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Thursday, December 8, 2011

Alaska Goes Broke


Wow, only $21-Million during this state's latest “Slope” oil lease sale. A sale that included the Beaufort Sea nearshore and offshore area leases! Am I the only one laughing? In comparison, the original Prudhoe Bay lease sale garnished over $900-Million, in 1970 dollars! With the conversion, that 21-Million today amounts to “Busted”! So I am sure it is not laughter heard from on high and I am sure that it is crying I hear from Parnell's office. And with an Alaskan natural gas pipeline turning out to be nothing short a $500-million Ponzi & Abramoff & Rothstein scam, he is not the only one crying. Ponzi is a well-known con-artist, Abramoff is a well-known acquaintance of Don Young and Rothstein is a well-known acquaintance of Sarah Palin. Guilty by association is what I am getting at! And Harold Heinze has already run for cover. Don't ask, don't tell? Why not. Heinze is the goof-ball that believed he could build a bridge from Prudhoe Bay to Norway, across the North Pole! That was when he was the head honcho for ARCO, soon after that delusion he was unemployable, so was hired by the state! That is where this state was branded the “Bridge to Nowhere” state. Anyway, with the Department of Natural Resource's “December Oil Lease Sale”, the results so far indicate a pathetic showing and goes to show that the oil development era is over with for the “Lost Resource” state. Hey, we still have some “Frontier” left, as long as SHELL goes to Hell! Look, we cannot be so stubborn, foolhardy and naïve to believe oil development in whale country can be done when we find a guy like Ben Stevens at the helm of an oil rig escort vessel. Would you trust him on any environmental detail? As oil was leaking away from a pipe, he would be waiting for that “consultant's” retainer – a.k.a. bribery! But this poor showing has the DNR chief saying, “What went wrong”? Well this is just another fallout of Sarah Palin's reign of terror as this state's governor. It takes time to tango, so we may be seeing what she really had in mind for this state. And it is spelled, D,O,O,M. Not her intent, but goes to show when lacking knowledge, there may come serious repercussions. Of course someone's lack of knowledge is another's sack of cash, just ask Trans-Canada! Look, she packed up and left for Arizona – what does that tell you about sincerity. She messed with “Big Oil” and there exists a grudge even today. Now this poor showing of hands still interested in the North Slope potential, it doesn't mean that the “Big Players” are packing their bags and heading to gooier pastures, it means they are here to stay a little longer but with no intent to extend their domain. Maybe a little creep here and there, but basically a time for hibernation. But this lease sale that had excited all the state bureaucrats, it is the poorest showing on record. I believe that things poor relate and reflect to how well the representatives are doing – POOR. Now even the National Petroleum Reserve, which was supposed to be an area of excitement amongst the geological “Cretaceous” society, it also had a “busted” showing. The good old days are over with, face the facts. Gone are the 2-million barrels a day days! Sure this state reaped the benefits of oil development, with royalty and taxes, but we were screwed, from day one with respect to what we should have exploited from oil men exploiting the “Black Gold” resource. If “We the Citizens” enjoy ownership of that resource as dictated through this state's Constitution, then how come when that black goop came topside we only enjoyed 12-cents on the dollar? For how many years? With how many barrels? Look, it is a very simple equation, this goes for the “Big Players”, like EXXON, SOHIO and ARCO. Hey, I like the old names! In fact one can still see the outline of the SOHIO logo at the BOC base camp. Like what happens when the tundra is disturbed, its mark is forever! Now the 30-year old and still in good health infrastructure is paid for, clear title. The pipelines, the gathering stations, along with the Trans-Alaska-Pipeline - TAPS, it is all fully paid for. And for 30-years by now, “Big Oil” has been stuffing into an escrow account 5-cents on every barrel transported south, for the D&D fund, which acts as a deterrent to just pack up and leave, as the task to pull apart 800-miles of oil contaminated pipe along 800-miles of fragile ecosystem, this pipe will be forever in service, as this “D&D” account makes for millions in interest – why spend it? So “Big Oil” is smart, as they find an oil production flow-rate that basically costs them “zero”. And with a most recent realignment of the main infrastructure based on sound economic reasoning, the TAPS was “reconfigured” in what was tilted the “Strategic Reconfiguration” project, just a fancy name for a brilliant marketing scam – all legal! Look, there exists only a single pipeline south, so guess what? So with a system that is paid for and a system that was reconfigured to take advantage “blood out of a turnip”, we have today front and center the “new age” of oil development here in Alaska, which appears “Busted”, with respect to any worthwhile growth. For “Big Oil”, it is something for nothing, as when oil had dropped too $7.50 a barrel back in the late 90's, the “Lifting Cost” for Prudhoe Bay oil was at $2.75, less then what is cost the Saudis to extract oil. This is confidential so please don't tell Parnell, as it could be information used behind closed door tax assessment meetings. So with an infrastructure paid for in full, with the existing tax rate structure something to still write home about, simple subtraction paints the picture of how much profit “Big Oil” makes on a barrel of oil pumped south. With present day speculation, possibly over $100 a barrel when considering the corporate tax rate and other deductions. Yes free! Like already mentioned, “Big Oil” has learned very valuable lessons over the past 30-years here in Alaska and are not about to let anybody disturb this “Golden Goose”, or as U.S. Congressmen John Dingle once said, “The Cash cow of all cash cows“! Now things are different today, as there comes encroaching upon this brave and wild land a new player, so-called the “Independents”. In fact, a majority of the money spent on this “Busted” lease sale, it came about from interest these scavengers. Yes scavengers, as these outfits are using old and outdated geological data from “Big Oil” to re-track earlier exploration attempts, on leases deemed exploitable but due the difficulties of the environment, out of reach. It hasn't worked, it won't work. And it won't work for many reasons. Today, the true “lifting costs” as well as infrastructure development, it means for a bankrupt venture right off the bat. In comparison, how about closer to $48.00 dollars a barrel “lifting costs”. And then when that oil finally gets to topside, it must find a way to market. This little piggy went to market, this little piggy stayed home...” And the complicated economics of the TAPS is a stranglehold to further any “Independent” development attempts. Like already mentioned, “Big Oil” is in it for themselves, no Mr. Good Samaritan” exists, which spells once again “DOOM, as the little guys cannot survive. It is trespassing! And if you want to get “Big Oil” pissed off, remember they own the only way oil can get to market, offer “royalty relief” or talk about tax breaks for the “Independents”! The only way it works is if “Big Oil” was given amnesty and could re-capture back to day one the tax advantages given today to the “Independents”. It is the only fair way to deal with today's situation, decreased oil throughput which means decreased state revenues. Aren't you glad Sarah embraced and accepted Obama's $2-Billion dollar “stimulus” gift. Yes indeed, Sarah had too sign for it. And any amnesty to “Big Oil”, based on fairness, that would bankrupt this state's Constitutional Budget Reserve. So “Big Oil” is happy and doesn't give a rat's ass about this state's economics. We my as well get used too it, and before we let these “Independents” loose upon the tundra, or loose upon the waters of the Beaufort Sea, maybe we need to collect a ransom, just like the D&D, to make sure they can clean up after themselves. An accident will happen. Take that back, intentional hazardous discharges will become a reality, as it already has with Pioneer Natural Resources' illegal discharging of 49,000 gallons of contaminated glycol – the largest illegal discharge on record for Alaska's North Slope. As far as SHELL, you don't see Alaska's experienced “Big Oil” getting involved with SHELL”S intent to go digging where no reasonable corporations has gone before, as experience so far with under-sea pipelines and drilling inhospitable climates, it costs just too damn much. Which means for this venture to be profitable, any produced oil would have to be offloaded onto awaiting tankers, and what we don't need is another reality TV show about a bunch of pathetic boat people, especially if Ben gets a leading role!

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