Bill Popp

GUEST COMMENTARY: Hilcorp’s Prudhoe purchase will ultimately benefit Alaska

The recent announcement that BP is selling its Prudhoe Bay assets to Hilcorp Alaska may have surprised Anchorage and Alaska, but the Anchorage Economic Development Corp. believes in the industry’s strength, Hilcorp’s efficient business model and that positive outcomes will ultimately result from this change. This is far from the death knell for Alaska’s oil and gas industry. It’s a transition to a different business model than what we’re used to. Hilcorp didn’t buy this asset to take it down to zero. Hilcorp’s investment is indicative of confidence in its ability to produce additional revenue. When Hilcorp first came into the oil and gas scene in Cook Inlet, we saw a production and investment renaissance. Hilcorp has ramped up exploration and production plans in Cook Inlet over the last several years, relying heavily on new and existing professional services firms, resulting in a nice bump in the economy on the Kenai Peninsula. We may be able to expect some of the same in the North Slope. Before the country’s recession kicked in, the U.S. was at an all-time record high oil production of about 9.6 million barrels a day. The United States had more than 525,000 people employed nationwide in the oil and gas extraction industry for 2015. At the bottom of that recession, that number dropped dramatically, and the workforce dropped to just more than 350,000. The national oil industry recession has ended, and oil production is projected to rise to a new record of 12.2 million barrels per day in 2019; however, the oil and gas workforce has only risen to about 436,000. With new technology, production is a more efficient process. The Hilcorp business model has embraced this new way of doing things. With this changing business model, and with Hilcorp leading the way, other mid-size exploration and development companies may be attracted to Alaska. From Hilcorp to ConocoPhillips, Oil Search and more, we are seeing a lot of activity going on in the North Slope and I believe we will see a solid turnaround there in the next three to five years. Here in Anchorage, I see opportunity. Looking at AEDC research and reports and a talented, skilled labor pool at the BP headquarters, I see a match between needed skills and available workforce. The city has seen a net loss of about 20,000 people in the last five years, between people moving out of Anchorage to the Lower 48 and the number of new people coming in from the Lower 48. This net loss of families and workforce to the Lower 48 leads to a lack of qualified candidates to fill open jobs. I also hear from employers that many other industries are seeing a skillset shortage. Where does that leave us? A fresh opportunity for skilled workforce and employers, both in the oil industry and in other sectors of the economy including project management, logistics, accounting, and HR to name a few, who may be able to tap into a significant talent pool to fill their openings. While I am sorry to lose BP, they, too, are transitioning to the industry’s new realities. A legacy field with declining performance is not the right fit for a major like BP anymore. There is much to be applauded in what the company has done for Alaska, the revenues it has generated, the employment it has provided for Alaskan families, the investments it has made in our community, and the way that BP employees, volunteerism, and philanthropy have become part of the fabric of our state. We’re going to lose some of those people, and it saddens me that friends I’ve known for many years will be moving to other parts of the world. I want to close with my deep gratitude to BP for its contributions to Anchorage, Alaska, and to AEDC over its long history in the state. BP has been a tremendous partner with Alaska over the last 60 years. But I believe in Anchorage, I believe in the change that Hilcorp brings to the table, in this industry as a whole and I look forward to the transition ahead. We’re going to see an evolution in this industry over the coming years — and a resultant change in employment — that I’ll be watching closely. Bill Popp is president and CEO of Anchorage Economic Development Corp.

COMMENTARY: Initiative process is wrong way to change permitting system

As leaders of Alaska’s three largest economic development organizations, we know our cities want to see new economic opportunities come to our respective areas, and we align to oppose policies and address issues that diminish or take away those opportunities. Our position on Ballot Measure 1 is one such example: We stand united in opposition to the ballot initiative for one very simple reason: the threat it poses to our local economies, and our state’s economy. On the macro level, we agree that an issue as complex as permitting has no place on the ballot, especially when that regulation that seeks to prioritize the relative value of Alaska’s diverse natural resources. Complex issues should evolve in public, include robust and open public discussion, and occur under a thorough vetting process that involves all impacted parties. Ballot Measure 1 did not go through this process and leaves voters with one way to participate: a yes or no vote. We advocate for a no vote on this proposition. Actions like this also send a negative signal to investors — that Alaska is a particularly risky place to do business — and has a chilling effect on many of the companies and businesses we need to invest in our state. On the regional level, all three of our cities are facing serious negative consequences if Ballot Measure 1 passes. In Anchorage, we fear further job losses in resource development if current and new projects can’t get permitted or are repeatedly sued by activists determined to shut down our oil, gas, and mining industries. We are just starting to see good news again from these sectors, with big new projects either underway or in the advanced planning stages. On a more practical level, serious questions have been raised about the ability of our wastewater utility to maintain its current operations under the terms of this measure. The answer to whether Anchorage will be forced to pay for a multi-million dollar upgrade to our wastewater treatment system because of Ballot Measure 1 is unknown. The fact that we can’t determine from the ballot measure’s decidedly vague language whether such an expense is coming our way is cause for great concern. In Fairbanks, our concern stems mainly from Ballot Measure 1’s prioritization of one industry at the expense of all others. Our economy can be damaged in very real ways if this measure passes. For example, the Fairbanks community recently celebrated Fort Knox Gold Mine the announcement of its upcoming expansion — and extension of a resource base that may extend the mine’s operational life by a decade or more. Fort Knox is the largest contributor in tax revenue to the local municipality, paying more than $8.7 million in property taxes last year alone, and the mine pays wages that average in excess of $75,000 a year to its 100-plus local employees. The mine is one of the best, largest, and strongest private-sector employers in the Borough. The Fort Knox expansion is unlikely to move forward as currently defined — if at all — under the terms of Ballot Measure 1. Given the huge impact Fort Knox has on the Fairbanks economy (and it, in combination with mines like Pogo and Usibelli, have on the regional economy), risking this project and others like it is unacceptable. In Juneau, we also believe a ballot measure is a poor vehicle for this type of complex public policy. The fishing industry is a huge economic driver for us and all Southeast Alaska, and yet we are opposed to Ballot Measure 1. State officials have testified about the uncertainty surrounding hydroelectric projects, mining operations, tourism activities, and other components of our economy under this ballot measure. In everyday terms, many of the amenities we enjoy in Juneau were built on or near wetlands: Fred Meyer, Costco, Egan Drive, the airport expansion, our police station, and at least one of our fire stations likely would not have been eligible for construction had Ballot Measure 1 been in place or made so expensive that project economics would have ruled them out. To be clear, all three of our organizations believe in public process, support citizen input, and encourage Alaskans with concerns about fish habitat to get involved. We also understand that Alaska invested a great deal of time, thought, and effort creating what we and others recognize as a model system of permit application review and issuance. It is for this reason we urge all involved parties to come to the table and make specific, reasonable requests of our lawmakers and regulators using that existing, proven, balanced and effective public process. We all agree that our unique Alaskan ecosystems and resources are high-value and worth protecting. We also agree that broadly-shared prosperity and dynamic, local, regional, and statewide economies, achieved through the balanced development of all Alaska’s resources, is the goal. We believe we can all agree that passage of an under-considered, imbalanced, overly-broad and potentially devastating ballot measure is not the way to achieve that worthy goal. We encourage a NO vote on Ballot Measure 1 on Nov. 6. Bill Popp is the president of the Anchorage Economic Development Corp.; Brian Holst is the president of the Juneau Economic Development Corp.; and Jim Dodson is the president of the Fairbanks Economic Development Corp.
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