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Vol. 25, No.11 Week of March 15, 2020 Providing coverage of Alaska and northern Canada's oil and gas industry
New initiative for EV charging stations
Chugach Electric partnering with other entities for the installation of new facilities that will support electric vehicle use
Alan Bailey
for Petroleum News
Anchorage-based electric utility Chugach Electric Association is partnering with five other entities to participate in an electric vehicle charging station research project in Southcentral Alaska, Chugach Electric has announced. The entities, selected competitively based on criteria such as geographic diversity and the availability of activities to carry out while charging is in progress, consist of Alyeska Resort; Creekbend Co., Hope; Dimond Center; JL Properties, South Restaurant retail center; and the Municipality of Anchorage parking lot, east of Rustic Goat Restaurant, Chugach Electric says.
Each selected member will choose, install, own and maintain a charging station for the duration of the three-year research project. Chugach Electric will contribute up to $7,500 towards the installed cost of each facility. The objective of the project is to better understand the driving habits and charging needs of electric vehicle owners, and to gain insights into the extent to which the use of chargers may be made in commercial areas.
While the charger at Alyeska Resort has already been in operation since September 2019, the other facilities will be installed by the end of June, after the ground thaws, Chugach Electric says.
Growing use
The use of electric vehicles in the Anchorage region has been growing, albeit from a very low start. Although expensive to buy, the vehicles are relatively cheap to operate, with much simpler maintenance requirements, higher energy efficiency and lower fuel costs than traditional gasoline or diesel vehicles. However, the vehicle mileage range between charges impacts their popularity - hence presumably the interest in evaluating and promoting the use of commercial charging stations. The Alaska Energy Authority is planning to help fund an electric vehicle charging network in Alaska, using funds allocated from a U.S. settlement relating to cheating by Volkswagen over the testing of emissions from diesel vehicles.
Chugach Electric says that the most recent count indicates that just over 150 all-electric (as distinct from hybrid) vehicles are registered in the Municipality of Anchorage. That represents an increase of 50 vehicles since last August. The vehicles come from 12 different manufacturers, but with 110 of the vehicles being made by Tesla, Chugach Electric says.
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Alaska Energy Authority Funds School Bus Replacement Program
March 18, 2020 By Dylan Tucker, NASEO Environmental Transportation
Last month, the Alaska Energy Authority (AEA) announced $4.4 million in funding to replace 33 school buses in eight school districts around the state. The funds will remove older diesel buses from the road and cover the costs of newer, more efficient, and cleaner burning buses. “By replacing older engines with new technologies, the school buses will help improve air quality in these areas of the state,” said AEA Executive Director, Curtis W. Thayer, in AEA’s press release. "The new buses will result in a reduction of 24.6 short tons of NOx and 1.8 short tons of fine particulate matter over the remaining lifetimes of the replaced school buses.” The focus on school buses will also protect the health of schoolchildren around the state.
These funds were made available under the Volkswagen Settlement, where the automaker was fined nearly $15 billion due to cheating on vehicle emission standards tests. Of those funds, $3 billion was allocated to state governments, Source: Wikimedia Commons based on the number of affected vehicles in each state. In 2017, Alaska was allocated $8.13 million to administer programs which reduce NOx emissions. AEA announced the VW Settlement School Bus Replacement Program, asking school districts to apply for new buses. Applications were then ranked on expected reductions in air pollution, and ambient air quality where the buses are operated, as well as the presence of at-risk communities which would be exposed to this pollution.
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Join Now http://www.newsminer.com/news/local_news/gvea-executive-gives-status-report-of-utility/article_54386a72-68e7- 11ea-b024-438cef0c63b8.html GVEA executive gives status report of utility
Amanda Bohman [email protected] Mar 18, 2020
An attendee walks through the rows of solar panels during a tour of the new GVEA Solar Farm off of South Cushman Street Friday afternoon, October 12, 2018. The 563KW solar array consists of 1760 300-watt panels and covers about 2 1/2 acres. The micro-inverter system has an estimated peak production of 6 megawatt hours of electricity per day. (THIS FROM PRESS RELEASE) Golden Valley Electric Association and local officials held a ribbon cutting ceremony today to acknowledge the commissioning of its 563-kilowatt solar farm. GVEA’s solar installation is the largest photovoltaic (PV) system in the State of Alaska. The project should produce enough energy to power 71 homes (using an average of 660 kWh per month). “GVEA is expanding its renewable energy portfolio with the addition of this solar PV system,” said Cory Borgeson, GVEA’s President & CEO. GVEA’s Board of Directors approved this project last fall. A local Fairbanks business, ABS Alaskan Inc. supplied the 1,760 panels, each of which has a peak generating potential of 320 watts. “This solar farm will give Golden Valley a better understanding of the performance of a solar farm on our system and the resulting cost per kilowatt-hour,” Borgeson said. The solar array is constructed on a 3-acre parcel between Van Horn Road and Bidwell Ave. The site is located next to GVEA’s Wilson Substation and the Battery Energy Storage System (BESS). There’s room for future expansion, and the panels will be visible looking north from Van Horn Road. The project will cost just over a million dollars to complete. A grant from the U.S. Department of Agriculture’s Rural Energy for America Program offset $225,000 of the cost. Golden Valley has a dedicated web page for the project at http://www.gvea.com/energy/solar-farm. The page includes a 2-minute project overview video from project manager Nathan Minnema. Eric Engman
Electricity rates starting March 1 went down a smidge yet far from enough to offset a 20% rate increase that took effect late last year. The cost of electricity will remain this way at least through May 31, John Burns, interim CEO of the Golden Valley Electric Association, said during a presentation Tuesday.
Burns also spoke about the utility’s power generation facilities. They are aging, and it’s time for the board of directors to talk about building something new, he said. He additionally touched on the Railbelt Reliability Council, a new governing agency being launched to look after the grid.
The GVEA executive’s virtual slide show was livestreamed from the Carlson Center. The Greater Fairbanks Chamber of Commerce hosted the online event in lieu of its weekly membership luncheon due to the coronavirus pandemic.
Later, GVEA announced that its face-to-face customer service is closed until further notice “as a result of the coronavirus (COVID-19) outbreak and as a precautionary measure for the safety of our employees, members and the communities we serve …”
Offices offering counter service close at 5 p.m. today indefinitely. Members are encouraged to pay their bills online or use payment kiosks.
“GVEA is closely monitoring the rapidly evolving issues and recommendations related to COVID-19. GVEA is following the guidelines of the Centers for Disease Control, along with local and state directives, to help prevent the spread of the virus in Alaska,” a news release stated.
Member service representatives will still be available during normal business hours by calling 452- 1151.
Members experiencing financial hardships due to the pandemic are encouraged to contact member services, the news release stated.
The announcement came more than three hours after Burns spoke at the Carlson Center.
Electricity rates aren’t dropping in the near future due to several factors, he said, including lower- than-expected output at a coal-fired plant in Healy and planned maintenance at power plants in Fairbanks and North Pole.
Another factor is “limited purchase power available from Southcentral utilities due to gas supply constraint issues.”
Burns noted the state of GVEA infrastructure. Power generation facilities built in the 1960s and 1970s are going to need to be replaced, he said. “GVEA likely will be looking at, ‘How do we address that?’” he said. “What generation do we want to put online?’”
The Railbelt Reliability Council was another topic. It will be operated by a 12-member board of directors, plus a CEO, representing six utilities, the Alaska Energy Authority, independent power producers and a consumer advocacy group. Two members will be unaffiliated.
Burns described the new organization as an achievement and said it was long overdue.
“We are going to work through issues to ensure that decisions are made on behalf of not only our individual utilities but the Railbelt as a whole,” he said.
In connection with the new Railbelt council, a bill in the Legislature would require GVEA to get approval from the Regulatory Commission of Alaska before building a new power generation facility.
Burns said the bill has been approved by the Senate and was merged with a House bill that is expected to go to the floor for a vote.
The cost of the new Railbelt council is not known, according to Burns.
Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough. https://www.frontiersman.com/news/coronavirus/legislature-works-on-a-state-economic-relief-package-but-politics- enters-the-picture/article_7ce5501c-70b6-11ea-b1d3-37754a437f4b.html Legislature works on a state economic relief package, but politics enters the picture
By Tim Bradner For the Frontiersman Mar 27, 2020 The end of the legislative session must be afoot, or at least this phase of it.
Most committee meetings were cancelled Friday and the few that were scheduled were delayed and o en cancelled anyway. Legislative leaders closeted themselves behind closed doors, attempting to negotiate agreements on the budget and key bills.
It’s hoped that enough work can be accomplished, particularly on the budget, so Gov. Mike Dunleavy has the tools he needs to ght the COVID-19 pandemic and the sharp economic decline that has come with it. The Legislature plans to recess until summer or fall, hopefully when the virus spread is under control.
But political games are a part of the end of any session, even one ending temporarily during an emergency.
On Thursday House Republicans withheld their votes for a needed three-quarters “super majority,” or 30 votes in of the 40-member House, needed to tap the Constitutional Budget Reserve, or CBR, for supplemental appropriations to pay for COVID-19 response among other things.
The result is that only $246 million of the $359 million supplemental is approved to augment the state health and social services budget, which was underfunded last year. The supplemental appropriations would also cover state expenses in ghting last summer’s wild res, and other unexpected expenses.
If the CBR action isn’t reversed, which it may be, the governor will have to decide how to spend the money he has available, choosing between the virus outbreak or restoring state Medicaid funding shorted last year.
If the Medicaid money isn’t fully approved the money currently available to pay health care providers will run out before the start of the next scal year on July 1. That would mean payments to some providers will be curtailed at a time the state’s health care system will be under growing stress from the virus.
However, this is an old game. Withholding votes from the needed three-quarters majority is a common tactic used by a legislative minority to leverage the majority, usually on budget matters. This year Republicans are in the House minority and the majority is led by a coalition led by Democrats and Republicans, although House Speaker Bryce Edgmon, of Dillingham, is an independent.
In the past Democrats have been in the minority, and Republicans in the controlling majority and Democrats have used their clout on a CBR draw to gain leverage. However, it isn’t yet clear what the House Republicans want in this year’s bargaining, or at least they haven’t said in public statements. The timing on this is also awkward, with the governor and legislature racing to deal with the virus outbreak and its economic fallout.
Senate President Cathy Giessel, R-Anchorage, and Senate Finance cochair Bert Stedman, R-Sitka, said the three-quarter vote leveraging is irresponsible this year given the public health and economic crisis. The senators said that in comments to reporters last week.
Meanwhile, in what may – or may not – be the last days before a recess, the Legislature is moving quickly on giving the governor tools to augment a huge package of federal economic funds headed for Alaska as well as other states.
One initiative underway is a state program for business loans guaranteed by the state that is now being taking shape in the Legislarture. Gov. Mike Dunleavy wants the Alaska Industrial Development and Export Authority to take the lead in this, the governor said in a press conference this week. Additional state economic stabilization e orts are to be announced Monday, March 30. However, one bill being worked on now is Senate Bill 242, in the Senate Finance Committee, which would among other things allow the state to order private lending institutions to waive payments on loans, for autos and home mortgages, for examples, and to delay foreclosures and evictions. While it’s clear the state can do this with state agency nancing through agencies like Alaska Housing Finance Corp., extending this into the private sector is a legal gray area, the state Department of Law told the Senate committee Friday.
State attorneys told the senators that this might be made to y under the existing Alaska Disaster Act, which provides for con scation of private property in an emergency, but which must be compensated. It was suggested that the Senate committee dra language allowing claims of nancial damage to be led against the state by private lenders for actions that interrupt payments or other commercial transactions.
Legally, it seems more clear that a freeze on payments, repossessions or penalties could apply to loans from state entities, such as bulk fuel loans to communities by the Alaska Energy Authority and possibly industrial or commercial nancing by AIDEA. As this is written the bill is still in the Senate committee. However, authorization for a small business grant program was tacked onto another bill, Senate Bill 241, when it passed the House Thursday. The bill basically extends the governor’s declaration of an emergency into the fall, ensuring continued services during the COVID-19 outbreak.
Among other things SB 241 provides $10 million from the state disaster relief fund to help with response e orts and gives the state medical director, Dr. Anne Zink, authority to issue standing orders for health care providers engaged in e orts to combat the virus. It also gives the state authority to recognize licenses issued in other states ro trained nurses or other licensed medical professionals who are in Alaska, such as military spouses, to augment the state’s health care workforce.
Grant program A last-minute provision added through a oor amendment by Rep. Zack Fields, D-Anch., would allow the Dept. of Commerce and Economic Development to establish a grant program for small businesses to prevent bankruptcy or layo s.
The grants, intended mainly for very small businesses, would be administered by the nonpro t regional development organizations, or ARDORs, set up in di erent parts of the state. The Senate must still agree to this change in SB 241, however.
Meanwhile, there is a wave of federal money headed for Alaska in the $2 trillion-plus economic relief package just approved by Congress and signed by the President. Senior Trump administration o cials said they hoped SBA-backed business loans could be available by the end of next week, but it may take longer. There is also hope that the $1,200 checks to federal taxpayers ($2,400 for joint lers) depending on income, would be deposited or in the mail in two to three weeks.
The state Legislature is also considering two $1,000 Permanent Fund Dividends, one paid in June and the second later in the year, but lawmakers have yet to agree on that as this is being written.
The Senate Finance Committee was also briefed Thursday by its sta on major provisions of the pending federal legislation. Among other things there is authorization for block grants to states with a minimum of $1.25 billion, which would be what Alaska receives as a state with a small population. From what can be determined now this appears to be a payment to the state General Fund intended mainly to help state programs aimed at ghting the COVID 19 virus, but it may have broader uses.
Senators asked on Thursday to get that clari ed as soon as possible. There is also a nationwide grant of $8 billion to tribal entities, to programs administered by tribes, and Alaska should get a good portion of this.
There are also the “wage replacement” sections of the federal bill including the $600-per-week supplement to Unemployment Insurance Compensation recipients and a separate $600 per week for self-employed workers who are not otherwise eligible for UIC. The federal bill has provisions for small business loans on generous terms made more generous if employers agree to retain workers. How this would relate to a pending state business loan program done through AIDEA is uncertain.
Support local journalism. By subscribing you help local journalism continue to thrive. For our latest digital subscription information, see frontiersman.com/site/forms/subscription_services/ About Us Popular Recent Sign Up CONNECT WITH: FRIDAY, APRIL 3, 2020 News Tweets SEARCH https://t.co/c5OYuoiS8w Must Read She Department Your e Alaska is is of Revenue taking SEARCH news of extends sign- Sign up people, payment waving deadline for politics, to corporate Jedi policy, income tax level. Donate culture, #Anchorage Home / Columns / Help Alaskans. Pay The Full Dividend Now #EagleRiverALMANACto Must and Democrats’ #elections Read happenings national Alaska convention in Alaska. postponed https://t.co/xctjaObtJs APRIL 1, 2020 / AUTHOR:It is edited GUEST CONTRIBUTOR / 31 COMMENTS #COVID19 SUPPORT by Suzanne MUST Downing, who Putting https://t.co/fd8optG886 Help Alaskans. Paythe theThis full dividendREAD first ‘social’ is landed in in social Art ALASKA now distance Alaska in Chance sign- gold. 1969, and waving has called it home 10 new cases; Keep the ever since. total of 143, no new deaths, mainstream hospitalizations media on Contact its toes. Donate 2525 $100 today. Gambell
Street Suite Share this: 405, Anchorage, By JIM CRAWFORD AK 99503 More Alaska’s [email protected] are going to be financially hurt as a result of the COVID-19 coronavirus. Restaurant workers are being furloughed. Tourism companies are suspending operations. Cruise Likeliners this: are parked.
Like Some suggest the solution for Alaskans is to cut the Permanent Fund dividend to zero. Be the first to like this The Alaska Permanent Fund is not the Legislature’s money nor the governor’s money. It’s the people’s fund, a financial stabilizer, managed for you, the beneficiaries. $
Ab t U P l R t Si U About Us Popular Recent Sign100.00 Up The fund was mandated to invest 25 percent of the royalties when established by Constitutional News Tweets SEARCH Amendment as a dedicated fund. https://t.co/c5OYuoiS8w Must Read She $100.00 Department Your e The other 75 percentAlaska of is royalties plus all the taxes and tari s and otheris numerous ways to grab money from of Revenue taking news of extends the oil patch were retained for legislative purposes. sign- DonateSign up people, payment waving Now Now legislators and others want your 25 percent of royaltiesdeadline plus fortheto entire earnings of the fund. Legislators politics, corporate tell us that we’re lucky to get whatever is le , a er their spending. Jedi policy, income tax level. Donate culture, #Anchorage The Permanent Fund long-term yields have been good and can lead to#EagleRiver prosperous Alaskans. Withto Must dividends, and we have a direct individual benefit for developingFive our Nine natural Democrats’Solutions resources,#elections just as Gov. JayRead Hammond happenings national Alaska intended. The PFD diversifies Alaskans’ income stream addingconvention investment income from the fund for in Alaska. education, retirement and making a ordable the higherpostponed cost of livinghttps://t.co/xctjaObtJs in Alaska. It is edited #COVID19 SUPPORT A waitress with by a husbandSuzanne and two kids earns $12,000 in dividends this year under existingMUST law. Downing, who Putting https://t.co/fd8optG886 That $12,000 can pay rents or mortgages due during thethe layo s. JustThis change the payoutREAD date from October first ‘social’ to April. is landed in in social Art ALASKA distance Chance Fishermen and Alaskatour operators in — indeed all Alaskans who will be hurt by the coronavirus pandemic — can get sign- gold. by if their full Permanent1969, and Fund dividends are paid. That’swaving because of good planning by our forefathers. has called Gov. Hammond would be well pleased that when the fund is le alone, it provides substantial direct benefits it home 10 new cases; to Alaskans. Greater security, more a ordable education, and cash reserves for emergenciesKeep the like the virus ever since. total of 143, no are all benefits of abiding by the original calculation of thenew dividend. deaths, mainstream hospitalizations media on Make no mistake, weContact already have the earnings – in cash. Anyone who tells you we don’t,its toes. can’t read the Comprehensive Annual Financial Report of the State of Alaska. Donate 2525 $100 today. Our problem is Gambellour legislators passed two conflicting statutes, both on the books for calculation of the dividend. The firstStreet one Suite is our historic 50/50 split. Earnings are evenly divided betweenShare the people’sthis: dividend and General Fund appropriated by the Legislature. 405, Anchorage, But, the Legislature enacted a “per cent of market value” approach that reduces the amount that can be AK 99503 drawn and shockingly, removed the calculation for earnings. More [email protected]
The Legislature, for three years, has divided the earnings with bloated government as Likethe winnerthis: and the people getting the short end of the stick. Like The solution to our fishermen’s cash flow is not to further cut a family’s cash. The sameBe is the true first ofto tourism like this employees, retailers, restauranteurs, and other Alaskans who are experiencing financial turmoil as a result of $
Ab t U P l R t Si U About Us Popular Recent Sign100.00 Up the virus. Our cash cow has had great earnings. The Legislature simply wants to butcher it – and use all the News Tweets SEARCH money to grow more government. https://t.co/c5OYuoiS8w Must Read She $100.00 Department Your e Alaskans have hadAlaska enough is and don’t want their PFD reduced or ended. is of Revenue taking news of extends sign- DonateSign up An alternative way back to fiscal sanity is to stop the Legislaturepayment from dedicating funds. The Alaska people, waving Now Constitution bans dedicated funds except for federally provideddeadline revenue for to and those funds in existence when politics, corporate we became a state. Or, we can do as we did when the Permanent FundJedi was established, with passage of a policy, income tax level. Donate constitutional amendmentculture, by the people. #Anchorage #EagleRiver to Must One unconstitutionaland dedicated fund is the PowerFive Cost Nine Equalization Democrats’Solutions Fund#elections at $1.2 billion,Read housed in the happenings national Alaska Alaska Energy Authority. AEA financial statements describeconvention the PCE assets as restricted and not available for in Alaska. government spending. That’s a dedicated fund. There arepostponed many in statehttps://t.co/xctjaObtJs government. It is edited #COVID19 SUPPORT The Supreme Courtby Suzanne ruled that dividends must compete with all other appropriations. MUST But, the Legislature unconstitutionallyDowning, protects who the PCE. PCE doesn’t competePutting for appropriations,https://t.co/fd8optG886 but your PFD does. Special the This READ interests are pleased.first ‘social’ is landed in in social Art ALASKA The Permanent Fund must return to averaging our five-yeardistance earnings to calculate the dividend. The market Alaska in Chance turmoil of today then becomes a blip on the screen of oursign- long term gold.investment program. Yes, stocks and oil 1969, and waving go up and down. That’s why we insisted on the five-year earnings average. A down year is not the end of life. has called Most Alaskans areit home o work awaiting clearance to return. We10 new have cases; time to communicate directions to our total of 143, no Keep the Legislators. My messageever since. to my Senator, Natasha Von Imhof and my Representative Chuck Kopp is simple: new deaths, mainstream Rescue our economy from the damage of coronavirus byhospitalizations voting to pay a full dividend. Please change the media on date to April 30, 2020. Contact its toes. If you fail in this e ort, I will vote against you. I will not vote for Legislators who damageDonate the people who 2525 elected them. Alaskans, if you agree, please share the instruction with your Legislators. $100 today. A er all, they work Gambell for you. Street Suite Share this: Doctors will solve405, this coronavirus and in time, we will be stronger as a result. Doctors take a Hippocratic Oath, paraphrasedAnchorage, as “First, do no harm”. Legislators should take that oath for our Permanent Fund AK 99503 dividend. More [email protected] Jim Crawford is a third generation Alaskan entrepreneur who resides in Anchorage with his bride of 36 years, Like this: Terri. He is president of The Alaska Institute for Growth, a local think tank which studies and reports on and Like may sponsor projects of sustained economic growth for the Alaskan economy. Crawford was a member of Be the first to the Investment Advisory Committee, appointed by Governor Hammond to plan and implementlike this the Alaska Permanent Fund Corporation. $
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page February ANS output down 1.3% 3 from January; Cook Inlet up
Vol. 25, No. 13 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of March 29, 2020 • $2.50
l EXPLORATION & PRODUCTION The ‘Beast’ headed to Alpine to spud first ERD well in late April Doyon Drilling’s new extended reach drilling rig is on its Juggling windows way to the North Slope Colville River unit to spud its first well in late April for ConocoPhillips Alaska. From CD2 pad, the giant ERD rig will target the Fiord Jade’s plan schedules Sourdough work to maintain economic viability West Kuparuk reservoir, which was discovered in 1996, but By KAY CASHMAN which at the time estimated because it’s in an environmentally sensitive area along the Petroleum News the prospect held 100 million coast it couldn’t be accessed. barrels of recoverable oil. Rig 26, which is being transported in seven modules, can couple of days after it The essential difference in drill targets some 7 miles from its surface location, whereas was filed on March 17 Jade’s new POD, which cov- other rigs are designed to drill about 22,000 feet from a pad. A Alaska’s Division of Oil and ers the period April 1 through This means the 9.5 million pound high-tech ERD rig will be Gas approved Jade Energy’s Dec. 31, is to drill the first able to develop 154 square miles of reservoir versus the stan- second Plan of Development new Sourdough appraisal dard 55 square miles. for the Sourdough prospect well, Jade 1, in the winter of see ERD RIG page 12 on the southeastern edge of ERIK OPSTAD TOM STOKES 2021-22, versus next winter. the Point Thomson unit. Jade worked closely with the Jade is both the majority owner of and operator division to come up with a plan that maintained the Furie/Kachemak asset sale craters; of PTU Tract 32 in Area F of the eastern North economic viability of the project, which is the fur- HEX, with AIDEA loan, in running Slope lease ADL 343112. thest east of all North Slope developments. Tract 32 holds two mid-1990’s oil discovery An acquisition by foreclosure agreement between Chapter 11 wells, Sourdough 2 and 3, that were drilled by BP, see SOURDOUGH page 11 debtor Furie Operating Alaska LLC and acquirer Kachemak Exploration LLC for the sale of Furie’s Cook Inlet assets appears to have broken down. l UTILITIES Kachemak — a Delaware corporation recently formed by GFR Holdings of Fort Worth, Texas, and Melody Capital Partners L.P. — is seeking to acquire the Cook Inlet Kitchen SB 123 goes to governor Lights offshore unit, related infrastructure such as the Julius R offshore natural gas platform, together with an onshore process- Legislature passes bill enabling formation of electric reliability organization ing facility and related pipelines. According to a Law360 report, Furie told Judge Laurie Selber Silverstein that the deal collapsed last week, during a March 25 By ALAN BAILEY In December all six of the Railbelt For Petroleum News see FURIE SALE page 9 utilities signed a memorandum of he Alaska Legislature has passed Senate Bill understanding for the formation of the Kenai refinery turnaround delayed T 123, a bill designed to enable the formation Railbelt Reliability Council, in effect an of an electric reliability organization, in particular electric reliability organization for the to fall due to coronavirus concerns for the Alaska Railbelt electricity system. The bill Railbelt. Marathon Petroleum Corp. said it has postponed a mid- also enacts a statute that gives the Regulatory April turnaround operation at its Kenai refinery due to coron- Commission of Alaska authority to regulate the construction of new major generation and trans- system in the Railbelt, to minimize the cost of avirus concerns. mission facilities in the electricity grid, and to reg- electricity for consumers while also assuring a “It’s a pretty extraordinary measure,” Casey Sullivan, ulate integrated resource planning for the system. high level of supply reliability. Marathon government and public affairs manager, told The bill now goes to the governor for his signature. In passing SB 123 the legislators added the text Petroleum News March 24. “This is a program that is tens and The purpose of the legislation is to ensure a of another bill, Senate Bill 81, presumably to allow tens of millions of dollars; it’s hundreds and hundreds of con- more coordinated and efficient approach to the the simultaneous passage of both bills. SB 81 tractors; it’s kind of a big ship and it is a hard thing to turn — overall management and operation of the electrical or turn off. see SB 123 page 10 “Lots of things in the air. We’ve been able to do it, with teams working really hard to do that ... to pause it as best you can.” l GOVERNMENT The company plans to get the turnaround back on the see KENAI REFINERY page 8 Waiting game for Alberta DEC hears concerns regs would be No sign of promised O&G sector bailout beyond individual, company support weakened, others urge updating By GARY PARK So far, the government of Prime Last year the Alaska Department of Environmental For Petroleum News Minister Justin Trudeau has limited itself Conservation sought input on requirements for its oil dis- to gaining approval of Parliament in an charge prevention and contingency plan requirements. The acing growing unease as the spread of emergency session to release C$27 bil- department said that based on feedback it “may consider FCOVID-19 accelerates and its eco- lion in direct support for individuals and amending contingency plan regulations” in 18 Alaska nomic underpinning crumbles, energy- companies and grant C$55 billion in Administrative Code 75, Article 4, and said it was “also driven Alberta is waiting for the Canadian deferred taxes. accepting comments on the related statutes that authorize the government to deliver a promised bailout But Trudeau was forced by the oppo- Article 4 regulations.” package to keep the province’s oil and gas sition parties to back off a measure that “I’ve heard from many Alaskans that contingency plans are industry functioning. JASON KENNEY would have given the government sweep- unnecessarily burdensome while lacking corresponding envi- A spokeswoman for Natural ing new powers for the next 21 months to ronmental benefits,” ADEC Commissioner Jason Brune said. Resources Minister Seamus O’Regan said all unilaterally spend, borrow and tax Canadians with- “To achieve Governor Dunleavy’s goal of being open for busi- options are being weighed, including financial out obtaining the approval of Parliament. backing for skilled workers to remediate the envi- In the midst of this swirl the Trudeau adminis- see CONTINGENCY PLANS page 7 ronmental liabilities associated with abandoned, or tration released C$5 billion for the agriculture sec- orphan wells. see WAITING GAME’ page 10 10 PETROLEUM NEWS • WEEK OF MARCH 29, 2020 continued from page 1 economic value of security constrained ommending various changes to the man- would have operated as a for-profit cor- economic dispatch for all or part of the agement of the system. The commission poration. SB 123 system. Economic dispatch involves the recommended the implementation of Some utilities expressed a view that continuous use of the most cost effective merit-ordered economic dispatch; the for- the RRC should be formed first, to pro- makes changes to the statutes governing power generation that is securely avail- mation of a single transmission company, vide governance of the entire system. the operation of electrical and telecom- able. to operate the transmission grid; and the GDS Associates, the consultancy munications cooperatives — the existing But the RRC also requires RCA regu- implementation of a single set of involved in the development of the RRC statutes date from 1959 and need updat- lation and oversight, something that is not enforced reliability standards. The com- concept, has since suggested that func- ing to reflect the use of modern technolo- possible under current statutes defining mission also opened a docket to investi- tional control of the transmission grid gies and communication capabilities. how the RCA can operate. Hence part of gate the formation of some form of uni- could at some stage be made an addition- al responsibility of the RRC. However, Fragmented grid management the urgency to pass SB 123, to enable the fied operator, to oversee the management implementation of the RRC to proceed of the entire electrical system. this issue has yet to be resolved. The Railbelt electrical system, which this year. Since then the commission has been runs from the southern Kenai Peninsula encouraging voluntary efforts by the util- Governance through Southcentral Alaskan north to the Started in 2014 ities to follow the commission’s recom- Effective and balanced governance Fairbanks region, is owned and operated The passage of SB 123 and the initia- mendations. will be a critical factor in the success of by six independent electric utilities and tive to form the RRC are outcomes of a The utilities had been making signifi- future oversight of the electrical system. the State of Alaska. And, while the utili- process that started in 2014, when the cant progress towards the implementation On the one hand, the utilities have con- ties have achieved a high level of reliabil- Legislature directed the RCA to investi- of economic dispatch, especially in siderable expertise in the technicalities ity in supplying electricity to their cus- gate the manner in which the Railbelt Southcentral Alaska. However, the initia- and business of operating the system. On tomers, there are significant concerns electrical system was operated. Although tives for achieving this were placed on the other hand, there are other stakehold- regarding the need for a more coordinat- covering a large geographical area, the hold, pending the proposed purchase of ers, including independent power produc- ed approach to the provision and mainte- Railbelt grid is small in terms of its elec- Anchorage based Municipal Light & ers, consumers and the state, all of whom nance of generation and transmission trical load and generation capacity. But Power by Chugach Electric Association. have significant interests in the system. facilities across the system, and for open the evolution of the system through its In April 2018 the utilities filed an The RRC will be governed by a board access to the system for independent fragmented ownership has resulted in agreed set of reliability standards and with six members representing the six power producers. There are also concerns inefficiencies. There has been a lack of have since added cybersecurity stan- Railbelt utilities and six independent relating to the need for a consistent set of coordination in the development of new dards. Maintenance and enforcement of members representing other stakeholders. mandated reliability standards, including generation capacity, for example. The these standards would become a function The RRC CEO would have a tie-breaking standards for cybersecurity and physical pancaking of electricity transmission fees of the RRC, with regulatory oversight by vote on board decisions. Independent security. across sectors of the grid owned by dif- the RCA, enabled by the passage of SB members would consist of two represen- ferent entities elevates transmission 123. tatives from independent power produc- RRC agreement costs. The business economics of making In March 2019 four of the utilities and ers, one member representing consumer In December all six of the Railbelt major upgrades to the transmission sys- the American Transmission Co. filed an interests, a representative from the Alaska utilities signed a memorandum of under- tem are very challenging. And it is diffi- application for RCA certification of a Energy Authority and two non-affiliated standing for the formation of the Railbelt cult for independent power producers, transmission company. However, this members. The RCA and the state’s Reliability Council, in effect an electric including purveyors of renewable energy, application was withdrawn later in the Regulatory Affairs and Public Advocacy reliability organization for the Railbelt. to connect to the system. year following objections from some util- Section would have non-voting board The RRC will maintain and mandate reli- ities about the manner in which the pro- seats. l ability standards; administer rules for 2015 report posed transco was structured and would open access to the grid; conduct Railbelt- In 2015 the RCA responded to the operate. Key concerns included the gov- wide system planning; and investigate the Legislature by submitting a report, rec- ernance of the proposed company, which
continued from page 1 Mintz and including former Canadian metric ton to C$50 in 2022 and lower all impose new limits on methane emissions prime minister Stephen Harper to look at income tax at every level, while urging that are rated as many times more potent WAITING GAME the province’s medium- and long-term banks to provide no-interest loans and than carbon dioxide. economic recovery after COVID-19. loan guarantees. The Alberta Energy Regulator says oil tor, but nothing for the petroleum industry While those small steps were being What the critics don’t want to see is a and, as of Petroleum News press time, no and gas operations are responsible for taken, word was trickling out from federal replay of TARP, whose money flowed to sign of when or if a larger financial pack- 70% of the province’s methane emis- sources, including mention of a three- banks and wealthy shareholders. age will be made available for what is the sions, but Kenney insists his govern- hour meeting between O’Regan and the Since the oil price crash in 2014, more largest economic sector in Canada. ment’s own regulations to curb those Canadian Association of Petroleum than 50,000 direct jobs have been lost in For now the bleeding continues as emissions by 45% over the next five years Canada’s oil patch and analysts doubt Canadian companies slash another C$4 Producers. are more effective than proposed new billion in spending, a clawback that could Those sources suggested federal aid they will ever return, while companies federal rules. cut oil production by 1.3 million barrels could facilitate easier access to credit, have distributed massive dividends In addition, the Canadian government per day, or almost one-third of Canadian especially for small- and medium-sized among their shareholders, reaching is sticking with a 2021 target for a ban on output. producers who are rapidly sinking below C$10.3 billion to shareholders in 2019 certain single-use plastics — a plan All that has emerged from the national the surface as they get bled dry by the col- alone. strongly opposed by major petrochemical government has been a hint from Finance lapse in stock values and commodity Bronwen Tucker, an Edmonton-based companies that argue product demand Minister Bill Morneau of a possible prices. research analyst with Oil Change should be market-driven and not mandat- change to industry payroll taxes. International, said trillions of dollars will ed by government regulations. Credit facility pushed be needed to build a resilient economy The natural gas-derived plastics would after the COVID-19 crisis, but “handing Alberta measures Meanwhile, Kenney has put pressure be another blow to a sector that provides money over to oil and gas corporations Alberta Premier Jason Kenney has on the Trudeau administration introduce a 7,500 direct jobs and has annual exports will leave us more vulnerable.” opted to announce his own measures in credit facility similar to the U.S. Troubled of C$8.2 billion. She said the chance should be taken to hopes of helping the energy sector bridge Asset Relief Program, TARP, that saved In February Kenney told a business “fund a just transition from oil and gas its way to a more significant federal pro- banks and automobile manufacturers dur- conference that a company he did not that protects workers, communities and gram. ing the 2008-09 financial crisis. identify is planning a C$10 billion project The TARP program would see the fed- the climate instead of tying their future to The Kenney administration has tem- that would create 10,000 permanent jobs. eral government buy shares in distressed a sun-setting and volatile commodity.” porarily waived about C$113 million in Alberta’s Natural Gas Minister Dale companies, along the lines of what annual fees collected by the Alberta Nally said an aggressive federal attack on Canada did for the auto industry in 2008. Sector still reeling Energy Regulator from the industry and plastics would constitute an “unimagin- extended oil and gas tenures from 2020 to To drive home their woes, 65 petrole- Kenney has insisted that Trudeau “do able” overreach and flagrant attack on 2021, giving upstream operators more um industry chief executive officers also no further harm” to the oil and gas sector Alberta’s economy. l time to raise capital. asked the federal government to suspend which is reeling from a massive drop in Kenney also appointed an economic plans to raise the federal carbon tax in revenues and is in no position to handle advisory panel, led by economist Jack C$10 annual increments from C$20 per the planned increase in carbon taxes, or
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