On Mark Hamilton

Alaska Is Doomed!

What in hell does Mark Hamilton know about the Alaskan Oil Industry? NOTHING. But since vacating his job at the University of Alaska, Anchorage, he is moonlighting as a con artist. Really, that was his main focus when running the “U” into the ground. Sure he built an infrastructure not necessary for higher education, but wait just a minute, he has “zero” authority or experience in the infrastructure some 600-miles away in the frozen North. It appears he followed Bill Sheffield's footsteps, in the category of waste, as the “U” has a bunch of fancy buildings and a whole lot of vacant “student” seats. But great, there's a parking garage, if you are rich! And it is dangerous when individuals like Hamilton, due their past influence, think they have something to offer, think they have the credentials to be experts on almost everything. They don't have anything to offer, so they should just go away with their lucrative state retirement and lucrative health care plan and leave well enough alone. There is dangerous precedent being set here, wherein non-experts try to throw a little weight at something, like “Big Oil”, that already knows what it is doing to survive even the toughest of economic times. Seems that there is coming a whole lot of hype over the fact that the Trans-Alaska-Pipeline is operating well below maximum throughput. So what, it is operating efficiently and safely, no matter what the Federal DOT is concerned about with the latest shutdown. I was on the side-lines that shutdown, and Alyeska's engineering staff knew what they were doing to start the line up, the “cold” start-up. Several years ago “Big Oil” realized that the good old days of 2-million barrels a day going south was history, and would remain just that for the rest of the Prudhoe Bay oil field's life span. It was supposed to last only 10-years, so going past 30 is something achieved beyond expectations, but all good things to come to an end. And these “Great” expectations beyond were made possible for one and only one reason, the industry was comfortable with the tax situation in Alaska. So there is no need to provide concessions this late in the game, with more tax breaks as it will not find anymore oil to fill the void. This is “Big Oil” reasoning, I will get to the Independents later on this broadcast, as that is a different animal to consider. Now, since the infrastructure was paid for in full, “Big Oil” set in motion a production rate that would be easy money, realizing that the price of oil “worldwide” was on the increase. Look, oil can only go up, so a meager but guaranteed production rate is fundamental with futures trading and economic success. With the new goals of continuous production at lower production rates, it required a re-alignment of the entire infrastructure and process, from Prudhoe Bay to Valdez, and even affected the tanker fleet. On the pipeline, a project titled the “Strategic Reconfiguration” set in motion a multi-million dollar project to revamp the entire pipeline for, reduced throughput! That project is almost finished, with Pump Station #1 waiting for commissioning of the new equipment, including hi-tech pumps and drivers that can handle the current and future production rates. There have come hick-ups this new stuff that replaces the legacy stuff, but one must realize that the commissioning of the original pipeline back in the late 70s did take about 3 full years to accomplish, to get the bugs out. So this state and the bureaucrats yielding the doom and gloom sickle, just relax. See, with steady and sustained throughput, even this state should be able to balance the budget based on a guaranteed income. It is that simple. So there is no need or rush to judgment a call for increased production. It ain't going to happen. Not with Prudhoe or Kuparuk or even if ANWR were to get permission to open up for oil exploration and exploitation. If today the oil companies were designing a pipeline, based on the reserves leftover today, it would be a much smaller line than what is crossing the tundra and mountains for some 800-miles south to Valdez. So it works, as “Big Oil” knows what is good for its portfolio, for its profit margin. Since the Prudhoe Bay infrastructure is paid for in full, the profit ratio for what is produced is solid and mind boggling with respect to investment opportunities. The cost of lifting North Slope oil - defined as getting the crude out of the ground and on to markets – is less than that found in Saudi Arabia! Even though “Big Oil” will argue that fact for its own secretive manipulation the facts, as it paints a different picture away from doom & gloom, it is true, as history and numbers and data don't lie. So “Big Oil” is comfortable, mind you Mr. Hamilton. The sad thing behind the “state” doom & gloom warning is the fact that this state has wasted the resource development “nest egg” on failed projects and today, after some 30-years, we still have not provided a sustainable jobs infrastructure outside “Big Oil”. We blew it and there is no turning back. Now what is scary for the state is how the Independents are reacting. See, they are getting the dander up with state officials, it is their plan. The Independents can and will ruin the Alaskan oil business. They are running down to Juneau crying we need this and we need that, so the state bends over and what we get in return is a pittance on revenue and see maybe a few jobs, but no guarantee such are filled by Alaskans. The Texan mentality is positioned to “rape” this state “Big Time”. Here it is in a nutshell. We are not getting anything worthwhile from the Independents arriving to possibly fill the “void”. Remember, there is NO VOID. In efforts to entice the “Independents” into places even “Big Oil” laughed upon, to produce marginal fields abandoned by “Big Responsible Oil”, the Independents apply for royalty relief and tax relief. The sad thing, the formulas will allow the state to recoup some of the lost revenue, but the time line for such is way past the expected life of these marginal fields. We loose! Marginal fields to not contain enough of the “resource” to warrant an interest! Now that word “marginal” takes on a double meaning, as outfits like Pioneer Natural Resources offers marginal wages that cannot compete with “Big Oil”. The best thing that could happen in this day and age is for those working for the Independents is to “organize”, for better wages. And safety is also a concern. Look, 10-days after going on-line with production, ENI blew crude oil out of a flare stack? At Oligtok Point and only a few feet away from the ocean, which is the gateway to the Beaufort Sea. You get what you pay for and since wages are lower, so is the qualifications base. In this case, most are unqualified to perform safely. That is another reason a “union” would make it a safer place to work, as a concerted effort would demand “qualified” operators. Case on point: I was on a project down in California at a new power plant. The company could not find qualified operators to start the commissioning, due the fact that housing was still off the charts. So they stepped back and re-evaluated the entire pay structure, to include a hefty cost-of-living bonus. And yes it was a union job, but the union and the power company were in very good standing. And the power company was not about to gamble on beating the start-up deadline with an unqualified staff, so they waited out the storm and when said and done, started up with a staff that could run the plant safely. So what we see today in Alaska, with respect to the North Slope, it is highway robbery going on. When Pioneer came interested in Alaska, they sent an entourage of CEOs down to Juneau, to ask for tax and royalty relief, saying that they could only continue the project if oil was better then $44-bucks a barrel. At the time, oil was teetering on the edge, less then what Pioneer was comfortable with. So the sad state bent over, and for the 1^st time in history, the revenue boss allowed relief, to the lowest allowed by state statute. To show how ridiculous this is, I can have one foot on a Conoco lease with the other foot on a Pioneer lease, and Conoco is paying a royalty 10% higher! Do you think “Big Oil” cares about this preferential treatment? Of course, but they have different ways and means of getting even. Look, the state is getting nothing in return from the Independents flocking in. And when marginal fields are burping out oil, to fill the void we are talking hundreds of mom & pop operations littering the pristine wilderness and pristine coastline, as these fields produce nothing worth the bother, so we are talking a whole lot of little episodes which means a whole lot of meager income jobs. But I guess when Hamilton stands up in front of a crowd, he can get an audiences' attention, and glorify the doom & gloom scenario which will allow even more tax breaks and royalty relief, a few jobs, and “we the people” who own the resources by virtue of our citizenship will get screwed over again. Bottom-line, when we see “Big Oil” getting fined and jail time for stupidity when at the same time the “Independents” are getting away with everything and anything because the oversight authorities are being told to cool it, as we can not scare the “void fillers” away, this state my as well just declare the entire North Slope a “Super Fund” site, as that is what is happening on leases managed by the Independents. Wow, think about how many jobs that will create? And paid for by Uncle Sam, at Davis-Bacon wages. Maybe that is what is behind it all! If we don't care about the environment because we care too much about the worth of our yearly welfare PFDs, it goes to show that this state has changed for the worse. There is a report available at the AOGCC, titled “Alaska's Deadliest Sins”. It gathers together a years worth of abuse by the 1^st Independent that set foot on Alaska's North Slope. I wrote it, while working under-cover. It is mind-boggling what went on, the lies, the cover-ups. Pioneer likes to higher qualified lawyers to protect its interests. But if you really want an understanding of the “Independents”, those entities trying to get more and more concessions from the Juneau lawmakers, this reading, which is now available to the public, it is worth your while, as what is going on is pretty ugly! And until such time that one sees what is really going on with the Independents infiltrating, please Mr. Hamilton, forever hold your peace! Maybe Bill has a job for you down at the dock! Hey, when at your interview with Bill, ask him if he has seen the M.V. Susitna, as it is long overdue its arrival at the port!