- Associated Press - Monday, December 5, 2016

Here is a sampling of editorial opinions from Alaska newspapers:

Dec. 4, 2016

Fairbanks Daily News-Miner: Legislative split could facilitate progress on state budget

Come January, it’s going to be a new ballgame in Juneau. The emergence of a Democrat-led majority caucus in the State House will be a pronounced shift from affairs in the last Legislature, in which Republicans led a commanding majority in both chambers. It’s the first time in decades that the House, Senate and governor’s office will be controlled by different factions - a Republican majority in the Senate, a mostly Democratic majority in the House and an independent governor. Given the fact that no one party can dictate affairs, it’s possible that lawmakers will dig in their heels and refuse to budge. But, for the good of the state, they should overcome that impulse and realize that a solution to the state’s budget mess is critical and that it’s the primary issue that their constituents want them to address. It’s time to find common ground.

As it has been the past two years, the chief priority in 2017 will remain the state budget deficit of more than $3 billion. In 2015 and 2016, despite an eagerness to cut the budget, the legislative majority didn’t take meaningful action on state revenue, leaving Gov. Bill Walker in the unenviable position of partially vetoing this year’s Alaska Permanent Fund dividend to slow the rate at which state savings were being depleted. Though the state Senate voted to pass a permanent fund earnings restructuring plan that would have put a big dent in the deficit, the proposal was a non-starter in the House.

Though opponents of the restructuring plan vowed revenge at the polls against state senators who had voted for the permanent fund earnings plan, the election results didn’t indicate their views carried the day. The Alaska Senate remained in the hands of the Republican majority caucus that voted for the plan, while the House saw a shakeup, leaving Democrats and moderate Republicans caucusing together in a new majority. It would be a bridge too far to say that the shifts occurred because of widespread public support for the governor’s budget plan, but it’s more likely that Alaska voters are fed up with the intransigence in the Legislature and the inability to fully address the state’s budget issues.

It would be easy to view the incoming House majority caucus with skepticism. Too often, Alaska Democrats have blamed the Republican majority caucuses for being partisan and inflexible, while displaying that same inflexibility themselves on many issues. For the sake of the state, however, we should give the new majority the benefit of the doubt until they give us reason to believe otherwise - it may well be that years in the minority have made the Democrats not eager to exact revenge for past slights but rather more keen on setting a less-divisive example for how the House can be run.

Time will tell if the new House majority caucus will bring needed change to Juneau or simply more of the same partisan bickering that has ill served Alaska for the past two years in the Legislature. Alaskans should hope for the former, as 2017 is the year when significant revenue reform isn’t just beneficial, it’s necessary to the state’s fiscal health.

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Dec. 1, 2016

Fairbanks Daily News-Miner: Natural gas project hits speed bumps

November was a tough month for the Interior’s natural gas prospects. Two pieces of negative news related to the Interior Energy Project and natural gas delivery became public nearly simultaneously - the departure of IEP partner Salix and the disclosure that a test well drilled near Nenana by Native corporation Doyon, Limited, didn’t find commercial quantities of oil or gas. Both news items are unwelcome, but the Interior should continue pushing for low-cost natural gas, as it presents the best hope for affordable, cleaner energy for the community.

Local leaders had already sensed increasing reticence on the part of Salix during the summer, and they expressed their concerns to representatives of the Alaska Industrial Development and Export Authority and Alaska Energy Authority who were in negotiations with the company about terms for construction and operation of a gas liquefaction plant at Cook Inlet. Though AIDEA and AEA representatives did their best to reassure community members that an agreement was still possible, in the end, the concerns proved well-founded. Salix and the state were unable to find a way for the company to remain a partner with fiscal terms that would satisfy the project’s price goal of $15 per thousand cubic feet of gas to the consumer, the energy equivalent of heating fuel at $2 per gallon. Now the project is without a private partner, as it was after the departure of initial partner MWH Global.

There is a potential upside to the current status of the project, however: The state has signaled willingness to go it alone, without a private partner involved in the project. Although that increases the project’s risk and its cost to the state, it also removes the profit motive from all aspects of the gas delivery chain except the purchase of gas supply. Under end-to-end utility control, the project will have its best chance of meeting the $15 per mcf price target.

There is little upside, however, to the second piece of bad news for Interior gas - the poor result at Doyon’s Toghotthele No. 1 well near Nenana. The corporation had drilled the well primarily with an eye toward Interior demand for gas, hoping to be able to provide supply closer to home than Cook Inlet or the North Slope. Earlier in the summer, engineers at the site had been optimistic, giving the well a 50 percent chance of striking a commercial quantity of gas. But that optimism was dashed by the announcement in mid-November that the well hadn’t found gas in sufficient quantity to be produced economically.

Doyon officials have said the corporation will continue to prospect for oil and gas in the area. That could be good for shareholders’ bottom lines, but it’s hard to imagine that gas being a primary supply for the IEP: Though there will likely be some flexibility, hitting the $15 per mcf price point will require long supply contracts and firm, stable prices for gas that will allow the economics of the project to be as solid as possible. Still, some local entities could benefit if Doyon’s future drilling proves fruitful, such as electric cooperative GVEA or the mining prospect at Livengood, both of which could need more low-cost energy in the future.

The delays Interior residents have endured in waiting for natural gas to arrive have been frustrating, though those involved in the process have mostly been stymied by market conditions rather than selfishness or intransigence. Now that the levers of the project are almost fully in state hands, it should become clear whether the IEP can hit its price target of $15 per mcf and achieve its goal of getting gas to as many people as possible, as quickly as possible, for as low a price as possible.


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