Below is U.S. Senate candidate Dan Sullivan’s latest ad focusing on natural gas production in the Cook Inlet. In the ad, Sullivan is taking credit for helping bring to life what was considered a “dead” basin. “Companies were leaving. Energy production was declining” he says. “But instead of giving up, we stood strong and turned this basin into a source of new energy for Alaska. Creating jobs and opportunity, increasing investment in energy security for Alaskans.”
All of that is true, technically. There is a lot of optimism about future gas supplies, and much of the reason for the optimism results from a bill, penned with Sullivan’s help, in 2010 that gave generous tax incentives to companies to explore for gas in the basin. That said, as of yet, there’s been no overall net increase in the production in the Inlet. In fact, from 2003 to 2010, production has dropped nearly in half, from about 202 million MCF to 130 million MCF, according to the Alaska Oil and Gas Conservation Commission. In 2013, it dropped to a precariously low 107 million MCF. However, there is a tremendous amount of activity in the Cook Inlet that wasn’t there before 2010. And going from exploration to production can take years.
L48 Dan rides coat tails.
Because, if Parnell is re-elected, we are going to continue to spend substantial state funds regardless of how I feel about it including subsidizing energy schemes that, at best, offer perhaps a hope of a trickle down benefit for Alaskans.
Apparently the concept of a public utility to provide gas energy to Alaskans is unworkable. Our current “leaders” prefer regulated monopolies because they can appoint the regulators. Our local politicians would like you to think they believe in a “free market” to determine who wins in the energy market in Alaska.. That is a canard.
You don’t think the Fairbanks trucking scheme will be state subsidized, as is the “Cook Inlet Renaissance”, as was AGIA, as is the AGDC/ASAP and AKLNG pipeline projects, as is the Susitna Dam, as is the home energy rebate program, as is the power cost equalization program, as is the fuel tank storage farm at Pt. McKenzie, etc. etc, etc.
As sure as God made little green apples Parnell and friends will subsidize those who have made the appropriate political contributions. These folks have much interest in profit yet no interest in consumer energy rates.
At least we shouldn’t pay government funds to be charged the highest rates possible for natural gas.
Why is it the state’s job to consolidate the market? For a guy who is rightfully concerned about the state’s budget you seem to want the state to do a lot.
II think we agree that demand drives production and that the volumes of possible and probable reserves of gas in Cook Inlet are encouraging. That said, a “ton of gas” in the ground is of absolutely no worth if that gas is not produced and it will not be produced to only meet the miniscule (albeit important to us) seasonal demands of the consumers in South Central Alaska. Also, when will the state began tax Cook Inlet gas and oil production for state revenues at a rate comparable to the North Slope production tax rates.
On the domestic supply side, our state won’t even consolidate our demands for Cook Inlet gas. For example Parnell wants Fairbanks to truck gas from the slope and do you hear any mention of Cook Inlet LNG or CNG to other state locations by barge, rail or pipeline other than the Donlan Mine proposal? Is that failure to consolidate demands because the state doesn’t trust the future production from Cook Inlet or is Parnell trying to create a domestic market for his North Slope pipeline(s) gas? I understand that if increased production can be justified the Cook Inlet based consumers now probably won’t bid on the open season for either the AGDC/ASAP or AKLNG lines. Won’t that be an embarrassment for the Parnell administration? Perhaps if we had a comprehensive state energy plan, we wouldn’t find ourselves in such an expensive mess.
Finally, no domestic supply of gas should be state subsidized in any manner if the cost of that gas to consumers exceeds the cost of LNG imported to Cook Inlet through long term contract prices.
Lynn – we have a ton of gas in Cook inlet that will last well behind 2018. This is just a fact. Hilcorp has testified that they can keep drilling and supplying gas for years. Furie is putting in place a platform. Buccaneer proved up significant reserves at Cosmo. We will also see more drilling from Cook Inlet Energy, Nordaq, and Apache. Again the biggest impediment right now to additional development of known reserves is the lack of market.
Politicians like DNR Dan Sullivan only need to hear the term “Cook Inlet gas reserves” and they place themselves at risk for dislocating a shoulder from patting themselves on the back.
There are three categories of gas reserves; possible reserves, probable reserves, and proven reserves. Proven reserves require verification by drilling and only proven reserves can create contracts for sale. The fact is that we are not sure of the proven reserves in Cook Inlet for long term supply. Current south central contracts are now in place through 2018. We will need gas far beyond 2018.
The only assured other proven reserves for us are on the North Slope or in other nations who could export LNG to Alaska. So while things are looking much better don’t count your chickens quite yet and don’t be afraid to ask these politicians who are now singing the praises of intra-state pipelines if they feel we, as consumers, should pay more for this North Slope gas than for imported gas. Finally, how much tax revenue is the state realizing from gas and oil extracted from Cook Inlet to offset the current estimate of 7 million dollars a day drain on the state’s savings?
Jon K,
You’re right, he does say ‘we’, I hadn’t noticed that initially. Out of fairness, I’ll say that I didn’t notice because it was implied by his sign-off that the results were due to his efforts on the project. Dan said, ‘we did ____’, while never defining who ‘we’ was. And at the end, he said that ‘as your Senator, I’ll get results’. Now, you have to admit that he’s leading people to believe that he was responsible for those results – right?
As somebody who likes to believe they think critically, I’m just not a huge fan of how politicians tote their records during campaigns. And so I ask of you, how long is a ‘considerable amount of time’? Didn’t he leave both the AG position and the DNR before his time?
Jon. I don’t mean to be cynical here, and I’m aware that production takes a long time. But we simply haven’t seen the kinds of commercial finds that I believe we need in order to call the Cook Inlet basin “alive.” Hilcorp might be sitting on something, but for the other companies? Who knows? What I do know is that we’re spending gobs of money on so far relatively small pools of gas. Is it worth it? Maybe. Maybe not..
Nora, Dan’s ad clearly says “we” – his ad does not say “I” unlike some others who seem to think they should get all of the credit for CD-5. Anyway, Dan clearly played a role in helping this process along. But I agree: Dan certaintly does NOT deserve all of the credit, or most of the credit. But he does deserve some. He spent a considerable amount of time working on Cook Inlet issues and in getting new companies and investors to the state.
There is a new level of activity taking place in Cook Inlet thanks to new legislation and the efforts of dNRR Commissioner Dan Sullivan. Technically, all of your assertions and facts are true. To date, there has not been a net gain of new gas; however, it is true that companies are drilling and beginning to find commercial quantities of gas in Cook Inlet. Finding gas isn’t like turning on a light switch. Exploration and development along with building the infrastructure to get the gas to market is a multi-year project. Thanks to Sullivan’s leadership, we’re seeing new activity and are just beginning to see how the new finds are turning around the gas supply outlook. He clearly made a difference.
Jon, I think the point here is that he’s inflating his record by taking credit for the current production in the Cook Inlet Basin. The changing tides in Cook Inlet’s production are based on work previously done by other people, and probably not attributable to Dan. We might see his results in time, but production takes awhile to get started.
Wait, did you two actually sign up to be ‘Digital Captains’ for the guy who censors people on his Facebook page? Are you screaming for a man who battles against your first amendment rights? What do you think he’ll do if he gets into a position of power?
You can check out how many he’s doing daily. If you go onto his FB page with your phone, and it says ‘# Comments’, and you click to find nothing there, he has deleted commentary and vicariously silencing Alaskans. At least Mark lets the people speak. Oh, wait, a democrat who respects other people’s right to speak their mind? Heresy!
Amanda – last January the utilities were running around Juneau claiming we were running out of gas and we would have to import LNG. Some were saying we would see shortfalls this year. Thanks to Dan’s efforts in helping to bring companies to Alaska and a generous fiscal regime and CINGSA, it didn’t happen. Now the utilities say we are fine until at least 2018. The problem we are facing now is there isn’t a sufficient market for all of the new gas. Cook Inlet has seen a huge turn around. Go watch the testimony from last year where Hawker and Millet berated Dan and DNR for saying we won’t have to import gas. Turns out DNR was right.
Sullivan is the only primary candidate that can back up his talk with proven results. I’m confident that he’ll be a very effective senator in D.C. I can’t say the same for the other guys.