Energy

Gov. Walker strengthens ties with oil industry in Slope tour

DEADHORSE -- Known for having an adversarial relationship with the oil industry as a private attorney, Bill Walker made his first trip as governor to the state's North Slope oil fields this week, taking a three-day tour of the widespread facilities and at times discussing prickly issues with oil officials.

Production taxes came up, as did the massive Alaska LNG project that Walker wants to accelerate, but those issues weren't the driving force of the trip, he said.

Instead, he wanted to spend time on drill rigs talking with workers and meeting with executives in "their setting" rather than in formal offices and familiarize himself with an industry that drives the Alaska economy.

"This is one of the most exciting things I've done as governor," said Walker at the end of his trip.

With the state's oil production one-fourth of its peak in the late 1980s, Walker said he was excited to see drilling rigs in action, including at a ConocoPhillips field where he missed the start of one drilling operation by a few hours.

"I said, 'Man, I'd love to stick around for that.' That's just like catching the first fish for me. It would just be exciting to be part of that," he said.

He visited ConocoPhillips on the Slope's western front on Wednesday, Exxon Mobil's Point Thomson field on the eastern front on Thursday and the central Prudhoe Bay Unit on Friday.

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He said the trip was also a chance to highlight the operations that arch across the top of the state for more than 150 miles but are little known to many Alaskans. He said he dreams of having a cabinet meeting in Deadhorse, the industrial heart of some of the continent's largest oil fields.

ConocoPhillips and Exxon Mobil did not allow media to come on the tour of their fields, despite requests from the governor's office.

BP, operator of the massive Prudhoe Bay field, opened up its tour to the media.

At Prudhoe Bay, the governor, wearing a hard hat and blue coveralls, visited a state-of-the-art drilling rig just launching efforts to increase production of hard-to-access oil in the Lisburne reservoir, in part by using horizontal drilling that extends more than a mile.

Awestruck by the technology, Walker asked a driller if he could sit in his control chair before monitors that highlighted such things as drill bit location and speed. Walker held the joysticks like he was ready to punch a hole in the ground.

"This is the first time I've seen one of these," he said of the $100 million-plus rig. "This is awesome."

Meeting with a reporter late Thursday night -- after the tour with ConocoPhillips and Exxon Mobil -- Walker said the topic of production taxes had come up tangentially.

He said he told company officials that such taxes will be discussed – along with a variety of other revenue generating possibilities -- at a statewide fiscal conference his office is organizing for early June.

"I said I think everything needs to be looked at," he said.

Walker said in the interview that oil revenue alone won't close the state's $3.5 billion deficit and a gas line is a long way down the road. "So how are we going to manage our wealth? Do we look at an income tax? Do we look at a different dividend program? What do we look at?"

Walker also discussed the Alaska LNG project with company officials, he said. Walker's plan to upsize a state-owned backup gas line project has sparked concern among some who say it would compete with -- and threaten -- the Alaska LNG project that has the support of the three oil companies.

Walker said discussions with company officials help them understand his views.

"Every time we get together I think they become more comfortable that I'm not out trying to do anything other than advance a gas line as quickly as possible," he said.

Janet Weiss, regional president of BP Alaska, attended the tour with Walker on Friday. At the Lisburne processing facility, where about 30,000 barrels of oil are processed daily, she said Walker's interest was exciting.

"I'm thrilled that he came up here to see what we do and meet the people that work here," she said. "It shows he has a real interest in what we do," and that he understands the "interdependence" of the state and the oil industry.

Of his efforts on Alaska LNG, she said she understands that he wants to ensure that the state doesn't miss another opportunity to complete a gas line project.

"We look forward to de-risking Alaska LNG so it's the obvious way to go forward," she said.

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Walker, who fought the Point Thomson development agreement between the state and Exxon Mobil, said on Friday that as a private citizen he had felt that the agreement had "constitutional deficiencies." But as governor, he said he has decided to move on. He supports the development he saw happening there, where some 10,000 barrels of oil are expected to be added to the trans-Alaska pipeline next year.

"I celebrate the work being done there," he said.

At Prudhoe Bay, Walker also signed a disaster declaration for the flooding along the Dalton Highway, large sections of which have been washed away. A previous declaration had recently expired. The new declaration expands what will be covered beyond just the Dalton Highway to include Deadhorse and other areas in Prudhoe Bay.

Dawn Patience, a BP spokeswoman, said the declaration will help expedite state and federal permit approval needed to repair damaged oil field roads.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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