The Alaska State Capitol on March 25, 2024. (Eric Stone/Alaska Public Media)
Key state lawmakers are throwing cold water on the idea of cutting state royalties on oil and natural gas to spur production in Cook Inlet. It’s one of several ideas lawmakers are considering to ease a projected gas shortfall in the basin that’s powered Southcentral and the Railbelt for decades.
And with the clock ticking on the legislative session and projections on gas output looking grim, the Legislature has to take action, said Sen. Bill Wielechowski, an Anchorage Democrat and chair of the powerful Rules Committee.
“We have to do something,” he said at a recent Senate Resources Committee hearing. “We’ve wrestled for many, many years, as long as I’ve been here, with tax breaks, tax deductions, bringing up jack-up rigs — and things work temporarily, but we’re really at the cliff.”
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So in the final few days, lawmakers are trying to understand how cutting royalties will affect companies’ investment decisions. The Senate Resources Committee on Wednesday and Thursday dug into a pair of economic models — one from the state Department of Natural Resources and another from the Legislature’s frequent oil and gas consultant, GaffneyCline — looking at what would happen if lawmakers cut gas royalties in Cook Inlet substantially, maybe even to zero.
But it’s not all about numbers. GaffneyCline’s Nicholas Fulford told lawmakers there’s a lot about Cook Inlet that makes it less competitive than other gas fields. It’s isolated. The infrastructure is old. Imports might be on the horizon. There might be a North Slope gas pipeline one day that could bring gas south for less than it costs to get it out of Cook Inlet. Utilities that buy lots of gas are looking at renewables. So even if a project seems to pencil out on paper, it might not ever wind up getting drilled, he told the committee.
“These are features which begin to explain why an apparently attractive gas province has failed to attract capital for development,” he said.
And there were plenty of numbers. But what lawmakers should take from the array of spreadsheets, graphs and statistical models is up for debate. Here’s what Sen. James Kaufman, R-Anchorage, said he took away from the presentation:
“Essentially, that royalty relief is needed, and we need to structure it as carefully as we can so as to be both effective and not unnecessarily put an unneeded ding into our state revenues,” he said Friday.
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Kaufman amended the bill to create a multi-tier incentive structure — basically, the sooner you produce gas, the more money you make. And though he’s tasking the Senate Finance Committee with fine-tuning the numbers, Kaufman said he’s hearing support for the proposal from House members. The House on Friday advanced a different royalty relief bill from its Finance Committee.
But Senate Resources Committee co-chair Sen. Cathy Giessel, R-Anchorage and the Senate majority leader, said she came away with an entirely different conclusion from Kaufman.
“At the conclusion of it, it seemed evident that royalty relief really wasn’t going to make a difference,” she said Friday.
The Department of Natural Resources told lawmakers that cuts to gas royalties by themselves would not have as significant an impact as they would if paired with oil royalty cuts — oil is, of course, a lot more valuable than gas, and they’re often found in the same place. But Giessel said she’s hesitant to cut any more breaks on oil.
“The production tax on oil in Cook Inlet right now is $1 per barrel. It is significantly low,” she said. “We already have an incentive to explore for oil.”
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Giessel said it’s clear lawmakers need to make it easier to get renewables on the grid, and she continues to push for a bill that would create an integrated Railbelt electrical transmission system, but Giessel said gas will continue to play an important role.
A more effective approach, Giessel said, would be to focus on two gas deposits leased by companies that say they don’t have the money to drill: the Cosmopolitan Unit, leased by BlueCrest Energy and the Kitchen Lights Unit, leased by HEX.
And that’s where Wielechowski said he’s leaning, too. Though royalty relief might make a marginal difference, “I think the biggest problem in Cook Inlet continues to be the access to capital,” Wielechowski said.
Wielechowski said he didn’t expect that royalty relief would induce more drilling by dominant Cook Inlet producer Hilcorp. Hilcorp did not respond to a request for comment, but in February, an executive told lawmakers it would be hard to assess the impact without seeing the final text of the bill.
Rather than royalty relief, Wielechowski said he supports something that would address the capital constraints more directly: a system known as “reserve-based lending,” in which the state would loan money to producers and use underground oil and gas as collateral.
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It’s unclear if that can pass by the end of the session — but things can move quickly in the Legislature’s final days.
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Eric Stone covers state government, tracking the Alaska Legislature, state policy and its impact on all Alaskans. Reach him at estone@alaskapublic.org.
The first Jesuit missionaries in Alaska sailed up the Yukon River in 1887. By the turn of the 20th century, the religious order of the Catholic Church had as many as 50 Jesuits in the state.
Now, only two remain. And by the end of June, there will be none.
The Jesuits’ nearly 140 years in the state was honored at an event at Bethel’s Immaculate Conception Church on June 16. A procession of priests wearing long white gowns with red hems walked down the aisle to open the event. The Bishop of the Diocese of Fairbanks, Stephen Maekawa, thumped the ground with a shimmering silver staff known as a clozier as he approached the altar.
Bishop of the Diocese of Fairbanks, Steven Maekawa, walks toward the altar at the Immaculate Conception Church in Bethel.
“My brothers and sisters, we gather together to celebrate this wonderful and blessed occasion to acknowledge the love of God and the work of God through the 139 year mission of the Society of Jesus of the Jesuit fathers,” Maekawa said to open the event.
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A traditional Catholic mass followed, with readings in both English and Yup’ik. During the sermon, Maekawa acknowledged the vastness of the Fairbanks diocese, and the tremendous amount of work done by the Jesuits to establish it.
“All of the 46 churches of the Diocese of Fairbanks that we currently have were established by either the Jesuit fathers or by direction of a Jesuit bishop,” Maekawa said. “We have a long history of the Society of Jesus’ presence and ministry here in all of Alaska.”
The Jesuits are an order within the Catholic Church, akin to the Dominicans or Franciscans. They have a reputation for taking on some of the Catholic Church’s most remote assignments.
That missionary spirit brought the Jesuits to the Yukon River in 1887, where they built churches, schools, and ministries. Without their work, Catholicism may not have taken root in huge swaths of Alaska, particularly among Alaska Native communities.
The Immaculate Conception Church in Bethel.
But the Jesuits leave a complicated legacy. Their methods of converting Native people to the religion, particularly in the first half of the 20th century, created generational traumas still felt to this day.
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Fr. Sean Carroll is the provincial of the Jesuits West Province, which oversees Alaska and nine other states.
Fr. Sean Carroll, provincial of the Jesuits West Province, speaks at an event recognizing nearly 140 years of Jesuit service in Alaska.
“Thank you for all that you have taught us about who Jesus is and how to love and serve Him wholeheartedly,” Carroll said. “I also thank you for your patience with us. For there have been times when we have sinned and when we have hurt you.”
Missionaries, including the Jesuits, forcefully converted and assimilated Alaska Native people into Western culture and religion. Students at Jesuit-run boarding schools were forced to abandon their Native languages and physically punished when caught speaking languages other than English. Native dancing and drumming were also banned.
The Jesuits West Province maintains a list of 150 Jesuits with credible claims of sexual abuse against minors or vulnerable adults. A quarter of the accused Jesuits served in Alaska at some point in time.
“I ask for your forgiveness for all that we have done that was not rooted in Christ and love for Him, and for when we did not value your culture nor recognize the presence of God in you,” Carroll said.
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Carroll gave the order to withdraw from the state last spring. A big issue was the recruitment of Jesuits willing to travel and serve in remote villages. He told the congregation that the Jesuits’ work would continue, just without a permanent presence.
Fr. Rich Magner, one of the two remaining Jesuit priests in Alaska, attends a ceremony in Bethel.
Fr. Rich Magner is one of the two remaining Jesuit priests in Alaska. His last day serving Chevak, Hooper Bay, and Scammon Bay is June 30.
“We all always knew coming in, or should have known, that we’re not going to be here forever. It’s going to be mission accomplished at some point,” Magner said. “And then we hand it off to the diocese that we’ve helped create, and so that’s a good feeling.”
Magner’s next stop is a Clinical Pastoral Education residency in Tacoma, Washington.
The other remaining priest, Fr. Tom Provinsal, first came to Alaska in 1968 to teach. A fond memory, he said, was meeting Elders that practiced traditional subsistence lifestyles.
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“Some of the grandmothers, their fingers were just all bent with arthritis and stuff like that, you know, their whole lives they’ve been working out in the cold and the wet, doing food, sewing, all that kind of stuff,” Provinsal said. “I’d say I just feel very privileged to have come when I did come and to see that.”
Provinsal returned in 1975 as a priest and has served in the region ever since. After moving away, he plans to take a five month sabbatical. What happens next, he said, is in God’s hands.
Two lines formed in the aisle for communion at the end of the mass. After taking communion, Bethel’s Parish Administrator Susan Murphy gave a final thank you.
“It’s difficult to say goodbye to people who have been a part of our lives for so long,” Murphy said. “We know that you have done what was yours to do, and have taught us to do what is ours to do. We are grateful.”
Jesuit priests form a row along the altar of Bethel’s Immaculate Conception Church as members of the congregation lift their arms and pray.
Dominic Hunt, a Yup’ik deacon that flew in from Emmonak for the event, led the congregation through a final prayer.
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“Bless them with your wisdom, that they may be a word of hope, a world in need. We ask this through Christ, our Lord. Amen,” Hunt said.
About 70 people posed for a photo on the altar – priests, deacons, parishioners, Elders and children — many of them smiling, some standing quietly.
The photo doesn’t tell the whole story. But it’s a moment when gratitude, grief, and memory all shared the same room.
Bishop of the Diocese of Fairbanks, Steven Maekawa, stands in the middle of a crowd waiting to take a photo at Bethel’s Immaculate Conception Church.
JUNEAU, Alaska (KTUU) – The Supreme Court of Alaska will be taking up the case of the State of Alaska, Division of Elections v. Daniel J. Sullivan, Jr.
The oral arguments will be held Monday at 10 a.m. via Zoom, according to an order and opening notice.
The document also specifies that a decision is expected to be made before noon on Tuesday.
According to documents from the Division of Elections, the state must start printing ballots at noon on the same day.
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This comes after an Anchorage Superior Court Judge ordered Dan J. Sullivan on to the ballot Friday.
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