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Alaska Taxes

6-25-14 "This is Alaska's time -- and it feels like we're back in the game" - ConocoPhillips Alaska President Trond-Erik Johansen

25 June 2014 7:40am

Resource Development Council for Alaska Report Below


Publisher's Note:

Our friend, Alaska Salmon Alliance Executive Director Arni Thomson (NGP Photo) provides us with this Arni Thompson, commercial fishing, alaska, oil tax reform, Photo by Dave Harbourlink to the Seattle Times: "North Dakota is booming, and its largest city has reinvented itself, attracting creative types and energetic entrepreneurs."  

Recently, we pointed out that Alaska had the lowest domestic product gain of any state, during 2013...in sharp contrast to other oil producing states that are moving ahead of Alaska, including North Dakota, Texas and even California.

Our friend from Senator Lisa Murkowski's Energy Committee Staff, Robert Dillon (NGP Photo), today gave us perspective on this week's federal approval to export lightly refined product.

Dillon wrote,​ "over at the Houston Chronicle's Fuel Fix blog:  Robert Dillon, Senate Energy Committee, Murkowski, Alaska, crude oil exports, pioneer, Photo by Dave HarbourJennifer Dlouhy has a nice summary of the Commerce Department’s decision yesterday to allow Pioneer and Enterprise to export condensates that have been lightly processed or 'stabilized' in a distillation tower, thereby turning them into 'refined products.'

"While the decision does not end the outdated policy that bans most crude oil exports," Dillon said,"it is a step in the right direction. Sen. Lisa Murkowski, the ranking Republican on the Senate Energy and Natural Resources Committee, has been pressing the Obama administration to lift the 1970s-era export ban since January. She has suggested a three-step road map to ending the ban, including allowing the export of condensates and a presidential finding that modernization of our export policy is in the national interest."  

The oil export ban issue is important to Alaskans since the ability to export crude oil broadens the market for and improves the price of Alaska oil.  

It is important to all Americans, since the ability to export improves US balance of payments, can assist our allies in becoming less dependent on unfriendly sources and enhances job creation.

It is important to Canada since a lifting of the US oil export ban could expand displacement and other economic strategies for most efficiently using North American energy supplies -- including throughput of the Obama-administration-delayed Keystone XL Pipeline project. 

-dh

While we acknowledge local statistics of low unemployment in Alaska, we also know that can be a temporary condition unless Alaska's investment climate continues a one-year improvement trend since passage in 2013 of SB 21, the oil production tax reform bill.  

If that job creating trend is killed by an ill-informed voter repeal of SB 21, Alaska will resume its slide past investment climate mediocrity toward insolvency.  This is because Alaska is so dependent on oil production and sustainable oil production requires sustainable tax and regulatory treatment--among other things.

We would draw reader attention to the Resource Development Council for Alaska (RDC) story below.

Ralph Samuels, RDC, ACES, Oil Taxes, No On One, Proposition One, Photo by Dave HarbourYesterday, speakers were confident in the economic future of the State, if...

...if, Alaska can become a more stable investment climate.  It can do this by 1) soundly rejecting (i.e voting 'no' on) the August primary election proposition to repeal the state's improved, reformed production tax law that is already creating more investments ... and, 2) by giving investors confidence in the durability of fiscal certainty that could lead to a $40 - $60 billion LNG Export project.  "It is up to us," as former legislator and incoming RDC president, Ralph Samuels (NGP Photo) said.  -dh

 

(Find Ralph Samuels' complete presentation here.)


 

 

"...we're back in the game!"

Commentary by

Dave Harbour

ConocoPhillips Alaska President Trond-Erik Johansen (NGP Trond-Erik Johansen, ConocoPhillips, Alaska, SB 21, RDC, ACES, Photo by Dave HarbourPhoto-L) pretty well summarized the theme of yesterday's Resource Development Council for Alaska Annual meeting. 

In his introduction of company Chairman and CEO, Ryan Lance (NGP Photo), Johansen said, “I’m sure many of you are aware that since oil tax reform legislation was signed into law a year ago, ConocoPhillips has announced new projects and increased investment in Alaska.

Ryan Lance, ConocoPhillips, Alaska, ACES, production taxes, alaska gas pipeline, lng, RDC, Photo by Dave Harbour“We are hopeful”, he said, that “SB21 will stay in place so we can continue to build on the momentum that is here now.  This is Alaska’s time – and it feels like we’re back in the game.” 

In today’s Alaska, the two big political issues du jour both concern “Investment Climate”. 

Calling on a background as former government relations director for ARCO years ago, I continue to think that a “good investment climate” exists when the tax and regulatory rules are competitive with other areas, and when those “rules of the game” are stable, predictable, and durable.  

In short, after you invest your money in good faith, you are harmed and deterred from future investment when government authorities change the rules of the game –- to take more of the money you make, or to make it harder for you to get a return on your investment -- after the investment is in place.

Over a decade ago, the governor and legislature raised the production tax IN EXCHANGE FOR assurances of investment climate certainty that would permit large gas pipeline investments. 

The severance…or, production tax was raised, sure enough, but the oil company investors were then "rope-a-doped" -- denied investment climate certainty.  It was becoming crystal clear that, after several decades of relative investment climate stability (i.e. since 1981), in Alaska “A deal was no longer a deal”.

So, the first issue du jour dealing with a “good investment climate”, is the upcoming effort by some citizens to trade away long-term stability – by repealing the recently passed tax reform bill, SB 21 – for higher taxes in the short term.  The second issue is whether investors have sufficient faith in the durability and reliability of Alaska’s fiscal policies, to plunk down $40- $60 billion on a gas pipeline and LNG export project.

*     *     *

Phil Cochraine, RDC, BP, ACES, Alaska oil and gas tax, Photo by Dave HarbourThe 2013-14 RDC president, Phil Cochraine (NGP Photo-L), opened RDC’s 39th Annual Meeting at the Dena’ina Convention Center in Anchorage by introducing Anchorage's host mayor, Dan Sullivan​, who with his Energy Advisory Counsel over the years, detected the need and successfully lobbied for improved oil industry investments in the Cook Inlet area of the state.  

Paula Easley, RDC, Resource Development Council for Alaska, Photo by Dave HarbourHe went on to recognize board members, veterans, staff and Paula Easley (NGP Photo), long-time executive director and then board member—who received a standing ovation. 

He recognized elected officials in the room, including Lieutenant Governor Mead Treadwell, Senators Anna Fairclough, Cathy Giessel, Charlie Huggins, Kevin Meyer and several State Representatives including Mia Costello, Shelly Hughes, Craig Johnson, Bob Lynn, Lora Reinbold, Dan Saddler, Bill Stoltze and Geran Tarr and  (Please let us know of others so the archives may be accurately revised.)

KARA MORIARITY, AOGA, KIDS, RDC, SB 21, NO ON ONE, PHOTO BY DAVE HARBOURAlaska Oil & Gas Executive Director Kara Moriarty then addressed the large crowd of some 1,200.  “Alaska runs on oil,” she said.  Moriarty emphasized the importance an improved investment climate leading to improved production upon which jobs, the state budget and the future of Alaska’s children depends (NGP Photo).  Pointing to the assembled children, she said, “These kids are our future ... future miners, future commercial fishermen….  It’s all about jobs.”

Moriarty warned that in the weeks leading up to the August primary election, “…you will hear about the SB 21 $2 billion give-away…that DOESN’T EXIST.”  She also cited a recently completed McDowell Group study emphasizing the impact of oil industry investment on jobs.  (View Moriarty's slide pack.  Note that the actual presentation may have deviated somewhat from prepared remarks.)

Following the introduction by Johansen, Lance (NGP Photo) addressed, “The U.S. Oil & Gas Renaissance – Alaska’s Role” (We provide his slide pack here).

He said the U.S. oil and gas renaissance is growing because of a shale revolution and affirmed that the phenomenon has “staying power”.  Canada is experiencing similar production increases which, together, make possible the increased export of natural gas by 2016. 

At the same time, he said, Asian consumer demand for gas is providing a market for the increased gas supply.  While several dozen LNG export terminals have been proposed in the U.S. and Canada, not all can be expected to be built, he said. 

Alaska has fiscal challenges and Lance noted that Canada has certain ‘infrastructure challenges’, as we have discussed in these pages. The surviving LNG projects, he suggested, will likely come from areas encompassing competitive advantages, including “reasonable fiscal terms”.  Lance emphasized that Alaska had advantages in the growing LNG marketplace, including its 40-year history of exporting LNG to Japan from its Cook Inlet plant at Nikiski and Alaska’s relatively close proximity to Asian markets.

He also said that Alaska’s role in producing more crude oil could be enhanced by reasonable policies.  “ConocoPhillips has a 50-year history in Alaska and remains committed to the state,” he said.  He said he sensed the excitement in the economy and emphasized that maintaining the tax reforms of SB 21would be, “…good for the state, good for jobs and good for industry.”

In an interview following the meeting, we discussed the nature of fiscal certainty with Lance.  We asked about the importance of reliability to a gas pipeline decision.  He said, “stability and certainty are pretty important when making investments over 40-50 years. “

He added that, “We just want an understanding that we can ... say this is the kind of returns we expect out of these projects and that does require some sense of fiscal certainty and stability. 

“But I tell people”, he went on, “we handle this around the world everywhere.  We have fiscal stabilization clauses in our contracts … with most governments and we make big investments all around the world.  So this isn’t new ground we’ve had to tread....  ...we’ve done this globally, we know what it means, what we are just asking is … when we are in these big long projects that you keep us stable through the course of that period. “

We think no reasonable person would think Lance’s request to be unreasonable.  Even Russians and Chinese don’t apparently think the request for fiscal certainty to be unreasonable.

As we probed the subject further, he said, “…people ask me about Russia, China, and where we’ve been for over 20 -30 years … we haven’t changed the contract most places.” 

He added that in Alaska, the fiscal terms have changed, “numerous times”.  He concluded, “…that’s why the companies are talking about this issue; talking about why we need to have some sense of stability and certainty as we go forward with these investments.”

If any elected official were to ask us, “how do we make the investment climate attractive to a gas pipeline investment,” we would say, “Dear Alaskan colleagues, you have a problem.”

We would explain that Alaska has to overcome the greed mentality behind statements like, “It’s our oil”, and “They represent their shareholders and we represent ours”.

Both of those statements are employed as excuses to rob investors of money after they have made investment decisions.  Oil company shareholders and boards would never condone actions by their company to represent them by violating lease terms or breaking tax laws or vilifying public officials.

Yet Alaska over the last decade has taken billions more from oil companies after investments have been made and risks undertaken in good faith; passed tax legislation demanding retroactive payment; and, vilified Alaska’s most capable investors for no defensible reason. 

Alaska's elected officials have given tax breaks to film producers and small oil companies that produced few jobs and little tax revenue while unfairly taxing large petroleum investors who employ many and pay much.

If Alaska wants to attract more investment leading to more oil production and a gas pipeline it had better start doing an attitude check.  Like North Dakota and Texas and Oklahoma, Alaska just might be better served by admitting it is an oil state, appreciating that blessing and becoming proud of its standing as a big “oil patch state”.

Being friendly to investors does not mean giving away the store.  It does mean becoming a place where, after an investment is made, the investor does not lose sleep wondering if the state’s leaders in the morning will decide they want to take more money and saddle the investor with new tax and regulatory burdens.

Like RDC President Ralph Samuels said, “It’s up to us”.

If our decision is to become a responsible investment Alex DeMarban, ADN, Anchorage Daily News, Ryan Lance, Alaska Dispatch, ConocoPhillips, ACES, Photo by Dave Harbourclimate, perhaps we can certify Trond-Erik Johansen’s hope that we are, truly, “back in the game”.

* See ADN story by Alex DeMarban (NGP Photo: DeMarban at press conference following luncheon speech.)

* See RDC's video of Lance's presentation.


Luncheon Remarks

For Ralph Samuels

RDC’s 39th Annual Meeting Luncheon

Dena’ina Convention Center

June 24, 2014

            Thank you, Phil.  It is my honor to serve as President of the Resource Development Council. Alaska faces many challenges, but there are also great opportunities on Alaska’s horizon. 

GOLDPAN PRESENTATION TO PHIL COCHRANE

          RDC has been fortunate to have both a strong board of directors and staff over the course of its nearly 40 years of existence.  Our leadership team has been second to none and Phil Cochrane is no exception.  Phil has served as RDC’s president for two consecutive years and helped guide our team as Senior Vice President for the two years prior.

At this time I would like to present Phil with our traditional President’s Gold Pan in appreciation for his service to RDC.  Thank you Phil for your leadership, hard work, and unending commitment to the mission of RDC – growing Alaska’s economy through responsible resource development. (Applause)

LEGISLATURE AND OIL PRODUCTION TAXES

Over the past year, the 28th Alaska legislature and Governor Parnell’s administration made significant progress in affecting positive change for Alaska’s natural resource dependent economy.  RDC members engaged in a proactive way by testifying, writing, calling and visiting their elected leaders on important issues.  To all of you who responded to our repeated action alerts, thank you! If you didn’t step up, there is more work to do and there will be many opportunities to make your voice heard.

The legislature and administration made progress on advancing a large-diameter Alaska gas pipeline project by passing enabling legislation that empowers the state to become an owner in the Alaska LNG project.  The legislature also passed injunctive security legislation relating to industrial operations in our state – an issue RDC has been working on for several years to bring more fairness and reason into the litigation process. RDC was at the forefront of these and many other issues.

For years RDC has been advocating for the reform of ACES, the oil and gas production tax put in place in 2007 that has been hugely responsible for an accelerated North Slope production decline. As you all know, oil production tax reform finally passed the legislature last year and RDC’s top priority this year is to defeat Ballot Measure 1, which would repeal the new tax structure that took effect January 1st and bring back the old failed ACES tax regime.

The new tax policy is a significant improvement and the industry’s response is encouraging. There is good reason to be optimistic that Alaska is back in the game and that the stage is now set for a future of growth and opportunity. At this time I would like to call on RDC Executive Committee member Kara Moriarty to further address this critical issue.

INTRODUCTION OF TROND-ERIK JOHANSEN

Thank you Kara. Turning to our program, RDC is pleased to welcome both Trond-Erik Johansen and Ryan Lance to our program. Mr. Johansen will be first out of the gate, followed by our keynote speaker. Mr. Johansen is president of ConocoPhillips Alaska, a position he assumed in April 2010.  He joined ConocoPhillips in 1986 and has held a variety of petroleum engineering, well engineering and leadership positions in numerous locations in the U.S. and abroad. Please welcome Trond-Erik Johansen.

(Note for Ralph: Trond-Erik will introduce Ryan Lance)

FOLLOW-UP REMARKS

           (Any personal comments and reflections on the presentation. Present to Ryan as a token of our appreciation, Judy Patrick’s new book, “Photographs of Alaska’s North Slope: Arctic Oil.”)

FINAL COMMENT

A big thank you once again to all of our sponsors for their generosity, and each and everyone one of you for your ongoing support of RDC.  With all of us working together, we can build a prosperous economy and overcome the challenges before us.

I would like to remind everyone to visit the RDC website at akrdc.org on a regular basis for the latest industry and issue updates. Today’s presentation, as well as all other RDC events and breakfast meetings, are available online.

Please mark your calendars for RDC’s annual conference this fall, which will be held on November 19-20th here at the Dena’ina. Our breakfast forums will resume in September.  

One final note, in the next decade alone, Alaska will need to fill 7,500 oil and gas jobs.  And with the potential Alaska LNG project and other oil and gas projects, there will be even more jobs available for Alaskans.  The Alaska Department of Labor and Workforce Development – in partnership with industry and other stakeholders – unveiled a comprehensive workforce plan to prepare for oil and gas jobs now and in the future.  There are cards on the tables at the back with more information. You can also go to the department’s website at Labor DOT Alaska DOT GOV.

In addition, as you leave today, please take with you a copy of our 2014 Annual Report, which is available on the tables and at the exits.

Finally, remember to VOTE NO ON 1 come Tuesday, August 19th!

This concludes the 39th Annual Meeting of the Resource Development Council. Thank you all! 

Categories:

6-9-14 Young Republicans Sponsor Nonpartisan Oil Tax Forum

19 June 2014 6:20am

Calgary Herald by Stephen Ewart: Two pipelines, two countries: A waiting game without end


Young Republicans Sponsor Open Meeting To Hear Experts Discuss Oil Tax Reform

Report and Commentary

(We remind our readers that since accuracy of our archives is of primary concern, we solicit factual additions/corrections and will quickly make necessary changes.  -dh)

by

Dave Harbour

Michelle Hart, Young Republicans, oil tax reform, SB 21, No On One, Photo by Dave HarbourLast night at Anchorage's Loussac Library, Young Republicans had assembled a VIP Panel to brief the general public on an oil tax reform issue scheduled for a vote on Alaska's upcoming primary election ballot (NGP Photo: Young Republican President Michelle Hart).

Panel members.... (Scroll down for more or click here.)


Murkowski Holds FERC's Bay at Bay

Washington, D.C.--U.S. Sen. Lisa Murkowski, (NGP Photo), Lisa Murkowski, Norman Bay, FERC, Cheryl LaFleur, nomination, Senate, Photo by Dave Harbouryesterday voted against appointing Norman Bay to be the next chairman of the Federal Energy Regulatory Commission (FERC). Murkowski said Bay lacks the experience and the background in energy policy to lead the independent regulatory agency. 

“Bay’s responses to my questions on any number of important policy issues facing FERC did not provide the level of clarity needed to win my support,” Murkowski said. “Whether it’s where he stands on recusals, the cumulative impact of the EPA’s recent environmental regulations, or FERC’s current and future course his responses were not forthcoming or worse.”

It’s official: 1 million barrels a day. Williston Herald. North Dakota crude oil production officially surpassed the 1 million barrels per day milestone. North Dakota became the fifth state to hit the million barrel mark, according to the North Dakota Petroleum Council. Alaska, California, Louisiana and Texas have previously hit the mark.

The Senate Energy and Natural Resources Committee on Wednesday marked up the nominations of Bay and current FERC chairwoman Cheryl LaFleur, approving Bay 13-9 and LaFleur 21-1.

Murkowski has repeatedly voiced support for LaFleur’s nomination to a second term on the commission. She has also questioned why the president would demote LaFleur, the commission’s current chairwoman with more than 20 years of experience in the utility industry, to make Bay chairman.  

“I am not interested in the chairman of the FERC doing on-the-job training, particularly when we have a woman – the only woman on the commission – who has been at the helm as the acting chairwoman, and by all reports from both Democrats and Republicans alike, she’s been doing a good job. She has been fair. She has been balanced. She has the temperament that we need. She has the personal qualities of leadership that we look for. She has the experience.”


Young Republicans Sponsor Open Meeting To Hear Experts Discuss Oil Tax Reform

(More event photos here)

Report and Commentary

by

Dave Harbour

Michelle Hart, Young Republicans, oil tax reform, SB 21, No On One, Photo by Dave Harbour​​Last night at Anchorage's Loussac Library, Young Republicans had assembled a VIP Panel to brief the general public on an oil tax reform issue scheduled for a vote on Alaska's upcoming primary election ballot (NGP Photo: Young Republican President Michelle Hart).

Panel members included:

  • SB 21, oil tax reform, Doug Smith, Alaska Support Industry Alliance, Young Republicans, Andrew Halcro, Senator Cathy Giessel, Mayor Rick Mystrom, Dr Scott Goldsmith, ISER, Little Red Services, Anchorage Chamber of Commerce, Northern Gas Pipelines, Photo by Dave HarbourPanel moderator, Andrew Halcro​ (NGP Photo-Middle), Anchorage Chamber of Commerce President
  • Alaska State Senator Cathy Giessel (NGP Photo)​
  • Former Anchorage Mayor Rick Mystrom (NGP Photo-Middle-R)
  • Dr. Scott Goldsmith (NGP Photo-Middle-L)​, University of Alaska Anchorage Professor Emeritus of Economics
  • Doug Smith (NGP Photo-L)​, the President and CEO of Little Red Services, an oilfield support services company is a former President of the Alaska Support Industry Alliance.

Former Mayor Mystrom (NGP Photo) attracted and kept the audience's attention by first saying that he'd been following Alaskan issues for four decades and that, "this is the single most important issue I have seen in my Alaska life."

He said that if Alaskans vote to repeal their oil tax reform law (SB 21), oil production will continue declining.  While oil companies have too much invested in the state to just "walk away", he said that reverting to the higher tax burden would deflect investments to other oil producing states and countries.  

Dan Fauske, SB 21, AGDC, Alaska Gasline Development Corporation, Photo by Dave HarbourMystrom quoted the President of the State-owned Alaska Gasline Development Corporation, Dan Fauske (NGP Photo), as saying that if SB 21 is repealed in August, "the Alaska gas pipeline is toast."

All of our knowledgeable sources concur with Fauske's assessment because returning to a predatory tax structure in a world awash in rising oil and gas production creates huge barriers to what is, potentially, the most expensive construction project in history (i.e. $40 - 60 billion).

Dr Scott Goldsmith, University of Alaska, ISER, oil taxes, ACES, Photo by Dave HarbourGoldsmith (NGP Photo) refuted claims of some critics that the new tax reform bill is a "$2 billion giveaway" to oil companies, pointing out that the state was in deficit mode before passage of SB 21.  If the long run is not taken into consideration, including enhanced employment, exploration and development arising from SB 21, one could only claim that the state is reaping $88 million less under SB 21 than under ACES.

Doug Smith, Little Red Services, SB 21, ASRC, Oil Tax Reform, Alaska Support Industry Alliance, Photo by Dave HarbourSmith pointed out that the decision to keep or repeal Alaska's year-old oil tax reform law is one of the biggest decisions in Alaska's history, "...and we need to get it right".  Using his own small business as an example, Smith said that work had dramatically increased following passage of SB 21 a year ago.  He said that his company was doing more work and producing more jobs than in his company's entire history.  

He said that new oil and gas field work has now risen to about twice the level (i.e. about 14 drilling rigs) than existed before passage of SB 21 (i.e. about 6 drilling rigs).

Smith also noted that due to increased Alaska North Slope work, the decline rate in oil production is at its lowest level in six years.

Cathy Giessel, SB 21, Tax Reform, Photo by Dave HarbourSenator Giessel (NGP Photo) addressed the argument of some that, "it's our oil" (NGP It's Our Oil, David Gottstein, Photo by Dave HarbourPhoto), resulting in a mindset to tax that commodity to the hilt.  

But when Alaska provides leases on oil producing tracts in return for cash bonus bids, for example, and lease holders find oil, the majority of the oil, she said, becomes "their oil" by virtue of lease agreements which only preserve about an eighth of the oil as a state royalty.  

Of course, Alaska then adds to the producer's burden an income tax (in addition to federal income tax), a property tax and a production tax--the latter one of which is the subject of SB 21 tax reform.

Giessel traced the history of recent oil tax laws, pointing out that with lower taxes come a higher number of drill rigs exploring for oil.  She compared the almost 30 rigs at work in Alaska today -- following tax reform -- with the dozen rigs operating in 2011.  

She said that according to a recent study by the McDowell Group, the oil industry was responsible for over 110 thousand direct and indirect jobs in the state (i.e. 33% of total jobs), along with over $6.4 billion in wages (i.e. 38% of total wages) and billions in royalties and taxes.

Sarah Palin, Governor, Alaska, ACES, AGIA, Photo by Dave HarbourACES (Alaska's Clear and Equitable Share) was the production tax law created by Governor Sarah Palin (NGP photo) and a bipartisan majority of the Legislature, in late 2006.  The tax increase was enormous and created hastily, in the wake of a scandal involving several legislators and an oil industry support company a decade ago.

SB 21 is the oil tax reform production tax bill at issue this summer, enacted last Spring after four years of committee hearings and debate on how to improve ACES.

Andrew Halcro, Anchorage Chamber of Commerce, SB 21, Oil Tax Reform, ACES, Photo by Dave HarbourHalcro pointed out that, "under ACES, it just didn't make sense for companies to expand."  Expansion is the best way to produce oil, he said, not simply trimming expense.  He reminded the audience that when oil companies make more money in a state dependent on oil jobs and income, everyone does better.  He gave as an example, ExxonMobil, which is the single largest holding in the Alaska Permanent Fund.

Halcro also documented how the State Revenue Department overstated prospects for future oil production before the full, economic effects of ACES materialized into a disappointing and dangerous trend downward.  

During a question and answer period following the presentations, Smith said in response to the hurried way ACES was created, "We can't make decisions like ACES on emotion."  The crowd applauded.

Ralph Samuels, Alaska, ACES, Production Tax Law, Photo by Dave HarbourResponding to a question about why ACES passed in the first place, Halcro said it was a combination of lawmakers who didn't like oil companies and lawmakers who were afraid to vote against a popular governor (i.e. Palin).  He noted that Representative Ralph Samuels (NGP Photo) was a courageous exception to the rule," another comment resulting in applause.

Halcro also noted that ACES included tax and investment incentives for small companies.  But after two years and many millions in incentives had been dedicated to these companies, they told the state that though they could discover new commercial reserves, they could not afford to produce them under the tax burden imposed by ACES.  

Halcro added that since the passage of ACES in 2006, Alaska's spending has risen 50% but its income has dropped 30%.

Halcro pointed out that the state is home to some 6,000 non profit corporations.  (i.e. This is a higher per capita density of non governmental organizations (NGOs) than anywhere in the country if not the free world.)  As government grants decline, Halcro said, these NGOs become more dependent on business and individual giving.  As the saying goes, he said, "when the oil industry catches a cold, everyone else sneezes.

Earlier this year we editorialized on this issue and provided these statistics, concluding that, "We continue to be surprised at how few non profit organization leaders testify to the Legislature in support of oil companies, how few write letters to the editor.  Yes, Non profits are professional, profligate writers of corporate and foundation grant requests, but how many stand up to support oil company investment -- which directly and indirectly affects their own prosperity?

*     *     *

In another recent presentation, Dr. Goldsmith opined on various strategic alternatives for Alaska's economic future:

1. Natural Resource Development
2. Value Added Processing
3. Federal Spending
4. Infrastructure Investments
5. Renewable Energy
6. Footloose Industry
7. Other Economic Development Ideas
8. PETROLEUM
 
Of these, Goldsmith was quick to add that, he believed Strategy #8, "trumps the rest".

-30-

*   *   *

(See KTUU Television Video)


Additional Event Photo:

Young Republicans, College Republicans, Alaska, Photo by Dave HarbourYoung Republicans 

with 6-18-14 SB 21

Panel Members

Categories:

6-17-14 Alaska Is Dead Last In Gross Domestic Product Gain In 2013 - Obama Moves To Zone Oceans

17 June 2014 7:10am

Doc Hastings, Congressman, Ocean Zoning, Obama, Overreaching Executive Action, Photo by Dave HarbourToday, Congressman Doc Hastings (NGP Photo) said, "...the Obama Administration has threatened to impose ocean zoning to shut down our oceans, and today the President is making good on that threat." 

(We began updating readers on this threat of Executive Overreach years ago.  Scroll down to 'Current Event #4' , on this page.   Also see Washington Post News Alert which mentions involvement of White House Chief of Staff John Podesta, a leading player in the Enviro-Industrial-Governmental Cabal.  -dh)


Globe & Mail by Peter Tertzakian.  Rising instability may make $100-a-barrel oil seem cheap.


The one state out of 50 with real gross domestic product loss in 2013 was Alaska....  With declining oil production, and high governmental, climactic, geographic, marketing and logistical costs Alaskans are justified about being very concerned for the future of their children.  This is why voting to repeal oil tax reform in the August primary election is a vote for continuing economic decline.   The Department of Commerce is also documenting with this report that poor Federal natural resource policy in Alaska (i.e. and elsewhere) results in economic weakness.  -dh

US Department of Commerce.  Real gross domestic product (GDP) increased in 49 states in 2013, according to new statistics released today by the Bureau of Economic Analysis (BEA).  (Our thanks to Dan Kish, Institute for Energy Research's SVP, for bringing this report to our readers' attention.  -dh)


Alaska Dispatch.  A group fighting to repeal Alaska’s new oil-Tony Knowles, No On 1, Alaska Governor, Oil taxes, ACES, Photo by Dave Harbourproduction tax cut publicly issued an apology on Monday days after a volunteer sent out a caustic statement that, among other things, accused former Gov. Tony Knowles (NGP Photo) of being a “paid shill” for the other side.

In fact, the group, Vote Yes! Repeal the Giveaway, has no evidence showing that Knowles is paid by the opposition and should have never have sent the email, said the group’s campaign manager, T.J. Presley.


From the Alaskanomic's Blog:

Posted: 16 Jun 2014 11:11 AM PDT

The Anchorage Chamber of Commerce commissioned a study on Cook Inlet Oil and Gas by Northern Economics. The report that resulted from this study was published this spring. For your convenience, we have included a link to the report in the Resources section of Alaskanomics. 

It should be no surprise that the Cook Inlet oil and gas industry is extremely important to Southcentral Alaska and the rest of the state. In Anchorage, 82 percent of homes are heated by natural gas. The Anchorage Chamber of Commerce has made energy security a top priority. In a recent survey, over 40 percent of members noted that energy was a concern and the biggest concern in relation to energy was the high price due to deficient supply.

The study finds that the impact of Cook Inlet oil and gas is significant. There is a $2.8 billion economic output from the industry in Cook Inlet. $350 million of this is in payroll with 1,300 direct jobs on the Kenai Peninsula. There is a $423 million benefit from using local, Cook Inlet Gas, rather than using other fuel sources. The total worth of Cook Inlet oil and gas is $4.7 billion. This is over 10 percent of the Alaska economy and with new investment pouring into the State; Cook Inlet appears to be rebounding.

The view the full report, please use this link.

Categories:

6-16-14 Brooks Range Petroleum's Alaska North Slope Progress!

16 June 2014 9:41am

Globe & Mail: The Harper government is set to announce a key decision on Enbridge Inc.’s politically charged Northern Gateway project.... (Shawn McCarthy)

Leader-Post: "...high capital costs of building liquefied natural gas plants on British Columbia’s coast...." (Derrick Penner)


Tim Bradner, GTL, Plan B, Plan A, Alaska North Slope, Gas Pipeline, Photo by Dave HarbourADN Commentary by Tim Bradner (NGP Photo):  "...the 'GTL' option may be another way to commercialize stranded gas on the North Slope."


Today's Consumer Energy Alliance News Links


Brooks Range Plans Mustang Development Production Within Two Years 

by

Dave Harbour

​Since accuracy of our archives has been our constant goal for over a decade, we invite factual additions/corrections to any of our reports or commentaries.  -dh

AAron Weddle, Commonwealth North, Mustang, Brooks Range Oil, Photo By Dave HarbourOur friend, Aaron Weddle (NGP Photo), of Commonwealth North (CWN) provided this audio link to last Friday's "Mustang Development Update", by Brooks Range Petroleum's COO, Bart Armfield.  Here is the slide pack that our readers can use to follow through the entire presentation.  Armfield was addressing CWN members and guests at the weekly Energy Action Coalition meeting in Anchorage. 

Common use of ConocoPhillips' infrastructure for Brooks Range development and Repsol exploration facilities, Armfield said, "...is a demonstration of super majors, mid majors and small independents having an infrastructure that is strategic to all...."  

It shows how the companies, in spite of their competitive natures, can work together, he said.  

It is, "...an acknowledgement that there is a need for cooperation and collaboration to allow everybody to achieve their independent goals."

Armfield began by stating his goal was to discuss only the short term plans of the company, primarily the Mustang development at the Southwest corner of the Kuparuk development area.  

He hinted that the company has in mind other large projects, to follow.

Jack Laasch, Canadian Gals, NSB, Mustang, Brooks Range, ARCO, Alaska Support Industry Alliance, Photo by Dave Harbour, Canadian Gala, Anchorage, Alaska(Note:  Armfield also introduced Jack Laasch {NGP Photo}, a longtime industry consultant, Alaska North Slope project veteran and member of the Alaska Support Industry Alliance who has assisted the company in developing the project.)

Armfield said the overall investment and project plan are based on internal and third party studies.

Development drilling will continue during fourth quarter, this year, followed by continuing design, engineering, fabrication and then, construction.  The company plans to install facilities at the end of 2015 with production beginning in early 2016, at initial production rates of 8-10 thousand Barrels of oil per day.

Mary Ann Pease, Commonwealth North, Oil Tax, Gas Pipeline, Alaska, Photo by Dave Harbour, MAPCommonwealth North Energy Committee Chairman, Mary Ann Pease (NGP Photo) asked Armfield to comment on the upcoming August referendum that will determine whether Alaska's recent oil tax reform bill will be repealed.  

Readers can listen to the dialogue here, but, in general, he opposed passage of Proposition 1, the repeal referendum.  He also noted that the issue affected different explorers and producers differently.

"When you are in a loss position, it means one thing.  When you in a revenue position and a growth mode it means a totally different position," he said.

Company and third party engineering reports, including one by former Arco executive, Dr. David Hite, verify proven gross oil reserves of over 24 million barrels, with much larger probable and possible estimates of oil in place.

The Mustang development cost will rise to nearly $700 million by the 2016 start up date, including a $70 million facilities investment by the Alaska Industrial Development and Export Authority (AIDEA) in addition to general facility financing and investment by Working Interest Owners.

Mustang project modules will be constructed in Anchorage and moved up the haul road to the North Slope.

Readers interested in a more granular timeline of budgets, local employment and investment targets will find them in the PowerPoint presentation.


TODAY'S Energy In Depth Headlines:

  • EID-Michigan: Survey: Support for HF highest in communities where development occurs (6/14)

NATIONAL

HF can help curb emissions. Asheville Citizen-Times, EID’s Steve Everley. The U.N. Intergovernmental Panel on Climate Change (IPCC) recently concluded that the “rapid deployment of hydraulic fracturing” — and the subsequent increase in natural gas supplies — “is an important reason for a reduction of GHG emissions in the United States.”
 
David Blackmon, Energy In Depth, Consumer Energy Alliance, El Paso Natural Gas, hydraulic Fracturing, Photo by Dave Harbour, Gas ImportsThe Weekly Oil & Gas Follies. Forbes, EID’s David Blackmon (NGP Photo). The facts are easy to summarize. Thanks to a rapid expansion of horizontal drilling and hydraulic fracturing, the United States in 2009 again became the world’s top producer of natural gas. Gas imports (mainly by pipelines from Canada) peaked as recently as 2007 at nearly 20 percent of the total supply; in 2013 they were just 11 percent.
 
Survey: “Gasland” ranks dead-last in list of credible info sources on HF. E&E News. In terms of where Marcellus residents were obtaining their information about hydraulic fracturing, newspapers scored the highest in the survey. "Gasland" scored last as a source of information on hydraulic fracturing for those living in counties hosting Marcellus Shale activity.
 
US petroleum production hits 44-year high. Financial Times. The US is already the world’s largest producer of oil and gas, taken together, and is one of the top three in terms of oil alone, alongside Russia and Saudi Arabia. The US boom is in sharp contrast to oil production elsewhere in the world, which is constrained by decline in mature areas such as the North Sea and political and security issues in countries such as Iraq and Syria.  (Click below for more....)

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6-10-14 Alaska Natives Support Oil Tax Reform

10 June 2014 10:13am

2:24 PM, ADT: You Read It Here First.  From Julie Hasquet BP, UAS, Prudhoe Bay, FAA, Julie Hasquet, BP Photoat BP comes this breaking news:  

"BP and AeroVironment are deploying an Unmanned Aerial System (UAS, BP Photo) technology at Prudhoe Bay, marking the first time (i.e. our emphasis added) the Federal Aviation Administration (FAA) has granted permission for UAS routine commercial services over land in the United States.

"The UAS technology has potential to improve safety, efficiency and the reliability of BP’s Alaska North Slope infrastructure and maintenance programs.

"BP’s vendor, AeroVironment, is performing high-accuracy land surveying and LIDAR mapping in Greater Prudhoe Bay. The UAS flight operation will survey and map Alaska North Slope gravel roads and pads using LIDAR (Light Detection and Ranging) 3D technology. This marks the first time UAS technology has been used over land in compliance with FAA regulations."

Check out this technology on the BP You Tube channel: https://www.youtube.com/watch?v=05t-dg6nFpE&feature=youtu.be   FAA press release: http://www.faa.gov/news/press_releases/news_story.cfm?newsId=16354


 

Sean Parnell, SB 21, Alaska Oil Production Tax Reform, Photo by Dave Harbour, Keep Alaska Competitive, Vote No on 1Comment:  Our readers know that over a year ago the AlaskaLegislature passed and Governor  Sean Parnell (NGP Photo) signed into law, SB 21, which reformed one of the most predatory, onerous oil production tax laws in the free world.  

From Keep Alaska Competitive:

Six Alaska Native regional corporations formed their own ballot measure group called No One On One. “It is our concern for the future of the state and economy that we stand before you today and ask you to vote no on 1,” said Rex Rock (NGP Photo), president and CEO of Arctic Slope Regional Corp.

“Our board unanimously voted to join the coalition because of how important the oil industry is to our state,” said Laura Edmondson, chief financial officer for Bering Strait.

Jason Metrokin, president of Bristol Bay Native Corp., said his company’s oil subsidiaries helped the Alaska Native regional corporation reach its goal of doubling shareholder hire and wages.

Sophie Minich, CIRI, SB 21, oil tax, Photo by Dave HarbourWe’ve witnessed the industry’s commitment to new investment and have seen for ourselves the rebound in jobs and activity in the oil and gas industry and we want to see that trend continue,” said Sophie Minich, president of Cook Inlet Region Inc.

Aaron Schutt, Doyon, SB 21, Photo by Dave HarbourDoyon, Ltd., owns seven rigs on the North Slope. “We saw two of our rigs go down right away” when ACES passed, said Aaron Schutt, Doyon president. “Each rig has about 80 employees, and 95 percent of our employees are Alaskans, and about half are Doyon shareholders.”

Helvi Sandvik, NANA, SB 21, oil tax reform, Photo by Dave HarbourNANA has worked on the North Slope for 35 years and has 4,000 employees supporting the oil industry, including 1,000 shareholders, said Helvi Sandvik, president of NANA Development Corp. 

While the state still reaps huge rewards from the oil production tax, the oil income tax, oil and gas royalties, and oil industry property taxes, SB 21 improved the climate of investment.  More projects are now being undertaken or planned than before passage of the Act.  

In August, a citizens referendum supported by legislators voting against SB 21, environmental activists and a few other special interests, will determine whether the SB 21 reforms will live on or be repealed.  

Thoughtful Alaskans, like our readers, are mostly concluding that the initiative should be voted down.  Others, who believe the former tax structure has no effect on investment, will be voting for the Proposition 1 repeal.

Groups all over Alaska are lining up, for or against repeal.  In the sidebar, is a report from the "Keep Alaska Competitive" group, reflecting the position of some of Alaska's major Native corporations.  -dh


Houston Chronicle.  “It’s the new way to come to the United States illegally,” said Congressman Ted Poe. “This administration will not enforce the rule of law on the border.”  (Note: We provide this link to demonstrate that the Administration is not only crippling the rule of law with respect to overreaching energy policies, but also in the area of national security.   -dh)


The Hill.  Speaker John Boehner on Tuesday harshly criticized the swap of five Taliban detainees for one U.S. soldier, saying the U.S. would “pay” for President Obama’s decision to negotiate with terrorists.  

(Note: We provide this link because the US has now signaled to terrorists that we will 'negotiate for hostages'...and this affects our readers directly.

This ends another important American tradition of not encouraging the proliferation of kidnappings.  

Accordingly, since natural resource companies have the reputation for 'deep pockets' we know our American and Canadian readers will be especially vigilant in the future about their own safety as a result of America's having traded an alleged deserter for five of the most deadly, Taliban terrorists.  

Though largely unreported, this Obama Administration act has a disproportionatly larger impact on oil, gas, mining, support companies and other multi-national corporations than on tourists in general or even on government employees.   -dh)


 

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5-14-14

14 May 2014 9:32am

Courtesy of Alaskanomics, we have the following Alaska North Slope project update:

North Slope Project Update

Alaska Economics, oil and gas, state budget, Northrim BankPosted: 13 May 2014 10:01 AM PDT

There have been numerous announcements from the oil and gas industry regarding new projects since the passage of SB21, the More Alaska Production Act (Note in our report last week the support for this oil and gas reform act from the mining industry  -dh). Announcements have come from the major producers, as well as smaller, independent companies. Information compiled by the Bradner Alaska Economic Report shows that $8.6 billion in new projects have been announced since the passage of SB21. This is on top of the $4 billion that was in the works at Point Thomson and $1 billion for  ConocoPhillip’s CD-5 near Alpine field.

Oil industry leaders have been quick to point out that SB21 helped spur the increase in projects and new production and these projects could change depending on the outcome of the August 19 primary election. The announced projects and their expected production include:

BP

  • West end of Prudhoe Bay- $3 billion project; 40,000 barrels per day (b/d) beginning in 2018
  • Prudhoe Bay Drilling- $1 billion; 2 rigs added in 2015 and 2016

Brooks Range Petroleum

  • Mustang Field- $600 million; 15,000 b/d by 2017

Cealus Energy

  • Nuna Project- $2 billion; 15,000-20,000 b/d

ConocoPhillips

  • GMT-1, Kuparuk drill site, and Kuparuk River site- $2 billion; 49,900 b/d
  • CD-5- $1 billion; 16,000 b/d to begin production in late 2015

Pt. Thomson Project

  • Field east of Prudhoe Bay- $4 billion; 10,000 b/d of liquid condensates in 2016

$13.6 billion and an increase of 145,900 to 150,900 b/d by 2018

These projects not only represent increased investment in Alaska and increased oil production, but they also represent more jobs for Alaskans. Oil industry leaders are optimistic that new development can continue with the help of SB21 and that the new tax reform is encouraging new projects throughout the State of Alaska.

 

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