Follow our reviews of the 2014 legislative sessions (upcoming)

House and Senate conferees on the contentious education bill reached tentative agreement Wednesday (outlined below) and a vote on that is expected in both bodies on Thursday. The Senate goes in at 9 a.m. and the House at 11 a.m. Meanwhile, other bills are still being worked on. Huggins said the plan is to convene at 9 a.m. to work on bills and, “we anticipate that, hopefully, by noon tomorrow we will deal with two products important to Alaskans,” the capital budget and education bill. Dyson asked if that meant other bills on the calendar would “go away?” Huggins said no. Starting at 9 a.m. “we’re going to deal with bills.”

Knik Arm bridge still in play: An action in the House Wednesday involved the House rejecting the Senate changes on the Knik Arm bridge funding bill, HB 23. A free conference committee has been appointed on the House side. The vote was 20-18 on accepting the Senate version, which means the vote failed (21 votes are required).  Republicans voting against concurrence: Reps. Costello, Feige, Hawker, Olson. Reps. Herron and Nageak were the only Democrats voting yes. Reps. Lynn and Reinbold  were exciused.

Costello’s vote against the measure was a surprise given her support for the bridge. The House waived the necessary rules and House Speaker Chenault appointed a free conference Committee on HB 23 of Reps. Austerman (chair), Stoltze and Drummond. Nobody gave real specifics on why they would not concur.

 

Workers’ comp reform: The workers’ comp medical fees “reform” bill has passed and is on the way to the governor. HB 316 changes the way fees are calculated for payments to health providers under workers’ compensation. Business groups and labor strongly backed it in hopes it would reduce high workers’ comp insurance premiums paid by Alaska employers.

AIDEA bill, mine financing to House floor: SB 99, making changes in the Alaska Industrial Development and Export Authority procedures, is on the House calendar Thursday and appears set for passage. The bill also provides financing for two important Southeast mine projects, the Bokan Mountain rare earths projects and the Niblack project. Both are on Prince of Wales Island.

 

Senate backs film tax, veteran hire tax credits: The Senate passed HB 306 after adding two years to the 2016 sunset date for the film production tax credit and removing any sunset for the veteran’s hire tax credit.

Sen. Donny Olson (D-Golovin), who moved the film credit extension, said NANA Corp., invested $40 million after the “intensive scrutiny by a subcommittee” that led to the 2023 sunset date adopted in 2012.

 

“No one should be afraid of a closer eye,” responded Sen. Anna Fairclough (R-Anch.), with reference to the program audits that remain in the bill. The House concurred with Senate CS for HB 306 33-0. Finance Cochairman Bill Stoltze added the early film credit sunset after failing to win House passage of his HB 112, which would entirely repeal the credit.

 

Olson’s amendment was adopted on a 15-3 vote with Senate President Charlie Huggins, Sen. Fred Dyson and Fairclough casting the opposing votes. Huggins, with six other majority Republicans, was on the losing side of a vote that protected the veteran-hire tax credit. The bill imposed a 2016 sunset date on the one-year-old credit, which currently has none.  Republicans Click Bishop, Mike Dunleavy, Cathy Giessel and Mike Kelly voted for Sen. Bill Wielechowski’s amendment with all other Senate Democrats.

 

Capital appropriations, SB 199: The capital budget, SB 199, appears ready for final action. On capital projects spending the Senate put unincorporated communities and “named recipients” (nonprofits, mainly) on a five- year “use it or lose it” deadline to start capital projects, which is the same rule that now applies for grants to municipalities. We’re unsure what prompted this, but it doesn’t seem unreasonable.

 

Education bill, the details: Here are details of the compromise education bill, as outlined in a statement from the Senate Majority:

“The Legislature pledged $300 million of additional support for education to be distributed over the next three years,” said Sen. Kevin Meyer, the chair of Senate conferees, in a statement issued late Wednesday.

“Although the House and the Senate started at a wide disparity when we first began these discussions, through a respectful and thoughtful debate, we were able to devise a plan which creates a robust, healthy education package for the next three years.”
Sen. Gary Stevens (R-Kodiak)  said, “I am particularly pleased we kept the change to lower the number of students required to begin a charter school from 150 to 75 students and the one-time $500 per enrolled student grant.”

Funding
The conference committee agreed to provide $300 million in forward funding to schools over the next 3 years. Roughly, $150 million will go into the Base Student Allocation (BSA) and $150 million will go towards incentivizing innovation and opportunities in schools.  The breakdown for the increase in the BSA is $150 increase in the first year, with a $50 a year increase each year for the two following years.

Innovation
The committee recognized the need to create equity for charter schools, which are a proven way to create more opportunities for students through alternative methods.

  • Incentives for building charter schools include:
    • Lowering the minimum number of required students for 95-percent funding from 120 to 75
    • Allowing charter schools first option to lease empty space in district-operated public schools
    • Providing a $500 one-time credit per student for start-up charter schools
    • Plan also includes more money for correspondence study programs by raising the 80% funding to 90% funding.

Committee members also carefully deliberated over other incentives and chose to include the following features:

  • Extended a pilot program for Science, Technology, Engineering, and Mathematics (STEM) to middle schools
  • Funding for broadband to provide more opportunities for distance learning in rural and remote communities
  • Allowing students to “test out” of core courses while still receiving credits required for the Alaska Performance Scholarship
  • Repealing high school exit exam instead allowing students to take the SAT, ACT or WorkKeys.

Other changes:

  • Funding comprehensive studies regarding how state money is distributed to school districts
  • Gathering more information relating to the number, attendance, and performance of students enrolled in the school whose parents or guardians are active members of U.S./Alaskan armed forces.

 

 

The state Legislature’s 2014 session is headed toward its required April 20 adjournment. As of today, the Senate has passed the operating budget back to the House. Next stop is the conference committee. The Senate Finance Committee has also released its first draft of a capital budget with appropriations to finish the partly-built University of Alaska Anchorage engineering building, to fund more work on the billion-dollar Knik Arm bridge, and to add funds, but not complete, the partly-built engineering building at the University of Alaska Fairbanks and the extension of the Alaska Railroad to Port MacKenzie on Knik Arm, in upper Cook Inlet. Read the rest of this entry »

Buccaneer Energy has formed a project team to plan development of a natural gas discovery at the Cosmopolitan offshore Cook Inlet prospect, company CEO Curtis Burton said in a teleconference with investors Sept. 10.

“Cosmo has turned out to be substantially nicer than we had ever hoped for,” when the asset was acquired from Pioneer Natural Resources, Burton said.

The plan is to work toward development of a gas discovery in the upper reservoir sections of the field and to work on further testing and possible development of a deeper oil reservoir, he said.

Buccaneer has now moved the Endeavour jack-up rig from the “Cosmo No. 1” well to its “Southern Cross” prospect in north Cook Inlet, and plans work on another well in the “North West Cook Inlet” prospect, but will bring the jack-up rig back to Cosmopolitan for more drilling and testing this winter, Burton told investors in the call.

Buccaneer is part-owner of the Endeavour rig along with Ezion Holdings of Singapore and the Alaska Industrial Development and Export Authority, the state’s development finance corporation.

“We have started the permitting for the new drilling we need to do,” this winter at the location, he said. Cosmopolitan is just offshore Anchor Point and south of the parts of Cook Inlet affected by winter ice.

Buccaneer is meanwhile also drilling another onshore gas well at its small Kenai Loop gas field near the city of Kenai. The “KL-4” gas well is almost drilled to its bottom location. It will take some additional time to run tests on the well and set casing before a decision on a gas production test can be made, Burton said.

The company is also sorting out issues with the Alaska Oil and Gas Conservation Commission on Kenai Loop that would affect decisions on the well, he said.

Following completion of that drilling, the mobile rig being used there, which is owned by Buccaneer, will be moved to the West Eagle prospect east of Homer, where it will drill a test well.

In other news on Cook Inlet exploration, industry sources have reported that Furie Operating Alaska, another independent exploring offshore prospects, has completed its planned drilling for the season and will be moving the jack-up rig it is using, the Spartan 151, back to Port Graham for winter storage.

Company officials could not speak the status of the company’s program but the source, asking to remain unidentified, said Furie is continued to work on development planning for a gas discovery made in late 2011.

Production tests on the discovery were done this summer, the sources said, but there is no information on gas reserve estimates. Furie Operating privately-owned and does not routinely release information on operations.

Buccaneer is a public company, in contrast, that is traded on the Australian stock exchange and under rules of that exchange must make detailed information available on its operations for investors.

When legislators open their 2013 session in Juneau, the knotty oil tax problem awaits them. Despite the new Republican-led leadership in the Senate, the Legislature will proceed cautiously in considering proposals to reduce the state’s oil production tax. The issue is highly complex and controversial, and the new Republican Senate leaders, while sympathetic to the need for changing the tax, will realize they must move carefully.

Read the rest of this entry »

There’s more gloomy information on the Southcentral Alaska gas supply situation. Enstar Natural Gas Co. is about the begin 2013 with about 4.2 billion cubic feet of its gas requirement for the year unmet, meaning not under contract. Enstar’s total annual gas need is about 33 billion cubic feet, so this is a significant amount and the largest supply deficit the utility has ever had at the start of a year. Enstar’s gap grows to about 50 percent of its requirements by 2016. The electric utilities also see gas supply gaps out there. There are new gas wells coming on line, but they will not bring in enough supply to make a significant dent in the gap.

Will this make things worse? We hear one Beluga gas field owner is reluctant to fund its one-third share of the proposed $50 million 2013 capital budget for the field. These are funds needed for new wells and other work needed to keep the field operating at peak performance to produce gas.

A group of Japanese companies interested in a large Alaska liquefied natural gas project are getting a cool reception from the administration of Gov. Sean Parnell. The group has been talking with the administration on and off since summer, and would like to develop a large LNG plant either in Valdez or Cook Inlet they would own, with the pipeline owned by other parties. However, they have been asking for some form of Memorandum of Understanding with the state, similar to an MOU Gov. Frank Murkowski’s administration signed with the Alaska Gasline Port Authority in 2004, indicating that the state and the Japanese group would work together on a feasibility study. The president of the Japanese company has been in Alaska since mid-November attemping to meet with the state, but has not been able to arrange a meeting. The group is about to terminate its Alaska project and look elsewhere, we’re told.

It has been two and a half months since the Legislature adjourned its special session on oil taxes. Lawmakers have long since returned home to ponder the failure of the session, and to busy themselves, in most cases, on re-election campaigns. There was a lot of work done on oil taxes in the 2012 session and despite the failure, in the end there was some progress on this divisive and controversial topic.

Here’s the problem: As is well known, oil production on the North Slope is declining at rates of about 6 percent a year. The Trans Alaska Pipeline System is approaching rates of oil “throughput” where operating problems will occur – that rate is about 550,000 barrels per day. Countermeasures Alyeska Pipeline Service Co. is taking, such as heating the pipeline, will cost money. The best solution, Alyeska says, is to get more oil flowing through the pipe. Read the rest of this entry »

The state Department of Transportation and Public Facilities has released its summary of a reconnaissance study of possible road and rail routes to the Ambler Mining District of the western Brooks Range. The least expensive option, and the quickest to build, appears to be a road from the Dalton Highway to the Ambler district. Other routes for roads, and several options for railroads in the study, were longer and more expensive.

There are three significant known mineral deposits in the Ambler Mining District. The best known is Arctic roughly in the middle of the region, which has high grades of copper. At the eastern end is Sun, which has copper, zinc, and significant showings of silver. Smucker is to the west, a zinc deposit that also appears to have significant silver. Active exploration is underway at Arctic and Sun, but Smucker has been little recent exploration. Companies exploring in the region historically have been Kennecott Minerals, Anaconda and Cominco, and Noranda. More recently NovaGold Resources and NANA Regional Corp. have been active. Read the rest of this entry »

Alaska oil and gas operators are cautiously optimistic about prospects in 2012 on several fronts. Here’s an outline of where things stand for the industry in the new year:

• The state Legislature will resume work on a revamp of the state’s oil and gas production tax when it goes into its annual session Jan. 17, and although the measure remains highly controversial there are some signs that key obstacles may be overcome.
• Shell is very close to securing final approvals to pursue long-planned exploration in the federally-owned Beaufort and Chukchi Sea offshore areas of the Arctic. These areas are highly prospective and in the case of the Beaufort Sea could result in new production moving into the Trans Alaska Pipeline System in just a few years because of the presence of onshore pipelines in the area. The Chukchi is highly prospective as well but because of the remoteness of the region it would take a decade or more to plan and secure permits for infrastructure. Read the rest of this entry »

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