THE LINK SUMMER | JULY 2023 The official magazine of the Alaska Support Industry Alliance www.AlaskaAlliance.com HISTORIC MILEPOSTS FOR RAILROAD, NORTH SLOPE POINT WAY TO FUTURE INSIDE THIS ISSUE n Legislature 2023: Budget with no new taxes n WOTUS decision offers hope to limit EPA n Hilcorp ramps up North Slope activity n Conoco gains speed on Willow development
OUR BROADBAND FIBER INVESTMENT DELIVERS MORE TO THE ALEUTIANS gci.com/aleutians | 800.800.7754 For the first time, businesses in Unalaska are now experiencing high-speed internet delivered over our Fiber+ network. Expanding our fiber network in the Aleutians and bringing 5G to the North Slope are parts of our ongoing commitment to faster speeds and better connections across Alaska. Photo: Savannah Yatchmeneff
THE LINK: JULY 2023 4 Alliance Members and Friends: In 1995, then-Alyeska Pipeline President David Pritchard addressed the attendees of Meet Alaska. He closed his comments with the following anecdote: “I’d like to close by telling you about something that happened to me yesterday. I was at the dentist. And like all dentists, just when he got to the most crucial part of the operation — I was completely helpless — he started cross-examining me. And what he said was ‘Tell me a lie, tell me that the oil industry’s going to be here for a long time.’ So when he fished all the iron out of my mouth I said, ‘I can understand why you’re cynical because at the moment, most of the drilling in Alaska is being done by dentists rather than drilling rigs.’ But I said ‘I will tell you that the oil industry is going to be here for a long time, and that’s not a lie.’ ” The more things change, the more they stay the same. Two things stand out from this conversation, which could have happened just yesterday: n One is the growing recognition in Alaska (and now the United State) that their success is tied to our success. n The second is that the dentist didn’t feel the industry was up to it. Then, and now, that tells us what our responsibility is, and it’s an awesome responsibility, to make sure that we don’t let our stakeholders down. With Willow, Pikka, AKLNG, Donlin and other projects coming down the pipeline — many Alaskans are skeptical of our ability to complete the tasks. We won’t let them down! It will be a team effort — to address workforce issues, supply chain issues, infrastructure and permitting issues. Alliance members are committed to tackling these challenges head on. Please join us! We all share an awesome responsibility for the future Message From Randy Beltz Board of Directors President Stay connected with us We are working proactively to keep our members informed and connected via online platforms and events. Watch for our updates through email and social media. And if you’re not receiving our updates, email cchambers@alaskaalliance.com. Stay up to date at AlaskaAlliance.com.
3601 C Street, Suite 1424 Anchorage, Alaska 99503 www.petroak.com info@petroak.com Alaska’s Oil and Gas Consultants Geoscience Engineering Operations Project Management 907.272.1232
Page 12 No new taxes yet enacted by Legislature The Alaska Legislature left Juneau in May with a balanced budget, smaller Permanent Dividend and no new taxes, but expect new oil taxes to be back on the agenda in 2024. Page 18 Dunleavy’s carbon plan moves forward Gov. Mike Dunleavy’s plan to lease underground reservoir space to store carbon dioxide in depleted and producing oil and gas fields got funding from the Alaska Legislature. Page 22 Sackett decision pushes back EPA The recent court decision in Sackett vs EPA should help Alaska development by limiting the EPA’s ability to unnecessarily restrict projects under Waters of The US guidelines. Page 34 Hilcorp ramps up its plans on North Slope Hilcorp Energy has big plans for new development for Alaska oil on the North Slope in coming years. FEATURES The Link is published in partnership with the Alaska Support Industry Alliance by Fireweed Strategies LLC, 4849 Potter Crest Circle, Anchorage, AK 99516. We actively seek contributions from Alliance members and the oil and gas and mining industry. For advertising information and story inquiries, email Lee.Leschper@FireweedStrategies.com. Our magazine is mailed at no charge throughout Alaska to those interested in resource development and a healthy Alaska economy. To subscribe, email Admin@FireweedStrategies.com. Publisher: Lee Leschper | Editor: Tim Bradner | Production, Design: Will Leschper Contributing Photographer: Judy Patrick THE LINK: JULY 2023 6 ON THE COVER The Alaska Railroad celebrates a century of providing service to the state’s most important areas with a focus on continuing to play a vital role for numerous industries in years to come. Photo Courtesy Alaska Railroad ON THIS PAGE Wildlife like this handsome bull caribou, photographed near Kuparuk, are oblivious to oil activity on the North Slope, despite outside claims to the contrary. Caribou in particular use TAPS for shade during the summer months. Photo by Judy Patrick
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THE LINK: JULY 2023 8 A few weeks ago, I had the pleasure of joining a panel at the Society of Professional Engineers Western Region Meeting in Anchorage. The topic was “Outlook for fossil fuels in the Energy Transition.” As part of my remarks, I talked about the opportunity for our industry to be a beacon of hope for a generation of young people who are being misled by sensational messaging from climate doomists. Many of the attendees agreed that this was a critical issue to be addressed. A professor from U.C. Berkley in attendance spoke passionately about what he was seeing, every day, with his students because of climate doomism. It was not good. Climate doomism is the idea that we are past the point of being able to do anything at all about global warming — and that mankind is highly likely to become extinct. That is wrong, and it is doing serious damage to our future generations. Multiple polls over the past year have indicated that our young people are feeling overwhelmed, anxious and depressed about global warming. In a recent BBC interview, one young man said “Give me hope. Convince me that there’s something out there that’s worth fighting for, that in the end we can achieve victory over this, even if it’s only temporary.” Our industry has the opportunity to provide that hope and we should all get involved in the conversation. When you hear young people express concerns about the potential for mankind to become extinct in the not-to-distant-future (or any other alarmist messages), I hope you will take the opportunity to talk to them about what is really happening in the efforts to achieve a cleaner energy future. They need to know that every day, people are working hard and are successful in their efforts to move toward a clean energy future. They need to hear that oil, gas and mining are playing, and will continue to play, a vital role in their clean energy future. Most importantly, they need to know that climate doomism is wrong, there is a role for them to play in developing their future and there is plenty of time to do it! Don’t let doom win. Teach your children well: We have a vital role to play Message From CEO Rebecca Logan
THE LINK: JULY 2023 9 AKOGHS has been busy! Board members Joe Mathis, Brad Chastain, Dave Norton, Dave Haugen, Dave Myers, and Kara Moriarty are holding monthly meetings to conduct the business of the society and determine what activities should be done to advance our mission of collecting, preserving, and sharing Alaska’s oil and gas history. Founding Members Campaign: We have raised $67,000 from individuals and companies who have become founding members of our society. A big thanks to Lynden, Furie, Michael Baker International and Price Gregory for all joining at the $10,000 level and to Marathon Petroleum for their $5,000 membership. You can still become a founding member at www.akoghs.org. Categories range from $100-$25,000. Grants: We have applied to the Atwood Foundation for a grant that will cover the first year of our Oral History Project. Oral History Project: We have completed our first video interviews of seven industry pioneers. We are finalizing details with the University of Alaska Oral History Department so they can begin interviews with other industry pioneers that will be archived on their website and available to the public. If you know someone who should be interviewed for this project, please email Rebecca Logan at rlogan@alaskaalliance.com Preservation: We requested an “Expression of Interest” from several Alaska organizations to provide archival services to the society. The UAA/APU Consortium Library responded to our request and we have met with them to discuss the details of the services they can offer to support our collection of historical materials. Collections: We have finalized a donor agreement to be signed by those who are interested in giving their items to the AKOGHS. We have already received several donations. Sharing: We have begun to make public presentations about the organization and the opportunities for people to participate. Don’t miss the opportunity to be a founding member of the Alaska Oil and Gas Historical Society. Membership categories range from $100-$25,000. Sign up for the AKOGHS newsletter at www.akoghs.org Alaska Oil and Gas Historical Society (AKOGHS) Update
THE LINK: JULY 2023 10 Tax on Hilcorp included in changes in Senate Bill 114 There was a flurry of interest in oil and gas taxes in the Legislature this spring, but interest quickly dissipated when there was strong pushback from oil producers and support companies, and opposition voiced in the state House, which is led by Republicans. The issue will resurface in the 2024 session, however. One bill, targeted at Hilcorp Energy, one of the most active companies in the state, has moved to the Senate Rules Committee, an advanced stage of passage in the state Senate. Sen. Bill Wielechowski, D-Anch., chairs that committee and is also sponsor of the tax legislation. There are two major tax changes in Senate Bill 114, the original bill sponsored by the Senate Rules Committee. One is the “Hilcorp” tax, which requires Hilcorp, which is organized as an S Corporation, to pay the state corporate income tax of 9.4 percent that is paid by other oil producers who are organized as ordinary C Corporations. This is a form of business organization used by Hilcorp, which is privately owned, in all states where it does business and the exempt status from the state corporate income tax has been known since Hilcorp began investing in the state in 2012 and 2013. In S corporation the state income tax liability passes through to the shareholders. However, because Alaska has no personal income tax there is no tax paid, which has long bothered Sen. Wielechowski. SB 114 leaves the S Corporation exemption intact except that oil producers organized that way, Hilcorp being the only one, must pay the same amount as if they were organized as C Corporations. This would apply only to S Corporations earning more than $4 million in profits, so it does not affect smaller companies, and explorers, organized that way. The other change in SB 114 is a reduction in per-barrel oil production tax credits that are allowed producers as incentives to develop more oil. The credits are graduated from $8 per barrel down as oil prices drop so Oil and gas taxes likely to come up again in ‘24 Photo by Judy Patrick Hilcorp Energy has continued to invest heavily in its infrastructure in the state of Alaska.
THE LINK: JULY 2023 11 that taxes are lower in periods of low prices, encouraging continued activity, and higher when prices are robust. SB 114 would lower the credit range from $8 per barrel and down to $5 per barrel are down. Roger Marks, a private petroleum economist, estimates that this will increase the tax burden by 40 percent. The per-barrel tax credit was passed by the Legislature in 2012 as a part of Senate Bill 21, a major overhaul of the state’s petroleum tax laws. The 2013 changes have been criticized as giving away too much to industry, but the fact is that exploration and development work jumped just after the law was enacted and production, in decline for years, stabilized and has even increased. SB 114 remained in the Senate Finance Committee as the 2023 session adjourned by part of it, the Hilcorp change, was grafted into another bill, SB 121, which has to do with corporate income tax paid by digital businesses. This bill, with the Hilcorp tax, has advanced to the Senate Rules Committee. Were SB 114 to pass including both the Hilcorp tax and per-barrel credit reductions, the combined added tax on companies in FY 2024, which begins in July, would be $1.05 billion, the state Department of Revenue has estimated. Of that, the Hilcorp tax would be $190 million next year. However, those amounts are higher because SB 144 would be retroactive to Jan. 1 rather than starting on July 1, the beginning of the new fiscal year. This means FY 2024 covers an additional six months of tax collections. Going forward, if the bill were to pass, the tax would be lower. The Legislature had made tax changes retroactive before. What worried companies is that SB 114 seemed to have the support of the Senate’s leadership at the start. Sen. President Gary Stevens, R-Kodiak, spoke of it as “our” bill in press conferences. Sen. Cathy Giessel, R-Anch., the Senate Majority Leader, spoke favorably of the Hilcorp provision. Also of concern was that Gov. Mike Dunleavy, who is hunting for revenue to pay a higher Permanent Fund Dividend, was silent. State House leaders voiced strong opposition, however. — Tim Bradner
THE LINK: JULY 2023 12 Modest PFD won’t require large draw on state savings It was a slog — taking 121 days and extra time in a one-day special session — but the Legislature’s FY 2024 $6.2 billion budget is balanced, a $2.4 billion Constitutional Budget Reserve was not drawn on, and there was no talk of an overdraw on Permanent Fund earnings to pay a big Permanent Fund Dividend, or PFD, proposed at $2,700. In the end, the conservative-led state House Republican Majority agreed to the plan for a more modest dividend put forth by the state Senate, which is led by a coalition of Democrats and moderate Republicans. The large PFD would have created a deficit of $600 million to $800 million that would have required a draw on savings. As they return home legislators are likely to encounter little argument from constituents over the smaller dividend, as has happened in the past. Unless there is a huge spike in oil revenues (unlikely, experts say) this could set the stage for a realistic formula to guide calculation of the PFD, replacing a current one that is obsolete, and perhaps end the annual wrangle over its amount. This debate preoccupies legislators at the end of every legislative session and is a distraction from other issues. The FY 2024 budget enacted in Juneau includes a provision that if oil prices and revenues rise there might be an extra $500 dividend. Meanwhile, there is talk of a special session in October to discuss a state fiscal plan that would include a new PFD formula. New revenues could be part of this — higher oil taxes or a state sales tax might be part of a package. However, this is going into the 2024 election year, which will dampen talk of new taxes. Also, talk of special sessions in the fall are common but unless there is an emergency they rarely happen. The FY 2024 budget is tight given the constraints of revenue but contains these items, including others: n $28.35 million was appropriated to pay down past oil exploration tax credit liability. $55.7 million had been proposed earlier in the budget cycle to completely pay off this liability but it was later reduced to help achieve a final budget compromise. The last of these obligations should be paid off next year, bringing to an end painful, as it turnout, experiment with oil and gas exploration tax incentives. The program was well-intentioned but when it was developed more than a decade ago, but it became too complex and too easy for ambitious small explorers to “game” in stacking one incentive atop another to the point that the state was paying, in cash, up to 70 percent of more of exploration well costs. The program did result in the discovery of some oil (how much is uncertain) and it did help firm up new natural gas resources in Cook Inlet, which are important for the state’s major communities. Gov. Bill Walker and the Legislature had to end the program after state oil revenues took a sharp downturn in 2016. An unpaid liability of almost a billion dollars of credit payments had built up, forcing some small independents out of business. The tax credits are now mostly owed to their banks. n $9 million was appropriated for renewable energy grants mostly for projects in rural communities. The Legislature also approved, and the governor has signed, a bill making this grant program, through the Renewable Energy Fund, permanent rather than requiring periodic reauthorization. The Legislature must still make appropriations to the fund for grants, and the governor must approve those. n $7.5 million was allocated for childcare assistance grants, although bills making systematic improvements in assistance wait until next year. Improved childcare has turned out to be very important for most business and industry groups because the difficulty of getting both adults in a household back to work after the pandemic is seen as a major source of workforce recruitment problems. Top Alaska labor organizations, for example, designated childcare as their top 2023 legislative priority. — Tim Bradner Legislature ends session with balanced budget GIESSEL STEVENS
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THE LINK: JULY 2023 14 Photos Courtesy ConocoPhillips Willow is in the NPR-A west of Alpine and other producing fields on the North Slope, which are on state lands. It is the latest, and largest, discovery made to date in the petroleum reserve. $700M spent to date on lease acquisition, exploration, permitting ConocoPhillips is continuing work on its $8 billion Willow development as it awaits U.S. District Court Judge Sharon Gleason’s decision on environmental lawsuits seeking to block the project. Earlier this year Gleason approved winter construction, mainly an eight-mile gravel access road, but the judge has yet to decide on the main court challenge. ConocoPhillips is meanwhile preparing for a hoped-for favorable decision. “We have about 300 staff and contractors currently working to bring this project to fruition. We have a thorough execution plan, a robust development concept, and we are well-advanced in detailed engineering,” company spokesperson Rebecca Boys said in a statement. “Winter construction activities have concluded on the road to Willow and the Tiŋmiaksuvik boat launch. Non-ground disturbing activities like turning and compacting ConocoPhillips preps Willow, waits on judge
THE LINK: JULY 2023 15 the gravel in the newly installed road segment will continue,” she said. To date, ConocoPhillips has invested more than $700 million in Willow lease acquisition, exploration and appraisal drilling, engineering, environmental studies and permitting. “As we move towards FID we will continue placing long-lead material orders and finalize contract awards in support of the project. At this stage, we want to move the project forward to enable the State of Alaska and our key stakeholders to realize the benefits of responsible, sustainable resource development within the National Petroleum Reserve-Alaska,” or NPR-A, Boys said. Willow is in the NPR-A west of Alpine and other producing fields on the North Slope, which are on state lands. It is the latest, and largest, discovery made to date in the petroleum reserve. Two other smaller discoveries made by the company, GMT-1 and GMT-2, are now producing. Willow is eight miles west of GMT-2 and about 25 miles west of the Alpine field. Meanwhile, in a related development ConocoPhillips announced that funding has been approved for developing the Nuna project from the 3T drill site, as the Nuna pad is now designated, in the Kuparuk River Unit. The company acquired the Nuna acreage in 2019 from Dallas-based independent Caelus Energy, who made the discovery and had already constructed the gravel road and pad for drill site 3T. Project construction activities will begin this year and continue in 2024 with pipeline and on-pad construction, the company said. Drilling is anticipated to begin in late 2024 with the first oil production “The additional drilling opportunities we’ve identified at Nuna are a positive development that should increase oil production at Kuparuk. Our investment in this project was approved due to Alaska’s stable fiscal regime which is clearly working to promote new and ongoing investment.” — Erec Isaacson, President, ConocoPhillips Alaska CONTINUED on PAGE 16
THE LINK: JULY 2023 16 anticipated by early 2025. The expected peak oil production rate is 20,000 barrels per day. “The additional drilling opportunities we’ve identified at Nuna are a positive development that should increase oil production at Kuparuk,” said Erec Isaacson, President, ConocoPhillips Alaska. “Our investment in this project was approved due to Alaska’s stable fiscal regime which is clearly working to promote new and ongoing investment.” The Nuna project will add 29 development wells, on-pad infrastructure and pipelines that tie back to existing KRU processing facilities. Drill site 3T will be the 49th drill site developed within the KRU. In other activity in ConocoPhillips operated North Slope fields, Fiord West, a deposit in the Alpine field, is now producing through its first production well. An injection well to support production was drilled earlier. “We have a producer-injector well pair now on line,” said Boys, the company spokesperson. Fiord West is significant because the deposit is tapped with long extended-reach horizontal producing wells drilled from established drill sites several miles away. The horizontal wells allow Fjord West to be tapped without building stand-alone surface infrastructure and a bridge over the Colville River channel. Meanwhile, Doyon Drilling Rig 26, Doyon’s specialized extended-reach drill rig, is working on horizontal wells into Narwhal, a deposit south of Alpine, Boys said. The company is also drilling new wells at the West Sak viscous oil project in the Kuparuk River field with Doyon Drilling Rig 142. More West Sak wells are planned in 2024, she said. ConocoPhillips Alaska will continue to invest about $1 billion a year to grow our Alaska legacy business with projects such as Nuna. — Tim Bradner Photo Courtesy ConocoPhillips CONTINUED from PAGE 15
THE LINK: OCTOBER 2022 17 Alaska Service Center 1-877-678-SHIP Matson.com/Alaska Expertise. Resources. Reliability. Twice-weekly vessel service to Anchorage and Kodiak and weekly service to Dutch Harbor, linking domestic and international cargo with seamless rail and trucking connections to the Kenai Peninsula, Valdez, Fairbanks, and Prudhoe Bay.
THE LINK: JULY 2023 18 Dunleavy’s plans for underground storage likely to come up in ‘24 Gov. Mike Dunleavy achieved the passage of the first part of his carbon legislation, offering forest carbon offsets for sale. The second part, establishing the framework for a state-managed carbon dioxide underground injection program with permanent storage, did not pass but will be on the governor’s front burner for the 2024 legislative session. The forest carbon offset sales will bring only modest state revenues. State natural resources Commissioner John Boyle says it will help pay for active management in state forests for fire and insect prevention and mitigation. The carbon dioxide injection and storage program, if approved, has much more state revenue potential because companies would lease unused reservoir capacity from the state, which owns it. However, the legal framework for this must be established in state law. Conceptually, both programs seem simple. Trees absorb carbon dioxide and if forest owners manage their lands to maximize this the avoided carbon offsets can be sold to companies needing to offset their own emissions. This is now done in the Lower 48 and in Alaska on lands owned by Alaska Native corporations. The advantage here is that this can be done soon — there are now buyers and reputable companies in this business. First part of carbon offset legislation moves ahead Photos Courtesy Office of the Governor From left, Laura Stidolph, state legislative director; Gov. Dunleavy; DNR Commissioner John Boyke, Special Assistant Rena Miller and Deputy Commissioner (oil and gas) John Crowther.
THE LINK: JULY 2023 19 Senate Bill 48, which the governor has signed, includes a provision allowing private individuals to lease state lands — with trees, of course — and market the carbon offsets through the state, which will itself sell offsets from state forests. Part two of the carbon package, in Senate Bill 49 and House Bill 50, involves the leasing to companies of underground reservoir space for injection and permanent storage of carbon dioxide. This will come next year, and it has the potential of earning much more revenue for the state. That is because the potential volume of CO2 safely stored will be much larger and more easily measured for certification by buyers. But this will take time to develop because it is not yet clear where the carbon dioxide with come from. If the big Alaska LNG Project is built there will be a huge amount of C02 available for storage on the North Slope because the natural gas there is high in carbon dioxide, at least in Prudhoe Bay where most of the gas is located. This will be injected and stored in underused reservoirs there because the carbon dioxide cannot be shipped through the Ak LNG pipeline for the making of liquefied natural gas for export. Cook Inlet has ample potential for CO2 injection and storage, too, but where would this carbon dioxide come from. A potential rebuild and restart of the closed Agrium Corp. fertilizer and ammonia plant, with reasonably-priced natural gas delivered through Ak LNG, would be one source. Japanese companies are also interested in shipping liquid CO2 to Cook Inlet for injection and storage, and one company there has already contracted for construction of a specialized CO2 tanker, although is unlikely that this first vessel will be to serve Alaska, at least at first. A lot of work is also being done on the direct capture of carbon dioxide in flue gas, both from coal-fired boilers in Interior Alaska and gas-fired turbines on the North Slope and Southcentral Alaska. The capture in coal boilers is more easily done than in gas turbines. A lot of research is underway in this area aided by federal tax credits for greenhouse gas reduction. Industrial and power plant emissions could be sources of CO2, but the technology to capture them is still evolving. In Interior Alaska Usibelli Mines and the university are looking at the potential for injecting and storing CO2 in deep unminable coal seams. In Cook Inlet and the North Slope there are also prospects of using pore space in deep saline water aquifers, former state Natural Resources Commissioner Corri Feige says. In Southcentral Alaska those are too deep to have contact with drinking water aquifers, and there are no drinking water aquifers on the North Slope because of permafrost. — Tim Bradner
THE LINK: JULY 2023 20 John Kurz became the next President and CEO of Alyeska Pipeline Service Company April 10. Kurz follows interim president Betsy Haines who led the company during the executive search conducted by the Trans Alaska Pipeline System Owners. Kurz brings over three decades of experience in the oil and gas industry. This includes serving as Senior Operations Manager for Greater Prudhoe Bay in Alaska in addition to multiple executive positions around the world. In his most recent role, Kurz was Chief Operating Officer for Santos and Oil Search in Papua New Guinea. Career highlights include overseeing operations in oil and gas fields, terminals, and pipelines. Kurz has a track record of improving safety and environmental performance and cultivating the next generation of leaders. “Alyeska is a great company with a rich and proud history and an exciting future,” Kurz said. “Its employees are critical to the State of Alaska, the communities, the upstream and downstream customers we serve, and employees and families who rely on the oil and gas industry for work. Leading an organization and team of this significance is a tremendous responsibility and honor, and I intend to help Alyeska achieve even higher levels of performance.” Kurz met his spouse in Anchorage, all three of his children were born here, and he holds a Master of Science Degree in Engineering Management from the University of Alaska. “We have strong connections here,” John said. “It is an incredible opportunity to return home and serve as Alyeska President and CEO.” In addition to his Prudhoe Bay experience, Kurz served as the executive responsible for operations in Baku, Azerbaijan for the Sangachal Terminal and in Basra, Iraq for the giant Rumaila Field. Kurz previously held other roles in oil and gas in Egypt, Indonesia, and Texas. “In all my leadership roles, I have worked to inspire the Team to deliver greater performance and results across the board in safety, production, cost, and other business measures, while also leaving an enduring legacy of improvement,” Kurz said. Including Haines, Kurz is the 13th president to lead Alyeska since its formation in 1970. Haines, who retired from Alyeska in 2021 after 30 years of service, plans to resume her retirement plans after assisting with the transition. “It has been a privilege to lead this organization as interim president,” Haines said. “Certainly, when I retired, I didn’t imagine this opportunity, and it was a surprising and wonderful way to end my career. I look forward to bringing John on board as he takes on this new challenge. We’re all looking forward to this next chapter for Alyeska.” For more than 45 years, Alyeska has operated the 800-mile Trans Alaska Pipeline System (TAPS), safely moving oil from Prudhoe Bay on the North Slope of Alaska south to the Port of Valdez, the northernmost ice-free port in the United States. The pipeline traverses three mountain ranges, permafrost regions and 34 major rivers and streams. Alyeska personnel work in Anchorage, Fairbanks, and Valdez and at pump stations and response facilities all along the pipeline. Alyeska Pipeline Service Company turns to Kurz KURZ
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THE LINK: JULY 2023 22 Supreme Court’s ruling limits EPA regulating authority Alaska’s industry leaders applauded the U.S. Supreme Court’s ruling in Sackett vs. EPA, which sharply reduce the authority of the U.S. Environmental Protection Agency in regulating wetlands. The decision has particular impact in Alaska where much of the state is now classified as a wetland. That brings with it regulatory authority under the U.S. Clean Water Act to protect wetlands under the U.S. Army Corps of Engineers “Section 404” dredge and fill permits. The Supreme Court’s decision would reduce the amount of land where Section 404 permits would be required. Along with reduced regulatory jurisdiction would be a reduced requirement for compensatory mitigation for wetlands affected by development. The 9-0 ruling provides clarity and flexibility in developing land and reduces uncertainty on what is qualified as “waters of the United States,” or “WOTUS,” under the Clean Water Act. Most of the North Slope is considered a wetland along with many areas where mines and other industrial projects are built or proposed. The current rules on mitigation are ambiguous at times, which creates uncertainty, and the new court ruling would reduce that. The Associated General Contractors of Alaska, the Council of Alaska Producers, the Alaska Support Industry Alliance, the Alaska Forest Association, the Alaska Oil and Gas Association, the Alaska Chamber, the Alaska Miners Association, and the Resource Development Council for Alaska expressed support for the Sackett v. EPA ruling. “This is a huge win for Alaska,” said Rebecca Logan, CEO of the Alaska Support Industry Alliance. “The Biden WOTUS led to massive uncertainty and more burdensome regulations. The administration should now do its part and rescind its WOTUS rule, which is clearly considered unconstitutional by the highest court in the land.” “We are thrilled with the Supreme Court Sackett vs. EPA ruling,” said Alaska Miners Association Executive Director Deantha Skibinski. “Rejecting the significant nexus test restores common sense and clarifies how WOTUS is implemented. Now the Biden Administration must revise its WOTUS rule and provide for a durable rule that clearly details waters that fall under federal jurisdictions versus those that will be regulated by the states.” “This ruling reaffirms the primary role of states in managing their own land and water resources,” said Karen Matthias, executive director of the Council of Alaska Producers. “It will provide much needed regulatory certainty for all projects in Alaska.” “We are pleased with the Supreme Court’s decision in Sackett vs. EPA. The court correctly identified that the EPA’s plan was an extreme overreach by the federal government with potential to extend to all waters of the United States,” said Kara Moriarty, AOGA president/CEO. “This decision balances state and federal powers and provides certainty.” “RDC welcomes the practical limitations set by the U.S. Supreme Court,” said Leila Kimbrell, executive director of the Resource Development Council for Alaska. “For too long, federal agencies have expanded the definition of ‘waters of the United States’ resulting in burdensome and destructive federal overreach of state and private lands.” “This is a win for State’s rights and private land ownership rights,” said Alaska Chamber President/CEO Kati Capozzi. “The Alaska Chamber is pleased to see the U.S. Supreme Court enforce the literal and figurative boundaries the EPA should have followed all long,” The precise definition of WOTUS is fundamentally important to the construction industry,” said Alicia Amberg, executive director of the Associated General Contractors of Alaska. “AGC members perform many construction activities on land and water that require a WOTUS evaluation before proceeding. The fluctuations in WOTUS regulations, case law, and implementation guidance throughout the years have impacted our members’ ability to secure financing and approval to construct new projects or maintain existing infrastructure and facilities across Alaska. The Sackett decision provides the clarity needed to adopt a durable WOTUS rule that follows the intent of the Clean Water Act,” Amberg said. — Tim Bradner Alaska leaders applaud decision on wetlands Chugach Electric Association and Hilcorp Energy have entered into a shared services agreement for operations at the Beluga gas field near Anchorage, in Southcentral Alaska. The deal will result in significant cost savings amounting to $700,000 a year for Chugach alone, the utility said in a statement. Both are part owners of the gas field, which supplies fuel to the adjacent gas-fired power plant owned by Chugach. Hilcorp staff will continue to man field operations while Chugach employees will continue to operate the power plant, but the two will share equipment like cranes, loaders, warehouse space, lodging and catering. Hilcorp has increased drilling at Beluga with four new gas wells in 2022 and five new wells in 2023. — Tim Bradner Chugach Electric, Hilcorp share services in Beluga gas field
The Link Magazine BRINGING FIBER CONNECTIVITY TO THE ALEUTIANS AND MAKING IT PERSONAL. sponsored content July 2023 Alaska’s largest telecom provider, is bringing fiber connectivity to 12 Aleutian communities, including Unalaska, which received 2 gig consumer internet access in late 2022. With more communities scheduled to receive access this year, the endeavor is well underway. For one team member, interest in this massive undertaking goes far beyond her professional role as GCI Rural Affairs Director — for Jenifer Nelson, this project is personal. “I first heard about what we now call the AU-Aleutians Fiber Project when I started working at GCI six years ago,” recalls Jenifer. “At the time, GCI had just turned up its TERRA network in Western Alaska, and I was meeting with people who had just signed up for GCI’s new internet service. I heard firsthand how transformational it was for them. I kept thinking what a difference that kind of connectivity could make for the Aleutians.” Jenifer’s thoughts were driven by more than just her job. She is Unangan (Aleut) from King Cove, which makes the Aleutians Fiber Project one that literally hits home. “Every time I visit my family in King Cove, I experience the digital divide in real time, and I’m reminded of the challenges of getting connectivity in rural Alaska,” she relates. “It’s hard to put into words what a difference fiber will make. This is instantly life changing.” This transformational project provides direct local access to long-haul fiber bringing urban-level, speed, service, and reliability to some of Alaska’s most remote communities including Unalaska, Sand Point, Akutan, Chignik Bay, Larsen Bay, Chignik Lagoon, Chignik Lake, Cold Bay, False Pass, Ouzinkie, Port Lions and Jenifer’s hometown of King Cove. A Vision for Digital Equity GCI has been serving Alaskans for more than 40 years, so they understand the connectivity and communications challenges faced by the state’s many remote communities. While Anchorage and other hubs in Alaska make huge strides with advancements like 2.5 gig consumer internet and 5G mobile service, GCI realizes that incremental changes would never amount to digital equity across the state. As Jenifer explains, “we need bold steps, public/ private partnerships, and fiber to make real, lasting change in Alaska’s connectivity landscape.” Enter the AU-Aleutians Fiber Project. The $100 million AU-Aleutians Fiber Project runs from Kodiak along the south side of the Alaska Peninsula and the Aleutians to Unalaska. With its more than 800-mile-long fiber optic backbone in place, the venture extends GCI’s gold standard for connectivity to areas which house some of the most remote communities in the Arctic, unlocking countless possibilities for thousands of Alaskans living and working in these areas. GCI, Photo: Savannah Yatchmeneff “It wasn’t necessarily the industry that attracted me to GCI, it was the opportunity to work with rural Alaska communities. It’s been exciting to learn about telecommunications and see the way it impacts people’s lives,” states Jennifer. “I have been supportive of this project from the very beginning when it was just a concept, and it will be super exciting when service lights up. It means a lot to me to know that I played a small part in helping connect not only my hometown but communities across the region.” - Jenifer Nelson Jennifer Nelson growing up in King Cove, a community she’s now helping connect with highspeed fiber access.
THE LINK: JULY 2023 24 Photo Courtesy Alaska Railroad The Alaska Railroad is under state ownership and continues to support the growth of Alaska’s economy. Infrastructure built to support defense, resource development In its day, construction of the Alaska Railroad in the midst and aftermath of World War I was as defining an event as building of the Trans Alaska Pipeline System in the 1970s. Both were seen as national security infrastructure and key to opening access to natural resources — the Interior Alaska goldfields in the case of the railroad and newly-discovered North Slope oil fields in the case of the pipeline. There were key differences, of course. The pipeline was built and financed by private industry, North Slope oil producers Atlantic Richfield, BP, and Humble Oil (later ExxonMobil). The railroad was a government initiative, owned and operated by the federal government until it was purchased by the state of Alaska in 1985 for $22 million. President Woodrow Wilson had the vision to push this strategic infrastructure in 1914, as war clouds loomed in Europe, and to persuade a reluctant Congress to fund its estimated cost of $35 million. Construction began in 2015 with completion in 1923, one hundred years ago on July 15. President Warren G. Harding traveled to Alaska to drive a golden spike at Nenana, southwest of Fairbanks, to mark the completion. On his return trip Harding died from food poisoning in San Francisco. The number of construction workers, peaking at 4,500 in 2017, was not to rival the 10,000 that worked on the pipeline, but the project had a huge impact on Alaska at the time and was to transform the then-territory. Anchorage, founded as a construction 1923-2023: The Alaska Railroad at 100 years
THE LINK: JULY 2023 25 Pipeline Construction & Maintenance | EPC Contracting Powerplant Construction | General Contracting Anchorage | Deadhorse | 907.278.4400 | www.pricegregory.com Thousands of Miles of Experience Committed to Client Satisfaction Dedicated to Safety Excellence camp in 1915, was to become its largest city. There were prior railroads, of course, regional lines built to support gold mines. The private Alaska Central Railway, later the Alaska Northern Railway, was built a few miles north from Seward. It later went bankrupt. The rail line was later acquired by the government to be part of the Seward-to-Fairbanks line. A regional 45-mile rail line from Fairbanks to nearby gold fields was also acquired, although this was mainly to obtain the rail terminal in Fairbanks. The government wanted the railroad to make money, but the territory’s economy was thin, at least in Interior and Southcentral Alaska, as gold mining declined. Seward, Anchorage and Fairbanks had combined populations of 5,400, not enough to generate a lot of business. In 1938, however, the railroad turned its first profit, and with the start of World War II its strategic importance was amply illustrated as military and civilian freight increased sharply, and so the President’s decision to build the railroad was justified. In the post-war years Congress appropriated $100 million for track rehabilitation to repair the effects of heavy wartime use. The railroad also started its streamlined passenger service between Anchorage and Fairbanks, a train dubbed Aurora, with blue and gold colors. This ushered in a new service catering to summer visitors as well as Alaskans and laid the foundation for the railroad’s important role in supporting the small but growing visitor industry. By 1953, however, there was growing competition from trucks and autos on highways that were being built or upgraded. Passenger service to and from Seward was discontinued, not to return until the present-day summer service supporting cruise ships calling at Seward. Whittier, built by the U.S. Army during World War II, was becoming important for the railroad, which reached the Prince William Sound community through tunnels built during the war. The first train-barge service from Whittier was established in 1964, enabling rail cars from anywhere in the Lower 48 to be brought to Alaska by sea and to reach any point along the Alaska Railroad. Earthquake damage on March 27, 1964, disrupted rail traffic but service was quickly restored. Freight service between Anchorage and Fairbanks resumed April 6 and to Whittier on April 20. Passengers were again traveling by April 11. The railroad again demonstrated its value in the 1970s, providing heavyhaul service to support construction of the trans-Alaska oil pipeline. Rails had meanwhile been extended east of Fairbanks to Eielson Air Force Base, providing support to that installation, now home to the nation’s most advanced fighter-interceptors. Plans were made for further extensions east to Fort Greely, where the nation’s missile interceptors are based. That link has not yet been built but a bridge across the Tanana River was constructed as the first increment of the rail east. Today the bridge supports U.S. Army operations on training ranges south of the river. Today, the Alaska Railroad is under state ownership and continues to support the growth of Alaska’s economy. — Tim Bradner
THE LINK: JULY 2023 26 Doyon, Limited, the Alaska Native regional corporation for Interior Alaska, has announced its acquisition of Fairweather, LLC, a veteran oilfield support services in Alaska. Fairweather is joining the Doyon Family of Companies. This acquisition will support Doyon’s existing operations on the North Slope, providing expertise in oilfield support, weather, logistics, and medical services. Fairweather, LLC was founded in 1976 by Sherron Perry with a focus on providing aviation weather observation services to remote regions of Alaska. Responding to the growth of the emerging oil and gas industry, Fairweather expanded its operations to include a number of highly sought-after support services designed to support exploration and production activities. “We are pleased to cross the finish line on this agreement with Doyon,” said Rick Fox, Fairweather Senior Vice President and General Manager. “Fairweather has over 80 years of management experience, and over 180 employees, with expertise in oilfield services, aviation, medical services, airport, and weather support, and expediting and logistics services. We know our business model will continue to support Alaska’s North Slope.” Fairweather is a strategic investment opportunity in a growing Alaskan service-based organization — a business that complements Doyon’s existing oil field services in Alaska’s oil and gas industry. Fairweather’s 180 team members will join the Doyon Oil Field Service Pillar, which includes Doyon Drilling, Mid-Alaska Pipeline, Doyon Associated, and Doyon Anvil. These companies provide Arctic drilling, pipeline ownership construction, maintenance and operations, camps, engineering, and procurement services to Alaska’s oil and gas industry. “We are very pleased to have Fairweather join our Family of Companies. Fairweather has a well- earned reputation and there are many synergies between our existing Doyon oil field services companies and Fairweather,” said Aaron Schutt, Doyon President and Chief Executive Officer. “We are both Alaska-based companies focused on our employees, customers, safety, and successful project outcomes for our clients.” The acquisition of Fairweather continues Doyon’s position as the leader in Arctic oil field services. Doyon, Limited was established on June 26, 1972, as a for-profit corporation pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA). Headquartered in Fairbanks, Doyon, Limited has more than 20,400 shareholders and was established under the 1971 Alaska Native Claims Settlement Act. Doyon has subsidiaries in oilfield services, government contracting, and tourism, is also the largest private landowner in Alaska and one of the largest in North America. In the oil and gas industry Doyon is particularly noted for its Doyon Drilling company, a veteran North Slope drilling company recognized for its innovations in technology, such as its Rig 26, a specialized heavy rig designed for extended-reach drilling. Doyon is also noted for its power generation services as operator of coal-fired power plants for military bases in Interior Alaska and a natural gas-fired power plant that serves Joint Base Elmendorf-Richardson in Anchorage. The corporation has recently ventured into telecommunications through an initiative to build fiber optic cable that will bring broadband and high-speed internet to rural communities in the Interior. Doyon’s mission, it says is to continually enhance its position as a financially strong Native corporation in order to promote the economic and social well-being of its shareholders and future shareholders, to strengthen its Native way of life, and to protect and enhance its land and resources. For more information, visit www.doyon.com. Fairweather’s services include advanced logistics and drilling support, remote medical support, meteorological and oceanographic forecasting, aviation and airstrip support, and bear guard security. Fairweather supports its remote operations professionals with highly skilled teams of licensed health, safety and environmental (HSE) professionals. Fairweather is committed to meeting the industry’s highest standards, ensuring the needs of every project are met, safely and efficiently, no matter how complex. — Tim Bradner Doyon adds Fairweather, expands Slope footprint
Become a Founding Member of The Alaska Oil & Gas Historical Society The Alaska Oil & Gas Historical Society (AKOGHS) is a nonprofit organization dedicated to preserving and sharing the history of the oil and gas industry in Alaska. Our mission is to educate the public about the important role that oil and gas have played in shaping the state and its people and to preserve the legacy of those who have worked in the industry. If you are interested in learning more about the history of Alaska’s oil and gas industry, or if you would like to become a member, we invite you to explore our website and join us in our mission to preserve and share this important part of Alaska’s heritage. Learn more and become a Founding Member today at akoghs.org THE LINK: JULY 2023 27
THE LINK: JULY 2023 28 EDITOR’S NOTE: This story was produced in partnership with Alaska’s Energy Desk, a public media collaboration focused on energy and the environment, as part of a new podcast, Midnight Oil. The eight-episode podcast explores the trans-Alaska pipeline’s 40-year history, how the pipeline reshaped Alaska’s economy and asks if Alaska will always be an oil state. Tom Marshall died in Anchorage in 2020. By Elizabeth Harball/ Alaska Public Radio You could argue — and a lot of people do — that Prudhoe Bay’s billions of barrels of oil might still be hidden under the tundra today if it weren’t for Tom Marshall, who’s now 91 years old, and lives in a little brown house in Anchorage. Tom Marshall, a petroleum geologist, suggested that the state select Prudhoe Bay. It reminded him of big oil basins he’d seen in Wyoming. Marshall won’t bring it up himself, but for many Alaskans, he’s a hero. There’s an award tucked between the photos lining his living room wall. It’s for “professional discernment and courageous foresight.” Marshall earned this award for something he did in the early 1960s, when he worked for the brand-new state of Alaska. Then, the state depended on federal dollars and a few resource industries, like salmon fishing. Marshall remembers it as a tense time — with a tiny economy and population, it was a real question whether Alaska could support itself. “There was a great deal of anxiety of just how we were going to accomplish this,” said Marshall. But under the statehood act, Congress handed Alaska something like a scratch off lottery ticket. While the federal government still controlled much of Alaska’s 375 million acres, the state could select over 100 million acres to develop as it pleased. If Alaska picked land with valuable resources, it would have a winning ticket. “This land would put us in a position to pay our bills,” said Marshall. That’s when Marshall, a petroleum geologist, quietly became Alaska’s most important employee. He was tasked with picking the land. A ragged chunk of Arctic coast called Prudhoe Bay caught his eye. The geology reminded Marshall of big oil basins he’d seen in Wyoming. Marshall thought this could be the jackpot Alaska needed. But when he suggested selecting a remote chunk of tundra on the icy ocean, Alaska’s first governor, Bill Egan, wasn’t impressed. “Gov. Egan’s comment was, ‘doesn’t he know it’s frozen?’” said Marshall. Still, Marshall kept pressing Egan to select Prudhoe Bay. Some people thought Marshall was onto something. A handful of oil companies were intrigued with Alaska’s northernmost edge, a region known as the North Slope. This vast, remote area stretches from the Brooks Mountain Range north to the Arctic Ocean and includes Prudhoe Bay. The federal government had started leasing land on the North Slope in 1958, and a few gutsy companies were laying plans to drill there. Marshall’s Folly: One man’s vision set the future for Prudhoe Bay … and Alaska Snapshot Into Alaska’s Oil and Gas History CONTINUED on PAGE 30
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