We provide an update of the FY 2016 budgets actions (lower item this page).

The state Legislature convened its 2016 regular session Jan. 19 amid fresh concerns about plummeting oil prices and state revenues. It’s isn’t a pretty picture: Back-to-back $3 billion-plus budget deficits and draws from state cash reserves.

If there’s a silver lining it is this: Pressure is growing on legislators to adopt a fiscal plan, tapping other resources, such as investment earnings, to offset lower oil income. Several Senate leaders have endorsed the idea of using Permanent Fund earnings, but the House has yet to grapple with this (there are internal problems). Use of Fund earnings would come this year, under the current thinking, with modification of the Permanent Fund Division and possible taxes considered next year, after the 2016 elections. (See more in our published Legislative Digest. (Contact us at timbradner@pobox.alaska.net to inquire.)

State Attorney General Craig Richards unveiled Gov. Bill Walker’s new fiscal plan, in concept form, in a Oct. 28 briefing to legislators in Juneau. Essentially the plan calls for bulking up the Permanent Fund by transferring in other state savings accounts like the Constitutional Budget Reserve and also having certain oil revenues flow to the Fund instead of to the state general fund. The bulked-up Fund would then be managed like one of the large endowments that fund major universities and foundations.

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Alaska gas producers are considering expanding the pipeline size for the planned $50 billion-plus Alaska LNG Project from 42 inch to 48 diameter pipe, Gov. Bill Walker said Friday in an interview.

The state of Alaska is a partner in the project with producers BP, ConocoPhillips and ExxonMobil. Walker has pushed for the larger pipe size to provide capacity for shipping more North Slope gas, the governor said.

“If the pipe is expanded the state and the producers have agreed to share the cost of the expansion,” said Katie Marquette, Walker’s press secretary.

There are concerns that a late change in the project design could complicate the Federal Energy Regulatory Commission process now underway, but FERC has told the state it won’t be a problem.

“FERC chairman Norman Bay met with the governor in August in Alaska and told the governor that the change in design at this stage will not complicate or delay the federal regulatory process,” Marquette said. Read the rest of this entry »

Prudhoe Bay producers now expect to ultimately recover 14.1 million-14.2 billion barrels of oil from the giant Alaska North Slope field, about 60% of the estimated oil in place in the reservoir rock, company managers said.
That’s up from 9.6 billion barrels, a 40% recovery, estimated when Prudhoe was first discovered in 1968.

“The Prudhoe producers have done a very good job of maximizing recovery, and they’ve had a very high quality reservoir to work with,” said Mark Myers, Alaska’s Commissioner of Natural Resources.
To get this result, Myers said, the field operators have employed innovative new production and drilling technologies, some of them invented or first applied on the slope.

These include multi-lateral wells, or several wells drilled underground off a single well from the surface; use of low-cost coiled-tubing units for drilling; extended-reach horizontal production wells and “four dimensional” seismic, the commissioner said. Read the rest of this entry »

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