Two tracks: Pipeline decline requires special attention, too
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We’ve previously urged the Alaska Legislature to create a special committee to report to the state’s residents on the status of the proposed North Slope natural gas pipeline.
The state needs such a panel because of rising skepticism about the project. Alaskans continue to receive reports about abundant natural gas supplies elsewhere, both in the Lower 48 and abroad, that can serve the nation’s needs.
That’s not the only large task the Legislature must undertake.
Lawmakers must also dedicate themselves, as a body, to a separate yet equally important topic — talking to Alaskans about the real possibility that the state will not have a natural gas pipeline online in time, or at all, to provide sufficient revenue for a secure future.
This topic hasn’t received the attention it deserves from the state’s leaders and from the public itself. It’s easy to see why: The price of oil was at incredibly high levels, approaching about $145 in July 2008. Cash was pouring in to the state treasury.
Today, however, Alaska North Slope crude sells for about $75 per barrel. That’s still a nice price, but who knows how long it will stay there.
The volatility in oil prices isn’t the only factor Alaskans need to pay attention to. Just as important is the daily production of the North Slope fields.
Those fields shipped 709,000 barrels of oil down the trans-Alaska oil pipeline on Tuesday. That’s down from 776,000 barrels on Nov. 24, 2008, about 880,000 barrels per day for the same date in 2005. Production was just more than 1 million barrels per day on Nov. 24, 2003.
That’s a decline that requires constant attention and, as one lawmaker suggested this week, action.
Alaska needs to become a more friendly place for the oil companies to work.
It needs to do so now, before its financial situation becomes so troublesome without a natural gas pipeline that it has to give more in oil and gas incentives than it might need to do today.
Gov. Sean Parnell and Alaska’s legislators need to embark on a public education effort to inform Alaskans about life without a gas pipeline and with continued declines in oil production. That education can begin with special hearings in the Legislature and a series of open houses around the state.
Alaskans need to know about, and understand, the financial situation of the state. And they need to have a trusted update on the status of the natural gas pipeline.
The Legislature should ensure that residents receive both.
Making decisions about the future of the state isn’t something that should be left solely to leaders in Juneau. Those decisions are the responsibility of all of us.
Yes they do hold the cards, and maybe your way will keep us afloat for a couple years more, but we still will be at the end of the line soon enough even if they do go and develop some more fields. At least we will have what is left over for some future generation when oil has become even more scarce and maybe they will reap some rewards. If we give the rest of it away in a panic to keep the line flowing for a couple more years we will still be no better off and there will be none left. I say leave it in the ground for now. The tough times are coming regardless.
Let me help you figure this out. Nearly 90% of Alaska's general fund revenue budget is fueled by the petroleum industry. The trans-Alaska pipeline is running at less than one-third capacity, with production declining at more than 6 percent a year. State spending continues to increase. Under governor Murkowski we needed oil to sell for around $45 a barrel to balance our state budget. We now need it to sell for at least $60 per barrel just to break even.
Nobody needs our natural gas anymore, thanks to lower-48 shale gas. Oil is running low here. Even if new reserves are found, they take can take a decade to develop. We have nothing to replace dwindling oil revenues. When this hits our economy, people will begin moving away, just as they did in the late 1980's. Jobs will dry up, home values will plummet.
Venezuelan nationalization is irrelevant. We needed exploration yesterday.
Nice piece Frank M.
Maybe we could send the oil industry CEO's home baked cookies? Would that help?
Seriously, Have they not made out quite profitably with Alaska's oil? Oh yeah right, they wont open their books on that. Could it be in reality it has been us Alaskans that have been ridden roughshod over by the oil industry for 3 decades? What do they want? 3rd world conditions where they can completely screw the locals, pollute the place, buy off the leaders and get at the oil for next to nothing? One thing they do benefit from by working Alaska's fields that never show up on any comparison the oil industry uses when they describe how expensive it is to operate here. That being how a lot of those cheap places can suddenly decide to nationalize the oil companies fields. That has happened all over the world and wont ever happen here. We have the rule of law that protects the corporation.