Recently the Anchorage Daily News printed an editorial column slamming Governor Dunleavy’s plan to pay the full PFD by law and calling for the legislature to reject another special session. Soon after the ADN opinion was published, a column by former Deputy Commissioner Larry Persily advocated for ditching the historic dividend formula and adopting a new distribution formula in law that would allocate some funds for the PFD and use the balance for government spending.
As long-time supporters of the Permanent Fund and the PFD, we know how important it is to protect the PFD. And we’re wary of any rush to spend the people’s savings on government. We’ve seen how the PFD is held hostage by politicians the past three years as part of the annual appropriation process. It’s time to pay the People’s PFD from the funds cut from dividends over the last four years.
And we need a change in how we pay the PFD. The key issue here is how to pay Alaskans a PFD into the future in order to protect the Permanent Fund system and benefit all Alaskans. The Permanent Fund Dividend has been a hot political topic the past four years. The dividend payment is now an annual political topic that hinders debate on how to build a sustainable operating budget.
It is time to decide the dividend issue with certainty, a task that requires a special session. A change to the PFD in law, with no vote of the People, will not accomplish the stability our state needs.
We believe a special session addressing the dividend is critical to the financial well-being of our Fund and rights of all residents, the Alaska resource shareholders.
Every eligible Alaskan deserves a Permanent Fund Dividend guaranteed by a formula embedded in our state’s Constitution. After all, the dividend is funded from mineral royalties the citizens voted to preserve in a trust account protected by the Constitution. The dividend is not a discretionary welfare check set at the whim of politicians.
We urge the Governor to work cooperatively with the House and the Senate to set an agenda for a productive special session. This includes passing a resolution for constitutional protection of a fair Permanent Fund Dividend that the Alaska public will vote on next year.
The two of us have different backgrounds. Clem, a commercial fisherman, still works on the water near his home in Halibut Cove on Kachemak Bay. Rick, a commercial pilot, flies from his home in Eagle River to work and family residence he maintains near Dillingham. Each of us served in the Alaska legislature for decades. We both worked to establish the Permanent Fund and care about this legacy for our children and future Alaskans.
We also agree the single best thing our state can do to insure the long-term viability of Permanent Fund is establishing the link between the citizen owners of the fund by placing the Permanent Fund Dividend formula in our Constitution.
The need to act this year is clear. PFD issues require focused attention before the budget fights and gridlock resume in 2020. A stable and conservative formula for paying the annual PFD needs to be embedded in the Alaska Constitution. We call on all Alaskans to urge the legislature and our governor to deal with these critical issues in a special session this year.
Clem Tillion served in the Alaska House of Representatives and Senate. He is the Chairman of the Permanent Fund Defenders. Rick Halford served in the Alaska House of Representatives and Senate. He is a board member of the Permanent Fund Defenders.
Unlocking Arctic Energy Is Vital for Alaska — and America
This week the House of Representatives is set to consider measures that would restrict America’s future energy supply, including one that would block responsible development in northeast Alaska. As the state’s congressional delegation, we are unified in strong opposition and believe passage would be a reckless strategic mistake.
The bill in question comes from a California representative and targets the non-wilderness 1002 Area of the Arctic National Wildlife Refuge, which Congress set aside in 1980 for future exploration. After years of debate, Congress agreed in 2017 to allow careful development of just 2,000 acres of the 1.5-million-acre area, itself located within the ANWR’s 19.3 million acres. This developable fraction of a fraction amounts to one ten-thousandth of the refuge.
We believe, in fairness to Alaskans, that the leasing program should proceed responsibly, with Congress and the Trump administration ensuring that lands and wildlife are cared for. All of us are working to put the proper guidelines in place. Yet some in Congress still remain eager to repeal the provision, based on misperceptions about what is at stake and what most Alaskans want.
Most offensively, the repeal effort ignores the Inupiat people of Kaktovik, the only village located in the ANWR. Most who live there, like a sizable majority of Alaskans, support responsible development of the 1002 Area.
Members of Congress seeking a repeal ignore the significant environmental protections that apply to development, as well as the decadeslong record of safe operations on Alaska’s northern coast under some of the world’s strictest environmental regulations and oversight.
They ignore incredible advances in technology, which have dramatically reduced the surface footprint of development while increasing drillers’ subsurface reach by as much as 40 times.
They also overlook the importance of economic vitality in sustaining Alaskan life. Our state wasn’t allowed into the union until 1959 when Washington was finally satisfied we could support ourselves through resource production, and maintaining a strong economy remains essential to all of our goals, including environmental preservation.
Alaska is still young and will need to develop its resources long into the future. As recent years have shown, our economy, our state budget and our people suffer when federal restrictions prevent development. But it isn’t only Alaska that stands to lose.
According to the Seattle Metropolitan Chamber of Commerce, Alaskan oil supports 12,000 jobs and $780 million in wages in Washington’s Puget Sound region each year. All of that could vanish if the Trans-Alaska Pipeline shuts down. The pipeline is currently only a quarter full and needs new throughput from the 1002 Area to reach capacity.
Further south, data from the California Energy Commission shows the state’s imports of foreign oil have risen significantly as Alaska production has declined. California’s answer is that it plans simply to stop using oil—yet it still ranks near the top of the list of oil-refining states.
Despite ceaseless rhetoric about a Green New Deal, the reality is that our nation and the world are demanding the resources that will come from the 1002 Area. If Alaska doesn’t supply them, another country will. Global oil demand is rising, not falling. President Trump’s commitment to America’s energy renaissance has helped create thousands of well-paying jobs across America, strengthening families and communities along the way. And while prices have been relatively stable, artificial restrictions can lead to price spikes that cause hardship and unrest. See Paris as a recent example.
Careful development of the 1002 Area will help strengthen America’s economy and improve our energy security in the long-term. It will also benefit global energy markets, allowing the U.S. to provide allies with alternatives to resources from unfriendly nations and cartels.
Competition for resources in the Arctic is another geopolitical dimension of the ANWR issue. Russia and China are expanding their presence in the region, with billions of dollars of investments in infrastructure. The U.S. is falling behind in icebreakers, deep-draft ports and other Arctic infrastructure needs. Pulling up the stakes on an American energy program that helps build a presence in the region would put us further behind.
We understand that Alaska has earned an almost mythological place in the minds of many Americans. But we cannot be treated like a snow globe, to be placed on the shelf for viewing pleasure only. Alaska has tens of millions of acres of national parks, wildlife refuges and federal wilderness. We also have room for the responsible development of a small part of the 1002 Area, and all Americans should recognize this is in our nation’s best interest.
Congressman Don Young, Senators Lisa Murkowski and Dan Sullivan, Washington, D.C.
Alaska’s Oil and Gas Future Looks Strong
Alaskans worried that BP’s sale of its Prudhoe Bay assets to Hilcorp means Alaska’s oil and gas potential is waning can be reassured: Hilcorp’s growing strength is just the beginning of a new wave of investment and activity heralding a more energetic phase in our resource-rich state’s top industry. Here are a few examples.
When we faced a potential gas shortage in Cook Inlet in 2012, Houston-based Hilcorp was purchasing mature fields from Chevron and Marathon. Hilcorp then embarked on a vigorous drilling and efficiency program, increasing oil and gas production and ensuring reliable energy supplies for Southcentral Alaska.
Hilcorp next took their plan north, buying in to four of BP’s North Slope units in 2014. Most recently they began producing viscous oil from their Moose Pad at Milne Point, increasing field production to levels not seen in years. With declining oil throughput in the trans-Alaska oil pipeline, Hilcorp’s aggressive strategy is delivering the kind of results Alaskans need, and the jobs critical to our economic security.
Oil Search, a Papua-New Guinea independent new to Alaska, is systematically, deliberately and thoughtfully pursuing its Pikka development, aiming to start oil production in under four years. Pikka will create high-paying jobs and boost state royalty revenue, and could increase pipeline throughput up to 20 percent. Oil Search and its partners Armstrong, a Colorado independent, and Repsol, a Spanish global oil company, have several other North Slope prospects that may not be far behind.
U.S. major ConocoPhillips may bring its Willow prospect online about the same time as Pikka, increasing oil production by a similar amount. This expansion of development westward from Alpine and Greater Moose’s Tooth into the National Petroleum Reserve-Alaska will add critical infrastructure, making other western prospects more commercially feasible.
London-based newcomer Premier Oil, in partnership with Australian independent 88 Energy and Texas independent Burgundy Xploration, plans to drill this winter to further evaluate a block of leases called Project Icewine, 50 miles southwest of Prudhoe Bay. We’ve known since the 1960s this area holds potential for oil discoveries, and these optimistic independents believe they can bring this prospective area into production.
Other veteran and new independents have big exploration and development plans. We saw expressions of interest at CERAWeek last March, and I’m confident we’ll see evidence of that interest at the state’s North Slope areawide lease sale on Dec. 11.
Lease sales generate immediate revenue for Alaskans through lease sale bonus bids and rents, and are the third-largest source of revenue generated by the Division of Oil & Gas, after production royalties and net profit shares. Last year, lease sales brought in over $28 million to support the General Fund, Alaska Permanent Fund, and others.
Along with its regular lease offerings, the State plans to offer three Special Alaska Lease Sale Area (“SALSA”) blocks. These contiguous lease blocks represent a unique opportunity to acquire lease rights combined with a trove of associated well and seismic data and other information compiled by the State. The intent is to jump-start a company’s understanding of the North Slope and thereby accelerate drilling and development plans.
Also in December, the Bureau of Land Management will offer leases in the NPR-A and, for the first time ever and after decades of waiting, tracts in North America’s most prospective onshore prospect: the coastal plain of the Arctic National Wildlife Refuge.
Clearly, there are many reasons to be optimistic about the future of oil and gas in Alaska. New technologies, new investments and new players will add more jobs in the industry, more money in the economy and state treasury, and put more oil in the pipeline. Last winter was the North Slope’s busiest in 15 years. That trend continues.
James B. Beckham, Acting Director, State Division of Oil & Gas