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(Archived January 20, 2008)

Legal Opinion Challenges
TAPS Tariff Settlement Terms

Policy Shift Has Cost State
More Than $1 Billion Since 1997

By Richard Fineberg
July 11, 2007

The Alaska Department of Law maintains that the state is obligated to "support and defend" shipping charges filed by the owners of the Trans-Alaska Pipeline System (TAPS) under the 1985 tariff settlement agreement between the pipeline owners and the State. But a legal opinion requested from a knowledgeable attorney in private practice suggests the state may have more leeway to fight its bad deal with the TAPS owners than indicated by the state.

(Article plus additional materials and list of previous postings on pipeline tariff issues.)

(Archived July 14, 2007)

How to Shoot Both Feet with the Same Bullet

In 8 Weeks Since Mar. 5 Hearing, Failure
To Remedy TAPS Tariff Policy Has Cost
State Treasury $30 Million; Hemorrhage
Continues at more than $500,000 per day

While Governor and Legislature dream of a gas line,
neglect of oil pipeline tariff overcharges diminishes
State Treasury -- and chances for gas pipeline

By RICHARD FINEBERG
April 28, 2007

Since the State House Resources Committee met March 5 to consider the stinging rebuke to the owners of the Trans-Alaska Pipeline System (TAPS) delivered by the staff of the Federal Energy Regulatory Commission (FERC), excess TAPS tariffs (shipping charges) have cost the State Treasury another $30 million. As explained in the following guest editorial (versions of which appeared in the Anchorage Daily News, the Fairbanks Daily News-Miner and the Juneau Empire between April 19 and April 26), from a public policy standpoint TAPS tariff overcharges constitute a double whammy. In addition to the ongoing loss of revenue - conservatively estimated at $400 per minute - the state's long-running failure to ensure that independent shippers will be not be forced to pay excessive tariffs to bring North Slope petroleum products to market sends a bad signal to prospective explorers and developers --the very companies on whom the state is counting to convert the long-sought North Slope natural gas pipeline project from dream to reality.

(Archived July 14, 2007)

Analysis and Comment on March 5 Tariff Hearing:

State House Resources Committee Finds
More to TAPS Ratemaking Issues than Meets the Eye

By RICHARD FINEBERG
March 10, 2007
(Minor revisions posted Apil 18, 2007)

Apart from the state's confirmation that hundreds of millions of dollars in potential refunds to the state ride on the outcome of challenges to the 2005 and 2006 Trans-Alaska Pipeline System (TAPS) tariffs at the Federal Energy Regulatory Commission (FERC), the paucity of information the administration provided the Legislature was the most unusual aspect of the House Resources Committee hearing in Juneau Monday, March 5.

(Archived July 14, 2007)

The Arctic Refuge Numbers Game (Update):

High Prices Unlikely to Close Gap Between
Estimated Lease Bonuses and Actual Bids

By RICHARD A. FINEBERG
March 4, 2007

The President's budget proposal, released Feb. 5, once again includes anticipated revenue from lease bonus bidding on the Coastal Plain of the Arctic National Wildlife Refuge. His proposal calls receipt of $7.0 billion from the first Arctic Refuge lease sale in 2009, followed by $1.0 billion from a follow-up sale, two years later.

(This summary analysis contains charts updated in October 2006; it links to the author's Dec. 20, 2006 report discussing the significant disparity between agency estimates of potential bonus bid revenue from leasing on the Arctic National Wildlife Refuge Coastal Plain and the much lower amounts received from North Slope leasing during the last two decades.)

(Removed from Home Page July 14, 2007 -- Archived Jan. 20, 2008)

Pigs Behaving Badly

BP in Alaska: 3 Reports

Update Report (May 15, 2007)

The Shutdown (Sept. 3, 2006)

North Slope Spill (March 15, 2006)

(Archived on September 5, 2006)

Tale of 2 Barrels: Stable Region Big Fields
"Enormously Profitable" for Oil Companies

June 6, 2006

Two depictions of an oil barrel tell the story: In April, BP presented legislators with a brightly colored picture of a barrel purportedly showing that BP loses money on the North Slope at oil prices below $22.50 per barrel. The April 30 article published at this site refuted this misleading notion. The cover of Business Week May 15 also features a barrel of oil. Inside, the magazine reports that BP and its partners are "milking" Alaska's North Slope "for all that it's worth."

(Archived on September 5, 2006)

Stranded Gas and PPT: Update and Observations

By RICHARD FINEBERG
June 6, 2006

State Legislature Special Session Ends June 8 Update

For the second time in one month, as the Legislature approaches the end of its session June 6, the fate of the production profits tax (PPT) was in doubt.
During the Legislature’s regular session, which ended May 9, the governor linked the petroleum fiscal regime reforms, including a long-term freeze on changing the terms, to pending natural gas pipeline negotiations. At the same time, he refused to release the draft gas line contract arrangements he had negotiated with the major North Slope producers. Meanwhile, the industry unleashed a lobbying blitz in Juneau and an aggressive statewide television advertising campaign. When the House and Senate couldn’t agree on the PPT terms at session end, the governor immediately called the Legislature back into a special session.

(Archived on September 5, 2006)

Comment: Legislature Should Slow Down

Misleading Oil Data Mask Importance
Of Pipeline Tariffs, Income Tax Calculations

By RICHARD FINEBERG
April 30, 2006
(Rev. May 10, 2006)

"That's the point at which BP makes zero profit," Angus Walker, Vice President for Commercial Operations, BP Alaska, told the Alaska State Senate Resources Committee April 10 as he handed legislators a chart labeled "Breakeven Barrel $22.50." The BP executive was responding to this question: Why does BP's analysis show a loss, while the Alaska Department of Revenue (ADOR) shows that BP still makes money at prices below $20 per barrel? But BP's simplified chart purporting to show how the revenue from a barrel of oil is divided was highly misleading.

(Archived on June 4, 2006)

Juneau Report

Special Session Needed for Oil Taxes

- Updated May 7, 2006 (with data revision posted May 10, 2006)

While the outcome of the Alaska State Legislature's overhaul of the state's petroleum fiscal regime is in doubt at this writing, it is safe to say that the energy the Alaska State Legislature has devoted to this issue has surprised most veteran observers. . . .

On the following pages, you will find two additional publications this writer released as these developments unfolded during the first week of May (both of which contain a data correction posted May 10 and discussed in Worksheet 2 of the latter report):

"Community perspective" for the Fairbanks Daily News-Miner (May 7) urging the Legislature to defer consideration of petroleum fiscal regime overhaul to a special session so that legislators can give this important issue the focused attention it requires.
"What You Don't Know Can Hurt You" (May 4), a report to the Alaska Public Interest Research Group summarizing the materials reported in the April 30 commentary and placing that information in the context of the deliberations in Juneau.

(Archived on June 4, 2006)

Recent Headlines from Alaska on North Slope and Pipeline Production and Development

April 9, 2006

Updates on TAPS

As the attempt by drilling advocates to include drilling for oil in the Arctic In early April, press reports disclosed that a financial analyst on the Alyeska Pipeline Service Company's Trans-Alaska Pipeline System (TAPS) says he was asked to leave the company after he refused requests To provide inflated reports of how much the pipeline company spends on anti-corrosion measures. A few days later, in a separate incident, another press report disclosed that an Alyeska worker at the pipeline's Valdez Marine Terminal had falsified environmental compliance documents between 2001 and 2003. (See: Falsifying Documents?)

(Also: Information on TAPS tariffs and the March 2, 2006 North Slope oil spill.)

(Archived on April 30, 2006)

Documents Reveal Trans-Alaska Pipeline In Trouble; Monitors Punt

By RICHARD FINEBERG
November 2, 2005

Operational and management problems on the 800-mile Trans-Alaska Pipeline System (TAPS) pose a serious risk to Alaska's environment and a major source of the West Coast's crude oil supply, according to internal documents written by senior personnel before they left their positions on the pipeline. Alyeska Pipeline Service Company, the oil company-owned consortium that built and operates TAPS, portrays the criticisms as routine. But the pipeline company is in the midst of a major revamping that is more than a year behind schedule and, reportedly, hundreds of millions of dollars over budget. The pipeline makeover adds a major workload for a work force that insiders say is already stressed by normal operations. The documents were written by the pipeline company's second in command and two veteran field engineers who had been with the pipeline company for 30 years. During 2005 all three left Alyeska soon after voicing their individual concerns. The record they left behind provides a rare opportunity to penetrate the public façade of a troubled company that has carefully sought to rebuild its image after the 1989 Exxon Valdez spill.

(Posted November 2, 2005; Archived on April 9, 2006)

The Arctic National Wildlife Refuge:
Alaska North Slope Bidding Realities
v. CBO Federal Revenue Projections

September 26, 2005

It is unrealistic to expect that leasing the 1002 area of the Arctic Refuge willl bring $2.4 billion into the Federal Treasury. . . .

(2 updated charts plus a two-page discussion and sourcing note.)

(Posted November 2, 2005; Archived on April 9, 2006)

Briefings on Arctic Refuge and Current North Slope Production and Pipeline Revenue Issues

As the attempt by drilling advocates to include drilling for oil in the Arctic National Wildlife Refuge in the federal budget comes to a head, this parliamentary maneuver poses three critical numbers questions that Richard A. Fineberg addressed to members of Congress and their aides during a briefing in Washington September 14. . . . Four weeks later, Fineberg was invited to discuss Alaska North Slope development issues at the first People's Endowment Energy Seminar in Fairbanks. (see "Give Me A Break!" .)