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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

4-15-13

15 April 2013 6:22pm

Sean Parnell, Alaska, Governor, ACES, oil tax reform, Photo by Dave HarbourFrom Governor Parnell's Office.  Following the close of the first session of the 28th Alaska Legislature, Governor Sean Parnell (NGP Photo) today thanked legislators and highlighted the successful passage of many of his key priorities to improve Alaska. Reforming Alaska’s oil tax structure, providing cheaper energy to Interior and rural communities, reducing payroll tax increases, exercising fiscal restraint, and protecting Alaskan families led the governor’s agenda this session.

Alaska’s Oil Production Comeback
 
"After thoughtful analysis and debate, legislators passed Senate Bill 21", a statement from his office said today, "Governor Parnell’s bill to create a prosperous future for Alaskans though increased production. This legislation simplifies Alaska’s oil tax structure and provides the right balance for Alaskans at both high and low oil prices. Senate Bill 21 significantly improves Alaska’s competitive standing."
 
“This session, we took major steps to grow our economy and create opportunities for Alaskans,” Governor Parnell said. “Senate Bill 21 sets the course for an oil production comeback on the North Slope. I thank the many Alaskans from across the state who made their voices heard and testified on the importance of oil tax reform and what it means to their future.”
 
The Legislature also passed the governor’s permitting legislation. House Bill 129 and Senate Bill 27 will give Alaskans more say over the permitting process.
 
Interior Energy Plan
 
Additionally, the Legislature passed the governor’s Interior Energy Plan, which will provide cheaper energy to the Interior and Alaska’s road and river communities. Senate Bill 23 puts in place a financing package for natural gas liquefaction on the North Slope and a distribution system, in conjunction with private sector financing. 
Last week, Parnell complimented the Legislature on passage of gas pipeline legislation.  “Alaskans have had to wait too long to get their gas,” Governor Parnell said. “I commend Representative Hawker and Speaker Chenault for spearheading this legislation to get Alaska’s gas to Alaskans first, then to markets beyond.”
 
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4-12-13

12 April 2013 2:58am

 Calgary Herald by James Wood.  Prime Minister Stephen Harper said Thursday that Ottawa and Alberta are taking a “Team Canada” approach when it comes to getting the controversial Keystone XL pipeline approved by the United States government.  And he offered some praise for Premier Alison Redford, who has returned from a two-day trip to Washington D.C. where she touted the environmental record of Alberta and Canada — along with the merits of Keystone, a cross-border pipeline proposed by Calgary-based TransCanada which is intended to ship oil from northern Alberta to the U.S. Gulf Coast.


Intrastate Gasline Legislation

See Our Editorial: "The Government Gas Pipeline"

US Upstream by Tonya Zelinsky.  The recent decision makes the AGDC a stand-alone corporation, giving it the tools to move forward on its plans for the US$7.5-billion Alaska Stand-Alone Pipeline (ASAP), which would connect North Slope gas with Alaska tidewater.

War over gas pipelines flares in Alaska Senate - Alaska Dispatch - It's being Mike Chenault, AGDC, Gas Pipeline, ACES, AGIA, Photo by Dave Harbour, Speaker of the House, Alaskadeveloped by the state-owned Alaska Gasline Development Corp., a subsidiary of the Alaska Housing Finance Corp. Chenault (NGP Photo) joined in the attack on the lawyers, noting that he was proud of his 12th-grade education and saying he was so upset at ...

Senate panel advances in-state gas line - San Francisco Chronicle - ... on a bill aimed at advancing an in-state natural gas pipeline. The Senate Finance Committee advanced its version of HB4 Thursday. It contains provisions that supporters say the Alaska Gasline Development Corp. needs to get a project to an open season

Energy issues on floor of House, Senate; committee tables oil tax - Alaskajournal.com - In the Senate, a bill making changes to statutes governing an in-state gas pipeline project will be voted on. House Bill 4 makes technical changes in laws governing the Alaska Gasline Development Corp., the state corporation formed to pursue an in ...

Bill to shift Knik bridge construction to AHFC doesn't move - Anchorage Daily News - Costello's amendment creates a new public corporation inside AHFC, the Knik Crossing Development Corp. That follows the model for the Alaska Gasline Development Corp., created by Fauske inside the AHFC when he picked up that project in 2010.

House Approves Gas Trucking Bill.  (Governor's Statement)

Resource Development Council for Alaska (RDC) Urges Oil Tax Reform Support As Legislature Moves Toward Adjournment!

Senate Finance Committee Released Oil Tax Reform Bill Yesterday.

RDC issued the following call to action yesterday: 

With only days left in session, the Legislature continues its deliberations on SB 21, oil production tax reform. Critical votes are right around the corner.


Alaskans from across the state have made their voices heard. Hundreds have testified on the bill in numerous committee hearings this session with a strong majority supporting the legislation. Dozens of RDC members from across Alaska's natural resource industries, including mining, forestry, and tourism, have weighed in not once, but numerous times.
Moreover, in a recent poll, most Alaskans supported oil production tax reform because they recognize that more production and more investment are needed to stem the North Slope's steady production decline, boost future state revenue, and most importantly, grow our economy.


Independent experts have testified that SB 21 will better protect the State at low oil prices, while ensuring we are competitive at high oil prices.  Companies have testified that SB 21 in its current form will lead to greater investment and more production.


The Legislature has been working extremely hard over the past few months analyzing oil taxation policy, and now is the time for our legislators to create a better climate for new investment and production.


If you support increased industry investment and oil production in Alaska, email legislators immediately to let them know you support SB 21. Those opposing the bill have ramped up their efforts and their voices are being heard in Juneau. Legislators need to hear from you, too. Please do not allow the opposition to speak for you.


An efficient and fast tool for emailing your legislators is available through Prosperity Alaska. Emailing your elected officials takes less than two minutes. Choose from a letter template or personalize your own, and your message will be emailed directly. 
Email your legislators now and let them know you support CS SB21. 
Read RDC's latest testimony on the bill.

Robert Dillon, Senator Lisa Murkowski, US Senate Energy Committee, Photo by Robert Dillon (NGP Photo) of Senator Lisa Murkowski's Energy Committee sends us the following note which should once again demonstrate to Alaska lawmakers that Alaska's energy reserves are not unique and must be competitive if Alaska is to prosper.   -dh 

ICYMI: The scientific body responsible for evaluating our nation’s recoverable natural gas resources this week released a report showing future gas supply estimates increased by 22.1 percent since 2010 to a total of 2,688 trillion cubic feet. 

That’s the highest resource evaluation in the 48-year history of the Potential Gas Committee, a nonprofit organization of natural gas experts at the Colorado School of Mines. The committee’s assessment confirms that the United States possesses abundant, recoverable natural gas resources both onshore and offshore that can benefit all sectors of the U.S. economy, including helping to reduce our nation’s trade imbalance.
 
The Potential Gas Committee’s year-end 2012 assessment of 2,384 Tcf includes 2,226 Tcf of gas potentially recoverable from “traditional” reservoirs (conventional, tight sands and carbonates, and shales) and 158 Tcf in coalbed reservoirs. Compared to year-end 2010, assessed traditional resources increased by 486.4 Tcf (28%), while coalbed gas resources declined by a nominal 0.4 Tcf (0.2%), resulting in a net increase in total potential resources of 486.1 Tcf (25.6%).
 
Since 2002, the Potential Gas Committee’s estimates of potential gas resources (excluding proved reserves) rose 111.5 percent. In other words, over the past decade, the size of the potential resource base has more than doubled thanks to new technology and American ingenuity. Most of the increase arose from new evaluations of shale gas resources in the Atlantic, Rocky Mountain and Gulf Coast areas.
 
View slides from the April 9 Potential Gas Committee report here and a press release on the report here.
 
AOL Energy has a pretty good summary of the report:http://aol.it/12PfJ4Y

 

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4-9-13

09 April 2013 8:52am

 

 The Make Alaska Competitive Coalition this morning sent this email message to contacts around Alaska:
Alaskans will have their last opportunity to testify on how to fix ACES in front of the House Finance Committee when it takes public comment on SB 21, the Governor’s proposed oil tax reform bill.
5 - 8 p.m. Tuesday, April 9
Testimony will be taken statewide in person at your local Legislative Information Office. Click here for a list of Legislative Information Offices.
Comments should be limited to two minutes.
The Resource Development Council for Alaska provides its contacts throughout Alaska with this message today:
 
With the legislative session approaching its final days, there are two important actions RDC members must take this week to secure oil production tax reform this session. 

• Testify at the final public hearing on the Governor's oil production tax reform bill, CS SB 21, in the House Finance Committee.

• Email members of the Alaska House of Representatives. 

Public Hearing:

The House Finance Committee will hear public testimony on the governor's bill on Tuesday, April 9 at 6:00 p.m. Testimony will be taken statewide and the preference is for people to testify in person at your local Legislative Information Office (LIO). Comments should be limited to two minutes.

Even though you may have testified numerous times this session on the bill before other committees, your testimony is needed one more time to encourage the House Finance Committee to move forward with meaningful policy changes this session to attract new investment and increase North Slope production. 

If you have yet to testify, please make your voice count – NOW. Your participation in the process is absolutely vital and it can make a difference. House Finance is the final committee of referral and is the final opportunity for public testimony on the bill. 

Emails:

It is also critical that you email members of the House to let them know you support CS SB 21. Even though a recent poll has revealed that 56 percent of Alaskans statewide support oil production tax reform, those opposing the bill have been making their voices heard loud and clear and have attracted considerable media attention. Legislators need to hear from you. Please do not allow the opposition to speak for you. 

Thanks to Prosperity Alaska, emailing your elected officials with this important message takes less than two minutes. Choose from a letter template or personalize your own, and your message will be emailed directly. It's simple, efficient and fast. Email your legislators now and let them know you support CS SB21. 

Conclusion:

The House Resources Committee improved SB 21 by lowering the base tax rate from 35% to 33% and extending the small producer credit to 2022. The 33% tax rate will put Alaska in a better competitive position and make it more attractive for private sector investment.  To compete for the investment that will move the needle on production, Alaska must stand out from its competition, as opposed to settling for a position in the middle of the pack. 

Please testify on Tuesday and contact your legislators today and encourage them to support CS SB 21. 

Email your legislators now and let them know you support CS SB21. 
Thank you,
RDC

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4-8-13 Denali Gas Pipeline Anniversary

08 April 2013 7:31am

In honor of her service and life we provide some of Margaret Thatcher's quotes.  Not included is this one, perhaps the greatest of all: “The problem with socialism is that you eventually run out of other people's money.”  Here is a great story.   -dh


Last week, NGP reader, Dawn Patience, reminded us of a milestone that quietly passed Alaska Dorene Lorenz, Your Alaska Link, Channel 13, Anchorage, oil and gas, streaming, Photo by Dave Harbourby earlier this year, Tom Brennan, Snowflake Rebellion, ARCO, Anchorage Times, Alaska, Oil and Gas, Photo by Dave Harbourperhaps lost in the intensity of oil tax reform and intrastate gas supply project debates.   In early 2013, Alaska saw production of the 12 billionth barrel of crude oil from the North Slope initial production area.   Here's the link to that story, told by Frank Baker.

Today, Snowflake Rebellion author Tom Brennan (NGP Photo) and I will review this history, a Canadian history 'tie-in" and related current events with Dorene Lorenz (NGP Photo) of Your Alaska Link.  If you don't have a TV at work, and wish to tune in at 4 p.m., you can catch us on a live stream, here, from anywhere in the world.  Ain't technology great!  -dh 

P.S.  From the News Miner/AP: The end is near. Right? The Legislature is scheduled to adjourn from its 90-day session on Sunday, with a number of major pieces - oil taxes, budgets, an in-state gas line bill - still in play.

P.P.S.  Double Hitter: at 1:30 today ADT, the Senate Finance Committee will take testimony on the Alaska Gasline Development Corporation bill and the House Finance Committee will take testimony on the Oil and Gas Production tax reform bill.


Another Anniversary: Denali Gas Pipeline Project Would Have Been Five Years Old Today.

April 8, 2008--BP and ConocoPhillips today announced they have combined resources to start Denali - The Alaska Gas Pipeline. The pipeline will move approximately four billion cubic feet of natural gas per day to markets, and will be the largest private sector construction project ever built in North America. The project combines the financial strength, arctic experience and technical resources of two of the most capable and experienced companies in the world.


Then, almost two years ago, we reported the project's ending.   -dh

CBC notes that a Canadian Province is subsidizing for one of it's counties what Alaska is planning to do for Fairbanks  -dh.  The Nova Scotia government has announced plans to spend several million dollars to help bring natural gas to businesses and homes in Pictou County.


Reader Steve Borell brings us this link from Algemeiner.  It provides another dimension to the competition U.S. and Canadian natural gas producers experience: attractive and friendly investment climates abroad.  -dh  

The Tamar field is designed to deliver natural gas rates up to 1 billion cubic feet per day, and will likely reach this maximum capacity during the peak summer demand in the third quarter this year.  Noble Energy chairman and CEO Charles Davidson said, “In just over four years from discovery, the Tamar project is fully operational and delivering significant volumes of natural gas to Israel. The project is a technological and commercial milestone for Noble Energy and our partners.”

 Fairbanks News Miner.  The Senate on Thursday approved a five-year deal to sell royalty oil to Flint Hills Resources’ North Pole Refinery.


Today's Energy Links, Courtesy: Consumer Energy Alliance:

Philly Blurbs: Philadelphia region an emerging player in energy industry - Now, natural gas is helping to energize the region’s manufacturing base with the revival of several formerly dying or dead facilities. This fall, Sunoco announced that its closed Marcus Hook site will reopen as a natural gas processing facility, which will bring new business and attention to the Delaware Valley. In fact, it was reported that state officials applauded the project as “a big boost for Pennsylvania’s Marcellus Shale industry by connecting the areas producing natural gas in western Pennsylvania to markets linked to Philadelphia.”
 
Wall Street Journal (Editorial): The 1% Keystone Confusion - Our favorite anecdote from the tour, however, came when some protesters against Keystone XL chanted outside another rich man's home, "What do we want from the President? No pipeline for the 1%." These protesters need to have their consciousness raised too. The 1%-ers writing checks to Mr. Obama loathe the pipeline. The folks who need and want it are the 99%. They're the working stiffs who are "struggling to get by" in this economy.
 
Oil & Gas Journal (Editorial): Arkansas pipeline leak no reason to block Keystone XL - Environmental pressure groups responded predictably to a Mar. 29 pipeline accident in Arkansas. “With stakes this high,” the Sierra Club said after crude oil leaked into a neighborhood near Little Rock, “there is no excuse for the White House to approve Keystone XL.” So where were the Sierra Club and other like-minded groups when the Carnival Triumph cruise ship blew off its moorings in high winds and hit another vessel in Mobile, Ala., the following week?
 
POLITICO: Yea or nay, W.H. will face backlash on Keystone - Got questions about the Keystone XL oil pipeline? Don’t ask the White House. Amid growing anticipation over the decision on the controversial project, the White House is swatting away reporters’ questions, directing them to the State Department, which is deep into a lengthy analysis of the pipeline. The State Department is the ultimate decider on the pipeline, not the president, White House aides say. “Again, this is a decision that’s housed within the State Department and made on the merits,” press secretary Jay Carney told reporters Thursday, reiterating his long-standing response to questions about Keystone.
 
U.S. News & World Report: What's Next in the Ongoing Keystone XL Saga? - With the public comment period for the State Department's draft environmental statement drawing to a close, debate over the approval of the controversial Keystone XL pipeline has started heating up again, not least because of two recent spills involving Canadian crude oil. Although the Obama administration seems to be leaning toward approving the pipeline, according to experts, navigating the political climate surrounding the issue promises to be difficult, especially with the president's comments about stemming the progress of climate change.
 
National Journal (Energy Experts Blog): Is the Keystone XL Pipeline Too Risky? - Do the risks associated with the Keystone XL oil pipeline outweigh the benefits? That's the debate playing out in Washington and around the country right now in the wake of an oil-pipeline spill in Arkansas. The ExxonMobil-owned pipeline accident, which spilled at least a few thousand barrels of oil in a Little Rock suburb, is a stark reminder that energy production comes with unavoidable risks. Ironically, the spill occurred a little more than a year after President Obama signed a law strengthening the nation's pipeline-safety regulations.
 
NBC News: Disputes over environmental impact of 'fracking' obscure its future - Carol French still has the canning jar full of cloudy and gelatinous water that came out of her well right before her daughter got sick and some of her 40 milk cows developed a rash. She agrees that this jar, by itself, proves nothing about the environmental impact of "fracking," the drilling technology largely responsible for America's boom in oil and gas production. You can't determine the environmental effects of drilling and fracking from one person's Mason jar full of water.
 
Associated Press: Fracking coalition upsets both greens and drillers - Like a marriage the in-laws don’t approve of, a new plan to strengthen standards for fracking is creating unusual divisions among environmentalists and supporters of the oil and gas industry. At first glance, it’s hard to fathom all the angst over the Pittsburgh-based Center for Sustainable Shale Development. Environmental groups, foundations, and major oil and gas companies came together to support stringent measures to protect air and water from pollution in the Appalachian region, and they invited other groups to join in and help limit pollution from fracking. Not everyone was flattered by the invitation.

 

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4-5-13

05 April 2013 8:28am

Alaska Support Industry Alliance

Here are some new video and audio messages dealing with the investment climate issue; they are posted on the Alaska Support Industry Alliance webpage.


Lindsay Holmes, Alaska, Representative, LNG trucking, Fairbanks, Republican, Photo by Dave Harbour

Fairbanks News Miner by Matt Buxton.   With legislation backing the Fairbanks natural gas trucking project near the finish line, some lawmakers are asking about the alternatives.  The question came from Rep. Lindsey Holmes (NGP Photo) during a Thursday morning House Finance Committee meeting on legislation that would put $355 million of low-interest loans, bonds, grants and tax credits behind a project to bring North Slope liquefied natural gas and propane to Fairbanks starting in 2015.  “Is this going to provide more affordable gas to the Interior than an alternative of importing LNG and either trucking or railing it up to the Interior?” Holmes asked. “If the goal is to get affordable energy to an area that is really distressed, is this a more affordable option than the alternative?”


Legislation: Last night the Senate Resources Committee voted to pass HB 4, the Alaska intrastate gas pipeline legislation while; today, the House Finance Committee takes up the production tax reform bill, SB 21.


 Today's Consumer Energy Alliance links

The Hill: Alberta premier heads to DC to press Keystone pipeline - Alison Redford, premier of the Canadian province of Alberta, will be in Washington, D.C., next week to make the case for the proposed Keystone XL oil sands pipeline. Redford will appear at the Brookings Institution on April 9 to discuss “the Alberta-U. S. energy relationship, environmental efforts undertaken by her administration, and the Keystone XL pipeline,” an advisory states.
 
New York Times: Obama Tells Donors of Tough Politics of Environment - Appearing at the home of an outspoken critic of the Keystone XL pipeline, President Obama on Wednesday night told a group of high-dollar donors that the politics of the environment “are tough.” Mr. Obama appears to be leaning toward the approval of the pipeline, although he did not specifically mention it to the donors. But he acknowledged that it is hard to sell aggressive environmental action — like reducing pollution from power plants — to Americans who are still struggling in a difficult economy to pay bills, buy gas and save for retirement.
 
Politico Pro: EPA yanks 2011 biofuel standard - EPA is backtracking on its 2011 renewable fuel standard for cellulosic biofuel, acquiescing to a January ruling that tossed its 2012 standard that was created using the same methods. The decision marks another win for oil industry groups that say the RFS puts an unfair burden on industry. EPA is required to project volumes of renewable fuel each year that refiners, importers and blenders must use. When the industry doesn’t meet those volume mandates, they must purchase credits.
 
The Fiscal Times: How the U.S. Blew Up the Global Energy Market - The energy business and politics are intertwined in Russia, more so than in any other country in the world. Since Putin took office as president, Russia has used its energy industry not just to build its wealth, but to exert its political will. So when two Russian energy executives tell the world not to worry about American industry, they’re sending a political message. As the U.S. shale industry grows, it makes Russia less and less important to vulnerable countries like Poland, who are at Russia’s mercy. It also takes away potential customers, as the United States looks to explore markets that were targets of companies like Gazprom.
 
Houston Chronicle: Penn State launches ‘world’s premier’ energy center - Pennsylvania State University is gunning to become the global beacon for natural gas research and learning, seeking to fill what the school says is a gap in study of the booming domestic fuel. Penn State has announced the launch of the Institute for Natural Gas Research, which it plans to develop into “the world’s premier academic institute” on the production, transport and use of natural gas. The school says it also will focus on water and environmental issues related to natural gas development.
 
Associated Press: Pipeline pitched to ship Bakken oil across Wyo. - A company proposes to build a nearly 500-mile pipeline that would feed oil from North Dakota’s booming Bakken oil field into another pipeline in eastern Wyoming. The 12-inch pipeline would cost $300 million. Initial capacity would be 50,000 barrels a day but the pipe could handle up to twice that. Oil would begin flowing in August 2014. The pipeline is proposed by Hiland Crude, a subsidiary of Oklahoma-based Hiland Partners. The Casper Star-Tribune reports Hiland Vice President Jim Suttle discussed the pipeline with Converse County commissioners in Douglas on Wednesday.

 

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4-2-13

02 April 2013 6:17am

Today we heard this tax reform 'thank you' commercial on a local radio station, sponsored by the Alaska Support Industry Alliance -- illustrating the many dimensions the controversy covers.  The point about sustainable policy benefiting many generations -- not just this one --  is a cultural value we have stressed for years and we thank the Alliance for its message.  -dh

Status of Alaska In-State Gas Pipeline: 

Mike Chenault, Speaker of the House, Kenai, Alaska, ACES, Photo by Dave Harbour, AGDC, AGIAMike Hawker, AGDC, Alaska House of Representatives, Photo by Dave HarbourThe Alaska House of Representatives last night passed legislation enabling the state’s gasline development corporation to continue progressing towards building its Alaska Stand Alone Pipeline (ASAP) project.   Here is a session late yesterday wherein the House Finance Committee discussed the bill and amendments.  Of particular interest is the back-and-forth regarding responsibilities accorded the Regulatory Commission of Alaska by the legislature.  
Representative Les Gara, Alaska, Alaska Dispatch, AGDC, Alaska Gas Pipeline, ASAP, Photo by Dave HarbourAlaska Dispatch Op-Ed by Representative Les Gara (NGP Photo).  No one who knows natural gas pipelines disagrees with this point: a line that delivers a vastly higher volume of gas does it more efficiently, for less cost. Alaska is in the middle of a shell game with a lot of potential, but not perfect, pipeline prospects. Some people say “just pick something.”  Here’s why that’s not so easy, and picking the wrong project can harm the state with high natural gas prices.
The Alaska Gasline Development Corporation is planning a 500 million cubic feet per day buried natural gas pipeline from the North Slope to tidewater in Southcentral.  House Bill 4, sponsored by Representative Mike Hawker (NGP Photo above-L) and Alaska House Speaker Mike Chenault (NGP Photo-R), empowers AGDC to connect Alaskans with the Arctic gas.  According to the sponsors, "The legislation establishes AGDC as an independent state corporation; provides a clear, strong regulatory framework; and calls on the state to assist AGDC in getting gas to Alaskans within six years. The Legislature created AGDC through passage of House Bill 369 in 2010."

Status of Alaska Oil Tax Reform:  (Here is the status of Alaska production compared with other states, including Texas and North Dakota.)

  • Today's House Resources hearing video.
  • Yesterday's House Finance Committee consideration of SB 21.   Below is testimony prepared by Steve Pratt, Consumer Energy Alliance - Alaska.  
  • Yesterday we offered an "April Fools" update and commentary.  Part of that commentary revealed that Alaska has virtually no savings -- aside from the Alaska Permanent Fund -- when one deducts outstanding liabilities.  Here is a letter dated March 27 from Jay Dulany, President of the Retired Public Employees of Alaska.  Among his many relevant points is this: " based on calculations of the Alaska Retirement Management Board (“ARMB”), the State’s annual appropriation to PERS/TRS will soon exceed $1 billion.  Payments at this level, which will only continue to grow as the UL (i.e. unfunded liability) advances beyond its current $12 billion level, will simply not be sustainable, by neither the state nor by local government employers.  A benefits crisis may not be right around the corner; an employer contributions crisis is."   If Alaska is to fulfill its public employee obligations, the $12 billion liability should be paid off now while Alaska has the savings available.  Otherwise, public employees can expect to have their annual income reduced by a judge someday, as retired employees in Detroit and Stockton can attest.   This is because the state's fiscal house is in disorder, a fact which we believe the bond rating agencies will soon discover.  We also believe the rating agencies have not competently assessed the gravity of Alaska's fiscal crisis for bond holders and future investors.  Any decrease in Alaska's credit worthiness will result in higher rates paid on public debt, further exacerbating Alaska's pending, economic decline.  We believe this challenge is a requirement for increased investment and oil tax reform.  Keeping a predatory tax policy in place is a short term solution to a looming fiscal crisis.  Reforming the oil production tax to create a more attractive investment climate is a long term solution.  The short term model benefits this generation at the expense of the next while the long term approach can make the economy sustainable for this and future generations.  -dh
  • Here are results of a poll on this subject.  Dittman Corp. surveyed 800 Alaskans last week (March 13-14), resulting in a 3.4-percent margin of error. All regions of the state were represented and balanced to the 2010 Census. The House traditionally commissions a poll to help inform members and the public on priority issues before the Legislature.
    “Alaskans, generally, feel our economy is stable, and support many of the issues we have identified,” Alaska Speaker of the House Mike Chenault, R-Nikiski, said. “They agree with us that we need to modify our oil tax system to make us competitive, and build an in-state gasline for in-state use. Alaskans, also, want the chance to decide whether we amend our constitution to allow parents the right to choose where to send their kids to school. Dittman Research and staff have provided us with another top-shelf document we can add to our discussions over the course of the next three weeks. It’s a valuable and informative tool to help us understand where Alaskans stand on issues before the legislature.”

AK urges North Slope producers to grow LNG commitment - Gas Business Briefing - A pending bill would give the state-owned Alaska Gasline Development Corp, which is planning the project, more flexibility in doing engineering along with ...


Members of the House Resources Committee –
 
My name is Steve Pratt, Executive Director of Consumer Energy Alaska, a regional chapter affiliated with the national Consumer Energy Alliance.  We believe the greatest economic threat to Alaska energy consumers is declining TAPS throughput as state spending increases.  We need to reverse these decade long trends.  Consequently your focus on declining throughput and fiscal issues this legislative session is critical.
 
CEA Presentation on Economy 2013 TAPS Budget V1A.jpg
 
As energy consumers, we all have a direct interest in obtaining competitively priced domestic energy.  We also have a direct interest in robust overall economic activity to maintain livelihoods and at least 30% of working Alaskans are dependent upon oil and gas exploration and development for employment.
  
Unfortunately, Alaska oil production has declined from a peak of over 2 million barrels a day to a little over 500 thousand barrels, and is in freefall at the rate of 5 - 7% per year.  What is especially remarkable is that these declines have occurred during times of high and increasing oil prices. 
 
Alaska is capable of making a substantially greater contribution to U.S. domestic oil production and the nation’s energy and economic security than it does today.  Five weeks ago CEA met with Adam Sieminski, the head of the Energy Information Administration in the U.S. Department of Energy.  Mr. Sieminski gave us a presentation on the agency’s draft 2013 Energy Outlook.  To me, Alaska was a disappointment.  In the Energy Outlook, Alaska’s contribution to the nation’s energy supply will never return even to 2011 levels let alone increase unless state fiscal and federal regulatory changes occur.  We are not doing our part to secure US energy security or fulfill our constitutional mandate to develop our resources.
 
 
A sustainable increase of only 500,000 bbls/day from today’s levels, at $100/bbl., would add $1.5 Billion per month to overall U.S. economic activity.  It might also reduce the export of 1.5 Billion U.S. consumer dollars per month to OPEC nations.
 
However, new, risky exploratory and development drilling is necessary to stem the decline in Alaska oil production.  Alaska students need to compete globally for jobs.  Alaska natural gas needs to compete globally to secure markets.  And Alaska oil field development needs to compete globally for investment dollars.  Your work here can enable that ability.
 
The rates and Progressivity structure of Alaska’s current tax regime provide a disincentive to attracting risk capital to the state as evidenced by declining production during times of high oil prices.  As demonstrated in the EIA’s Energy Outlook, increased prices and new technologies have resulted in substantial increases in oil production in other locations around the United States, but not in Alaska, and not because more oil is not available.
 
Alaska’s remoteness from the markets, Arctic climate, high labor and logistical costs argue for a more competitive tax and regulatory structure.
 
Consumer Energy Alliance – Alaska, along with a solid majority of Alaskans, is in favor of the Alaska State Legislature reviewing and approving revisions to the Alaska Tax Code that will improve the investment climate in Alaska. 
 
In closing I will simply note that something is terribly wrong here, and I thank you, members of the Resources Committee, for taking on the task, with the Governor, of coming up with useful changes to the tax code.

  The point about sustainable policy benefiting many generations is one we have stressed for years.

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