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Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to suggest others existing before 2001.

 

Alaska Taxes

10-25-13

25 October 2013 6:51am

Our Commentary Goes Nationwide

We find more evidence supporting the wisdom of oil tax reform

by

Dave Harbour

CBC.  To avoid disturbing the site where ancient human bones were discovered, a Saskatchewan pipeline company says it will tunnel deep below.​


On Wednesday, we inventoried ways in which the Federal government was hamstringing job creation by blocking natural resource development (i.e. Thinking Critically About CNBC).

Yesterday, we noted that the Steller Sea Lion is finally off the threatened species list.

Doc Hastings, Congressman, Prairie-Chicken, Lesser, US fish and wildlife service, Western Association of Fish and Wildlife Agencies' Lesser Prairie-Chicken Range-Wide Conservation Plan, Photo by Dave HarbourToday, Congressman Doc Hastings (NGP Photo) explains why citizens must still remain critical of Administration strategy (re: Lesser Prairie-Chicken Range-Wide Conservation Plan--another initiative that threatens human livelihoods.)  -dh

Also noteThe National Blueways Secretarial Order was signed by Interior Secretary Ken Salazar in 2012 and creates unilateral authority for the Secretary to designate entire watersheds as “National Blueways.” 


More: The nation's energy infrastructure is under attack. The destruction of the utilities that provide electricity or its ability to refine oil is critical to crippling a nation's ability to function, based on the universal use of hydrocarbons such as coal, natural gas, and oil.  EnergyBiz.

Earlier this week, we posted a commentary on Repsol's Alaska investment (i.e. Take Heart But Take Heed).  That commentary Governor Sean Parnell, More Alaska Production Act, Repsol, SB 21, Photo by Dave Harbourwas edited and reformatted by Master Resource, with our permission, and released today to its thousands of readers.  In part, we said, "In 2011, Repsol acquired a large lease position in Alaska given the rich prospecting and the upside of positive tax reform in the state. The latter occurred in mid-2013 with the passage of Senate Bill 21, the More Alaskan Production Act, signed into law by Governor Sean Parnell (NGP Photo).

 
Late yesterday, a reader (i.e. J.N.) alerted us to a related Wall Street Journal article.  In it, we find that the highly respected independent operator, Pioneer Natural Resources, has sold its Alaska operations to another firm attracted to the state by oil tax reform.   According to the Wall Street Journal article, James C. Musselman, President and CEO of Caelus Energy Alaska LLC, stated, "We are excited to enter the North Slope through the purchase of Pioneer's assets. The current Pioneer Alaska team is very impressive and has the experience to develop the significant resource potential they have identified and help us grow the business in the future. We are attracted to Alaska because of the enormous geologic opportunity as well as the incentives, such as SB 21, that the state has put in place to encourage energy investment by independent oil and gas companies."
 
 
Some opponents of tax reform -- those seeking repeal of the new reform act -- believe that more moderate taxation does not attract more investment.  We urge citizens on a local and national basis in both the United States and Canada to put new credence on the very basic economic principle that, "The more you tax the less you get."  
 
We do admit, however, that economic realities sometimes take years to manifest themselves.  This means that in the short term, a greedy government may well make 'more' NOW for current beneficiaries by taxing more -- even if it is at the LATER expense of the helpless, non-voting generation who depend on our judgment and decisions.  -dh
Categories:

10-23-13 Why All Alaskans Should Support Oil Tax Reform: We've Proved It Works!

23 October 2013 7:31am

Commentary: We've Proven Tax Reform WORKS!

This morning, Alaskanomics sheds light on how much film production tax credits have helped the economy.  Here's a Peninsula Clarion story that demonstrates how five separate tax incentives have leveraged more jobs and production in the Cook Inlet Area.  With these two examples of how moderate, competitive tax policy produces good results for Alaska, one wonders why several legislators and community activists are trying so hard to repeal SB 21, the "More Alaska Production Act" designed to increase Alaska North Slope production, jobs, Trans Alaska Pipeline throughput and Alaska's economic strength!     -dh

(Ref: existing incentives)

Oil & Gas Online:  

Sixty-seven percent of voters nationwide support offshore drilling for domestic oil and natural gas resources, according to a new poll conducted by Harris Interactive for API’s “What America is Thinking on Energy Issues” series.

This support bridged party lines, with clear majorities of Republicans (79 percent), Democrats (57 percent) and Independents (67 percent) all supporting offshore drilling.

 “Americans get it: domestic oil and natural gas development is a key driver for new jobs, economic growth and energy security,” said Erik Milito, director of upstream and industry operations for API.

(Scroll down for our related editorial, yesterday.  -dh)

 

 


 

Dan Hassey

Today's Natural Gas Price Analysis From Dan Hassey, Uncommon Wisdom

The natural gas production cost currently ranges from $1.50 up to $4 per million cubic feet. When natural gas prices fell to the $2 level, producers shifted to oil and natural gas liquids.

With a glut in natural gas supplies, production is falling. One of the best ways to determine the potential supply of natural gas is to look at rig counts.

Baker Hughes (BHI) tracks the number of rigs operating all over the world. This table from its website shows the decline of rigs used for natural gas drilling:

The U.S. natural gas rig count fell by 240 rigs in the last year, a 40% decline. Notice how the number of oil rigs rose slightly since a year ago. Those are producers switching from natural gas to oil.

Now look at this natural gas price chart.

When prices hit $2.00, producers cut back on production. Then demand picked up, especially from utility companies. Prices recovered and have now doubled to the $4 area.

Categories:

10-21-13

21 October 2013 2:48am

HOUSTON'S ENERGY DAY IS BIG SUCCESS!  Cities all over North America could emulate this model to interest children in Innovation, Science, Technology, Energy, Engineering and Math!


Energy Day Festival Sparks New Interests for Houston Area Students 
Mayor Parker and Event Organizers Urge Students to Pursue Careers in Energy 

Houston, TX – Twenty thousand people turned out Saturday to applaud more than 85 Houston area teachers and students who were recognized at the third annual Energy Day Festival.  Elementary, middle school and high school age students participated in one of six contests exploring the science and technology behind today’s energy innovations.  
 
David Holt, Energy Day, Consumer Energy Alliance, Photo by Dave Harbour“There are great possibilities for students who pursue careers in science and technology,” said David Holt (NGP Photo), the President of Consumer Energy Alliance, the chief organizer of the festival.  “Energy Day is showing young people the practical applications of what they are learning in the classroom. We need more students engaging and pursing careers in innovation.” 
 
Houston Mayor Annise Parker and the University of Houston Professor Alex Ignatiev also spoke during the festival, each challenging students to pursue careers in science and technology.
 
Photos from Energy Day Festival ‘13

The festival in its third year, featuring over 70 exhibitors, set a new attendance record.   Local law enforcement estimated over 20,000 people attended the one-day event. 
 
The Energy Day Festival marks the conclusion of a series of academic events happening throughout the previous school year.   Students participated in the Energy Academic Program which is made up of six separate contests:  The Science and Engineering Fair of Houston; the CSTEM Challenge; the CASE Houston: Energy City of the Future 2050 Competition; the Children’s Museum of Houston Young Inventors’ Showcase; The International Sustainable World Energy, Engineering and Environment Project; The HGS/HMNS/CEA Art, Essay and Media Contest and the John Kingsley Kerver Educator Award. 
 
Review the 2013 winners at www.energydayfestival.org.

Jim Prentice's LNG message yesterday was as important to Americans as today's commentary may be to future investors in Canada's oil patch!  -dh


Take Heart But Take Heed!

Alaska Must Never Become Like Hostile Argentina

Cautious Optimism From Alaska's Oil Patch

Commentary by

Dave Harbour

Would you rather invest your money in a safe place or an unsafe place? 

Spanish oil company, Repsol, has answered that question by shifting its attention from Argentina to Alaska and other more reliable investment areas among the some three dozen member states of the  OCED (Organization for Economic Cooperation and Development). 

In  1993 Repsol paid $13 Billion for nearly 60% of YPF, the Argentine oil company.  In 2010, Repsol discovered a significant oil shale play in an area called Vaca Muerta.  In 2011, Argentine President Cristina Fernández de Kirchner took action leading to nationalization of most of Repsol’s YPF interests.  Since then, production has declined and the trade deficit has increased.  In wake of the expropriation, according to Forbes, “The EU, along with the UK, Mexico, Chile and Colombia” condemned Argentina’s action.  The U.S. State Department also condemned Bill Hardham, Repsol, Alaska, Argentina, expropriation, taxes, Photo by Dave Harbournationalization of the company. 

Last Friday, at a presentation to Commonwealth North’s Energy Action Coalition, Repsol’s Alaska Operations Manager, Bill Hardham (NGP Photo), told members his company acquired a large lease position in Alaska in 2011 amid peaking tensions in Argentina — as Alaska’s oil tax reform effort was promising an improved investment climate here. 

Oil tax reform finally did occur later with the 2013 passage of SB 21, though a short time later environmental activists and anti reform legislators -- among others -- promoted repeal of the law via a voters' referendum.  The question of whether to repeal oil tax reform will appear on Alaska’s primary ballot next summer.

Recognizing the voters' referendum to repeal tax reform during the primary election next summer, Hardham said that, “We purchased leases and partnered with Armstrong with confidence that Alaska would adopt a tax reform proposal.  Repsol remains confident that Alaska voters will see the benefit of filling the pipeline and attracting new investment into the state.” 

Hardham briefed members on the company’s significant progress since obtaining its Alaskan stake.  In addition to offshore leases in the Chukchi and Beaufort Seas, Repsol  has a 70% working interest in and is operator for 700 thousand leased acres on the Alaska North Slope (ANS).  In 2012 the company completed 48 miles of ice roads and drilled two exploration wells.  Last winter, the company completed 38 miles of ice roads, drilled three wells and identified gravel sources for future operations.  This winter, the company is, “well underway with its planning and permitting,” Hardham said, for 22 miles of ice roads, an air strip, 3 wells, appraisal of last year’s work and flow testing. 

“We want to be here for the long haul,” Hardham emphasized – more than once. 

At conclusion of the presentation, NANA Development Corporation’s Senior Vice President and Chief Operating Officer David Marquez said, “I appreciate your confidence in Alaska voters but what would a vote for oil tax repeal do to your plans?”

“Plans would change,” Hardham said. 

Tom Case, Chancellor, University of Alaska Anchorage, Commonwealth North, LTG, President, Photo by Dave Harbour, USAFCommonwealth North President and University of Alaska – Anchorage Chancellor, Tom Case wondered about ‘surprises’ the company had experienced upon its arrival in Alaska.  Hardham spoke of the complexity of the permitting process and said, “Without our very capable consultants, we would have had a very difficult time navigating the regulatory process.” 

Another member asked about what ‘we’ could do to help.  “The best thing Alaskans could do would be to defeat the referendum to repeal tax reform.  Other than that,” he said, “it would be nice if you could lower Alaska’s very high operating costs.”  The audience greeted that commentary with knowing smiles and a little ironic laughter. 

Pat Galvin, Great Bear, ACES, Department of Revenue, Commissioner, Photo by Dave HarbourFormer Revenue Commissioner, now a Great Bear Petroleum LLC Vice President, Pat Galvin, asked about Repsol’s plan regarding expiring leases.  Hardham replied that the company regarded expiring leases as a ‘driver’ of plans.  He said that expiring leases would have priority attention while in other cases the company could seek extensions of expiring leases. 

Hardham concluded with a summary of the many consulting and contracting opportunities Repsol’s development projects would require, including employment for several hundred Alaskans.   

“Hopefully, we’ll have multiple phases of development,” he said, a statement of optimism chastened by caution.  It was clear that the jury is still out on whether Alaska’s policies will enable the company to continue its progress, or whether a repeal of oil tax reform will align Alaska more with the policies of Argentina.  

One listening to the presentation could take heart at Repsol's large, decisive and rapid Alaskan investments.  But Alaskans who wish to learn from others should also heed the counsel of Fredrik Erixon, director of ECIPE, the world economy think tank in Brussels.  The author of “Pariah in the world economy – how should other countries respond to Argentina’s return to  economic nationalism”, he wrote this spring that, “ the most damaging consequence of the confiscation is that the government has undermined efforts to fund new production in the giant oil shale reserve, Vaca Muerta, discovered by Repsol in 2010.  The expropriation has created a very uncertain investment environment, to say the least, for potential partners in Vaca Muerta.”

Repsol’s management will, no doubt, long remember Argentina’s 2011 expropriation of over $10 billion in shareholder assets, including the undeveloped shale play called Vaca Muerta.   Vaca Muerta is fittingly translated as, “Dead Cow”. 

One hopes that Repsol’s current investment in Alaska is greeted by a friendlier regime – one that does not take assets by increased taxation after investments are made—as has been Alaska’s recent practice. 

After all, “killing the Alaskan goose that lays golden eggs, up here”, in principle, is similar to “killing an Argentinean cow that sustains a faltering economy, down there”. 

Either analogy repels and is repugnant to investors.  


Today's news briefs courtesy of the Office of the Alaska Gas Pipeline Federal Coordinator:

Categories:

9-26-13 Appearing As A Guest On Terzah's Alaska Political Insider Show

26 September 2013 3:52am

From Michael Soukup in Governor Sean Parnell's office: 

Alaskan trucking companies have a renewed sense of optimism as new opportunities are being created across the state. According to Scott Hicks of Alaska West Express, things like more jobs, more production, and more cash to the state are why he’s excited about the More Alaska Production Act and its impact on the trucking industry. To view his testimonial, please visit:
http://gov.alaska.gov/parnell/priorities/resources/more-alaska-production-act/testimonials.html

We have made careful note over the years of many instances of "Federal overreach" in Alaska.  We have organized those examples into a category (below left) called "Federal Obstruction".  Reviewing the video below reminds us that we may sometimes miss instances where a Federal agency has efficiently moved due process to a rational conclusion benefiting Alaska.  Moving in a timely way to grant a right of way over federal lands for the Alaska Gasline Development Corporation might be one example that seems to reflect Federal regulatory competence benefiting Alaska; kudos to the Bureau of Land Management.  We invite readers to submit a paragraph describing other instances of Federal natural resource decisions benefiting Alaska--either with or without your identity. Submit those ideas anytime and we will archive them under our story category of "Federal Progress."  -dh

Categories:

9-6-13 North Slope Borough Breaks Ground For $90 Million In Utility Improvements At Prudhoe Bay

06 September 2013 4:45am

"US Leadership In An Emerging Arctic" is the lecture topic next Tuesday in Anchorage, when Ambassador David Balton (NGP Photo) and former Lieutenant Governor Fran Ulmer (NGP Photo) will address the World Affairs Council.  Reservations here. Various Arctic energy issues are certain to be addressed, including Arctic shipping, resource development, and sovereignty issues.  -dh

 

"Alaska's Troubled Romance With LNG", by Dave Harbour.  Here is this week's Xtra column, submitted for distribution to tens of thousands of households.  

Note that these columns (see them all, here) are limited to about 1,000 words.  Accordingly, it grieves us that much must be left out.  With that limitation in mind, we encourage readers to support our goal of 100% accuracy by sending us additions/corrections here and we will make necessary adjustments to the archived story below.

 

 

 


North Slope Borough Breaks Ground For $90 Million In Utility Improvements At Prudhoe Bay

by

Dave Harbour

On Wednesday several dozen Alaska North Slope Native residents, service company managers and oil industry officials gathered at Prudhoe Bay to 'break ground' on for new utility facilities serving the large oil field.

Improvements now in the design stage will involve replacement and upgrading of the North Slope Borough's water and wastewater treatment plant and expansion of the landfill.

...more coming next week.  We confess that priorities and a desire to provide readers with a good story required that we take the weekend to complete our work.  Have a nice one....  -dh


Alaska’s Troubled Romance With LNG

By

Dave Harbour

After the Prudhoe Bay discovery (“the discovery”) in the winter of 1967-68, Alaskans learned that their great, Arctic oilfield was also the largest natural gas find in American history.

Then, in 1969, a Kenai Peninsula Liquefied Natural Gas (LNG) plant began cooling Cook Inlet gas to almost -260 degrees Fahrenheit, compressing it to 1/600th of its gaseous volume, transporting it by tankers to Japanese utilities.  The Kenai plant introduced Alaska to its love affair with LNG.  It was only U.S. LNG export facility for over four decades.

The larger, Prudhoe Bay discovery injected vigor into the 49th state: new jobs, new public services and amenities, and countless new business opportunities for a new age of pioneers.

Prosperity also produced political tensions.  Politicians wanted tax money for constituent projects.  Proliferation of social services increased state spending.  Environmental activists sued developers.  Petroleum investors –and the state treasury--wanted the lowest possible capital and operating costs to secure profitable returns. 

*     *     *

After that discovery 45 years ago, companies began planning transportation alternatives for Prudhoe’s oil and natural gas reserves. 

Investors wanted the most efficient transportation system, but politicians wanted a say, too. 

In the early 1070s Congress concluded the oil line should run through Alaska to Valdez while a gas pipeline could move Arctic gas to Midwest and other markets. 

Alaskan oil producers completed the Trans Alaska Pipeline System (TAPS) in 1977.

To build a gas pipeline, twenty-seven U.S. and Canadian oil and gas companies formed Alaskan Arctic Gas Pipeline Company in the early 1970s led by former Lieutenant Governor Bob Ward.  Former TransCanada President Vern Horte led the sister company, Canadian Arctic Gas Pipeline Limited. 

Arctic Gas chose a Mackenzie River Midwest pipeline route for Alaskan and Canadian gas, and rejected inefficient alternatives including LNG trucks, tankers, trains, dirigibles and submarines.  It spent $250 million on technical studies and the most extensive environmental study in history.

Arctic Gas was well into its planning when El Paso Natural Gas began promoting a Gravina Point LNG project near Valdez.  Alaskans loved it and a new LNG romance began.

A third challenger entered the fighting cage in the mid-1970s when Northwest Energy Company and Alberta Gas Trunk Line defected from Arctic Gas’ Consortium to promote a separate Alaska Highway routing for Alaska gas.

All three projects fought for Federal Power Commission (FPC, now “FERC”) approval in the United States while Alcan and Arctic fought for Canada’s National Energy Board (NEB) blessing.

Alaska’s governor, William A. Egan, and a budding grass roots organization called Organization for the Management of Alaskan Resources (OMAR) supported El Paso’s LNG Project.   Most Lower 48 Governors and influence leaders favored Arctic Gas.

In 1977, FPC Administrative Law Judge Nahun Litt said, “The Arctic Gas application is superior in almost every significant aspect when compared to El Paso.” 

The FPC decision supported either Alcan or Arctic; El Paso’s LNG scheme was dead!

Canada’s NEB rejected Arctic Gas and approved Alcan’s project which, ironically, was eventually taken over by TransCanada PipeLines Ltd. TransCanada now leads the Alaska gas project, along with Alaska producers.  Its goal – also an ironic twist of fate -- now seems to favor moving Alaska’s gas, not via the Alaska Highway route which it had adopted, after opposing -- but via a pipeline-LNG system to Asian markets. 

*     *     *

America and Canada had dismissed the Arctic and El Paso LNG alternatives but successive Governors worked to commercialize North Slope gas.

Governor Jay Hammond appointed Governors Hickel and Egan to co chair a gas task force.  The 1982 group embraced LNG marketing of Alaska’s gas.  Hickel later formed Yukon Pacific Corporation to sponsor an LNG project. 

Governor Tony Knowles issued Administrative Order 188 forming another gas pipeline advisory group in 2001.  His theme was, “My way is the highway”.   Though a noble effort, a project could not go forward without producer ‘buy-in’ and producers hadn’t completed their own pipeline and LNG feasibility studies.

After Congress passed the Alaska Natural Gas Pipeline Act of 2004 to expedite an Alaska gas project, Governor Frank Murkowski negotiated a contract with producers to increase taxes in return for giving them “fiscal certainty”.  The Legislature increased their taxes but didn’t deliver the fiscal certainty necessary to finance a giant, 30-year project.

Governor Sarah Palin’s “Alaska Gasline Inducement Act” (AGIA) in 2007 demanded benefits for Alaska from a pipeline project in return for subsidies.  TransCanada became the State’s AGIA partner.  But Palin also sponsored increased oil taxes that made Alaska investments very risky.

Meanwhile, back at the LNG ranch, two main suitors continued their own quest for an enduring relationship with Alaska.

The Hickel inspired, Yukon Pacific, closed its doors in 2011 after a valiant effort to collect permits and unsuccessful work to attract LNG buyers.  Municipal entities, including the City of Valdez, formed the Alaska Gasline Port Authority in 1999 supporting another Valdez LNG project which many Alaskans still love to support to this day.  But last March, the Energy Department rejected the Authority’s gas export application.

After 2007, US markets for Alaska’s gas evaporated with skyrocketing Lower 48 shale gas production.  Today’s domestic gas prices seem too low to support a multi-billion dollar Arctic pipeline to the Midwest.

Happily, Japan’s catastrophic tsunami and nuclear meltdown of March 2011 did stimulate demand for more natural gas.

But Canadian, Russian, Indonesian, Middle Eastern and Australian gas producers are also hungrily eyeing Asian markets.  Once Asian utilities have signed long term LNG contracts, latecomers will be locked out.

Will Alaska be locked out?  

*     *     *

Competition increases and most of Alaska’s competitors don’t have to build an 800 mile Arctic pipeline -- on top of LNG costs.  Most have lower costs of labor.  Most operate in low cost temperate zones – except Russia.

Will Alaskans enthusiastically unify behind the AGIA gas project, helping it achieve the lowest possible costs in our high cost environment?

Or, will Alaskans continue fighting over routes, taxes and regulations as federal government rules proliferate and environmental opposition to all energy projects becomes more intense?

Alaska’s troubled romance with LNG continues. 

One wonders, as opposition grows and competition mounts, if the aging romance will give birth to an LNG project or lead to a final break up.

Stay tuned.

-30-


Dave Harbour has directed external affairs for a variety of oil and gas companies in Alaska and consulted with many others.  He is former Chairman of the Regulatory Commission of Alaska, the Anchorage Chamber of Commerce, the Alaska Council on Economic Education and the Hugh O’Brian Youth Foundation.  He assisted in founding Arctic Power, Saturday Market, the Anchorage Downtown Partnership and the Alaska Support Industry Alliance.

Categories:

8-28-13

28 August 2013 5:45am

Here is A Link For Readers To Our Latest Column In Xtra, Anchorage's Community Newspaper.  Here Is Our Unedited Submission: "Responsibility"

Another Abuse of Endangered Species Act


Relevant to our essay, above, on 'Responsibility', Canada's Globe & Mail piece by Jeffrey Jones notes the importance of tax policy to energy project investors.  We believe that all decision makers will want to take heed.  Those who support higher taxes and regulatory barriers, in essence, wish for fewer energy jobs and investment while those who seek moderate taxes and rules will create more attractive energy investment climates.   By their works ye shall know them.  D'accord?  -dh


Lisa Murkowski, Anchorage Chamber of Commerce, US Senate, IRAN, Syria, Federal Overreach, Photo by Dave HarbourNote:  We compliment Northrim Bank and www.alaskanomics.com for producing a report of Senator Lisa​ Murkowski's (NGP Photo) ​speech Monday to the Anchorage Chamber of Commerce--by Katie Bender.  We plan to provide more detailed notes on her speech tomorrow which offers other gold nuggets of interest to Alaskans, Americans at large and our Canadian friends as well.  -dh

Another Abuse Of The Endangered Species Act.

PLF.  The U.S. Fish and Wildlife Service has labeled more than 1,500 acres of private land in St. Tammany Parish, Louisiana, as “critical habitat” for the dusky gopher frog. This designation would force the owners to jump through so many bureaucratic hoops that they would be barred from making productive use of their property.

Dusky Gopher FrogDusky Gopher Frog.

There’s one small problem with the attempt to safeguard the frog on this land: the area isn’t suitable for the species. There aren’t any dusky gopher frogs on the property.

...the Anchorage Chamber hosted US Senator Lisa Murkowski at its weekly, Monday Forum.

Murkowski ​shared that there was a large number of high ranking visitors that we have seen in the state this month and how the visits were important to the political climate.

In August, the Chief of the US Forest Service, Administrator of the EPA, the acting Under Secretary of Commerce for NOAA, the Air Force Chief of Staff, the Commandant of the Coast Guard and the Secretary of the Interior have all visited, or will visit, Alaska and learned how their respective agencies work within the Alaskan environment.

Murkowski continued by discussing the importance of the military in regards to Alaska’s economy. Alaska has strategic military value and the Pentagon is beginning to realize the potential across the state.

She spoke in depth about economic concerns and the Affordable Care Act (ACA) and how each affected the State of Alaska and its residents.

Murkowski noted that even though we don’t know a specific date, we will bump up against the debt ceiling in the coming months. She feels it is important to figure out a solution to the problem before it is too late and feels that Congress can do a better job of finding ways to fix the current budget. She stated that the sequestration does not provide solutions to the problem of the $16.9 trillion debt that the US currently holds.

Murkowski agreed that the US needed healthcare reform but did not feel that the ACA addressed the true problems of needing increased access and decreasing the cost of healthcare. She believed that defunding the act was not the solution because it would leave the law on the books and would burden individuals and families. She agreed that there were good parts to the new law, including the provision to allow dependents to remain on a parent’s plan until age 26, as well as the changes to insurers being able to limit coverage to individuals with pre-existing conditions. She stated that change will come when there is a reduction in cost of healthcare to individuals and families.

Murkowski wrapped up her presentation with a note that she felt that it was time for the Congress to start governing. Too much time was being spent on messaging and working to secure votes for the next election. She wanted Congress to lead the way and start to create laws that would make a difference, rather than blaming the other side for the Nation’s problems.

Murkowski is the first Alaskan born senator and the 6th to represent Alaska in Congress. She was re-elected in 2010 and holds a number of committee positions, including being a ranking member of the Committee on Energy and Natural Resources.

 Posted by Katie Bender 


Dave Harbour's Xtra Community Newspaper Column, Week of 8-28-13.

Responsibility!

By

Dave Harbour

Teenagers hate it when people tell them to be “responsible”.  It’s another way of saying, “You should change your ways,” when one is perfectly happy with the status quo

*     *     *

For Alaskan citizens, the status quo has been pretty sweet.  We were once America’s largest oil producer.  We put a ton of dough into a Permanent Fund.  We spent more per citizen than other states.  We passed a blizzard of social and public works programs.  We repealed the state income tax on ourselves and have no state sales tax. 

With oil production falling at a 5-7% annual rate things don’t look so sweet right now.

Our oil production is down by nearly ¾ and we lag behind Texas, North Dakota and even California.

Who cares?

We should all care about oil tax and spending policy if we are involved in education, government or nonprofit work.  If we are rural residents, our subsistence way of life is supported by oil.  If we are into health, transportation, wholesale, retail or professional services, we depend on Alaska’s oil production.

The Trans Alaska Pipeline System (TAPS) is like an umbilical cord giving life to Alaska.  TAPS oil pays for ninety percent of our state government.  It directly and indirectly supports over half of our entire economy.   Yet as our production declines, our elected leaders continually increase spending.

In modern words, “This is an unsustainable situation”.  In other words, “It’s our responsibility to do something”.

Alaska has the world’s largest commercial fishing industry.  It employs nearly 80 thousand mostly seasonal workers.  But its business leaders know oil provides most support to the state budget.  Without oil paying the lion’s share of government, fishermen would shoulder responsibility for more taxes.

Alaska’s tourism industry provides over 35 thousand mostly seasonal jobs.  But its hundreds of entrepreneurs know if oil didn’t pay for state promotions, transportation infrastructure and other amenities, tourism would have to pony up more taxes.

Alaska’s 44 thousand oil industry employees support most other Alaska jobs .

Oil companies like Atlantic Richfield Company (ARCO) risked a lot to first discover the Swanson River field on the Kenai Peninsula in 1957… and then Prudhoe Bay in the winter of 1967-68.  Their investment into this remote, high cost area was encouraged by a low tax environment.

Following the Prudhoe Bay discovery, Alaska’s Governors and Legislature began increasing oil taxes – in fact, about a dozen tax increases, year after year.

In 1981, the Governor and Legislature created an important oil tax reform package while repealing the individual income tax.  That day, March 18, 1981, marked the first day of roughly 20 years of oil tax stability for Alaska.  No significant tax increases marred oil company investments in new exploration and production even though oil prices remained low during a large part of those two decades.

A few years ago, with oil and gas prices increasing, elected leaders decided to increase taxes again.  The tax change was called “ACES”, Alaska’s Clear and Equitable Share.  It made Alaska the highest oil taxing jurisdiction in the free world.

Alaskan exploration slowed as oil exploration boomed in North Dakota, Texas, Australia and Canada.

Last Spring, lawmakers reformed ACES to make Alaska more competitive with other oil producing areas.  Since then, we have seen signs of greater oil investment in the state. 

However, some Alaskans still advocate a return to status quo with a repeal of the oil tax reform.  We can expect this issue to be widely debated in the months ahead.

How should readers think responsibly on this subject?  Here are a few credible sources that underscore the importance of tax and spending reform:

First, we rely on the University of Alaska’s Institute of Social and Economic Research (ISER).  In a February 27 report to Commonwealth North, ISER ‘s Scott Goldsmith said that Alaska has $60 billion in savings (i.e. including the Permanent Fund) and $89 billion of oil assets still to be produced, for a total of $149 billion.  To manage those assets for the long run, he said the state could spend approximately $5.5 billion/year.  But he noted that the 2013 General Fund budget of $7.6 billion resulted in overspending $2.1 billion. 

Second, Alaska banks have financial and economic expertise.  These locally owned institutions also have, “skin in the game.”   Northrim’s Alaskanomica.com published a piece on August 9, a couple weeks ago, noting that the oil tax reform bill, “…allows Alaska to be globally competitive in the industry….”   The First National Bank of Alaska’s, Alaskaseconomy.org webpage, portrays Alaska’s economy as a three-legged stool.  One leg is oil, but that leg also supports the other legs indirectly.  In a link to an Anchorage Daily News Column by oil economist Roger Marks, the Bank highlights, “10 things to consider about oil taxation.”  In the column, Marks points out that high oil taxes make Alaska less competitive and hurt chances for a natural gas pipeline.

Third, our State’s Revenue Department, in last year’s “Alaska’s Oil and Gas Fiscal Regime” analysis, illustrated Alaska’s need for tax reform to compete globally for industry investment.

Fourth, Canada’s Fraser Institute surveys petroleum industry investors.  The most recent survey reveals how over 600 investor companies react to investment opportunities in nearly 150 taxing jurisdictions.  Alaska is not at the bottom of the list but ranks behind 60 areas including Oklahoma, Texas, North Dakota, Canada, Australia, Tasmania, the United Kingdom, and Norway.

Fifth, Wood Mackenzie, a leading world energy industry research firm, ranked Alaska as one of the least attractive places in North America for investment. Only New York ranked lower than Alaska.

*     *     *

Would a responsible person think that controlling Alaska’s spending and increasing our oil investment competitiveness is essential to all of our futures?

Or, should we be confident that the status quo will continue to supply all of our economic needs?

Either way, we are responsible.  History will tell how we exercised our responsibility.

-30-


Dave Harbour is Publisher of www.northerngaspipelines.com.  He is a former Chairman of the Regulatory Commission of Alaska, the Alaska Council on Economic Education, the Anchorage Chamber of Commerce and the Hugh O’Brien Youth Foundation-Alaska.  He is also Co-Chairman of the 9th Annual Alaska Oil and Gas Congress held in Anchorage this September.

Reference notes:

  1.  ISER
  2.  Locally Owned Alaskan Bank Economic Analyses:

  3.  Alaska Department of Revenue ​

  4.  Fraser Institute

  5.  Wood Mackenzie quote

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