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Conoco profits prompt rush to the bully pulpit

Posted: August 7, 2011 - 8:00am

ConocoPhillips’ release of its second quarter earnings statement last week set off some political theater in Alaska as legislators mounted the pulpit to denounce anew Gov. Sean Parnell’s proposed modification of state oil production taxes.

Second quarter profits by the company show that reducing taxes would be a big giveaway, state Sen. Hollis French and Rep. Les Gara, both Democrats from Anchorage, said in a press conference.

“ConocoPhillips is making over $5 million every day in Alaska profits. Alaska is a cash cow for them,” Gara said.

ConocoPhillips said the earnings illustrate just the opposite, that Alaska’s tax structure limits companies’ ability to take advantage of oil price increases, an impediment to new investment, company spokeswoman Natalie Lowman said. The price of crude oil went up substantially between the first and second quarters, but ConocoPhillips’ net income didn’t increase.

“Since we take all this risks of investment, this doesn’t seem equitable,” Lowman said.

State Natural Resources Commissioner Dan Sullivan jumped into the fray, saying that other oil producing states are booming with new activity, but not Alaska.

“The most important figure to watch is the declining throughput of oil through the Trans-Alaska Pipeline System. That number continues to go down,” Sullivan said July 28 in a statement. “North Dakota reports 158 active drill rigs. Texas has more than 860. We have only seven.”

ConocoPhillips is the only North Slope producing company that reports Alaska income separately from Lower 48 and worldwide earnings. The recent report showed that net income actually dropped, from $549 million in the first quarter to $490 million in the second quarter, according to the earnings statement.

Lowman said ConocoPhillips also paid the state an estimated $1.1 billion in royalties and taxes during the second quarter. First- and second-quarter net earnings in Alaska were reported as $1.04 billion, but the company paid the state about $1.9 billion in royalties and taxes for the same half-year period.

“This follows the historical trend that for every dollar of net income, ConocoPhillips has paid about twice that much to the state government,” Lowman said.

The earnings statement also showed Alaska income at more than that for ConocoPhillips’ Lower 48 production, with $490 million earned in Alaska in the second quarter and $327 million earned in the other states. First-quarter income showed the same difference, with $549 million earned in Alaska and $314 million earned in the Lower 48.

Lowman said the difference occurs because much of the company’s Lower 48 earnings are from natural gas production and gas prices are at very low levels compared with crude oil. However, Lower 48 crude oil earnings are also lower than Alaska oil earnings because of an unusual price difference between oil sold on the West Coast, where Alaska oil is landed, and oil sold in the Midwest, where prices have been depressed because of competition from Canadian oil.

ConocoPhillips’ average sales price per barrel was $113.75 per barrel for Alaska oil, but only $77.99 per barrel, on average, for oil sold from elsewhere in the U.S.

The company’s Alaska production was up in the second quarter to an average of 223,000 barrels per day compared with a 214,000 barrels per day average for the first quarter, but first-quarter production was likely depressed by an extended Trans-Alaska Pipeline System shutdown in early January due to a pipe leak at pump station 1.

Production averaged 230,000 barrels per day in 2010.

In their press conference, French and Gara said the major producing companies were overstating any negative effects of Alaska’s tax policies and that the exploration incentives in the state taw law was actually encouraging new investment.

The two noted several recent positive developments, including the announcement by Spanish oil company Repsol that it would spend $768 million to evaluate new prospects on state North Slope lands over the next three years. 

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DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/07/11 - 07:26 pm
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ALASKANS ARE SMARTER THEN THIS, RIGHT?

The Trans Alaska Pipeline will soon shut down and Alaskans will lose 90% of this oil revenue that it takes to run Alaska's Government. http://www.pfd.state.ak.us/ Alaska tax laws needs more improvement fast.

Do the Alaskans really understand the risk they are running by not undoing the overburdening rules and high taxes placed on Alaska's oil Industry?

No one I know really thinks Repsol will do any real spending or much less do any meaningful drilling in Alaska untill HB 110 and SB 43 are passed. Alaskans need these high taxes lowered and made into law, hopefully this will happen soon. Repsol is a great company, even Lisa Murkowski's Brother Brain work for them.

All these bad Alaskan oil and gas rules and high taxes are unheard of in the other oil states. Alaska need roads, why don't Alaska leaders build a road to Point Thompson and ANWR? Texas has government roads everywhere in the oil and gas areas. Untill Gov. Parnell gave his million barrel a day of new oil plan many thought Alaska was left for dead. I heard many say these bad laws and high taxes had made Alaska the ugle duckling of the oil industry in the World, every conference I go to I hear it over and over. Gov. Parnell can't fix this by himself he need Alaskans to help, please call him and ask what you can do to help. The time to Change this is now.

If a few in the Alaskan Senate chooses not to work with the House and the Gov. Parnell and pass SB 43 and HB 110 then Alaska is doomed for sure. It may be too late. The Alaska Senate needs to hear from voters so Alaskans can see a oil boom like the rest the nation has.

We must fix Palins Aces tax law and make more changes so better tax laws will encourage oil drilling to come back to Alaska. If SB 43 and HB 110 fails then why not vote to cash in the $ 40 Billion in the Permanent Fund and share it amoung all Alaskans this year or next. If TAPS is shut down don't Alaskans see these Leaders like Stevens, Gara, and French may find a way to take all Alaskans Permanent checks away from them and use it to fund a Permanent ANTI Alaskan OIL Goverment? http://www.pfd.state.ak.us/

Many have known Alaskan Leaders need to fix it's very complicated and harsh oil and gas rules, lack of due process, and very bad tax laws, so Alaskans can see a million barrles of new oil per day and see real prosperity that touches each Alaskan voter in a meaningful way.

Why not just have only one tax called the "Oil and Gas Lease Royalty" on all new wells drilled. Do away with all other taxes on new wells or production?

Let's make it simple for a change! Governor Parnell and some in the Senate and most in the House are hopfully making Alaska better with new laws like HB 110.

Here is the change asked Alaska Leaders for in 2005 but never got;

http://www.legis.state.ak.us/basis/get_minutes_comm.asp?hse=H&session=24&comm=O!G&date=20051121&time=1310

An old Alaskan once told me that "Many Alaskans will do the right thing as a last resort"

hunteralaska
101
Points
hunteralaska 08/08/11 - 08:05 am
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Alaska ranks 49 out of 50.

Alaska ranks 49 out of 50 again this year for companies that do business here, and for attracting new business based on weak infastructure and the high cost of doing business. You people in Juneau are in lock step with the idiots in Washington DC. If you don't implement policies to attract business now, Alaska will be ranked 50th and businesses will leave. It's simple. Right now the majority of Alaska's income is derived from the oil and gas industry. Oil production has been on a steady decline. Taking more from the producers, enacting laws that hamper new development, issuing public statements such as the article above sends a clear message to industry. You people in Juneau JUST DON'T GET IT. I have been a resident since 1965 and I'm sick of the way our State has treated business in the last 15 years. I WILL VOTE AGAINST YOU UNTIL YOU ARE OUT.

alaskagunhunter
8
Points
alaskagunhunter 08/08/11 - 08:06 am
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Slope slow down

If you think all is okay in the pipe and the cash flow will survive ask someone who works up there how few rigs are sinking new wells. Remember when those who protest exploration finally shut it down where do you think the state will get the funds for all the social programs they dearly love? Yup from taxes deeper in our pockets. Other states don't have this much interference when they support themselves through resource development. Brown outs may be a reality this winter so better cut some wood while you can.

akal
252
Points
akal 08/08/11 - 04:26 pm
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0
oil

I call bull on these oil company shills ,the state takes what is fair and we pay plenty for our oil and the oil companies make much more. just compare the price of fuel here and elswhere we pay more than any other and when people tried to get it investigated a politician stalled the bill. Alaska is one of the most corrupted states as far as the political process go's and the oil companies are why.

drudge
3
Points
drudge 08/08/11 - 04:58 pm
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@DRILLALASKATAPNOTTAX

I smell a corporate shill.

Your post is incredibly similar to one over on the Juneau Empire (link).

Calling for the liquidation of the APF account is NOT in the best interest of Alaskan citizens, and your idea that "thousands of Alaskans [would become] self made millionaires and oil tycoons" is ridiculous.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/08/11 - 06:15 pm
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What is ridiculous is the high taxes and massive TAP decline.

Texas has thousands of mom and pop oil and gas production companies that in fact made thousands of it's citizens rich by drilling for oil. Many citizens from other oil states have taken risk capital out of their own pocket to drill oil wells and they have earned the name "oil tycoons" and are proud of it.

I will pay a one time payment of $ 1,000.00 to anyone that can provide me the name and proof that any Alaskan citizen has ever drilled an oil well and found oil and transported it to market and sold it's oil at a profit! That has not happened since statehood, why? It happens all the time in other oil and gas states, why not Alaska? Many say it is because they have lower oil taxes and good oil and gas rules, simple, simple, very simple rules that any citizen can understand, unlike Alaska! Just look at Texas with 870 wells being drilled this week and Alaska only has 7 at best. Why?

Alaska hurts it self with it's overburdening rules and high oil taxes which have been reported to have made Alaska the worst place in the country to do oil and gas business, see the Fraser Report.

So, my friend all I am saying is just lower the state's oil & gas taxes by getting HB 110 and SB 43 passed and pass another Bill to make the rules better so large and small oil companies can make a reasonable profit.

If not, then let Alaskans call for a 90% liquidation of the APF account ( $ 40 Billion to be paid directly to all Alaskans next year ) so Alaskans can use that money to risk and drill or do whatever pleases them. It is clear to most Alaskans feel, if Alaska leaders fails to fix it high oil tax and bad rules then the Trans Alaskan Pipeline will further decline and cause a shut down and the state will lose 90% of the money it gets from this oil to run the state.

That is when the APF money could be taken by the state to use to run the state once this oil money is gone, so Alaskans better vote for this now because if HB 110 and SB 43 is not passed this money will be gone forever. Alaska has hope with Gov. Parnell and the State has some very smart voters and they are saying Drill, Drill, Drill, Jobs, Jobs, Jobs, Now, Now, Now. Don't you hear them, everyone else does! Alaska is on the move with some very smart leaders, I see good days ahead.

drudge
3
Points
drudge 08/08/11 - 07:36 pm
0
0
What is TRULY ridiculous...

.. is that the owner of an Oil & Gas development company is trying to convince Alaskan voters to pass laws that would provide additional tax breaks for his business.

Since you're already a successful "oil tycoon", why should we, the Alaskan voters, provide you with the means for even larger profits? You don't even live here.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/08/11 - 08:46 pm
0
0
What is ridiculous is that you can't profit from my challenge...

If Alaska's tax laws and oil and gas rules where good and did not need to be changed then why is it that no one is making any meaningful money in Alaska's oil business. Why is the oil declining on the North Slope? Why is the TAPS at risk of shutting down?

I wrote this $ 1,000.00 challenge for you, but you can't seem to meet my challenge and make a profit from it can you?

It seems you would rather say that I am just a small American oil company not living in Alaska but I am a rich oil man or "Tycoon". What is your point? I am an American that invest in Alaska's oil business. I want to help bring more drilling, jobs and investment to Alaska for the sake of profit and more oil for all Americans.I want bring new money to Alaska to help find new oil. I am sure it is okay with you that I bring my risk dollars to Alaska to explore and but let me encourage better tax laws, so Alaskans and my investment maybe rewarded if I am sucessful.

It seems all current oil companies in Alaska need better oil and gas tax laws and better oil and gas rules so a reasonable profit can be made from the major risk taken.

I vow that "I will pay a one time payment of $ 1,000.00 to anyone that can provide me the name and proof that any Alaskan company or citizens that has ever drilled an oil well and found oil and transported it to market and sold it's oil at a profit! I will pay that in cash now.

I will give you another $ 1,000.00 if you and name one oil company with a market Cap of $ 500 million dollars or less that has ever made a profit from exploring, drilling and finding oil and transported it to the market and sold it's oil for a profit in the last 30 years.

Since it is very clear that not even the small Alaskan oil companies or Alaskans can make a profit under these high tax laws then why don't we fix the problem now. With ACES the state took even more taxes, that BP seems to say, goes as high as 80% and Conoco said above "“This follows the historical trend that for every dollar of net income, ConocoPhillips has paid about twice that much to the state government,” Lowman said"

How do you see the state running it's government after the Trans Alaska Pipeline Shuts down, I think the state will take the $ 40 Billion and use it, if Alaskans don't vote for liquidation of the APF account and take the money first for each Alaskan.

Since the small oil company or Alaskans and the now majors can't seem to make a reasonable profit then Alaska is doomed unless Alaskans take action now and follow Gov. Parnell and the House leadership and pass HB 110 and SB 43.

I have faith the fine people of Alaska will do the right thing and become the nation's number one oil producer once again!

drudge
3
Points
drudge 08/08/11 - 10:42 pm
0
0
Selling out for instant gratification

The recurring theme of your posts seem to center around Alaskans selling out our long-term investment for a "one time payment"..

The Alaska Permanent Fund provides long-term benefits to our state, our citizens, and our children. For many families and communities in our state, it is the reason they are able to stay warm during the winter.

Over the years, the PFD has allowed me to pay for college tuition, the down payment on my vehicle, and the deposit on my apartment. I would not have these things if my parents had long ago been offered a "one time payment" such as what businesses like yours are trying to push.

An impulsive man would accept your $1,000 reward.

A wise man would ask for $1 per day for 1,000 days.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/09/11 - 04:21 am
0
0
Long live the Alaska Permanent Fund so Drill more not tax more!

You can't find anyone outside the majors that drilled Alaska and made a profit from selling oil it's can you? I want Alaskans and smaller American oil companies in Alaska making a profit. I am trying to make a valid point, please don't misunderstand me. I want to see the permanent fund double and last for ever!

I want the Alaska people to see that Alaska's oil taxes are too high and the oil and gas rules are too harsh and unreasonable. This hurts all Alaskans. I want to help people see this high oil tax needs to be changed so everyone can benifit together. I have been working to bring investment and help cause new oil and gas to be produced in Alaska for decades and this helps the Permanent Fund. I am not a foe, I am a friend.

If you can please give me the name and any proof that you found of a oil company or person that used $ 500 million dollars or less to explore and has made a profit in Alaska from drilling, finding and selling oil at a profit the I will gladly pay you this $1,000.00 dollars!

I will pay anyone $ 1,000.00 all at once, why waste the postage stamp sending a dollar a day for one thousand days, as you suggested! A wise man would not waste the money buying 1,000 postage stamps to send one dollar per day for one thousand days. I did not know if you were joking or something, I did not think you were being rude, you ere being funny, right?

If back in the 1960's, 1970's and early 1980's Alaska had the current high oil taxes and all these overburdening oil and gas rules no one would have invested and drilled for oil in Alaska and Alaska would not have a permanent Fund. Alaskans need HB 110 and SB 43 passed ASAP or the permanent fund will be lost to pay for Government because the TAPS will be shut down very soon and so will 90% of the states revenue!

If this happens then your childern will NOT have all those benifits you described, "college tuition, the down payment on my vehicle, and the deposit on my apartment"... warmth and so on!

Alaska would never had the Great Alaska Permanent Fund if oil investors were taxed too high way back in your parents day.

Under a high oil tax, oil and gas companies would have never risk drilling in Alaska. Some say the 2006 ACES tax was a bait and swicth and Alaska's reputation is at stake with oil companies world wide. The State of Alaska can't sell a oil lease and have investors drill and if they hit oil double the take the state takes after the investment is made. It is like ordering food at a resturant and the price doubles from the time you order and the time the bill comes.

The facts are clear, I only wish educated people like your self would take take a deeper look at the facts. Alaska needs to attract more investment and find more oil.

Alaska's high oil taxes had been running the oil investors out of Alaska and Alaskans are not drilling so who is going to stop this oil decline. I can do so much, It is up to you and all Alaskans to support Govern Parnell and the House if not then I feel your children will not see the benifits afforded to you by your parents as they made sure oil companies would want to take the great risk and drill in Alaska.

Money is is leaving Alaska and the Trans Alaska Pipeline will shut down but Parnells plan with a one million barrels of new oil per day will hopfuly double the money you get fron the Alaska Permanent fund!

Let's work together, we are not that far apart! Let's build an understanding and add value to the debate. You want more money from the permanent fund and I want to invest risk capital to cause more oil to be produced, we should be friends.

The Great Alaska Permanent fund should stay as it is! What I am saying why not double it instead of letting it quickly decline along with North Slope oil production .

If you kindly support Governor Parnell and the House and call your Senator with the passing of HB 110 and SB 43. If you don't call your Senator and ask to lower these high oil taxes and improved on these many overburdening and complicated oil and gas rules then I feel your children will lose what your parents preserved for you. I know I care about my child as you do yours. Unity is needed, we all don't want our children dying in some war over oil. let's see Alaska help save ou good nation.
I see HB 110 and SB 43 as a win win not a take take situation! Good things are about to happen!

witchwitch
51
Points
witchwitch 08/09/11 - 01:16 pm
0
0
You can't drill without rigs ?!?

Alaska is not taxed higher than other jurisdictions when you take into account that the oil is OWNED by the people of the state.

I have no problem with changing the system to allow more producers and drillers to come to Alaska. However, tax breaks which give away our nonrenewable resources make no sense, if you have any concern for the long term consequences of such action.

People who OWN the resources in the lower 48 don't give their royalties back to the oil companies and neither should Alaskans. When you compare taxes AND royalties, the oil companies here have a very good deal indeed. Parnell is owned by oil interests and has no interests in the long term future of our state or the people who will remain when the oil is pumped and companies leave, taking their massive profits with them.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/09/11 - 06:30 pm
0
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When Aces was passed it took Billions more why not give back 10%

Don't kill the goose that lays the golden egg my friend, please consider the following.

Please read the Fraser report, Alaska taxes the oil Industry way too high and the oil and gas rules are very bad.

http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-...

Gov. Parnell wants to cause one million barrels of new oil production per day, if I were you I would support his effort as are most wise Alaskans. I wish Alaskans would drill oil wells like Texans do. The fact is Alaskans don't drill themself and until they do they will not understand how bad Alaska's oil Industry is, but Gov. Parnell and others are working hard to change that.

Where do you think the state got the money to give, as you say, "tax breaks which give away our nonrenewable resources make no sense"? These smaller oil companies a blessing, they are taking big risk, share some risk for goodness sake!!

Aces tax Billions more and a tad bit is offered to spur oil exporation in Alaska, that is good for Alaska! If you think this is a give away, then you don't know how hard these people work to bring new oil into production so Alaskans can share in the reward these small oil companies earn by taking risk, I would suggest you apprecate them. They are good hard working people.

Alaskans need to drill and take some risk so they can see how hard it is to deal with Alaska's harsh taxes and the many insane oil and gas rules. Talk to Dr. Paul Craig of Anchorage, an Alaskan that stepped up to the plate and try to build a sucessful Alaskan oil Company. Also talk to Alaska's own Bruce Webb that was born and raised in Alaska and worked for the State Division of Oil and Gas and hear the the truth from someone on the ground floor.

Alaska has 7 rigs drilling and Texas has almost 900 drilling this week. Why?

Alaska's oil is declining faster then the Stock market has. America needs oil and most everyone knows Alaska has it but they tax oil companies to death and write too many complicated oil and gas rules that sane people have a hard time dealing with. Gov. Parnell is trying to work with others to fix the problems, please help him or try to drill it your self, then tell us how wonderful Alaska is to drill risky oil and gas wells. See what Dr. Paul Craig told the Legislature in 2005,

http://www.legis.state.ak.us/basis/get_minutes_comm.asp?hse=H&session=24&comm=O!G&date=20051121&time=1310

Please read this and see how Dr. Paul Craig, a real Alaskan oil man feels about all this.

Alaska is our nation's hope for new oil and we should not let our soilder fight and die in the Middle East to protect our nation's interest over there. Alaska has the oil America needs and Gov. Parnell and others are only trying to help Alaska's oil Industry to come back alive, it has been near dead for years. Great days are ahead for all Alaskans and America.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/10/11 - 03:30 am
0
0
Alaska is on the move to become America's number 1 oil producer!

All Alaskans benifit from oil exploration as does America. Tax the oil and gas companies out of Alaska. Welcome new oil and gas investment with open arms is good. Alaska is on the move, thanks to some very good leadership that the voters support. Let the good times roll, once again!

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 08/11/11 - 07:16 pm
0
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What can we do if no one is talking about Alaska's oil tax

Who is working to make Alaska oil indusrty grow. I would like to know. Any comments would be good.

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