A Norwegian company recently announced that this August, two large ships will arrive in Cook Inlet to transport the fertilizer plant that once employed hundreds on the Kenai -- and pumped millions into our local economy -- from Nikiski to Ossiomo, Nigeria.
The image of this Alaska industrial icon being disassembled and carted off should serve as a reminder of just how much the economics of natural gas production in Cook Inlet have changed. The abundance of cheap natural gas that was discovered in the Inlet and led to the construction of the fertilizer and LNG plants on the Kenai has evaporated. And while some studies show that demand could exceed supply as early as 2013, Alaskans should know that the sky isn't falling. It isn't falling because the Legislature, Gov. Sean Parnell and Anchorage Mayor Dan Sullivan have all come together to put into place policies that promote emergency preparedness as well as new exploration and development.
Mayor Sullivan deserves a lot of credit for forming the mayor's energy task force. Through the task force, he brought local utilities together to develop procedures to respond to supply disruptions. Being prepared in the event of an emergency was a crucial step in attacking the natural gas supply challenge facing our community. The task force also provided valuable input and support for the Legislature's efforts during the 2010 session to improve the investment climate in Cook Inlet. Rep. Mike Hawker's Cook Inlet Recovery Act made several key changes to the production tax and regulatory system that encouraged new investment and exploration. My Senate Bill 309 made changes to the corporate income tax system and included a provision I worked on with Sen. Tom Wagoner to encourage companies to bring a jack-up rig to Alaska.
These changes have attracted new companies like Apache, Buccaneer, Linc Energy and others to the Inlet, raised state revenues through lease sales and spurred efforts to bring two jack-up rigs to Alaska. A jack-up rig is important because it enables exploration offshore, where many believe major new oil and gas discoveries can be made.
Although Escopeta's efforts have been temporarily hampered by the federal government's reluctance to issue another Jones Act waiver, the Parnell administration is also working through AIDEA to finance another jack-up rig. I am hopeful drilling will commence by July from a jack-up rig in Cook Inlet for the first time in more than a decade. Further, I am excited about Buccaneer's announcement that they have made a significant discovery onshore at their Kenai Loop field.
Some will undoubtedly view the dismantling and removal of the Agrium facility as a sign of a dying Cook Inlet oil and gas industry and ratchet up the rhetoric, but the story in Cook Inlet is nuanced and much better than it was even two years ago. It is better because lawmakers came together to tackle the problem and put different ideas on the table. Although the policies we adopted are just a short- to medium-term solution (a pipeline and Susitna Dam are longer-term ones we are currently working on), the resurgence in investment and interest in new exploration shows that changes to policy can have real impacts relatively quickly.
Thanks to the hard work of everyone involved, the sky isn't falling yet, but we need to make sure we progress in paving the way for a strong, secure energy future and prosperity in Alaska by seizing those opportunities through continually evaluating our policies and examining the ever-changing global environment. Although it's sad to see an energy icon leave Alaska, we can continue welcoming new exploration and development of our state's vital resources if we further build on the successful policy choices over the past couple of years that have brought Cook Inlet development back to life.
Sen. Lesil McGuire, R-Anchorage, has represented District N in the state Senate since 2007.
By SEN. LESIL McGUIRE