Alaska is worried
Everyone knows that Alaska depends on North Slope oil for the lion’s share of its tax revenue. Everyone also knows that production from the field is in decline and will soon face volume issues with keeping the pipeline flowing. But to get a sense of just how important this is to Alaska consider this latest proposal.
Alaska’s government proposed investing its own cash in an assessment of oil reserves in the U.S. Arctic National Wildlife Refuge, seeking to prod the federal government to consider drilling in the protected area.
Alaska’s governor plans to seek $50 million of state money to help with funding the assessment. This seems silly given the latest news that the U.S. is “energy independent” and is on the verge of passing Saudi Arabia in oil production. Based on the “SaudiAmerica” story Alaska should keep its money. We don’t need their oil.
Oh but wait they need our money for their oil. Remember Alaska is a petro state just like any Opec member.
There is one further reason Alaska should hold onto its money. They may need it to help deal with all those abandoned wells the U.S. Bureau of Land Management is planning on cleaning up. The draft plan was released earlier in May to deal with 50 identified wells in the Alaska arctic region.
For now though it doesn’t sound like Alaska wants to help with the clean-up cost. The reason is fairly simple; these wells were not drilled by oil companies or the state of Alaska. BLM manages the National Petroleum Reserve-Alaska, where more than 130 wells were drilled under the federal government’s direction as part of an exploratory oil and gas program from the 1940s to the 1980s.
Finally there is the ultimate question of when and who is going decommission the pipeline and that entire oil production infrastructure on the North Slope. Has anyone reserved for that future expense? Then again with the prospect of offshore production in the Arctic maybe it will last forever….????
Railroad intermodal volumes up
The Association of American Railroads reported carload traffic was up 1.9% compared to the same week in 2012. Petroleum continued its amazing growth rate up 38% on the back of increased U.S. crude production.
Intermodal continues to be a star performer with U.S. up 3.5%, Canadian up 4.6% and Mexican up 8.7% as rail continues to expand at the expense of long haul trucks.
The number of rigs drilling for natural gas in the U.S. was unchanged at 354 from last week according to Baker Hughes weekly rig data. The U.S. total drilling for oil was down 6 with North Dakota losing 5 from last week.