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Vol. 18, No. 32 Week of August 11, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

AK-WA Connection 2013: Lynden inks agreement to buy Northland

Purchase requires regulatory approval; family of companies focus on expanding, improving services and energy efficiency projects

Rose Ragsdale

Alaska-Washington Connection

The Alaska House of Representatives has passed a key piece of legislation in the governor’s push to reform permitting for development projects.

House Bill 129 passed April 9 on a 27-12 vote.

The bill then went to the Senate, where similar legislation, Senate Bill 59, was pending with five days left in the legislative session.

HB 129 would allow the state Department of Natural Resources to “consolidate” approvals for oil and gas exploration and development.

The legislation was introduced at the request of Gov. Sean Parnell, whose administration wants to streamline permitting and cut out “repetitive” approvals.

House members added language to the bill to address a March 29 opinion from the Alaska Supreme Court. The court said the state was constitutionally required to consider the “cumulative impacts” of an oil and gas project as it progresses from leasing into the exploration, development and production phases.

The ruling seemed to hold potential for more, not fewer, permitting steps.

But the “legislative findings” House members added to HB 129 basically say DNR already does consider cumulative impacts.

What bill would do

In offering HB 129, Parnell said it would “reduce the time required to get oil into production and flowing through” the trans-Alaska pipeline.

Boosting oil production, of course, is a political imperative for Alaska elected officials, as oil revenue sustains the state budget and North Slope output is falling.

The bill would allow DNR to approve oil and gas exploration or development over a large geographical area, across multiple leases. An approval would be valid for up to 10 years.

DNR officials provided legislators with examples of current policy, versus what could be expected if HB 129 becomes law.

A lessee would face six public notice and comment periods to push a project through the seismic, exploratory drilling and development phases, the current policy example showed.

Under HB 129, only two public notice and comment periods would be required, one for the exploration phase anThe Lynden family of freight transportation companies that primarily serves Alaska and the Pacific Northwest has been on the move in the first half of 2013 and the latter six months of 2012.

Lynden reported in April that it entered into a purchase agreement to buy tug and barge carrier Northland Services, Inc.

Northland’s major shareholder, Endeavour Capital, is a western U.S. private investment firm with a philosophy that centers on the principle of stewardship. In nine years, Endeavour, Northland’s other shareholders and management transformed the company via significant investment and expertise into a leader in marine transportation in the Alaska and Hawaiian markets, Lynden said.

Northland, which provides services between Seattle, Southeast and western Alaska and Hawaii, will operate independently within the Lynden organization under the direction of its current management team.

Lynden’s Alaska Marine Lines also provides tug and barge transportation services between Seattle, Southeast Alaska and central Alaska.

“Northland has a great reputation, and adds western Alaska and Hawaii to Lynden’s service, enabling us to provide more service capabilities to our customers,” Lynden Chairman Jim Jansen said in a statement announcing the deal. “We are excited about the ability to provide integrated statewide Alaska service, higher service frequency, and greater combined capabilities for our customers. Where there is service overlap, we will organize to provide a higher level of service. In certain communities where Alaska Marine Lines and Northland are the two primary freight carriers, other barge lines have plans to compete with us.”

Northland President and CEO Larry Stauffer said, “We have seen significant growth in our business over the past decade, and bringing two great companies and teams together will help improve and expand service in the communities we serve.”

Lynden said the proposed sale will require a lengthy, complex process to complete and is subject to regulatory review and other terms that, if completd another for the development phase.

The administration believes the legislation would accomplish a number of things. First, it would benefit the public by giving everyone a chance for input at the beginning of exploration or development. Second, it “provides certainty to the oil and gas industry that exploration and development projects may proceed within defined parameters.”

HB 129 also allows stipulations to be approved before a company develops site-specific exploration or development plans, the administration says.

Supporters and critics

Some industry players, including Linc Energy and Brooks Range Petroleum, in March wrote letters of support for the legislation.

Barton Armfield, chief operating officer for Anchorage-based Brooks Range, wrote that the current permitting process around plans of operation, exploration and development “is inefficient and cumbersome.”

The legislation “will reduce the permitting process by months, which is especially critical because exploration companies only have a few short months to operate during the North Slope exploration season,” Armfield wrote.

Charlotte Brower, mayor of the North Slope Borough, also sent a letter to the governor offering qualified support of the legislation. She ended her letter by saying adequate opportunities should be left in place for comment “by communities located near projects that are developed.”

Other interests oppose the legislation.

“The proposed changes would end review of specific project plans, for both exploration and development. Rather, once a decade DNR would establish general conditions for exploration and development that operators must meet,” David Arnold, executive director of the Fairbanks-based Northern Alaska Environmental Center, wrote in a March 18 letter to legislators. “Without plans of operation to review, the burden would be on local residents to identify all potential impacts to fisheries, wildlife and other subsistence resources before any site specific information on all projects is available.”

Supred, would likely result in closing in late 2013.

Focus on improvements

The Lynden organization has won numerous prestigious awards for excellence in service and safety, including several in 2012. But this does not impede the companies’ drive to do better.

For example, Lynden International, a full-service freight forwarding and logistics company, launched a newly designed website at www.lynden.com/lint in June. The expanded and enhanced site was created by Lynden’s marketing team to update and improve content and make navigation easier for new and current customers.

A year ago, the company expanded its 50+ office domestic network by opening a new location in San Francisco to serve northern California. Lynden International provides services to more than 6,000 U.S. cities.

Ongoing improvements in energy efficiency also are paying off. Among them:

Alaska Hovercraft in Bethel replaced High Pressure Sodium lights with high-efficiency fluorescents at the airport and shop and saw an immediate 26 percent reduction in electricity use and a recouping of the cost of both upgrades in less than two months, according to General Manager Kevin Carter.

Lynden’s Anchorage’s South Air Park facility uses heat recovery to warm some spaces, while cooling others. A split duct in the information technology computer room reroutes warm air into the basement below the offices and warm air from the second-floor offices is rerouted to the cross dock.

In Fairbanks, Lynden Transport recently completed a warehouse expansion and upgrades that included installing a dock door “curtain” to reduce heat loss in the winter months, plus new dock plates and insulation to keep a tight seal around the doors. “But the biggest change was a new heating system which allowed us to manage our heat with digital thermostats. We can now set temperatures for specific times of day and days of the week,” said Manager Greg Busher. The changes have resulted in a 20 percent reduction in natural gas use from 2011 to 2012. The Fairbanks upgrades were identified as potential ideas in an energy audit for the company done in 2011.

eme Court answered

The legislative branch wasted little time answering the judicial branch, as House members added extensive legislative findings to HB 129 in answer to the state Supreme Court’s March 29 ruling.

The high court held that DNR is required to write a “best interest finding” only for the leasing phase of an oil and gas project. That was a victory for DNR, reversing a lower court’s order for the department to make written best interest findings not only for lease sales, but for subsequent phases such as exploration and development.

The Supreme Court further held, however, that the state was constitutionally required to consider the cumulative impacts of an oil and gas project at its later phases.

That holding cheered environmental and Native groups that had sued DNR in 2010.

The legislative findings in HB 129 say that DNR each year calls for public comments “to determine whether there is substantial new information that justifies a supplement to the best interest finding for the most recent areawide lease sale.”

The findings add that “in addition to those efforts by the Department of Natural Resources, the processes for issuing numerous other state, federal, and local permits and authorizations ... provide the public with timely and meaningful notice of information related to the effects of leasing, exploration, development, and transportation.”



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