- Associated Press - Tuesday, September 22, 2015

Here is a sampling of editorial opinions from Alaska newspapers:

Sept. 16, 2015

Alaska Journal of Commerce: ExxonMobil doing heavy lifting on Alaska LNG Project

There was a bit of a flare-up in the ongoing negotiations over the Alaska LNG Project last week between Gov. Bill Walker and ExxonMobil CEO Rex Tillerson.

In comments to Natural Gas Week, Tillerson said “Alaska is its own worst enemy” when it comes to building a natural gas pipeline and according to the article made no effort to hide his frustration with the current effort begun under former Gov. Sean Parnell and now being revised constantly by Walker.

Tillerson said that Alaska’s frequent changes in direction coinciding with each new governor are the biggest obstacle to building a $50 billion-plus project.

Walker - who has appointed three different lead negotiators for the project in barely nine months in office, proposed and then abandoned a competing state-owned project, wants to buy out TransCanada and finance the state’s entire 25 percent share and floated the idea of a “gas reserves tax” to legislators - brushed aside Tillerson’s critique by saying that companies are “uncomfortable with what we’re trying to do, in taking a much more aggressive role in moving the project along.”

The trouble with Walker’s defense of his actions to date on the Alaska LNG Project is that his aggressiveness is actually not moving the project along. It is slowing it down.

Since the end of the 2014 legislative session, it was always the goal to have a special session this fall to present agreements for approval to the Legislature. According to Walker’s gasline staff, that is looking increasingly unlikely.

Further, if fiscal terms that both state and industry partners now agree will have to go before the people in the form of a constitutional amendment can’t be presented in the next session we will lose two years before it could go on the November 2018 ballot.

Walker offered another dig at ExxonMobil by leaving it out of the companies he was pleased with on progress so far, mentioning BP and ConocoPhillips.

Walker visited the North Slope earlier this year for the first time, but perhaps he should make another trip out to Point Thomson to see the - literal - heavy lifting ExxonMobil has been doing on the Alaska LNG Project.

On Sept. 8, the company announced that gigantic gas processing modules had arrived via four barges at Point Thomson after a 4,000-mile voyage from Korea. The company remains on track for first production in the first quarter of 2016 when it will begin transporting 10,000 barrels per day of natural gas condensate via a 22-mile pipeline to the Trans-Alaska Pipeline System.

ExxonMobil owns 62.2 percent of Point Thomson (BP is the other major owner at about 31 percent) and is shouldering a corresponding share of the $4 billion project cost.

It’s important to remember that the Point Thomson settlement reached between the state and ExxonMobil in 2013 under Parnell was the first step in creating the Alaska LNG Project. Some 25 percent of the natural gas that will eventually feed the pipeline will come from Point Thomson.

Were ExxonMobil really not that interested in pursuing the Alaska LNG Project it would have been far more cost effective to keep paying legal bills and string the issue out in court rather than commit about $3 billion in capital on this massive engineering and logistical challenge. It has spent 70 percent of that money in Alaska with 99 companies and achieved an Alaska-hire rate of about 90 percent.

ExxonMobil, along with BP, has also applied for additional gas offtake at Prudhoe Bay in order to supply the Alaska LNG Project. Again, this is not the action of a company that isn’t interested in keeping this project moving.

Every action they have taken in terms of permitting, engineering and actual expended capital indicates ExxonMobil is doing its part to advance the Alaska LNG Project. If the company is holding a tough line on fiscal terms it is only natural considering its level of investment to date and its status as the largest gas owner in the project.

Nearly every action Walker has taken indicates he is more interested in putting his stamp on the project and deviating from the path he inherited at every point possible.

The greatest enemy of this undertaking is uncertainty, and unfortunately it is Walker who is creating it.

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Sept. 16, 2015

Fairbanks Daily News-Miner: Low heating oil prices bring relief, but residents should stay course on IEP

For the first time in recent memory, historically high prices for heating oil have retreated in the Interior. And they haven’t just retreated, they’ve come down to a level at which the cost of delivered fuel is competitive - cheaper, in some cases - than the cost of delivered wood on a per-BTU basis. To Interior residents shell-shocked after years searching for respite from high heating costs, it’s a through-the-looking-glass scenario. And cheaper oil stands to upend many aspects of the Interior energy paradigm.

In past years - even last winter, when slumping oil prices coincided with relatively mild temperatures - the heating options available to Interior residents seemed fixed in their price hierarchy: heating oil was abundant but expensive, wood was cheap but energy-intensive to gather and burns dirtier, and natural gas was potentially cheap but frustratingly elusive for most residents. That’s the reality that led to the Interior Energy Project and the goal of low-cost natural gas that would ease residents’ heating costs.

As the state and its residents have learned during the past year, however, the price of fuel commodities is volatile. In late 2014, the price of oil collapsed by roughly half, throwing the state’s oil-dependent economy into turmoil. That has meant budget shortfalls, painful cuts and - for the first time in several years - costs for heating oil that aren’t nearly as burdensome as before. In fall 2012, heating oil prices were above $4 per gallon. In 2013, they stood at $3.70. A year ago, they were in a similar range, close to $4 per gallon. This year, as the first winter snowflakes fell in the Fairbanks area, the cost of delivered heating oil was $2.47 - a decrease of almost 40 percent since a year ago.

The benefit this winter for area residents will be considerable. According to state Department of Labor figures, the average Interior household spent $388 per month on heating oil to heat their home when prices were at $4 per gallon. That means that if prices remain relatively steady this winter, the average homeowner will save more than $100 per month on fuel. That money can be used for groceries, other consumer goods, or even to help weatherize homes or make them more energy efficient, turning the savings into a gift that keeps on giving.

But there’s a flip side of the coin, too. The Interior Energy Project’s goal is to bring natural gas to residents at $15 per thousand cubic feet of natural gas, the energy equivalent of $2 per gallon for heating oil. While residents will likely still be keen to switch over to natural gas when it arrives if it means saving only $0.50 per gallon instead of $2.00 per gallon, they may do so more slowly or in smaller numbers. That’s bad news for the energy project, which relies on a strong adoption rate to ensure the $15 per mcf price point is feasible. It could also be bad news for the political future of the project, as legislators may attempt to claw back money already allocated to the natural gas goal since Interior residents’ energy costs, at least for the moment, aren’t as severe as before.

Whether residents, legislators or anyone in between, what’s important for all those dealing with Interior energy issues to remember is that today’s heating price paradigm doesn’t predict anything about next year or the more distant future. Heating oil is cheap now, but it could easily be expensive a year from now. Interior residents would be wise to maintain focus on the Interior Energy Project, as heating costs that can be stabilized at the project’s goal would give residents price security for years to come. So far this fall, it’s looking like the Interior could get a reprieve on high heating costs for the winter - but, like the weather, that can change in a hurry.

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Sept. 21, 2015

Ketchikan Daily News: Implicit value

Congratulations to Vigor Alaska, which was named the Southeast Conference’s business of the year last week.

Vigor Alaska was honored for its ongoing work building two new Alaska Class ferries and for its role as an employer in the Southeast Alaska region. (It employs almost 200 people).

Here in Ketchikan, Vigor’s vital role as an employer and generator of economic growth through its operation of the Ketchikan Shipyard speaks for itself.

In the award, we also see an implicit endorsement of the Alaska Marine Highway System, a critically important piece of infrastructure that links Southeast communities - and funnels visitors looking to spend their hard-earned dollars into Alaska.

The state ferry system is facing budget cuts as legislators confront the daunting prospect of billion-dollar budget deficits every year for the near future. Lt. Gov. Byron Mallott declared it “crisis time” for the ferry system at the Southeast Conference. The head of the ferry system, Mike Neussl, warned of the need to cut the size of the fleet at the conference.

No area of the state’s budget should be exempt from the brutal fiscal reality facing Alaska, and the state ferry system is no exception. But it is important to remember that the No. 1 role of the Alaska Marine Highway System is to provide an invaluable service to Southeast Alaska - it is not a traditional business.

As current Alaska Department of Transportation and Public Facilities Commissioner Marc Luiken wrote in 2012, the ferry system “is not, and will not be, a profit generating operation.” The goal instead, as Luiken wrote, is to make the system as efficient as possible.

So, if the ferry system will not generate a straight-up fiscal profit for the state, what does it offer Southeast Alaska and the state as a whole?

Quite a bit.

An analysis of the Alaska Marine Highway System by the Alaska University Transportation Center, Institute of Northern Engineering released in 2012 found the following:

-The AMHS is critical to local economic development, “providing infrastructure necessary to many businesses.”

-The AMHS plays a vital cultural role in Southeast communities, “allowing residents, school groups, and sports teams (to) travel between communities served by AMHS more frequently and with greater safety and reliability.”

-The AMHS is an important tool for funneling visitors into the state. In 2007, about one-third of passengers were out-of-state visitors. Visitors accounted for almost half of the AMHS’ fare revenue.

-The vast majority of the AMHS’ budget is spent within the state. In fiscal year 2007, 80 percent of the system’s budget - $115 million - was spent inside Alaska.

-The AMHS system is an important generator of jobs in the state: The system employed 960 people in fiscal year 2007, and the circulation of AMHS funds generated another 480 jobs throughout Alaska.

There’s no doubt things have changed since 2007, and we all have to face this new reality together.

But as the 2012 report makes clear, the ferry system’s value to Alaska covers a vast socio-economic area.

It’s important to remember that the ferry system is more than a bleak set of numbers on a spreadsheet - the cash spent on the system ripples out into Alaska in numerous ways, and the system’s true value to local communities and local businesses is incalculable.

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