Alaska Oil Industry Faces Investors’ Doubts

By GARLAND KENNEDY
Sentinel Staff Writer

Alaska’s oil and gas industry expects to retain its dominance over the coming decades, although it’s had trouble finding investors and renewable energy sources have gained a sizable market share, Alaska Oil and Gas Association president Kara Moriarty told the Chamber at a virtual meeting Wednesday.

“The globe is on an energy transition… The projections from the Energy Information Administration demonstrate that 30 years from now oil and gas are still the dominant sources of energy consumption in the U.S. and the numbers for global are very similar to this… Oil and gas is still the dominant source of energy for the next 30 years,” Moriarty said.

AOGA is a trade organization that advocates for the petroleum industry.

Moriarty emphasized the economic benefits of the industry in Alaska, citing a McDowell Group study that called it the “single most important economic engine in the state.”

“There are not a lot of direct or indirect jobs in the Sitka area, but one would argue there are some induced jobs through government spending,” she said. “But in its entirety, about a quarter of all jobs and wages across the state of Alaska can be attributed back to the oil and gas industry.”

Kara Moriarty, below, and Rachel Bylsma of the Alaska Oil and Gas Association, make a presentation during a Zoom Sitka Chamber of Commerce meeting Wednesday afternoon. (Screenshot provided) 

Oil and gas royalties, she said, are the largest contributors to the state’s Permanent Fund as well.

Looking forward, Moriarty said the industry requires trillions in investment, which may present an obstacle.

“Over $11 trillion in new oil investment will be needed through the next 25 years to meet the demand growth,” she said.

The need for continued investment, she noted, may prove problematic, in part because the state no longer subsidizes the industry as it once did.

“The only real barrier to them moving forward is finding investors, and that is a common theme across all companies right now in AOGA, is the challenge in finding investment,” Moriarty said. “For companies like Fury and Glacier and Blue Crest, one of the reasons has been the state had a program ten or twelve years ago that offered cash credits to entice companies like Hilcorp to come to Alaska and they would repay the credit you had earned in cash… When oil prices crashed in 2015 the state was not able to afford paying those cash credits in the full amount and they went to a much, much lower payment. And frankly in the last few years there have been zero payments… That’s given Alaska a bit of a black eye in the view of some investors.”

Further complicating the investment issue is a recent push for financial institutions to divest from fossil fuel interests.

“All of our companies are struggling to get investment and capital dollars. Part of it is the black eye the state has on the lack of consistent tax credit payments. Part of it is the constant look at our production taxes,” she said. “But another major portion, most recently in the last 18 to 24 months, is this effort by environmental groups to put pressure on financial institutions to quit lending money to anyone doing business in the Arctic. And that number has now grown to over 80 global financial institutions.”

Earlier this month, Harvard, along with other U.S. universities, announced that they will divest from the fossil fuel industry.

Under recent fiscal pressure, she said, fossil fuel companies have cut back on employee benefits.

“Big companies like Shell and Exxon continue to try to do whatever they can to save money, reduce workforce. Some companies are no longer contributing to their 401ks for their employees, all in an effort to try to save cash,” she said. ConocoPhillips CEO Ryan Lance was paid $28 million in 2020, the Houston Chronicle reported. Shell CEO Ben van Beurden’s made $7 million in 2020, a 42 percent cut from 2019, Reuters reported.

Moriarty didn’t address the topic of climate change in her presentation.

As the globe warms due to human-emitted greenhouse gases, the ramifications are expected to worsen, the National Aeronautics and Space Administration says on the website, climate.nasa.gov.

The Alaskan oil and gas industry has installed cooling systems to prevent freeze-thaw cycles from damaging some infrastructure, National Public Radio reported in 2018. Such equipment is planned for use in ConocoPhillips’ Willow project, The Guardian said in 2020. That project is currently on hold following a federal court ruling that scrapped its Environmental Impact Statement in August. In that ruling, Judge Sharon Gleason ruled the EIS did not sufficiently consider the project’s foreign carbon emissions or its impact on polar bears.

For AOGA, “the greatest threat to our industry today in Alaska, besides the challenge of finding investment, capital dollars, is the constant threat to increase costs to our business by increasing taxes,” Moriarty said.

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AK COVID-19 
At a Glance

(updated 5-18-22)

By Sentinel Staff

The state Department of Health and Social Services has posted the following update on the number of confirmed COVID-19 cases in Alaska as of 11:55 pm Wednesday, May 18.

New cases as of Wednesday: 1,675

Total cases (cumulative) statewide – 249,522

Total (cumulative) deaths – 1,252

Total (cumulative) hospitalizations – 3,762

Current Hospitalizations – 44

To visit the Alaska DHSS Corona Response dashboard website click here.

COVID in Sitka

The Sitka community level is now "medium.'' Case statistics are as of Wednesday.

Cases in last 7 days – 54

Cumulative Sitka cases – 2,633

Hospitalizations (to date) – 32

Deceased (cumulative) – 6

The local case data are from Alaska DHSS.

  

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20 YEARS AGO
May 2002

Police blotter: Two juveniles who were seen throwing their belonging at each other were told to stop or face arrest. ... A woman was reported arguing with her husband and friends, all of whom agreed she had been drinking too much. ... A man said he thought a neighbor had his missing cat, but the neighbor showed police his cat and her six kittens. A watch will be kept for the missing cat.

 

50 YEARS AGO
May 2002

 There will not be a commercial herring spawn and help fishery in the Sitka area, Jim Parker, Fish & Game fisheries management biologist, announced.  There’s been good herring spawn but herring haven’t spawned in the macrocystis kelp beds.

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