ANWR, ARCTIC NATIONAL WILDLIFE REFUGE, DON YOUNG ALASKA, DORENE LORENZ, LISA MURKOWSKI ALASKA, THE TAX CUTS AND JOBS ACT

The small independents who depended on reimbursement from the State for oil and gas exploration may be getting a check in 2019, under Governor Walker’s proposed Alaska Economic Recovery Plan.

The Legislature ended what some called an over-generous cash credit program with the passage of HB111.

Tax credits have been credited with once dead Cook Inlet production rising up 80% since 2010, and the robust activity of smaller independent producers and explorers like Hilcorp, Caelus Energy, Repsol, and Armstrong.

After the State backpedaled on paying the tax credits, Caelus Energy delayed drilling of Smith Bay.  The field is perhaps one of the largest finds in recent history on the North Slope – holding up to 2.4 billion barrels of crude.

As part of the Alaska Economic Recovery Plan, the Walker Administration proposes to pay off the $900M remainder of outstanding future-obligations to independent oil and gas exploration companies at a lower rate.

It is hoped that the payments will create more confidence in the State for independent producers, which will equate to greater investment.

The State plans on offering a 10% discount rate in the fiscal year 2019. The rate will be lowered to a 6% discount rate in exchange for an override royalty interest in the well.

To fund payment of these outstanding credits, the state will issue bonds with the discount covering the cost of borrowing.

Fact Checking Alaska’s Economy

Courtesy of Ron Niebrugge

Those wanting to fact check Alaskan economic facts and figures this political season just got handed a plum. The Department of Labor and Workforce Development posts it’s monthly  Alaska Economic Trends on the internet, offering advanced indicators that tell the overarching story of how our state’s economy is progressing.

While it is no secret that the state is currently entering it’s second year of recession, how that compares to historical lows is now well understood. The crash of the late 1980s hit like a tidal wave, and cleaning up the aftermath changed the way many sectors of the economy went about their business – making them more resilient and adaptable.

State labor economist Dan Robinson: “We brought together many of the measures that we think are most relevant to try to understand the current health or lack there of in our economy.”

Alaska Economic Trends offers robust statistics on key indicators like job growth, unemployment, and gross domestic product growth.  They also offer statistics on wages, foreclosures, personal income, house prices, population growth, net migration, and initial claims for unemployment insurance.  All indicators are  compared against a ten year history, but the key indicators are also compared against relevant U.S. and historic Alaska trends.

Spoiler alert for those who weren’t here to experience it first hand, the current recession doesn’t hold a candle to Alaska’s real estate tank in the 80s.

State labor economist Dan Robinson: “Lot’s of bank failed, very high foreclosure rates.  Foreclosure rates right now, for example,… .06%, very low. Lower than our ten year historical average. Well below what the U.S. foreclosure rate was during that recession. Just a whole different scale than what happened in the mid-80s.”

Robinson says this is a recession in terms of job loss, wages and GDP, but so far it hasn’t had a large impact on housing.

Story as aired on KSRM News:
http://www.radiokenai.us/wp-content/uploads/2017/08/Dorene-on-Fact-Checking-Alaskas-Economy.mp3

Boy Scouts Prepare For Life By Preparing Fish Data For State

Courtesy of Ron Niebrugge

As the State of Alaska is taking the shears to its budget, former State Senator and current Anchorage Assembly member Fred Dyson is sewing up new merit badges for the Boy Scout sash.

Dyson says he has been working with biologists, Cook Inlet Keepers and other stakeholders on a new program that will help get boys prepared for life.

Fred Dyson: “What I am doing is getting boy scouts to help with the research… If that happens, a couple of score of boy scouts are going to be taking fish traps out and putting them in creeks for a period of time, filling out the paperwork and handing them over to biologists.”

Fred Dyson

Dyson thinks the scientists who are looking for evidence of invasive species will be able to use the field data collected by the boy scouts to better determine fish populations.

Fred Dyson: “I think it is kind of a neat deal. Every buddy wins. The State’s money for fish and game is really limited, and there is lots of research and monitoring and managing that is going on, and getting these kids doing it – everybody wins.”

Story as aired on KSRM News:

http://www.radiokenai.us/wp-content/uploads/2017/08/Dorene-on-Boy-Scouts-fish.mp3

State Family Leave Policy Gives Birth To Federal Lawsuit

Courtesy of Ron Niebrugge

The U.S. Department of Labor has filed suit against the State of Alaska, alleging the Alaska Marine Highway System violates federal leave laws.

A civil suit filed in U.S. District Court last week alleges the ferry system miscalculates time off mandated by the Family and Medical Leave Act for rotational employees,  those who work for one or more weeks straight, then take the same amount of time off.

The act requires large employers to provide three months of unpaid leave when a child is born, fostered or adopted. The leave also covers care for a seriously ill family member or the sick employee.

The federal complaint says the ferry system counts such time off as part of the 12 weeks leave required by federal law, and suggests that’s illegal. The State of Alaska argues the federal government is way off base.

Alaska Department of Law Cori Mills: “The State’s interpretation is that the twelve weeks applies to all employees the same.  It doesn’t matter if you have a flexible schedule, whether you were one week on, one week off, everything accrues the same.  Your benefits, your health insurance, and the Family and Leave Act applies the same regardless of your work schedule.” 

In the complaint,  the Labor Department asks the court to order the state to follow it’s interpretation of the rules and demands that any fired employees be reinstated and compensated for lost wages and benefits. It further demands that any worker who lost pay or leave time to have it restored.

Story as aired on KSRM News:

http://www.radiokenai.us/wp-content/uploads/2017/08/Dorene-on-Ferry-lawsuit.mp3

State Pushes In Clutch On Oil Exploration Incentives

Concerns that Alaska oil exploration could be coming to a hard stop soon are being addressed by members of the Alaska State Legislature.

Last month, the State announced that the oil cash credit program will end completely, leaving nearly a billion dollars in outstanding obligations left unpaid.

Alaska’s cash credit program was unique in that it was the only oil economy to reimburse companies for their losses, but the reimbursement was never a sure thing under the program.

As controversial as the tax credits may be, Representative Mike Chenault (R-D29) says the proof of how effective they were is in the pudding.

Representative Mike Chenault: “The tax incentives that were applied through the Cook Inlet Recovery Act and and through SB-21 they did exactly what they were designed to do: they incentivised new corporations coming to Alaska, and they invested money in the state.  They actually went out and found new reserves.” 

Chenault confirmed that if already earned credits had been paid, Alaska wouldn’t be seeing slow down with Blue Crest and North Slope projects. 

Unfortunately, with the price of oil dropping, the State of Alaska simply couldn’t afford to continue to pay out cash credits that would have equated to a quarter of the State budget.

Representative Mike Chenault: “In the legislation that was passed this year, there is other ways now that will allow them to recoup some of their costs as soon as they go into production, but they are going to have to go into production in order to receive those credits.”

Fallout from the delinquency is already hitting Alaska’s economy, with two oil companies recently announcing they are stopping work until the State catches up on its account payables.

This as the US Energy Administration announced a trifecta of robust marketplace indicators late last week: U.S. gasoline demand and exports reached a record high, U.S. natural gas production is forecast to hit a record high in 2018, and U.S. oil producers are expected to produce more crude oil.

EIA forecasts crude oil production to average 9.9 million barrels per day (b/d) in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.