ECON 919 - Cutting regulations to court investment

Oct 18, 2019

 


This week, Governor Mike Dunleavy was in Homer Thursday to speak to the Alaska Homebuilders Association. His talk highlighted not just what he sees as Alaska’s best economic opportunities, but also the hurdles in accessing some of those opportunities. But the big question, he said, is about politics.

 

 


“Do we have resources to sell or market. The question isn’t do we have the ability to transport goods and services with our airport and our access to the Pacific ocean. The question going forward will be what will the politics be? Not just in this country, but here in Alaska. Will the politics stay the same in the sense that we look upon resource development and resource transportation as something that Alaska does well? Or will we start to go the way of some other states down south, and in some ways the politics as a whole down south, will we start to reflect that here in Alaska where we don’t want to develop and we want to close things off.”

Dunleavy said he didn’t want the state to become a large national park. Alaska, he hopes, can be a refuge of sorts, for industries and companies that face too many regulatory hurdles back home.

“So they’re starting to look at Alaska as America and then some, meaning, we have American law up here for these investors; corporate law, corporate taxes, etc. It’s America. But at the same time, it’s like an emerging market. We have a lot of resources.”

Transportation, Dunleavy says, is a big opportunity. And to that end, his Department of Environmental Conservation is looking to repeal a number of regulations that would make it easier to transport a variety of resources, including oil through Cook Inlet.

“We continue, in our administration, to look at regulations to see if those regulations are necessary for the life, safety and health of Alaskans. Or, are some of these regulations just unnecessary and getting in the way of business. We’ve got about 100-plus regulations that we’re looking at potentially repealing that could help with more investment and more business in the state of Alaska.”

He pointed to a number of other states that have curtailed production, places like New Mexico and North Dakota, but didn’t note the market forces that have been at work in those places for some time. Regulations have had little to do with making wind energy less expensive that fossil fuels in much of the central U.S. And as for those potential investors, Dunleavy is looking to the Middle East as well as the Lower 48.

“They’re rebalancing their portfolios all over the world. The Saudis and Middle Eastern countries are looking at diversifying their economy and not just keeping it in their own countries and particularly in oil and gas. They’re looking all over the world to place investment.”

Meanwhile, Alaska’s economy remains relatively undiversified, and oil and gas prices remain low.

Now time for this week’s number: 24.

 

That’s how many individual drilling permits BlueCrest will file with the state for a new drilling program in the Cosmopolitan Unit off Anchor Point.

 

Steve Sutherlin of the Petroleum News reports that BlueCrest plans to drill what’s called a trident fishbone well, the company’s first. The trident wells will save up to five months of drilling time compared to other methods. The trident configuration involves drilling of three fishbone wells into an oil pool from a single wellbore that’s drilled three miles out and 1.5 miles down from the pad on the shore.

 

What that all means is more contact with the reservoir, and according to Alaska Business Magazine, it could also mean 150-180 new jobs.