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Sullivan: Advocacy for Alaska resources DNR commissioner encouraging investment in development of oil, gas, minerals; tells RDC he’s even done cold calls on industry CEOs Kristen Nelson Petroleum News
Advocacy for Alaska resource development — that’s what Alaska’s Commissioner of Natural Resources Dan Sullivan shared with the Resource Development Council Sept. 6.
Alaska has had a reputation as “a place that’s very difficult to do business, very difficult to invest,” with permits taking forever to get and a hostile government, Sullivan said.
“We’re turning that around,” he said. “And we’re going to continue to turn that around.”
He shared an advocacy presentation he does nationally, and internationally, working to interest companies and investors in developing the state’s resources.
He said advocacy for the state is “kind of a full-court press” with participation by everybody from the governor on down.
The work that DNR is doing is with companies, with private equity groups and with investment banks, he said.
And the department is also working federal issues, where, he said, “unfortunately it’s a little bit of two steps forward and one step back.” He cited Point Thomson as an example where the state is talking to federal officials “almost daily” because of the importance of having the environmental impact statement for that project out in September so work can start on that project.
Three interests Sullivan said that investors and companies are interested in three things: the resource base, what is state government doing and current industry activity.
The good news on resources, he said, is that almost everybody you talk to understands that Alaska has a great resource base.
As for state government, Alaska still has “to some degree a reputation of not welcoming investment, being hostile ... (with) taxes too high ... (and) lawsuits all over the place.”
But what he tries to focus on, Sullivan said, is the action, because investors sometimes want to the first movers, “but they also want to go where everybody else is going,” and so in presentations the state focuses on what’s going on.
“There’s a huge resource base; we’re taking action with regard to the government policies; but perhaps most importantly there have been decisions made by private companies about investment here that are very positive we think,” Sullivan said.
Relatively unexplored Two things a lot of people don’t know about Alaska’s resources is that the state is still “relatively unexplored,” Sullivan said, but the other thing is that the state has a large unconventional resource potential, and while looking for that there is also the possibility of finding conventional oil.
“In the Bakken or Eagle Ford you’re not going to find a 100 million barrel oil pool of conventional oil,” he said, but in Alaska’s that’s a possibility.
Sullivan also talked about the state’s mineral resources, and said it’s a list most investors “salivate” over.
The state is working hard on partnership both with investors and with other entities, and Sullivan noted that he signed a memorandum of understanding with the North Slope Borough over the summer, “to coordinate and make much more efficient our permitting and their permitting.”
Recent activity In reviewing recent activity Sullivan said that it isn’t just the large companies like Exxon, Shell, Repsol, Conoco and BP, but also smaller and medium sized companies.
And in addition to work on state land, there’s the outer continental shelf and then there is the shale play, “and you have private equity investment that’s now being pumped into Alaska, focused on the shale play by Great Bear and a very prominent private equity company called Riverstone — probably the best in the class in terms of energy,” Sullivan said.
“And these are areas where we’ve gone and we’ve pitched these guys,” Sullivan said. “We’ve told them what’s happening in Alaska and we’re starting to see the activity.”
Cold calls Sullivan said that one of the advantages of getting out and pitching Alaska to companies is the feedback it provides.
He said he’s even made cold calls on CEOs of companies, telling them he thinks they’re “missing the boat” because they’re not in Alaska.
When there is interest, Sullivan said, he offers to send the DNR technical team down to brief a company’s technical team on the resource potential in Alaska.
He estimated that more than 50 percent of the cold-call type meetings have resulted in follow-up meetings with the technical team.
In general, he said, companies are aware of Alaska’s resource potential.
“And the shale oil play that’s just starting to hit the radar screen of a lot of these companies — and we’re really making a pitch on that,” he said.
But, after companies talk about the resource potential, “then they talk about costs; and they talk about remoteness, Arctic climate, infrastructure, taxes — everybody talks about taxes,” he said.
He said they tell companies the administration is working on the tax issues, “but we have to acknowledge that it’s still very high.”
While the state can control taxes, “we’re not going to be able to control remote Arctic climate ... we’re always going to have that. So that’s why we’ve got to work so hard on the ones where we have the levers that control it,” Sullivan said.
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