Barnes: Alaska needs to fix permitting, regs

While Alaska is to be complimented on providing access with its areawide leasing program, the state has “a difficult, a complex permitting, regulatory (and) political environment,” says John Barnes, Marathon Oil’s Alaska production operations manager.

The result, Barnes told The Alliance’s Meet Alaska conference in Anchorage Jan. 19, is “longer lead times, fiscal uncertainty (and) project uncertainty.”

“Doing it the Alaska way isn’t really positive,” he said. “We need to turn the Alaska way into doing it quicker.”

For a starter, he said, “lots of efficiencies” could be gained in the regulatory process.

Marathon operates in Cook Inlet, producing some 160 million net cubic feet a day of natural gas, Barnes said, selling “to basically every potential customer out there,” including supplying about 50 percent of the natural gas used by local utilities. Recent Marathon investments have brought on a new field, Ninilchik, increased production from older fields and brought new gas pipelines into regulated service.

While the company has a staff of only about 40, three-quarters on the Kenai Peninsula, it uses the equivalent of about 250 full time employees through its contractors. The industry’s aging workforce is a concern, he said, “and trying to get young, talented individuals to get the education and come into the workforce is something that we all have to worry about.”

“And … as an industry … we don’t have the reputation we should as technology leaders.”

“The world needs Alaska resources, but Alaska needs world markets,” he said and “… we have to compete for investment,” since capital flows to areas with the best returns.

Operating costs are higher in Alaska, which puts Alaska projects at a competitive disadvantage, he said. “To overcome that we have to be quicker, we have to be more efficient in how we spend our money and the projects we bring on.” This is where Alaska’s permitting and regulatory processes hurt, he said.

Forging cooperation, streamlining the regulatory process and letting the market work will help meet the Alaska challenges, he said.

—Kristen Nelson