for AGDC is dependent upon appropriation by the Alaska Legislature. The agency has enough funding to stay open until the end of this fiscal year, June 30, but its future is uncertain after that. Funding, during a time of state fiscal crunch, may not be supported by the Alaska Legislature.

Originally, AGDC was one fifth owner of the project, but bought out TransCanada’s share and became one fourth owner, with BP, ConocoPhillips, and ExxonMobil. But the three oil companies said the project was not ripe for development due to current market conditions, and Gov. Bill Walker showed them the door in 2016. It’s now a state-owned project, with Gov. Bill Walker courting China as both the investor and customer.

Prices for natural gas are low, and getting FERC approvals are likely to be lengthy and expensive. Even after the final EIS is issued, environmental groups are already staging themselves to hold the project up in court, and could stall it for years.

Earlier, the governor said that 2025 was the target date for gas exports. But Walker has sought a $40 billion loan guarantee from the Trump Administration for the project, as part of Trump’s infrastructure program.

Details of the governor’s joint development agreement with the Chinese show that China is not obligated to any agreement or to expend any funds on the project.

Some 75 percent of the project debt financing from the Chinese would be in exchange for 75 percent of the gasline’s capacity for the life of the loan, with the remaining 25 percent reserved for AGDC to sell to other Asian markets.

With 100 percent of capacity awarded, the governor’s current plan shows no gas available for Alaska to bring down the cost of energy and provide energy for other development projects, such as the Donlin mine. In the original configuration of the gasline project, there were five offtake points for Alaska communities.

Quote of the day: Al Franken, Ann Coulter, Bill Clinton

The Social

Suzanne Downing

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November 17, 2017

1

“Her [Ann Coulter’s] books, like her TV appearances, consist of nonstop rabid frothing. Her first, High Crimes and Misdemeanors: The Case Against Bill Clinton, put her on the radar as an up-and-coming liar.”

– Sen. Al Franken, in his book Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right.

Franken is a member of the Senate Energy Committee who has spoken out against the opening of the Arctic National Wildlife Refuge 1002 area for oil exploration, until every drop of oil from existing leases in Alaska have already been pumped. His amendment to require that condition failed in the committee’s markup process on Wednesday.

London tabloid: Alaska prepares for nuclear attack

The 907

Suzanne Downing

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November 16, 2017

4

There’s no fake news like British tabloid fake news.

The Daily Mirror of London reports that Alaska is being urged to prepare for a North Korean nuclear attack – amid fears that a warhead “could reach residents in 20 minutes.”

“The country will NOT attempt evacuations if maniac despot Kim Jong-un fires a nuclear missile, emergency planners have warned,” the newspaper reports.

The Division of Homeland Security and Emergency Management says, “Not so fast.”

Emergency management professionals say that Alaska is not drafting any nuclear-specific plans, and that the State, as in the rest of the nation, has moved to an all-hazards planning operation to be prepared for manmade, natural, or technological disasters.

“Our message is we encourage everybody to be prepared for anything. Have a disaster plan with your family. Have a disaster supply kit,” said Bryan Fisher, chief of operations.

As for those Prussian blue pills mentioned on the web: An early version of the Mirror story referred to anti-radiation pills, but DHSEM phoned the news desk and had them correct the story.

“Anti-radiation medicine is pretty specific. It only works to prevent absorption of a specific type of radioactive iodine to the thyroid. It’s not going to help against radiation from a nuclear weapon,” Fisher said. He said the department was disappointed in how the story was spun.

[Read London Daily Mirror report — with skepticism — here]

Concern about Anchorage airport future raised at meeting

Suzanne Downing

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November 16, 2017

5

The DOT Aviation Advisory Board met on Wednesday. Between the agenda items discussed, such as the proposed Birchwood Airport divestment, rural airports, the governor’s proposed aviation fuel tax and the governor’s proposed airplane tax that targets private pilots, board members expressed concerns about what Gov. Bill Walker’s plans are now that he has released Airport Manager John Parrott. No replacement has been named.

Whomever the governor appoints may only have a one-year job, and then the next governor will have the ability to appoint his or her own person. Critics say the governor has injected politics back into the aviation sector and it is a destabilizing move at a time when the Alaska economy is on its heels.

The first political hiring was at the Fairbanks International Airport. The long-time manager left, and political appointee Jeff Roach was hired Nov. 6, 2015 at the request of former Walker Chief of Staff Jim Whitaker.

Now with Parrott suddenly gone, DOT Deputy Commissioner John Binder is acting airport manager.

One in 10 jobs in Anchorage is related to the Ted Stevens International Airport. It is one of the busiest cargo airports in the world. Parrott had been manager of the airport since 2008, and had been with the airport since the 1990s.

The aviation industry is nervous in Alaska. The governor has just rolled out his airplane tax and registration, and Birchwood Airport pilots are nervous about state talks of divesting the airport.

And word is the person Gov. Walker had lined up to replace Parrott has withdrawn his name.

The job pays less than half of the industry standard, according to those in the field, because it is a State of Alaska job. Finding a qualified person to run the airport is a challenge because of the uncompetitive pay and because the job may only last one year.

Reaction to China-Alaska gas letter mixed

The 907

Suzanne Downing

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November 16, 2017

0

Reaction to China-Alaska gas letter mixed

Gov. Bill Walker and his gasline team touted an agreement signed Nov. 8 with three Chinese mega-corporations as the largest step the state has ever taken towards finally putting together a North Slope natural gas project.

After a few days to digest the situation, legislators’ reaction has been more subdued.

Senate Resources Committee Chair Sen. Cathy Giessel, R-Anchorage, said she first sought out LNG industry experts to determine exactly what the arrangement, characterized as a joint development agreement by Walker and Alaska Gasline Development Corp. President Keith Meyer, substantively is.

Walker stressed the joint development agreement between the state, AGDC and the integrated Chinese oil and gas giant Sinopec, the Bank of China and the $813 billion sovereign wealth fund China Investment Corp., includes all the pieces needed to make the $40 billion Alaska LNG Project a reality: a gas seller, buyer, and project financiers and investors.

Meyer said in a briefing following the signing that the substance of the joint development agreement goes beyond what would be found in a letter of intent from a prospective gas buyer or project investor.

AGDC Board of Directors Chair Dave Cruz emphasized during an October project update to legislators that the state-owned corporation was seeking to have a letter of intent by the end of the year. Meyer has repeatedly said letters of intent are paramount for gas sellers because while they fall short of being a full-fledged take-or-pay contract, Asian gas customers do not back out of them.

The joint development agreement keeps AGDC on schedule to make a final investment decision on the project at the end of 2018, Meyer said further Nov. 8.

On the other hand, Giessel described it as “another in a line of (memorandums of understanding)” with potential Asian LNG customers or investor companies.

Dispatching the Dispatch

Politics

Suzanne Downing

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November 16, 2017

0

The Alaska Dispatch News is changing its name back.

On social media, the ADN says: “You may have noticed we’ve changed the name of our Facebook page. It’s not a mistake: We are changing our name back to the Anchorage Daily News starting this weekend. It’s a big change and it’s a somewhat complicated process. While the name change won’t be official on all our platforms, including the newspaper, until Sunday, our friends here are getting an early preview. Look for more changes in the coming days. As always, thanks for reading!”

[Read: Craig Medred writes about it at his site, CraigMedred.news.]

Quote of the day: Bernie Sanders says no to Alaska oil

The Social

Suzanne Downing

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November 15, 2017

8

“My main concern today is to make sure that we do not remain dependent on fossil fuels and we do not open the Arctic wilderness to exploration.”

– Sen. Bernie Sanders, a member of the Senate Energy Committee, speaking to his amendment on Nov. 15 during the committee markup of the bill that would open the Arctic National Wildlife Refuge 1002 area to oil exploration. Eighty-one percent of Alaska Democrats caucusing in 2016 voted for Sanders for president.

Alaska Air says ‘no cigar’ to Trump’s Cuba travel restrictions

The 907

Suzanne Downing

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November 14, 2017

0

LAST FLIGHT OUT

Turns out, travel to Cuba isn’t the bomb after all. Alaska Airlines announced today that it will end a daily flight between Los Angeles and Havana, Cuba. Rules by the Trump Administration are, in part, to blame.

The last flight out of Cuba to earn those coveted Alaska Air miles is planned for Jan. 22, 2018. The airline said new restrictions on travel to Cuba by the Trump Administration, combined with low demand for travel to the communist-controlled island, gave the airline pause about continuing to fly there.

Early on, President Donald Trump said he would reverse the liberal travel to Cuba set forth by the Obama Administration.

“Travel is about making connections, and we were honored to have played a role in helping people make personal connections by traveling between the U.S. and Cuba,” said Andrew Harrison, chief commercial officer for Alaska Airlines. “We continually evaluate every route we fly to ensure we have the right number of seats to match the number of people who want to go there.”

About 80 percent of Alaska Air’s flyers to Havana were covered by a State Department policy for individual “people-to-people” educational travel, the airline said.

Last week’s changes to that policy eliminated that allowance. The airline expects a big drop in demand.

“Given the changes in Cuba travel policies, the airline will redeploy these resources to other markets the airline serves where demand continues to be strong,” the airline said.

Alaska started the Los Angeles–Havana flight on Jan. 5, 2017. It was the first flight approved by the United States for a West Coast to Cuba route.

But in June, Trump signaled the travel policy to Cuba would end and that he was “cancelling the last administration’s completely one-sided deal with Cuba.”

Now, with U.S. diplomats to Cuba experiencing mysterious ailments and symptoms that some say are the result of being bombarded with sound waves while in their hotels, the Trump Administration has made the regulatory changes.

The high price of unpaid tax credits in Cook Inlet

AGDC asks feds for gasline fast track

London tabloid: Alaska prepares for nuclear attack

Concern about Anchorage airport future raised at meeting

Reaction to China-Alaska gas letter mixed

Dispatching the Dispatch

Alaska Air says ‘no cigar’ to Trump’s Cuba travel restrictions

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