Category Archives: Energy

Oil and alternative energy in Alaska

The final stretch

Adjournment is close at hand. And to the extent that the people knew what they were doing when the elected a predominately Republican legislature to get things done, they got what they wanted. Big bills, bills that have been debated in the Legislature for years, bills that have been the subject of hundreds of hours of committee hearings, of debate, those bills are now a hair’s-breadth from making their way to Gov. Sean Parnell’s desk to be signed. For better or for worse, depending on how you’re wired.

From oil taxes to money for construction of a small diameter natural gas pipeline that would run from the North Slope to Southcentral Alaska. From LNG from the North Slope to Fairbanks. From gun laws to the Knik Arm Bridge, insurance and drug laws, abortion and the Judicial Council. All the pieces seem to be fitting together nicely for an orderly adjournment by Sunday night right before midnight.

That is, of course, barring some unforeseen melt down or huge personality clash, which would likely come from one of the many divisions in the House, particularly from the faction that wants to lower the base rate on the oil tax bill. That amendment would likely come from Rep. Mike Hawker, who lowered the base rate to 33 percent in House Resources. At least two members of the Senate have drawn the line on 35 percent. So, if it succeeds, it will likely kill the bill. Some in the know say that because the tax break isn’t big enough, killing the bill is the goal of at least one of the three major oil companies. (Guess which one?)

However, given how well House Speaker Mike Chenault has been able to herd the cats so far—the demise of KABATA being case and point—the success of such machinations is unlikely.

Here are the four key bills that are “must haves” for adjournment:  SB 21 the oil tax reform bill, HB 4 the small diameter pipeline bill, the operating budget and lastly the capital budget.

What isn’t being reported on much is nonetheless important to note as some of these bills have huge impacts on the lives for average people. One bill that has gotten extremely little media attention–introduced by freshman Sen. Mike Dunleavy, and referred to only one committee which he chairs–was a bill to allow insurance companies to use credit scores as a factor in setting insurance rates.

During the public hearing process, the only witnesses testifying in favor of the bill were employees of the insurance industry and the state’s new Director of Insurance (it should be noted that the previous state insurance director opposed the bill for years). On the other hand, a lot of Alaskan consumers testified against the bill, citing its unfairness and questioning why in the world the Alaska legislature would consider advancing such a measure. Unfortunately, their concerns fell on deaf ears as committee members paid deference to Dunleavy who wanted to move the bill to the floor. (It should be noted that Dunleavy campaigned as the voice of the people.)

The half dozen or more lobbyists working together to advance this bill were gleeful. However, that euphoria crashed when the bill ran into the Senate Rules Committee, which schedules bills for floor action and is chaired by Sen. Lesil McGuire. She thought the bill was against consumer interest and she had enough courage to stand up to the insurance industry and the leaders of her caucus to squash it. Like a bug. With her stilettos.

Then there’s a bill sponsored in the Senate by Dunleavy and in the House by Rep. Lynn Gattis, who’s turning out to be one of the freshman stars, which would bring public education employees into the state’s large insurance pool. As of now, most of them are covered through an National Education Association trust. The state, which already pays for the insurance, says that combining the two pools will result in savings for all. The bill is being fought by the NEA and Sen. Bill Wielechowski, both of whom called it a “big government takeover of healthcare.” If that’s not irony for you, then there’s none of it left in the world.

There’s lots of other bills, but one of my favorites is a bill by Sen. Fred Dyson, a staunch conservative, which would make simple possession of schedule I and II substances a Class A misdemeanor, which still can carry with it up to a year in prison and a $10,000 fine. It’s supported by the ACLU, the Department of Corrections and a bevy of defense lawyers who have long been bemoaning the havoc our drug laws has wrought. It passed the Senate 17 to 2.

Here’s more irony for you: Two of those most vocal Dems in Alaska, Sens. Bill Wielechowski and Hollis French, voted against it after French offered two failing amendments that would weaken the bill.

That bill is now in House Finance, and will likely take a backseat to the other huge order of business on today’s schedule: the capital budget. The committee is expected to release the first draft later today.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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The governor tries to sell the public on oil tax reform

Governor Sean Parnell isn’t much known for using a heavy hand or voice in passing bills. Last year, he got about as antagonistic as he gets when he called the bipartisan Senate a “do nothing” body when they failed to pass his oil tax bill. That kind of backfired, temporarily at least, because for all the world the Senate was working very, very hard.

Anyway, things are going better for the governor this session, at least as oil taxes are concerned. (Trouble is brewing on other fronts, however. HB 77, a major bill that would revise Alaska’s water and land use laws to benefit mining and other commercial interests appears to be in trouble.) Even Rep. Les Gara conceded in a committee hearing that a reform to ACES will likely pass this session.

But Parnell’s success on this front has little to do with his own efforts, which seem to involve only talking to the Legislature through the Associated Press and writing a weekly oil tax message. (If that weekly message had done one little thing to change one heart and mind, then writers and thinkers with any talent everywhere should just give up and declare themselves the uncles of monkeys. The same goes for industry sponsored commercials on Gavel to Gavel, but that’s another story.)

Anyway, Parnell did get a little cutting edge on Thursday, trying to reach the masses today through twitter and urged others to do the same. In his tell-tale, conversational style, Parnell tweeted the following:

As one pundit put it, “The third floor’s political acumen remains less than stellar,” and then, in his real voice, he said, “This is how he’s trying to sell this bill?”

A few made fun of Parnell’s tweet, and two hours after he urged a re-tweet, only ten had done so, including Deputy Press Secretary Luke Miller, who, when he worked for U.S. Rep. Don Young, spent his days reaching out and actually talking to reporters. Strangely enough, that seemed to work.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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Incremental oil tax update

The draft of the House Finance Committee substitute on the oil tax bill emerged Thursday morning, and is likely to take up most of the air in the room of the committee meeting this afternoon and evening. In a nutshell, the bill generally strips the amendments proposed in House Resources and follows more closely what the Senate produced last month, which should make concurrence a relatively painless process. I’ll have more on this later this evening, but for now, below is a list of the main changes in the substitute:

1. The base tax rate has been raised from 33 percent to 35 percent.

2. For now, the small producer credit has been taken out of the bill.

3. A Competitive Review Board that was proposed by Sen. Lesil McGuire and killed in Resources is back in.

4. An accounting requirement called joint interest billing, which the producers lobbied hard for, was taken out.

5. There’s a $5 per-barrel credit for new oil produced and a 20 percent tax break, known as a gross revenue exclusion, for production of new oil. And there’s an additional 10 percent for new oil from fields outside the legacy fields which pay a higher royalty rate that those inside the legacy fields.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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Alaska House passes gas


Late into the evening with a virtually empty gallery, the Alaska House passed HB 4, which would facilitate and partially fund a small gasline that would run through the center of the state bringing North Slope gas to Fairbanks and Southcentral Alaska. It’s one of the most significant bills that the legislature will deal with this session. Nonetheless, the public was absent, the lobbyists were absent, and only a few sleepy eyed reporters sat looking bored, while the bill was being debated awaiting a final vote.

It was a long day for the sponsors of HB 4. House Speaker MIke Chenault and Rep. Mike Hawker, along with their key staffers, were in the Capitol early in preparation for what they were hoping would be the final House Finance committee meeting on their bill scheduled to begin at 8:30 a.m. But, as these things go, it got delayed until 1:30 p.m.

Chenault, anxious to get the bill to the Senate, didn’t close out his legislative day as is the normal procedure and instead announced that the body would reconvene at 6:00 p.m.- – a luxury the presiding officer has to accommodate a bill he wants to expedite

At 7 p.m., the bells finally rung, legislators gathered, seven eight Democratic amendments were offered and killed, Hawker urged the body “to pass gas” and at about 11:15, the bill sailed through 30 to 9. As expected, votes went mostly along party lines. Rep. Feige, who represents Valdez and who has been a behind the scenes supporter of the bill, voted against it. So did Rep. Neil Foster. A handful of Dems voted for the bill.

Through the years, hundreds of thousands of hours, and millions of dollars have been spent both trying to pass and kill the bill. And it’s not over yet. Four other big bills– oil tax, trucking natural gas from the North Slope to Fairbanks and two budget bills—are still getting hammered out in committees.

No doubt during these last two weeks of session, egos will erupt, and at least one of the big bills will be held hostage for another. But with a Republican dominated legislature, it looks as if the gasline bill will pass this session.

The Democrats dub the bill a “Pipeline to Poverty,” due to what many in that party consider poor regulatory oversight and consumer protection. (Chair of House Finance Rep. Bill Stoltze added substantial oversight and accountability to the bill, but it wasn’t enough for the Dems.)

Republicans by and large say that more regulatory and consumer protection will only mire the project in politics and will delay the market from working its magic. (An irony that isn’t pointed out nearly enough is that while the Republicans continually invoke the magic of the markets, it’s asking the legislature to fund a state agency to a tune of $400 million to facilitate building the line. And few doubt that the agency won’t come back for more state money.)

Democrats say politics are part of the public process. Republicans say politics kills projects.

The arguments go on, but one thing is for sure: Alaskans, who are sitting on the largest energy fields in North America, are natural-gas starved. Some residents in Fairbanks have resorted to chopping down trees to heat their homes. Some in Rural Alaska are going hungry in order to pay their heating bills. Anchorage is facing blackouts.

For decades the state has been chasing the dream of a big gasline, one that was almost always on the cusp of being built. Then, right before it looked like it was going to happen, really happen this time, the markets changed, plans changed, and more than 40 years after it was first dreamt, the big line is no closer than it has ever been to becoming a reality.

The small line seems the only one the state has left—at least in our lifetimes.

The bill will now be read across the Senate floor tomorrow, where it is likely to receive only one committee of referral. That committee, Senate Finance, has already noticed the bill and has a hearing scheduled for Friday of this week.

Update: Oops. I did it again. The bill is getting two referrals. One to Finance and one to Resources.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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Hello small gas pipeline. Bye bye big gas pipeline.

House Bill 4, the one that would facilitate the building of a small diameter natural gas pipeline running through the center of the state from the North Slope to Southcentral Alaska, is increasingly looking likely to pass.

And that passage will likely take with it the decade’s long dream of a big export line, a line that’s been the center of so much talk, the line that was going to bring the next boom to Alaska, the mythical line that made and broke careers, the line that was going to save the state when the oil ran out.

Although most know that the small line puts the final nail on the big line’s coffin, Bill Walker, spokesperson for the Port Authority, the group that’s been pushing the big line, has been the only one in Juneau to put it so starkly. Testifying against the bill in House Finance on Thursday, Walker said that the small line would kill the big line for the foreseeable future. “There will not be two mega gas projects in Alaska,” he said

(The big line was probably dead for the foreseeable future anyway.)

Roughly 700 miles long and costing about $8 billion, the small, or bullet line, is indeed a mega project.

But because it’s not as mega as the big line—the price of which is as much as $65 billion–and because the legislature, instead of ConocoPhillips, BP and Exxon, have the power over the line, and because Alaska needs the gas, it’s the only one that’s likely to be built.

The agency in charge of facilitating the project, the Alaska Gasline Development Corporation, is asking the state for more than $320 million to complete planning and to take the project to “open season.” That’s in addition to the $70 million it’s already received.

But because the state which has the largest energy fields in North America has for so long hinged all its hopes on the big line, which would not only provide exports but provide Alaska gas too, it’s at the point that there’s little choice. Fairbanks residents are cutting wood to stay warm. Residents in Southcentral are facing blackouts. The rest of the state is going broke paying to heat their homes.

A committee substitute of the bill is now in House Finance, and although there was a brief dustup over it on Friday, it will probably head to Rules on Monday. From there, it’ll go to the Senate and from there, and if egos can remain in check and the House plays nice with the Fairbanks natural gas trucking bill, it’ll land on Gov. Sean Parnell’s desk.

With some changes being proposed, Parnell has signaled that he’ll probably sign the bill. But he hasn’t been touting it, standing by instead while others fight the battle. Nor has he had the political courage to honestly tell Alaskans what others already know: that a large diameter pipeline isn’t going to happen anytime in his lifetime, and that the bullet line is the only dream we have left.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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Juneau gets gassy

Up until recently, almost every pundit and seasoned political observer in Juneau would tell you that Gov. Sean Parnell’s oil tax bill, SB 21, was the legislation that was driving the mechanisms of the legislature.

How things change.

Now, the 800 pound gorilla is two bills, both related to gas.  Speaker of the House Mike Chenault and Rep. Mike Hawker’s HB 4 by which would facilitate the development of a small diameter in-state pipeline running from the North Slope to Southcentral Alaska, and SB 23, which would truck LNG from the North Slope to Fairbanks. (Read more about the details of both here and here).

Both bills are in House Finance and both sound like relatively simple, albeit expensive, solutions to both areas’ natural gas shortage. (But if things were simple, then the citizens of the state with the largest energy fields in North America wouldn’t be chopping wood to stay warm or buying generators in preparation for energy blackouts.)

That is to say, everything seems simple until politics comes into play. So, here’s some of the scuttlebutt: The Fairbanks delegation is ready to take a sword for its trucking plan, and Chenault and Hawker and other Southcentral legislators are ready to fall on their swords for theirs.

They both need the approval of one another. But not all of the Fairbanks folk are crazy about the small line. Some want to hold out for the dream of the big line. Some think the small line is too expensive and the agency that will be in charge will be too powerful. Some of the Southcentral legislators see trucking as a waste of money and believe that the small line would solve their natural gas shortage.

Then there’s Valdez, which has appropriated $500,000 of public money to oppose pay for ads opposing the instate line and promote the big one, not to mention the myriad wants and needs of legislators in other parts of the state.

Parnell, as is his wont, doesn’t appear to be providing anything like strong leadership on this issue, but he does seem to support trucking while leery of the small line, for whatever that’s worth.

In any case, the oil tax bill might be used as leverage by all in order to pass either or both of these bills.

HB 4, the small line, is in House Finance and a committee substitute of it is expected to move as early as tomorrow, with trucking close to follow. Both bills will move to Rules where HB 4 will likely be quickly calendared for floor action. And trucking, or SB 23, will be held pending Senate action on HB 4.

In other words, mine is better than yours and I’ll move yours when you move mine.

Updates to come.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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Poll shows Alaskans support oil tax break and school choice

A poll conducted for and released by the Alaska state House majority on Friday might provide a window into why Democrats in Alaska continue to lose legislative races and why the party is losing members in droves.

If the numbers are right, the Dems are simply out of step with mainstream Alaska public opinion, at least on oil taxes, school choice, and gun control. (To be fair, other issues like abortion, Pebble mine, and Medicaid expansion, questions that Dems might have some traction, were conspicuously absent.)

The poll, conducted by Dittman Research shows that by a 54-32 percent margin,  Alaskans support lowering taxes on the oil industry. Fifty six percent support placing a constitutional amendment that would allow for school choice, an issue Dems seem to be opposed to. And a majority approve of Gov. Sean Parnell, as well as the Republican dominated legislature.

There’s strong public support for school choice (56-36%), with Alaskans supporting placing a constitutional amendment before voters that would open up the question. Also, by a 2-1 margin, Alaskans believe that school choice will create competition that will improve schools.

All might not be well for Parnell, however. Although he has a 51 percent approval rating, 11 percent didn’t have an opinion, which seems a high number for an incumbent this far into his term.

Surely bucking the national trend of approval ratings for political institutions, Alaskans seems to like their legislature. Fifty four percent approve of the House and the Senate. If it’s true that familiarity breeds contempt, it’s a number that might give legislators who have been pushing for a capitol move pause.

Alaskans also overwhelmingly support an instate gasline over a large diameter export line, numbers that will likely be continually touted by House Speaker Mike Chenault, and Rep. Mike Hawker, whose commitment to build an instate gasline has been unwavering and unrelenting.

Finally, a sad commentary on the Alaska PR firms that have oil company accounts: only 1 in 10 Alaskans know that oil taxes contribute 90 percent of state revenues.

Read the poll here.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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