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Monday, August 31, 2015

Another Poll -- August 31, 2015

Results of the poll in which we asked whether President Obama would show any support for Alaska's economic lifeline, it's Trans-Alaskan Pipeline. To recap, the pipeline needs at least 300K bopd to remain operational. Without any change in production on the North Slope, it is likely that production will fall below that threshold by 2024. President Obama had already opened the Arctic to drilling, but could more be done? The answer appears to be "YES." He will commit to another military icebreaker to be working the Arctic by 2020, two years earlier than expected.

The poll results:
  • Yes: 5%
  • No: 24%
  • He will avoid the subject: 46%
  • If asked, he will waffle: 24%
Updates

September 3, 2015: the EIA tweeted -- Alaska had the largest decline in natural gas and crude oil  proved reserves in 2013.

Original Post

From Seeking Alpha:
  • President Obama - visiting Alaska this week - agreed earlier this month to allow Royal Dutch Shell to resume Arctic oil exploration, yet Alaska officials say it may not be enough to save the 800-mile Trans-Alaska Pipeline System, the state’s economic lifeline for the past 40 years.
  • Volume on the pipeline, which funnels crude to Valdez in the south from Prudhoe Bay in the north, has declined along with North Slope oil production during the past three decades; flows are dropping ~5%/year and slid to 513K bbl/day in 2014 from a peak of 2M in 1988.
  • Alaska projects North Slope crude production to fall to ~320K bbl/day by 2024, and officials say a drop below 300K would trigger a “fundamental change” in operations and perhaps make the pipeline unfeasible.
When it rains, it pours. This is a perfect opportunity for another poll. Will President Obama show any support for Alaska's economic lifeline, the Trans-Alaska Pipeline?

There are a lot of implications. This, I think, is the biggest one: Californians, with the exception of Hawaiians, are paying the highest price for gasoline of anyone in the United States. The high price in California is not trivial, either; the price Californians pay for gasoline is quite significant, almost twice what some are paying elsewhere in America.

California relies heavily on imported foreign oil and oil from Alaska. It obtains some oil from the Bakken but that source is problematic due to logistics. Survival of the Trans-Alaska Pipeline is critical for Alaska and critical for California. It was also a technological marvel and the loss of that pipeline would speak volumes.

To remain ideologically consistent, killing the Keystone XL, requires that he also kill the TAP. It will be an interesting story to follow.

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