Thursday, January 1, 2015
So, after spending $millions$ to study just how screwed up we are, by thinking it was feasible to truck LNG from Prudhoe Bay to Fairbanks, well the cat is out of the bag. Yes, this project defiantly lived on through the 9-lives theory, when finally it went exhausted and now keeled over. Look, how many accidents on the Dalton, just this winter? And when you traffic jam that road with an additional “Dirty Dozen Ice Road” cowboy trucks heading back and forth with 35-thousand pound bombs attached, may as well set-up a toll booth – so we could at least re-coup the researching for this non-feasible project that was DOA since inception. What we need is a contraceptive, for the legislature down in Juneau that approves this crap. If we designed a scale that calculated the state's project management IQ based on the projects that have wasted good money, well it would be a sad outcome! Who in hell makes these decisions, to waste money on projects like this – no banks would entertain such ludicrous ideas, so it comes from...drum roll please, good old AIDEA. Yes, the Alaska Idiots Donating Everything Away have once again proved its “mission accomplished” is a statement consistent with “FAILURE”, after the robbery is successful. So we hear today that the LNG trucking project has been placed on hold, due many piss poor excuses. The sad thing, when somebody came up with this bright “lights-out” idea some 3-years ago, those in the know laughed and laughed and are still laughing – but it is no laughing matter now that the state is facing a fiscal meltdown – the price of crude oil is still crashing! But here it is in a nutshell. It all has too do with “Gas Sales Agreements” arranged between the sellers and the buyers of the natural gas. Even though we own the natural gas that would be used for this project, it has been hijacked by “Big Oil” and they aren't about to give it up on the cheap – as they have invested all whole lot in the infrastructure up north and utilize every damn drop of that gas – for oil recovery. So when they are forced to sell it, there exists some pretty rigid guidelines, as that gas must be processed by “Big Oil's” equipment and that comes at a cost. When crude oil was surfing at about a $100 a barrel, all was good. See, the formula for how gas is sold is very complicated, takes all kinds of things into consideration – like profit margins and that processing cost along with delivery, as it takes a pump which takes electricity which takes maintenance...So before the crude oil “wipe-out”, selling gas to outfits like Norgasco – a private entity that buys natural gas from EXXON and ARCO for transport to keep Deadhorse warm – the price of natural gas was earmarked to the price of crude oil based on energy content. Now when crude oil dropped to $80, the profit margins for “Big Oil” started to disappear, but still above what is called the “Hernia Rub“, the bellwether of all natural gas. Even though we are not part of the contiguous lower-48, for some reason they still control us with respect to natural gas indexing. Now when oil rested at $56 on the “Night before Christmas” and all was quiet at Governor Bill's house, all realizable profits were lost and the oil companies were practically giving it away. Not good. So with the “Sky Falling” and no stability in sight for crude oil pricing, there won't be any “Gas Sales Agreements” that make sense, and here's the ticket as too why the times are not good for negotiating. It is called “Force Majeure” which has already been used here in Alaska, to renege on contracts. Yes, one day Aurora Natural Gas decided it wasn't going to sell gas to “Large Consumers” in and around Anchorage – like for the schools. It was November, and cold, so Enstar had to step in and come to the rescue. Which was a “Good Samaritan” gesture until they tried to rob the little guys into paying for gas purchased to cover Aurora's cry baby attitude. See, Enstar had to buy “premium” and tried to sock-it-to-us and did get caught, and we were reimbursed. But precedence has been set, as an easy way out for crooks. When a business finds that what it is delivering crashes with respect to profit margins, it can declare this “Force Majeure”, which basically lets it off the hook. So even though the current crude oil “crash” is lowering the price of natural gas which means with the trickle down spout the cost to sell it in Fairbanks would also find reasonableness – it doesn't work that way as it is all built on “Profits” and today that has evaporated! And if you can't buy natural gas, what good is a project like was sanctioned by AIDEA – except to do a good job at managing “Wanton Waste” to the benefit of the crooks!
Posted by Green Mountain Boy at 10:46 AM