Exxon Mobil, BP May Lose Leases to Alaska Oil Field

Bloomberg.com:

Exxon Mobil Corp., BP Plc and other oil companies may have their leases for an Alaska oil and gas field revoked by the state because they took too long to develop it, a judge said.

Alaska Superior Court Judge Sharon Gleason ruled yesterday that the state was allowed in 2006 to revoke its agreement with the companies, which have held the leases for Point Thomson since the 1970s, because they failed to bring the field into production.

“This ruling represents another significant step forward in the state’s efforts to develop the valuable oil and gas resources in the Point Thomson reservoir and to hold the lessees to the commitments they made in the unit agreement,” Alaska Governor Sarah Palin said today in a statement.

Gleason ordered the Alaska Department of Natural Resources to hold a hearing on the lease terminations. She said the agency didn’t give the companies enough notice to respond when it decided to revoke the agreement.

The companies “have the legal right to have another opportunity but we don’t have to give it to them,” Nan Thompson, a petroleum unit manager at the Alaska Department of Natural Resources, said in a phone interview today. “We just have to hear them out.”

Exxon Mobil spokeswoman Kimberly Johnson Brasington said in an e-mailed statement the company is pleased that the Superior Court “reversed the DNR’s decision terminating the PTU.”

“The Superior Court decision confirms that the DNR action terminating the PTU was wrong,” she said. ExxonMobil and the other Point Thompson interest owners will continue to work with Alaska’s Department of Natural Resources to resolve this issue, she added.

A BP representative couldn’t be reached for comment immediately.

Read the whole story here.

BP plans to pull investment from Alaska after a $1.5bn tax increase

The latest broadside against the oil industry will eat into the value of the UK giant’s huge operation in the Arctic state

Carl Mortished, World Business Editor

BP is preparing to slash its spending on future oil developments in Alaska in response to a $1.5 billion (£760 million) tax increase imposed by the US state on oil companies.

The fiscal reform, which was signed into law last week by Sarah Palin, the Governor of Alaska, will eat into the value of BP’s huge Alaskan operation and could mean the cancellation or deferral of projects in one of America’s leading hydrocarbon provinces.

“The effect of [the tax increase] is likely to be reduced investment,” said Steve Rinehart, a spokesman for BP in Alaska. BP is currently revising its 2008 budget for Alaska. The company spent more than $2 billion in the state last year, including $1.2 billion in capital expenditure.

ConocoPhillips this month retreated from pledges to spend $1 billion in the state and scrapped plans to invest $300 million in a small refinery to produce clean diesel for use by vehicles in the Prudhoe Bay area.

Alaska’s move is a further blow to international oil companies, which have seen their assets come under threat in Bolivia, Kazakhstan, Russia and Venezuela. The fiscal broadside in the heartland of the US oil industry represents a home-grown political backlash against big oil after several years of mounting concern about bribery, corruption and operational negligence.

Two Alaskan legislators were recently convicted on corruption charges relating to efforts by the industry to stem the impact of tax reforms. Peter Kott and Vic Kohring, both Alaskan Republicans, were convicted of accepting thousands of dollars in bribes after an FBI investigation involving executives of Veco, an oilfield services company.

Meanwhile, sentiment towards the oil producers was damaged by a major oil spill in August 2006 caused by poor maintenance of BP’s pipelines. The spill became an issue in the political debate over oil taxes when it emerged that the British company would seek to take advantage of tax deductions from the cost of replacing old pipelines.

The reforms will raise Alaska’s tax burden on oil and gas producers by almost 10 per cent, according to Wood Mackenzie, the oil consultancy. On modest oil price assumptions, that would slice $2.7 billion from the present value of existing oil production on the Alaskan North Slope, but on a current oil price of about $90 per barrel, the loss of value to the oil companies would be more than $11 billion, representing 16 per cent of the present value of the known resource.

“After three tax increases in three years, would-be players may now question the frigidity of Alaska’s investment climate, rather than that of its Arctic tundra, before making the decision to move north,” said Wood Mackenzie.

BP said it had not yet decided which projects would suffer from the changing tax regime. “The projects that are the most challenging are going to be the ones that are affected,” Mr Rinehart said. “The easy oil is out. There is a lot left but it costs more.”

Alaska’s big resource of heavy oil could be a casualty of the tax increase. Extraction of the viscous fluid, similar to tar, would add extra technical difficulties in the already challenging environment of the Arctic and an additional cost burden from higher taxation could reduce returns to unacceptable levels.

Doubts are also being expressed about the viability of the state’s ambition to pipe the Prudhoe Bay gas reserves south to markets in the lower 48 states.

Prudhoe Bay contains some 35 trillion cubic feet, 13 per cent of America’s known gas reserves, and the Alaskan Government has been at loggerheads with the three oil majors, BP, Conoco and ExxonMobil, which control the Prudhoe Bay oil and gas resource, over a $30 billion project to pipe the gas to Chicago, via Canada.

The three majors failed to submit bids in a recent tender organised by the Government under the Alaska Gas Line Inducement Act.

BP said the fiscal regime offered by the Alaskan Government was still too uncertain for such a vast project over such distances.

“A ten-year limit on tax increases was not enough to mitigate the risk in a $30 billion project,” Mr Rinehart said.

Source: Times Online

Alaska Governor Shows Fearlessness

She’s taken on the oil industry and fellow Republicans

December 26, 2007
BY STEVE QUINN
ASSOCIATED PRESS

JUNEAU, Alaska — In her first year as governor, Sarah Palin has plunged ahead with the fearlessness of a polar explorer.

The populist Republican has raised taxes on the oil industry. She has pushed through ethics legislation amid a burgeoning corruption investigation of Alaska lawmakers. She has bucked her party’s old guard. And she has ordered her administration to seek fewer congressional earmarks after Alaska’s so-called Bridge to Nowhere became a national symbol of piggish pork-barrel spending.

The 43-year-old governor also has emerged as a national figure and a media darling, posing recently for Vogue magazine. Alaska’s first female governor says it is her responsibility to be available even to fashion magazines if it can help change the state’s reputation for graft and gluttony at the public trough.

“We’ve got to make sure the rest of the United States doesn’t believe the only thing going on in Alaska is FBI probes and corruption trials,” Palin said.

Breaking stereotypes

Palin has dismissed speculation she might leave Juneau for higher office before her term expires in 2010, saying, “My role as governor is where I can be most helpful right now unless something drastic happens, and I don’t anticipate that right now.”

Nevertheless, John Pitney Jr., a political scientist at Claremont McKenna College in California and former analyst for congressional Republicans, said Palin could be an ideal presidential running mate next year.

“What separates her from others is that at a time when Republicans have suffered from the taint of corruption, she represents clean politics,” Pitney said.

“The public stereotype of Republican is a wrinkled old guy taking cash under the table,” he said. “One way for Republicans to break the stereotype is with a female reformer.”

Party labels seem to mean little to Palin. Her revenue commissioner is a Democrat. Her husband, Todd, a blue-collar worker on Alaska’s oil-rich North Slope, is an independent.

Tackling her agenda

The former mayor of the Anchorage suburb of Wasilla ran on ethics reform in trouncing Gov. Frank Murkowski in the GOP primary. In the general election, she handily beat the Democrat, former Gov. Tony Knowles.

She immediately took on the state’s most lucrative industry, questioning whether Alaska — which gets about 85% of its revenue from big oil — is getting its fair share of the oil companies’ billions of dollars in quarterly profits.

She got what she wanted from the GOP-controlled Legislature. Relying heavily on Democratic votes, she won approval last month to boost taxes on oil company profits from 22.5% to 25%. That could bring in an additional $1.6 billion annually for the state, depending on oil prices.

On the same day a former Alaska lawmaker was convicted on federal bribery charges, Palin signed an ethics reform bill into law.

Since then, two more former lawmakers have been found guilty of bribery related to VECO Corp., an oil field contractor.

Another former lawmaker awaits trial, and U.S. Sen. Ted Stevens and U.S. Rep. Don Young, both Republicans, are under investigation.

Stirring the pot

Palin’s climb is happening without the backing of the state Republican Party, led by Randy Ruedrich. In 2004, as chairwoman of the Alaska Oil and Gas Conservation Commission, Palin exposed Ruedrich for ethics violations when he was a fellow commissioner.

She also has made trouble for the party’s establishment by calling on Stevens to give the public an explanation of why federal agents have raided his Alaska home in the investigation of his ties to VECO’s founder.

“I don’t sweat it at all that the partisanship isn’t playing a big part of my agenda,” Palin said. “What that tells me is this: that I’m on the right track, and that it hasn’t stopped us.”

Source: FOXNews.com

KTUU - Top 10 stories of 2007: The rise of Sarah Palin

pollster Dave Dittman (KTUU-TV)

Rep. Harry Crawford, D-Anchorage (KTUU-TV)

Rep. John Harris, R-Valdez (KTUU-TV)

radio talk show host Eddie Burke (KTUU-TV)

In 2007, new Gov. Palin got the Legislature to give her the gas line selection process she wanted and the increase in oil taxes she called a special session for. (KTUU-TV)

Link to KTUU Video

by Bill McAllister
Friday, Dec. 21, 2007

ANCHORAGE, Alaska — With approval ratings consistently between 80 percent and 90 percent, Sarah Palin is not only the nation’s most popular governor; she might be the public official in America who is held in the warmest regard by her constituents.

Just a year into her first term, Palin is gaining even more national attention.

As political honeymoons go, her’s might be one for the record books.

In 2007, new Gov. Palin got the Legislature to give her the gas line selection process she wanted and the increase in oil taxes she called a special session for.

Meanwhile, controversies over the failed state dairy and her vetoes of public works projects did little to blunt her popularity.

“I think that it’s been a great year,” Palin said. “Thanks to supportive legislators, who are kind of tired of politics as usual and recognize the need to do some things differently and really start progressing the state.”

At mid-year, pollster Dave Dittman found unprecedented high marks for Palin, with 88 percent of Railbelt residents approving of her job performance, notably her working relationship with the Legislature.

“They’re cooperating together. I think the public at large likes that,” Dittman said. “The Legislature has the highest marks I’ve ever seen.”

Legislators were grateful for Palin’s change of pace.

Read the full story at: KTUU

Alaska takes seriously its job of protecting polar bears

By GOV. SARAH PALIN

It’s that time of year when the entire world will see animated holiday images of cute, cuddly polar bears smiling and dancing — and pitching cold soft drinks on TV and movie screens.

That’s the closest most Americans will ever get to a polar bear.

To steal a line from one of the commercials, it’s not “the real thing.”

It’s unfortunate, because polar bears are magnificent animals, not cartoon characters. They are worthy of our utmost efforts to conserve them and their Arctic habitat.

For Alaska, that means recognizing that while climate change is a serious concern for everyone on the planet, it is not the only issue surrounding polar bears.

To help ensure that polar bears are around for centuries to come, Alaska has engaged in research and worked closely with the federal government to protect them. This includes enacting a ban on most hunting — only Alaska Native subsistence families can hunt polar bears — and taking habitat protection measures such as set-asides around known denning areas to prevent bear harassment.

We are also participating in international efforts aimed at conserving polar bears worldwide.

The state takes very seriously its job of protecting polar bears and their habitat and is well aware of the problems caused by climate change.

But we know it will take more than protecting what we have — it means learning what we don’t know. Which is why state biologists are studying the health of polar bear populations and their habitat.

As a result of these efforts, polar bears are more numerous now than they were 40 years ago. Despite what some may wish you to believe, the polar bear population in the southern Beaufort Sea off Alaska’s North Slope has been stable for 20 years.

I strongly believe that listing the bears under the Endangered Species Act is the wrong move at this time. My decision is based on a comprehensive review by state wildlife officials of scientific information from a broad range of climate, ice and polar bear experts.

Despite emotional arguments to the contrary, there is insufficient evidence that polar bears are in danger of becoming extinct within the foreseeable future — the trigger for protection under the Endangered Species Act. And there is no evidence that polar bears are being mismanaged through existing international agreements and the federal Marine Mammal Protection Act.

We’re not against protecting species under the Endangered Species Act. Alaska has supported listings of other species, such as the Aleutian Canada goose. The law worked as it should — the species was near extinction, and a recovery plan resulted in goose recovery and delisting under the act.

Listing the goose — then taking the bird off the list — was based on science. However, the possible listing of a currently healthy species such as the polar bear is based on uncertain modeling of possible effects. The listing is simply not justified.

What is justified is worldwide concern over the proven impacts of climate change.

The group asking for the polar bear listing recently disclosed that its goal is to force the government to either stop or severely limit any public or private action that produces, or even allows, the production of greenhouse gases. Such limits should be adopted through an open process where environmental issues are weighed against economic and social needs, and where scientists debate and present information that policymakers need to make the best decisions. But the Endangered Species Act is not the correct tool to address climate change — the act actually prohibits any consideration of broader issues.

There is little doubt that the world’s climate is warming. I established a Cabinet-level task force to address the effects of climate change in Alaska, charging the task force with developing recommendations to deal with the effects of climate change.

Climate change is a serious issue. I urge all Alaskans to become involved by offering comments and suggestions to the task force for constructive action by the state. Listing the polar bear as threatened is the wrong way to get to the right answer.

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Sarah Palin is governor of Alaska.

Printed in The New York Times, The Seattle Post Intelligencer and International Herald Tribune

 

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