News Donuts: Ambler delays, a North Slope tax dispute and growing opposition to Alaska's LNG project

The mining company leading the Ambler mine project has shelved a planned summer drilling program amid delays to a related road proposal. Plus a property tax dispute over the Point Thomson oil field.

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The biggest news of the week: Interesting Stuff has now officially been rebranded to News Donuts. Firstly, because the “donuts” component of the past week’s digest seems to have drawn the most reader engagement and second, because everyone loves donuts and eating them once a week is a completely reasonable thing to do.

I’ve been working on a time-consuming project with Alaska Public Media this week that’s pulled me away from Northern Journal coverage for a bit. But records requests are coming back, I’ve got some fun pieces planned and a summer reporting trip for a few stories in rural Alaska that’s starting to crystallize, so: Stay tuned.

For now, here are some updates on delays to the Ambler mine and road projects, a simmering tax dispute involving Hilcorp and the North Slope Borough and new obstacle for the Alaska LNG gas pipeline project. Send tips and feedback if you have them:

Ambler road delays slow proposed mine’s advancement

The executive leading development of a major mine in Northwest Alaska said this week that delays in advancing a related road project have forced it to cancel exploratory drilling work previously planned for this summer — and next summer’s plans are being called into question, too.

Ambler Metals last summer employed 120 people for its summer exploration season, based at the Bornite camp in the Kobuk River watershed, on land owned by NANA Regional Corp., the regional Alaska Native corporation.

This summer, Ambler Metals will do no drilling work and employ just 60 to 70 people, in support of the Alaska Industrial Development and Export Authority’s own fieldwork program, said Ramzi Fawaz, Ambler Metals’ chief executive.

AIDEA is leading the advancement of the 200-mile road project that would connect Ambler Metals’ proposed copper mine to the Dalton Highway, which runs from outside Fairbanks to the North Slope oil fields.

The road would run through an undeveloped swath of Northwest Alaska and cross Gates of the Arctic National Park.

Amid intense opposition and litigation from tribes and conservation groups, the Biden administration last year announced it would reconsider key Trump administration environmental authorizations.

And last week, the Bureau of Land Management said in a legal filing that the revised authorization would not be finished until the second quarter of next year — some six months later than previously planned.

“The delay, again, makes us think even about next year’s work, which would be devastating for us,” Fawaz said in an interview Tuesday.

The cancellation of this year’s drilling program, Fawaz said, translates into fewer jobs for local NANA shareholders, who typically make up about half of Ambler Metals’ summer workforce.

A spokesperson for the U.S. Department of the Interior, BLM’s parent agency, declined to comment.

Meanwhile, Ambler road opponents announced a new campaign this month, Defend Brooks Range.

The coalition, which includes Alaska and Outside conservation groups along with Tanana Chiefs Conference, an Interior tribal organization, launched the campaign last week in Washington, D.C., and held a screening of an anti-road film called Paving Tundra.

While Alaska LNG is getting a Biden administration boost, it also faces growing opposition from climate activists

Amid bipartisan support for the Alaska LNG project, environmental groups are escalating their opposition to the huge natural gas pipeline — creating another possible obstacle for the proposal to overcome.

The liquefied natural gas export project, for years, has faced sporadic opposition from the conservation movement, which lacked a consensus on whether to oppose natural gas projects and also dismissed Alaska LNG as too expensive to be plausible.

But now, amid dire warnings that existing fossil fuel infrastructure is already enough to push global temperatures up by more than 1.5 Celsius, environmentalists are taking a harder line against new natural gas projects.

Those projects include Alaska LNG, which has drawn support from top Biden administration officials like Rahm Emanuel, the U.S. ambassador to Japan, and Geoff Pyatt, a top energy official at the U.S. Department of State. The activist groups appear to have picked up on the project’s political momentum, and fear that federal subsidies — like billions in loan guarantees included in the recent bipartisan infrastructure legislation — could make it more viable.

The same day that Emanuel touted the nearly $40 billion Alaska LNG project at GOP Gov. Mike Dunleavy’s sustainable energy conference in Anchorage this week, climate activists gathered outside the convention center to criticize what they called “false solutions.”

And a national environmental organization, Friends of the Earth, has targeted the state agency leading development of Alaska LNG with a public records request. It seeks information about the Alaska Gasline Development Corp.’s contacts with its lobbying firm and a related consulting firm that are both associated with former U.S. Sen. Mark Begich, who’s working with AGDC.

Friends of the Earth has also retained a Palmer-based attorney, Teresa Clemmer, who's helping negotiate with AGDC on the conservation group’s records request. Clemmer sent a formal letter earlier this month taking issue with the way Alaska Gov. Mike Dunleavy's administration is processing the request and asking that relevant records be released by Friday.

“Nobody who cares about the climate, and nobody who cares about getting Joe Biden's climate presidency back on track, wants to see this project break ground,” Lukas Ross, a senior Friends of the Earth program manager who’s working on the organization’s Alaska LNG effort, told me.

The increasing opposition is worth tracking, as environmental groups have proven their ability to delay, if not completely thwart, major Alaska projects through litigation and political advocacy.

North Slope Borough, Dunleavy administration fight over multi-billion-dollar tax assessment of Exxon-Hilcorp oil field

A multi-billion-dollar tax dispute has been quietly unfolding over the state of Alaska’s property tax assessment of a major North Slope oil development, the Point Thomson field.

ExxonMobil, which still owns a 62% stake in the field, was the developer of Point Thomson. But the project is now operated by Hilcorp, which owns 32% of the field after buying out BP’s assets in Alaska and took over Point Thomson’s management last year.

Last week, the State Assessment Review Board, which hears contests to the Dunleavy administration’s property tax calculations, met to consider the North Slope Borough’s appeal of Point Thomson’s value.

The borough, which provides core government services to the eight communities in the remote region, derives some 95% of its $400 million in yearly revenue from property taxes it levies on oil industry and related service infrastructure on the North Slope. That dynamic has often produced costly, protracted disputes and lawsuits over valuation, especially of the trans-Alaska pipeline.

For several years, the borough had an agreement with ExxonMobil setting the value of Point Thomson at some $2.1 billion — roughly the same amount as the state’s assessment during that time. (Such property tax-related agreements are entered into routinely in Alaska, to avoid litigation.)

When those agreements expired, the state assessor preliminarily maintained the value at a similar amount. But the borough filed an informal appeal, saying the field’s true value was actually closer to $3 billion.

Instead, the assessor changed the methodology used to assess the field — moving from one specific to Point Thomson to one that assessed it like other North Slope oil infrastructure. That dropped the valuation to some $1.1 billion, which would cost the borough some $20 million in annual revenue, according to two people familiar with the proceedings.

The review board heard the borough’s appeal last week, with Hilcorp calling its own attorney and expert witness to defend the state’s position. The board’s decision, released Monday, was highly technical, but officials said it’s unlikely to substantially change the assessed value from $1.1 billion.

The borough can appeal the board’s decision to state court.

Point Thomson’s production has long lagged below expectations. It produced 8,724 barrels of oil a day in 2022, while initial projections called for some 40,000 barrels a day.

Other items of interest:

• Democratic U.S. Rep. Mary Peltola sent a letter this month to Chugach Electric Association, Anchorage’s big electric utility, asking that Alaska utilities include the Native Village of Eklutna as a formal party to negotiations around returning water (and, it’s hoped, salmon) to the Eklutna River. The river was deprived of water by a federally sponsored hydroelectric megaproject that still provides low-cost power to Southcentral Alaska residents.

• Chugach Electric Association’s board of directors, in a meeting this week, cemented its shift toward a more renewables-friendly posture after last week’s election by picking Sam Cason as its new chair.

• I stumbled across a previously unreported contract between the lobbying firm Begich works with, Brownstein Hyatt Farber Schreck, and the Bradley Lake Project Management Committee, which manages a major hydroelectric project on the Kenai Peninsula on behalf of Southcentral Alaska utilities. The contract, which runs through July, pays a maximum of $52,500, with an option of a one-year renewal, for work securing federal money for transmission upgrades for the region’s electric grid.

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