Slope investment to drive 2014 construction
A new report by the University of Alaska Institute of Social and Economic Research (ISER) projects overall construction activity will rise 18 percent in Alaska this year, driven primarily by a surge in oil industry activity across the North Slope.
“It’s pretty amazing,” said RDC Board member John MacKinnon, Executive Director of the Associated General Contractors. “I think we can attribute most of that to SB 21, the oil tax reform bill passed by the Legislature last year.”
The report noted “the biggest sector, and the one projected to increase the most this year, is oil and gas. We expect that, if actual spending matches the announced plans and past experience in the industry, spending will be up 33 percent from $3.2 billion last year.”
The report added, “the growth is being driven by the continuing high price of oil, the increase in the cost of inputs to all phases of oil and gas operations, the growing need to maintain the aging infrastructure and facilities on the North Slope and in Cook Inlet and, perhaps the most important, by the climate of optimism created by the passage of the new production tax on oil and gas that went into effect at the start of 2014.”
North Slope production rallies
A sharp uptick in activity by North Slope producers has resulted in more oil flowing down the Alaska pipeline than state analysts predicted in their fall forecast last December.
Production through January averaged 526,000 barrels per day compared to the forecast of 508,000 barrels per day for the fiscal year beginning July 1st and ending June 30, 2014. In December, production reached 569,000 barrels per day and 562,500 barrels per day in January. If the average for the remainder of the fiscal year is sustained at 526,000 b/d, the decline rate between FY 2013 and FY 2014 will fall to only one percent – compared to a forecasted decline of 4.4 percent in December. That is well above the North Slope’s long-term rate of decline of six percent.
Energy reporter and columnist Tim Bradner noted that some of the increased production is a result of activity planned before the passage of oil tax reform legislation last year, but also from an uptick in activity that stems from the tax change. Bradner reported there is a 30 percent increase in the drilling of new wells in the producing fields.
“There are no guarantees of new production, but there is already new activity and new production being documented by the state. It seems to be working,” Bradner said.
“The new production we’re seeing on the Slope represents the producers’ faith that Alaskans will vote to keep the new tax law intact,” Bradner added.
Court rules in favor of Tongass exemption
The 9th Circuit Court of Appeals reversed the District’s Court’s 2011 decision that invalidated the Tongass National Forest exemption from the 2001 Roadless Rule.
The panel held that the U.S. Department of Agriculture gave valid reasons for exempting the Tongass, including the changes in economic predictions and the high socioeconomic costs in Alaska. The panel concluded that the government’s reasoning in reaching its decision were neither arbitrary nor capricious. The panel remanded the case to the district court to determine whether a supplemental environmental impact statement is required under the National Environmental Policy Act.
“This is a huge victory for Alaska and their families who depend on economic development in the Tongass,” said Governor Sean Parnell. “Although the rule has already done irreparable harm to the timber industry and small communities in Southeast Alaska, this win will allow Alaskans to start building the industry back up.”
RDC supports working forest concept
In comments to the Alaska Division of Forestry, RDC said the new Southeast Alaska State Forest should be managed as a working forest to furnish a continuous supply of timber to the forest products industry.
A working forest is one that recognizes the human component of our forest, incentivizes workforce development and local jobs, while providing opportunities to enhance wildlife habitat, recreation, and subsistence activities.
RDC was a strong supporter of the legislation creating the Southeast State Forest in 2010. Currently, RDC is supporting a bill which would create the Susitna State Forest.
A major goal of RDC is to build a more diverse and vibrant economy in Southeast Alaska through the restoration of a fully integrated forest products industry.
The Tongass National Forest is well known for its timber resource base, but the vast majority is closed to active forest management. Overall, less than six percent of Southeast Alaska is open to logging.
RDC explained in its comments that an adequate long-term supply of economic timber is essential if the forest industry is to play a major role in rebuilding the region’s economy.
The majority of the timber is on federal land, but federal timber sales have declined sharply. Subsequently, the demand for state timber from local mills has increased significantly. While the Southeast State Forest does not have the timber base to fully support the industry, it can provide a stable supply of timber to local mills and supplement declining timber harvests from the Tongass. It can also provide relief to the industry while it waits for increasing second-growth harvests from the national forest in coming decades.
RDC defends Mooses Tooth project in NPR-A
At a public hearing last month in Anchorage, RDC urged the U.S. Bureau of Land Management (BLM) to move forward with the Greater Mooses Tooth (GMT) project in the National Petroleum Reserve-Alaska.
The GMT project was reviewed and approved by the BLM and its cooperating agencies 2004. It was further reviewed in the NPR-A Intergrated Activity Plan (IAP). Moreover, the project has been modified only slightly from its original proposal. The project is essentially the same as that approved for permitting in the 2004 Record of Decision and evaluated under the 2012 IAP, with changes that reduced impacts and the overall footprint.
The ConocoPhillips project will provide significant revenues to Alaska Natives throughout the state through royalties and revenue sharing among Alaska Native regional corporations. New oil production from GMT will help offset declining North Slope production. It will create new jobs, generate needed revenues to the North Slope Borough, state, and federal government, while reducing America’s dependence on imported oil.
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