New DNR commissioner calls for Feds to partner up at Economic Outlook Forum

Posted: Wednesday, February 02, 2011

The Kenai Peninsula Economic Development District (KPEDD) in partnership with the Kenai Peninsula Chapter of the Alliance held the 2011 Industry Outlook Forum at the Challenger Learning Center in Kenai January 13th and 14th. Nearly 200 participants registered to hear the latest updates on the oil, gas and mining industries as well as the state of the Alaskan economy from federal, state and local officials. The new Commissioner of the Department of Natural Resources, Dan Sullivan, was the keynote speaker at lunch on Thursday. Commissioner Sullivan shared his insight on his dealings with the federal government in his short time in office. After a conversation assuring the Commissioner cooperation and open communication, Ken Salazar with the US Interior Department designated parts of the National Petroleum Reserve-Alaska west of the North Slope oil fields as "Wild Lands". In reference to the impact of this designation, the Commissioner urged everyone working with the federal government at any level to encourage cooperation over regulation of Alaska lands. "We need the federal government as a partner in developing Alaska's resources not an opponent," said Sullivan.

Larry Persily, Federal Coordinator for the Alaska Natural Gas Pipeline Transportation Projects stated, "The real obstacles for the gas line are the natural gas market and the project's economics. Will the market price be high enough after 2020 to cover the cost to produce, treat and move the gas 3,000 miles and more to Lower 48 markets? That's a multibillion-dollar business risk," he said. Alaska Gasline Development Corporation established by House Bill 369 is charged with developing a plan to design, finance, and construct a stand-alone gas line that will transport North Slope gas to Fairbanks and Cook Inlet tidewater by the end of 2016. Dan Fauske, President of AGDC said the plan must be completed and submitted to the State Legislature by July 1, 2011.

John McClellan, Vice President of Development for Tyonek Native Corporation provided an overview of the numerous ongoing projects across Cook Inlet. The Chuitna Coal Mine area is adjacent to land owned by Tyonek. The two entities recently negotiated an easement agreement for a coal conveyer that will carry product directly to a dock facility on the Inlet. The Beluga CTL Plant, a 60,000 bbl/d coal to liquids facility is now fully funded; construction is estimated at 4 years. At full capacity, 60 thousand barrels of jet fuel will be produced daily at the proposed plant.

Also at the two day forum, representatives from producers with projects on the Kenai Peninsula gave an overview of their current endeavors. Newcomer Buccaneer Alaska, as well as long time operators such as ConocoPhillips and Marathon, discussed plans for future development. John Shively updated the attendees on the progress the Pebble Mine is making in the permitting process. "I was told when they hired me that we would be permitting at the end of 2008, we're now starting 2011 and I don't think we'll get to permitting until sometime next year, but this is a complex project with a lot of infrastructure. We've spent over $100 million dollars on environmental studies and we're putting that data into what we call a baseline document that will probably be 18,000 or more pages when completed and will be a project that will have to stand on its own," said the former Alaska DNR commissioner. "All of that data will be made available to the public when completed and copies will be provided to local libraries," said Shively.

Dave Harbour, publisher of Northern Gas Pipelines, who was the after-dinner speaker, said Alaska's biggest challenge was to fill the Trans Alaska Oil Pipeline. "We're 90% dependent for our state operating budget on TAPS and our economy is over 30% dependant on Prudhoe Bay. So if we're down from 2.1 million barrels a day to about 600,000 we're two thirds empty and declining at 7% a year, which would be only a matter of a few years where we will be at the threshold where the producers may decide to shut the pipeline down and then would be required by law to remove it from the right of way, thus loosing our lifeline to the arctic," said Harbour.

City Mayors and City Managers from Kenai, Soldotna, Homer, Seldovia, Seward and Dave Carey, the Borough Mayor updated the group on the projects in their communities as well as the effect the larger oil, gas and mining projects will have on the Kenai Peninsula economy. The 2011 Industry Outlook Forum was presented at no charge to the participants. Local vendors and industry sponsored the event. Louie's provided the food and beverages; ERA Aviation and the Uptown Motel offered reduced rates for travelers attending the forum. ConocoPhillips, ExxonMobil, Enstar, AKUSA, Dresser Rand, BP, Tesoro, Rain For Rent, Marathon, Udelhoven, Carlile, Homer Electric, Chumley's, City of Kenai, City of Soldotna, Kenai Peninsula Borough, and USDA Rural Development provided financial support.



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