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Op-ed: Alaska's oil comeback has begun

Posted: May 22, 2013 - 4:42pm  |  Updated: May 22, 2013 - 7:18pm

Alaska’s oil comeback has begun.

It’s been just over a month since the Legislature passed Senate Bill 21, the More Alaska Production Act. We’re already seeing the positive effects of our new tax regime.

Look at how the companies have responded: The Kuparuk field operator is moving a new drill rig to that field and is working to fund a new drill site. ConocoPhillips’ vice president for exploration and production said this about Alaska: “I would like to see us adjust the capital program so that we can completely arrest the decline in production in Alaska or even turn it around.”

Rather than simply trying to stem the decline, with SB 21 passed, companies are now setting their sights on reversing Alaska’s production decline and increasing oil production in Alaska.

Brooks Range Petroleum, a smaller Alaska-based company, has said publicly that the More Alaska Production Act improves its ability to develop the Mustang field.

And Repsol, a newer entrant to Alaska, recently said this about several new discoveries on the North Slope: “Recent tax reform passed in Alaska was a critical factor in ensuring the development of this project.”

These announcements of new investment and a greater commitment to Alaska are encouraging signs for our state’s future. This fall, as companies make investment plans for next year, Alaskans can expect more investment news to follow.

To get a sense of the level of investment Alaskans can expect under our new oil tax regime, I recently traveled to Scotland to meet with government officials and key oil and gas companies. After lowering its government take on North Sea oil, the United Kingdom saw a resurgence in its oil and gas sector. Tax reform in the UK led to new jobs, new investment and new production.

Here in Alaska, with the signing of the More Alaska Production Act into law, Alaskans now have a tax structure that can compete with others. The new structure is fair, encourages new production, is simple and balanced and is competitive for the long-term.

Our new tax system centers on the idea that not only our generation, but future generations of Alaskans ought to benefit from Alaska’s massive resource basin on the North Slope. We worked to ensure Alaska’s treasury is not exposed at low oil prices to making tax credit payments without the revenue to cover them. And, we made the State more competitive when oil prices are high.

Alaskans now have an oil tax system built around a 35 percent base rate and a per-barrel tax credit tied directly to actual oil production. It’s simple: Companies are treated fairly, and in order to get tax relief from the State, companies must put more oil into the pipeline.

While reforming Alaska’s oil taxes was vital to increasing North Slope production and filling the pipeline, we also worked to streamline and increase efficiency within the State’s permitting processes.

We introduced, and the Legislature passed, House Bill 129, which streamlines the State’s oil and gas permitting process to provide greater certainty to the public, oil and gas operators, and industry. It authorizes the Department of Natural Resources to evaluate oil and gas exploration projects in geographical areas, and allows project approvals to be consolidated into one comprehensive decision.

I want to especially thank those who made the Alaska Oil Comeback a reality, starting with the leadership in the Alaska Legislature, and all lawmakers who were dedicated to a rigorous public process. They set the tone early for one of the most productive sessions in decades. I applaud them for their focus on the facts and growing Alaska’s economy for the long term.

Hundreds of Alaskans, including small business owners and employees, teachers, and retirees made their voices heard by testifying in Juneau and contacting their legislators.

With the More Alaska Production Act, the foundation is set for the Alaska Oil Comeback. Alaska is on track for greater oil production, and the new jobs, new opportunities and new investments that follow.

Sean Parnell is governor of Alaska.

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DRILLALASKATAPNOTTAX 05/23/13 - 07:15 pm
Governor the DNR just increased oil lease rental by 8,333% why ?

Many feel that Alaskans can share in the State's oil and gas wealth if they could afford to bid in these lease sales that require that they be 18 years of age and a U.S citizen.

However we have a big road block keeping Alaskans out!

The New Commissioner and Director of DNR DOG have recently increased the cost to rent an oil lease from by 8,3333 % for some reason they chose to price Alaskans out of the game, why?

Governor you have said you want to open Alaska for business but your Commissioner at DNR and your Director at the Division of Oil and Gas has made it the harder for Alaskans to bid in lease sales, why?

Everyone wants more oil production but why has your DNR DOG increase the Minimum Bids per acre in state lease sales by 150% and lease rentals 1,000% up to 8,333%, why?

The DNR DOG has turn down unit applications from smaller oil and gas companies and cut the size on the very few they did approve in part, why?

The DNR DOG allows the majors to hold leases on the North Slope for 30 years, here is three lease examples,

The lease are proven oil and or gas discoveries HELD BY WELL ( HBW) without producing them for around 30 years, why?

The State of Alaska has lease sales every year yet only 5% get any bids, so why not have the DNR DOG reduce the MINIMUM BIDS back down to $ 1.00 per acre and yearly rentals at $ 1.00 per Acer so Alaskans will be enabled to bid on the 95% of oil leases that on average have no bidders.

Alaska has had many lease sales that had no bidders so why not go back to the $ 1.00 Minimum Bid and rent at $ 1.00 per acre. This once worked so well for Alaskans like Rick Wagner, Andy Bachner, of Fairbanks and the late great Monte Allen of Anchorage and many other fine Alaskans, why not?

Open Alaska oil lands up so any Alaskan who wanted to bid for a state oil and gas leases could if you would enable them to afford it. Alaskans are amazing, they make good things happen if Government would not set road blocks. The majors can deal with some competition from the people of Alaska, right?

Alaskans should not be priced out of the state's oil and gas business, right?

Governor will you please have the DNR DOG return to the 1980's minimum bids of $ 1.00 per acre and rentals of $ 1.00 so the other 95% of these tracts may be open up for all Alaskans to prosper?

Governor this is just a start and once Alaskans get to share in Alaska's oil wealth. Then we can work on the high cost of bonding and permitting wells the C plan that takes too long, almost a year! We have other stuff that kept Alaskans out of the game for too long!

Thanks for your effort to let Alaskans have what the majors enjoy 99% of and that is the oil wealth the majors export every day!

Please allow units to be approved and lower the cost of bidding for oil leases so Alaskans can enjoy a comeback of the days Alaskans were enabled to produce oil and share in the wealth.

The people of Alaska need not be taxed by bad DNR unit policies and skyrocketing 8,333% increases in oil lease rentals only the majors can afford!

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