GOVERNOR REJECTS PRUDHOE PLAN
THE VENEZUELA PLAN INSTEAD
Without even a whisper to the media, Alaska Governor Bill Walker has rejected the Prudhoe Bay Plan of Development. He went full Venezuela.
The governor has chosen a route of planned uncertainty by rejecting the required plan and extending the existing operating agreement until November.
This is a step a sovereign might take if it planned to “nationalize” its oil. It’s the Hugo Chavez move of the century and will send shock waves throughout the energy sector.
Governor Walker is hanging the threat of lease foreclosure and eviction over the heads of producers who have been, in good faith, developing and producing oil for Alaska for over a generation.
As reported here last month, Governor Walker’s Administration demanded confidential information from the major producers in Alaska, relating to how they pan to market the gas they hold in their leases.
That part of the story is best explained by the Alaska Journal of Commerce in April.
BP, the field operator said, in no uncertain terms, that it can’t give over the marketing plans because it would be an anti-trust violation if the companies had each other’s plans.
DNR COMMISSIONER WALKS OUT
On the day when the Acting DNR Commissioner walked out on the Administration, the governor came within an inch of defaulting the lease agreement.
But the governor was undeterred. He hired himself a new DNR commissioner, Andy Mack, who has a long history of opposing development. Mack is historically on the side of the environmentalist lobby and he’s now in charge of our resource-based economy. He now has the job where he will make critical decisions regarding the gas line and the oil fields.
Over at the Alaska Gasline Development Corporation, the brand new president Keith Meyer just finished telling the Senate and House Joint Natural Resources Committee that the state is going to go it alone on the gasline.
The State of Alaska is moving ahead without the other three partners on a $55 billion construction project, the largest in North American history.
When sitting in front of the same committee on Wednesday, representatives for the three producers were all asked if they had suspended negotiations on the fiscal and commercial terms for the gasline.
They all answered they had not suspended negotiations.
That means only one partner has suspended negotiations: The Governor of Alaska.
Only one partner has taken the unprecedented step of threatening foreclosure on the companies who produce oil in good faith.
Only one partner has asked those companies to violate anti-trust laws and disclose how they would market their gas.
Although Point Thomson was in litigation for a decade, Prudhoe Bay has been a producing oil field for the past 40 years, not an undeveloped resource. What the governor has done is an unprecedented move in the history of oil and gas in Alaska.
Update: On the Friday edition of the Dave Stieren Show on KFQD, Senator Cathy Giessel, who chairs the Senate Natural Resources Committee, said the combination of events this week was startling: “Alaskans need to ask themselves if they want their state government owning an oil company.” She expressed doubt about whether the gasline project could move forward under the current conditions the governor has created.
If you would like a PDF version of the letter, contact [email protected]