Falling oil prices are causing Alaska an economic
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Posted On: 05/11/2020 2:50:39 PM
Falling oil prices are causing Alaska an economic dislocation to a degree not experienced by the lower 48 states.
Initial jobless claims in the state have already reached more than 70,000. Most were in the oil and gas industry.
Even before the recent plunge in oil's price, Alaska's oil revenue, with oil at $50 a barrel, was calculated to be over half a billion dollars
below last years revenue, and now oil is at $24.50 a barrel.
Alaska’s oil revenue comes from a tax on oil production and royalties. Every drop of $1 per barrel of oil causes a $25 million loss in revenue.
50 years ago tens of billions of barrels of oil was discovered at Prudhoe Bay in Alaska, and surrounding areas. Production began in 1977.
The Alaska Permanent Fund was established at the start of production so that, instead of all the money received from the oil companies going to the government's coffers, a part of the "windfall of oil revenue" would go to the residents of Alaska. A portion of that accumulated money would go to residents once a year as a dividend check.
The Alaska Constitution (Article 8, Sec. 2) requires that all natural resources belonging to the state be used, developed and conserved for the maximum benefit of the people.
The people of Alaska received increasingly large checks from the fund as the oil production increased.
However, the North Slope's production peaked in 1988, just eleven years from the start of production, and by 1998 had fallen by nearly 40%. And now, even with improvements in extracting oil, it is producing less than 20% of its peak production. And the fund's checks to residents have fallen accordingly.
Oil accounts for much of Alaska's revenue, and is used to cover the state's budget. But even before oil's present price plunge, Alaska's oil revenue was not going to cover this years budget. The state’s budget was $4.8 billion, but the state's projected revenue income was only going to be $4.5 billion, a $300 million shortfall, and that gap is expected to continue to grow in the years ahead.
“There's going to have to be some serious discussions as to what the state's going to look like,” Alaska governor, Mike Dunleavy, told FOX Business. “Nothing can be left off the table.”
The Alaska Permanent Fund receives 25 percent, or more, of royalties and related revenues from oil and mined minerals depending on when leases were issued.
Alaska residents presently receive a $1,000 yearly dividend payment from the fund. Taking into account the inflation that has occurred since 1988, the $1,000 dividend check of today, would only have been $460 in 1988, and today's $460 equivalent check is a drastic drop from when the North Slope was at its most prolific production.
Revenue from new sources is desperately needed.
Northern Dynasty's (NYSE: NAK) enormously rich Alaska 'Pebble' ore deposit, with its world class amounts of gold and copper, as well as many U.S. listed critical metals, has only been partially explored. Drilling was still encountering maximum levels of ore at the greatest depths drilled. In fact, the ore's grade was increasing with depth. And drilling was also recovering maximum levels of ore at the furthest distances outward to the sides, as the deposit was explored.
Even though the Pebble deposit has only been partially explored, the amount of ore found so far would already supply { one third } https://www.mining-technology.com/projects/pe...ct-alaska/ of America's entire annual copper requirements. According to a U.S. Geological Survey, Pebble could triple U.S. reserves of copper.
Not only copper. The Pebble deposit also has one of the worlds largest gold deposits. The U.S. Department of the Interior, U.S. Geological { survey, } https://pubs.er.usgs.gov/publication/70175427 states that the Pebble deposit contains the largest gold resource of any known porphyry in the world. Even the amount of its silver rivals the respective largest deposits in the world.
This also applies to Pebble's hoard of critical metals, and Rare Earth Metals, which are essential for the giant wind turbines and for electric cars, as well as for producing highly sophisticated machinery essential for America's defense, such as high performance fighter jet engines.
The Pebble mine would employ over 1,000 people with annual salaries of over $100,000. It would also spawn ancillary businesses to serve the workers, such as restaurants and car dealerships/car repair, etc. which would significantly increase the area's employment rate.
The Pebble mine would also supply the state of Alaska with enormous annual tax payments and royalties. This would more than make up the state's steadily declining revenue from the oil companies.
A portion of Pebble mine revenue would go to the Alaska Permanent Fund, and this infusion of funds would result in the issuance of much larger yearly dividend payments.
Using the amount of known ore present, and the geology of the land, as well as the area's remote location, a 45 year mine plan was drawn up and the results examined. Taking into account how much ore could be produced and processed on a yearly basis, it was determined that in 45 years only { 42% } https://en.m.wikipedia.org/wiki/Pebble_Mine#Economics of Pebble's known deposit of ore would have been mined.
That meant that, the Pebble mine, using only the amounts of ore discovered so far, would last over a hundred years. Considering that the deposit is only partially drilled, and that other similar large deposits have been located near by; that indicates that the ore present on Northern Dynasty's property is multiples of what has been found so far, and that the amount of ore in the area will be enough to supply over 200 years worth of mining.
The Pebble mine will be supplying Alaska with high quality revenue, and Alaska resident's with high quality yearly dividend checks, for over 200 years.
The windfall checks from the oil companies only lasted for a little over a decade before starting a steady, relentless decline is size. In contrast, Pebble's revenue to it's residents, will continue full strength for generations of Alaska families to come, and it will be supplying Alaska with much needed revenue for century's into the future.
Within weeks the Army Corps of Engineers will issue its Final Environmental Impact Statement where it will give its verdict on permitting Northern Dynasty's Pebble mine. Its verdict will be based on science, not innuendo.
In its preliminary Environmental Impact Statement the Corps said that the Pebble mine would not harm the area and gave the mine preliminary approval. But prior to giving its final approval, the Corps allowed the submission of any further objections to the Pebble mine. Any, and all, objections have to be submitted by May 28. After review of the submitted objections, a Final Environmental Impact Statement decision on the Pebble mine will issued.
In 1999, the Corps established an administrative appeal process for denied permits. If the approval of the Pebble mine is denied, Northern Dynasty will be notified of any deficiencies in its mine plan, and working with the Army Corps of Engineers, it will be allowed to correct the deficiencies in its plan.
Mining plans are virtually never ultimately denied. This is only done if a company is not able to find a way to correct the deficiencies in its plan.
Fifty years ago containment dams that held back toxic mining waste were collapsing and sending the toxic mining waste into the surrounding country side. The causes of the dam breaks were examined, and the knowledge gained allowed improvements to be made in the Federal Industry Standards for Mining.
Today, when using these modern engineering standards for building mines and their tailing dams, there have been no modern mine failures.
Pebble mine critics point to the recent Mount Polley dam tailing's spill that devastated miles of the surrounding country side and said that this proved that even modern dams fail. They then went on to detail all the gruesome destruction that occurred from the toxic spill.
What they do not mention is that the company that built the Mount Polly dam did not drill test the land on which the dam was built, which is one of the modern protocol suggestions. It turned out that the ground was unstable. They also did not mention that, in order to save money in constructing the dam, the company did not follow safe construction protocols. If they had, the built in safety protocols of modern mine designs, would have prevented the dam failure, even though the land itself was unstable.
Northern Dynasty is following all industry mining standards, and has even hired an outside agency to examine their plans, plus Northern Dynasty is having Alaska regulators examine their plan.
Groups opposed to the Pebble mine have only submitted innuendos to the Corps, not scientific facts.
Northern Dynasty's Pebble mine has been deemed safe and the Army Corps of Engineers will approve it. This will be done within a short time after the May 28 dead line for submitting objections to the Pebble mine.
After that, it is projected that, by June or July, the Record of Decision will be issued. A permission to proceed with the mine is expected, although it is possible that it could be issued 'with conditions', such as where the tailings dam has to be located, or how any water released from the dam area has to be treated.
The Pebble mine will be approved.
Initial jobless claims in the state have already reached more than 70,000. Most were in the oil and gas industry.
Even before the recent plunge in oil's price, Alaska's oil revenue, with oil at $50 a barrel, was calculated to be over half a billion dollars
below last years revenue, and now oil is at $24.50 a barrel.
Alaska’s oil revenue comes from a tax on oil production and royalties. Every drop of $1 per barrel of oil causes a $25 million loss in revenue.
50 years ago tens of billions of barrels of oil was discovered at Prudhoe Bay in Alaska, and surrounding areas. Production began in 1977.
The Alaska Permanent Fund was established at the start of production so that, instead of all the money received from the oil companies going to the government's coffers, a part of the "windfall of oil revenue" would go to the residents of Alaska. A portion of that accumulated money would go to residents once a year as a dividend check.
The Alaska Constitution (Article 8, Sec. 2) requires that all natural resources belonging to the state be used, developed and conserved for the maximum benefit of the people.
The people of Alaska received increasingly large checks from the fund as the oil production increased.
However, the North Slope's production peaked in 1988, just eleven years from the start of production, and by 1998 had fallen by nearly 40%. And now, even with improvements in extracting oil, it is producing less than 20% of its peak production. And the fund's checks to residents have fallen accordingly.
Oil accounts for much of Alaska's revenue, and is used to cover the state's budget. But even before oil's present price plunge, Alaska's oil revenue was not going to cover this years budget. The state’s budget was $4.8 billion, but the state's projected revenue income was only going to be $4.5 billion, a $300 million shortfall, and that gap is expected to continue to grow in the years ahead.
“There's going to have to be some serious discussions as to what the state's going to look like,” Alaska governor, Mike Dunleavy, told FOX Business. “Nothing can be left off the table.”
The Alaska Permanent Fund receives 25 percent, or more, of royalties and related revenues from oil and mined minerals depending on when leases were issued.
Alaska residents presently receive a $1,000 yearly dividend payment from the fund. Taking into account the inflation that has occurred since 1988, the $1,000 dividend check of today, would only have been $460 in 1988, and today's $460 equivalent check is a drastic drop from when the North Slope was at its most prolific production.
Revenue from new sources is desperately needed.
Northern Dynasty's (NYSE: NAK) enormously rich Alaska 'Pebble' ore deposit, with its world class amounts of gold and copper, as well as many U.S. listed critical metals, has only been partially explored. Drilling was still encountering maximum levels of ore at the greatest depths drilled. In fact, the ore's grade was increasing with depth. And drilling was also recovering maximum levels of ore at the furthest distances outward to the sides, as the deposit was explored.
Even though the Pebble deposit has only been partially explored, the amount of ore found so far would already supply { one third } https://www.mining-technology.com/projects/pe...ct-alaska/ of America's entire annual copper requirements. According to a U.S. Geological Survey, Pebble could triple U.S. reserves of copper.
Not only copper. The Pebble deposit also has one of the worlds largest gold deposits. The U.S. Department of the Interior, U.S. Geological { survey, } https://pubs.er.usgs.gov/publication/70175427 states that the Pebble deposit contains the largest gold resource of any known porphyry in the world. Even the amount of its silver rivals the respective largest deposits in the world.
This also applies to Pebble's hoard of critical metals, and Rare Earth Metals, which are essential for the giant wind turbines and for electric cars, as well as for producing highly sophisticated machinery essential for America's defense, such as high performance fighter jet engines.
The Pebble mine would employ over 1,000 people with annual salaries of over $100,000. It would also spawn ancillary businesses to serve the workers, such as restaurants and car dealerships/car repair, etc. which would significantly increase the area's employment rate.
The Pebble mine would also supply the state of Alaska with enormous annual tax payments and royalties. This would more than make up the state's steadily declining revenue from the oil companies.
A portion of Pebble mine revenue would go to the Alaska Permanent Fund, and this infusion of funds would result in the issuance of much larger yearly dividend payments.
Using the amount of known ore present, and the geology of the land, as well as the area's remote location, a 45 year mine plan was drawn up and the results examined. Taking into account how much ore could be produced and processed on a yearly basis, it was determined that in 45 years only { 42% } https://en.m.wikipedia.org/wiki/Pebble_Mine#Economics of Pebble's known deposit of ore would have been mined.
That meant that, the Pebble mine, using only the amounts of ore discovered so far, would last over a hundred years. Considering that the deposit is only partially drilled, and that other similar large deposits have been located near by; that indicates that the ore present on Northern Dynasty's property is multiples of what has been found so far, and that the amount of ore in the area will be enough to supply over 200 years worth of mining.
The Pebble mine will be supplying Alaska with high quality revenue, and Alaska resident's with high quality yearly dividend checks, for over 200 years.
The windfall checks from the oil companies only lasted for a little over a decade before starting a steady, relentless decline is size. In contrast, Pebble's revenue to it's residents, will continue full strength for generations of Alaska families to come, and it will be supplying Alaska with much needed revenue for century's into the future.
Within weeks the Army Corps of Engineers will issue its Final Environmental Impact Statement where it will give its verdict on permitting Northern Dynasty's Pebble mine. Its verdict will be based on science, not innuendo.
In its preliminary Environmental Impact Statement the Corps said that the Pebble mine would not harm the area and gave the mine preliminary approval. But prior to giving its final approval, the Corps allowed the submission of any further objections to the Pebble mine. Any, and all, objections have to be submitted by May 28. After review of the submitted objections, a Final Environmental Impact Statement decision on the Pebble mine will issued.
In 1999, the Corps established an administrative appeal process for denied permits. If the approval of the Pebble mine is denied, Northern Dynasty will be notified of any deficiencies in its mine plan, and working with the Army Corps of Engineers, it will be allowed to correct the deficiencies in its plan.
Mining plans are virtually never ultimately denied. This is only done if a company is not able to find a way to correct the deficiencies in its plan.
Fifty years ago containment dams that held back toxic mining waste were collapsing and sending the toxic mining waste into the surrounding country side. The causes of the dam breaks were examined, and the knowledge gained allowed improvements to be made in the Federal Industry Standards for Mining.
Today, when using these modern engineering standards for building mines and their tailing dams, there have been no modern mine failures.
Pebble mine critics point to the recent Mount Polley dam tailing's spill that devastated miles of the surrounding country side and said that this proved that even modern dams fail. They then went on to detail all the gruesome destruction that occurred from the toxic spill.
What they do not mention is that the company that built the Mount Polly dam did not drill test the land on which the dam was built, which is one of the modern protocol suggestions. It turned out that the ground was unstable. They also did not mention that, in order to save money in constructing the dam, the company did not follow safe construction protocols. If they had, the built in safety protocols of modern mine designs, would have prevented the dam failure, even though the land itself was unstable.
Northern Dynasty is following all industry mining standards, and has even hired an outside agency to examine their plans, plus Northern Dynasty is having Alaska regulators examine their plan.
Groups opposed to the Pebble mine have only submitted innuendos to the Corps, not scientific facts.
Northern Dynasty's Pebble mine has been deemed safe and the Army Corps of Engineers will approve it. This will be done within a short time after the May 28 dead line for submitting objections to the Pebble mine.
After that, it is projected that, by June or July, the Record of Decision will be issued. A permission to proceed with the mine is expected, although it is possible that it could be issued 'with conditions', such as where the tailings dam has to be located, or how any water released from the dam area has to be treated.
The Pebble mine will be approved.
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