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Oil tax reform keeps Alaska in the game

Posted: December 2, 2013 - 3:40pm

A state that is 90 percent dependent on oil revenues cannot afford to lose 200,000 barrels of production each day — and continue to prosper.

Yet that has been the state’s fate under the ill-advised oil tax policy known as ACES.

Since ACES passed in 2007, North Slope production has fallen almost 31 percent while production is up everywhere else in the nation. ACES caused Alaska to miss out on the oil boom brought about by high oil prices.

That should concern every Alaskan interested in good jobs, a sound economy and a bright future. It certainly raised my hackles, which is why I joined with other Alaska businesses, Native leaders, unions and a broad cross-section of individual Alaskans to form the Make Alaska Competitive Coalition (MACC) three years ago to advocate for a change to ACES. We funded our efforts with our own pocketbooks as MACC accepts no money from oil producers.

We thought our mission was complete when the legislature passed — and the governor signed — the More Alaska Production Act (MAP) earlier this year. But opponents of tax reform collected enough signatures to force Alaskans to vote on MAP during the 2014 primary election.

So we’re back in the fight — but with a new name. Under state law, MACC must form a ballot measure group to continue to fight for Alaska’s future. We’re calling our new group Keep Alaska Competitive — Vote No on 1 and we hope you will join our effort. You can find out more about our group and our activities at www.KeepAlaskaCompetitive.com. I am the treasurer of the ballot group.

Our role will be to work with groups, organizations and businesses to dispel the myths and misstatements surrounding oil tax reform.

The new law increases the base tax rate from 25 to 35 percent, directly ties incentives to additional production and eliminates the crippling progressivity feature of ACES. In short, it rewards companies for producing more oil, which is what Alaska needs most.

It is key to commercializing our natural gas. The proposed Alaska LNG project can never happen without a healthy oil industry to pay the bills and keep the costs down. Without the oil, the gas can never compete.

MAP fulfills the four principles Gov. Sean Parnell laid out in January of being fair, simple, competitive and tying incentives to more production.

The new law is a good business deal for Alaska because it puts Alaska back in the game. It shifts Alaska’s tax rate from the high end of the global spectrum to the middle so we can better compete for the investment dollars we desperately need to stop our oil decline.

With oil prices at $100 — where they are today — only 16,000 barrels of additional production per day results in more state revenues over a five-year period than what Alaska would have collected under ACES.

We know the oil is there in huge amounts — at least 77 billion barrels of oil equivalent in place on the North Slope. While all of it is expensive, and much of it is technically challenging, Alaska has a 35-year track record of overcoming challenges and pioneering technology that has proven itself over and over again.

Which is why MAP is already producing results, even though it does not go into effect until Jan. 1, 2014. Repsol, BP, ConocoPhillips and new entrant Caelus Energy have all responded with additional development plans, which will result in new production, new opportunity and new jobs for Alaska.

At Dowland-Bach, we invest in our people and our long-term relationships. That’s what oil tax reform does. It asks us to give up a little right now to guarantee good jobs, a booming economy and a prosperous future.

Alaska cannot afford to return to a failed tax policy. I’m voting No on 1 next year — and I hope you will join me.

Lynn Johnson of Anchorage is a longtime Alaska business man and treasurer of the newly formed ballot measure group, Keep Alaska Competitive – Vote No on 1.

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DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 12/04/13 - 12:14 am
2
1
SB 21 MUST BE REMOVED BY THE

SB 21 MUST BE REMOVED BY THE PEOPLE OF ALASKA OR THE STATE WILL GO BROKE AND THE MAJORS WILL SUCK ALL THE REAL OIL WEALTH OUT OF THE STATE!!

ALASKA NEEDS TO ENABLE ALASKANS AND INDEPENDENTS TO EXPLORE AND PRODUCE OIL AT A PROFIT. ALASKA NEEDS THE 77-7 PLAN NOW AND KEEP ACES.

IF THE VOTERS DON'T ACT FAST THE PEOPLE WILL SEE THE GOVERNOR AND LEGISLATURE TAKE THE PERMENENT FUND AWAY AND USE IT TO RUN THE STATE SO THE MAJORS CAN EXPORT THE REST OF PEOPLE'S OIL WEALTH TO LONDON AND HOUSTON

The State of Alaska gets over 90% of it's revenue from oil. Many reports say that this source will soon be depleted as North Slope oil production crashes. The Trans Alaska Pipeline is about to shut down as it hits it’s cut off point at 300,000 barrel per day. The major oil companies are shutting-in and making plans to abandon platforms in the Cook Inlet, the same area that is facing a critical shortage of natural gas that is essential for electrical power generation. Meanwhile, Alaska continues to rank in last place on the National Baker Hughes Rig count, as it has for decades, with only 7 rigs active this week. (Texas had 644 rigs active.)

files.shareholder.com/downloads/BHI/9226...

Alaskans can no longer ignore the single greatest economic driver in their state. They, as citizens, must answer some basic questions to determine in which direction the state needs to head.

"Is oil and gas exploration and production good for Alaskans?"

"Will Alaskans let Alaska's oil drilling increase or decrease?"

"Will more production come from the majors if SB 21 runs off the few remaining Independents and the Alaskan oil and gas drillers?

"What is the best way to balance the state's oil and gas future by having the majors only or enable the Independents to profit or both?

"With about half dozen oil and gas agencies with vague and sometimes contradictory regulations, could not a one-stop-shop state agency make operating in Alaska more attractive to oil companies?"

"Can Alaskan's afford to sit by and do nothing while companies such as PIONEER AND APACHE place their investment dollars in TEXAS instead of Alaska?"

"Why has study after study say that Alaska is going in the wrong direction in regards to its oil industry policies and practices?" www.fraserinstitute.org/commerce.web/pro...

"Do Alaskans think it is time to ask for the answers to these questions from their state legislators?"

Little has been done to address serious industry concerns about Alaska's oil and gas laws, policies, and practices that are too vague, burdensome, and inconsistently applied.

(Alaska's well permitting process is longer and the bonding requirements are 76 times higher than the US and Canadian averages. See Dr. Craig's Testimony before the 2005 Alaska Legislature.) Many feel this is because the past Alaska legislatures and governors increased the oil and gas bonds and Financial Responsibility Insurance requirements so high that only major oil companies such as Exxon can afford them. As a result, the majors control over 90% the oil market.

There are some actions that can be taken that will have an immediate, positive effect on the Alaskan oil industry.

All the Federal and State Legislators have to do is establish a self-insured State and Federal oil spill fund using a set aside of 20 cents per barrel. Kansas has such a law and both the major oil companies and small independents are prospering because the cost of drilling a well is vastly reduced. New reserves are being added to existing fields while new discoveries are being made. The people of Kansas are benefiting both from the increased employment opportunities and the increased state royalty income.

Alaska did not get herself into this economic crisis overnight, and will not be able to correct overnight of the factors that led to it. That is no excuse not act quickly to implement sound and responsible laws, policies, and practices that will enable the American oil industry, both major and independent, to operate effectively and efficiently in Alaska for the benefit of all concerned. Too much time has been wasted just "adjusting" how the State of Alaska deals with its single greatest income source. The time has come to implement a complete overhaul of the system, before it is too late. "

It is time to repeal SB 21 and get new leadership that will transfer 90% of the $47 Billion to the people of Alaska, every man, woman and child next year for a pro rata share of around $ 60,000 to $ 75,000 each.

Then transfer 90% of all state lands both surface and subsurface rights to every man, woman and child.

This will make sure the rules will change to stop Alaska's paid off leadership that blocks everyone except the majors from producing oil and gas and puts the wealth in the hands of the people instead of those that want to give away the people's oil and gas wealth under SB 21.

DRILLALASKATAPNOTTAX
74
Points
DRILLALASKATAPNOTTAX 12/04/13 - 12:28 am
2
0
In my opinion, it is not the

In my opinion, it is not the taxes that hurts investment in Alaska's oil Industry as much as it is bad management of Alaska's oil and gas Agencies. The smaller oil and gas competitors have been harmed by harsh treatment and recent adverse Unit decisions toward smaller competitors.

The truth is the majors control most all of the state wealth and if you want them to have it all go ahead with the give away SB 21.

How did the majors get control of Alaska's oil wealth I think around 2000 key player sold out sold out the 728,000.00 Alaskan citizens and they made bad laws and massive red tape that aim to eliminate competition in the name of the environment and sometime in the name of god, SHAME ON THEM ALL!

ALASKANS ARE ON THE MOVE TO TAKE BACK ALASKA AND FINALLY ENABLE ALASKANS AND INDEPENDENTS TO COMPETE AND PROFIT BY STOPPIN...G ...SB 21 AND GIVE THE OIL MONEY AND THE LAND TO THE PEOPLE, THESE SOLD OUT 2000 IN GOVERNMENT WILL BE REMOVED BY TRUE ALASKANS.

IT IS COMING IN NOV. 2014

The efforts by these 2000 CBC VECO TYPES are in the state government right now pricing Alaskans and Independents out of the competition in favor of the majors. Here is proof that the state and the smaller competitors have been harmed by these tactics two years ago the DNR DOG's 150% increases on Lease sale minimum bids and 1,000 % up to 8,000 % oil and gas lease rental increases at a time few compete for leases.

It is crazy Alaska has 4 million acres under lease and the Baker Hughes Weekly Rig count showed Alaska with only 4 wells being drill and Texas at 900. That is 4 wells being drilled so that is one well for for every million acres under lease in th estate of Alaska, so the THE DNR DOG's DIRECTOR FORMER VP FOR VECO raised the price of rents over 8,000% how corrupt or insane is that??????????????????????????????????????????????????

I think you will have great support from the people, but the self insured 740 fund should be used to take down the outrageous bonding and permitting cost by adding $ 1.00 per barrel for any one producing over 10,000 barrels per day and put a cap on it at $ 1-3 billion dollars.

470 fund just sitting with $ 50 million dollars in it in case of an oil spill or other emergency. The Fund is currently 2 cents per barrel and a cap of $ 50 million dollars but it has never been used to clean up a oil spill or such. This should be used to lower cost for permitting and bonding. See Dr. Paul Craig's report, Alaska permitting cost is 76 times higher then the average lower 48 and Canada.

see Alaska 2005 legislative Testimony by Dr. Paul Craig and other Independents,

http://www.legis.state.ak.us/basis/get_minutes_comm.asp?hse=H&session=24...

See the 470 Fund Article,

http://www.adn.com/evos/stories/EV313.html

Maybe we can cause the uses 10 to 50% of this new 470 fund to provide income to help the state to pay for roads to resources and put Alaskans to work. Without roads on the North Slope you can only drill in the Winter the drilling season, with roads you can drill all year long with all the new directional drilling advancements Alaska can produce much more oil for the people of Alaska and help fill the Trans Alaska Pipeline..

The C-Plan must be eliminated because it hurts the Independents. The state can use the 470 fund to have a C- Plan. As it is now in Alaska it takes almost a year to get a C Plan approved and takes almost a year and can cost over $ 80,000. In Texas this takes days and cost much less.

One of the real reasons so few wells are drill in Alaska is because the state allows Agency people to be harsh and they are like bullies to smaller Independents and Alaskans. It is time to let the people to own the land and let the people have prosperity.

The 77-7 plan should be vetted and used since it can help defeat SB 21 and stop the billion dollar give away to the majors. This saving can help fund the ACES incentives and only changes the old North Slope ACES program by two simple amendments, 1. for the credits and 2. a holiday for 7 years on all new oil found and produced.

Then after 7 years these amendments go away and we have Aces as it was before SB 21 changed it. This can help with the vote to repeal under the SB 21 referendum.

This will be a start to undo 50 years of bad oil and gas laws and regulation of the majors buying influence that has kept Alaskans and other out of Alaska's oil and gas competition and prosperity.

After seven years new laws and regulation can be made that opens Alaska's oil and gas Industry to all and protects the state , the environment clean and keeps Alaskan oil and gas workers safe!

Norseman
3593
Points
Norseman 12/04/13 - 12:17 pm
2
0
Does anyone else think it is

Does anyone else think it is a ripoff to give hundreds of millions of dollars in subsidies to the richest corporations this world has ever seen?

We are being robbed blind by the robber barons.

I guess this is why the CEO's are billionaires and can now pour unlimited amounts of money to political campaigns.
Whoever can spend the most wins. That is why the little guys like you and me never stand a chance.

They now have a governor who has deep, deep ties to big oil. We have legislatures who are on the big oil's payroll.

Lemme guess how this is all gonna wash out.

Keep electing big oil people to represent you and pretty soon the robber barons will have sucked this state dry and moved on.

beckster
21
Points
beckster 12/05/13 - 11:43 am
0
0
I'm going to wait and see

@Norseman "Does anyone else think it is a ripoff to give hundreds of millions of dollars in subsidies to the richest corporations this world has ever seen?" Absolutely, I think we should retroactively collect about $50 billion in taxes from Apple.

"I guess this is why the CEO's are billionaires and can now pour unlimited amounts of money to political campaigns." Yup, that's hedge fund manager George Soros in a nutshell. Most billionaire hedge fund managers though "hedge" their bets by donating money to both parties.

"Whoever can spend the most wins. That is why the little guys like you and me never stand a chance." Not true. Lots of little green energy companies have received millions of dollars from the White House for just a few thousand dollars they donated to the DNC.

btw, Ryan Lance (CEO of ConocoPhillips) made about $19 million last year, Bob Dudley (BP) from what I can tell about $13 million. By comparison - Katie Couric made $15 million and Jon Stewart $25 million

Seafarer
1147
Points
Seafarer 12/05/13 - 05:19 pm
1
1
Beckster

Your comment is so convoluted and senseless as to be deviant.

Try and correlate this: We are talking about Alaska. This isn't Tea Time. Have a Tea Party and use your hateful ideologue with like Teeters. Between you all, there could be a toxic explosion!

Tea Party=Hate, Hate, Hate.

RaySouthwell
1045
Points
RaySouthwell 12/06/13 - 09:34 am
1
0
Money, money, money

He who controls the money controls everything. We blame our politicians because they must live under a system where the big corporations run the show. There was a time big monopolies were broken-up. When the native corporations were established it was feared if they were allowed to be one big corporation they would take over Alaskan politics. So, small native corporation were established. Don't blame politicians. They will do what is in their own self-interest and that means living under a failed monetary system where he who controls the money controls everything.

RaySouthwell
1045
Points
RaySouthwell 12/06/13 - 09:39 am
1
0
Want to change things?

Take control of Alaska's untouched resource called money. WE the people of Alaska could establish our own public bank. Banks have a great privilege. They create credit on money deposited. If we the people expanded the money supply here in Alaska, small independents could have the money to expand the oil production. I also believe politicians will follow our lead because they understand they must be liked by the people if they are to keep their jobs. Big money goes to big monopolies and politicians must submit because he who controls the money controls everything.

Norseman
3593
Points
Norseman 12/06/13 - 01:30 pm
2
0
I really like the idea of an

I really like the idea of an Alaska bank. Trouble is, anytime big money is involved, the scumsuckers arrive. Just look at how cheap some of our past legislatures were bought off.

In theory this sounds excellent. I would like to hear the details.
Who runs it? How do we get one started?

RaySouthwell
1045
Points
RaySouthwell 12/06/13 - 02:35 pm
0
0
Need for discussion

First it would be best to understand the banks ability to create money. Here is economics Professor Richard Werner explain "where money comes from"
http://www.youtube.com/watch?v=r7qOuY9ZJ8w

Second it would be best to understand money as a tool to promote productive economy. Today money is used in non-productive activities.

Third- it would be best to understand the difference between a public bank and a private bank. Watch this video concerning the only public bank in the USA. Bank of North Dakota.
http://www.youtube.com/watch?v=L75oinBuY1g

Here is one other link to the Public Banking Institute. I think they best explain the benefits of public banking.
http://publicbankinginstitute.org/

North Dakota pays no interest to private banks. basically they create interest free money for the State to build infrastructure projects. I wonder how much interest Alaska must pay in bond funded infrastructures. The two largest municipalities that have declared bankruptcy in the USA (Detroit and Jefferson County Alabama) revolved around the compounded interest payments to Wall Street banks.

Lastly we need to talk about these issues among the people. Politicians will be frightened of such a change unless the people wholeheartedly support it.

My published letter to the editor today would be a great spot to raise questions and challenges to me concerning economics, banking and money.

Seafarer
1147
Points
Seafarer 12/09/13 - 11:46 am
1
0
NBA / Alaska's Bank

National Bank of Alaska was begun when the pipeline was a twinkle in the eyes of a few influential folks in Anchorage. I was a little kid but I remember going to some rich people's house so all these folks could hatch the plan. I could name names, but none are very relevant today. The NBA was Alaska's bank.

Doing it again with honest people is a great idea, Ray, if only we could find some honest rich people to fund it.

RaySouthwell
1045
Points
RaySouthwell 12/09/13 - 12:18 pm
1
0
Seafarer WE the people

National Bank of Alaska is a private bank. All private banks have a fiduciary responsibility to make money for their shareholders. The only public Bank in the USA is Bank of North Dakota. Their fiduciary responsibility is to the people of North Dakota. Here is a video on BND's history.
http://www.youtube.com/watch?v=L75oinBuY1g

Alaskans have billions in our rainy day fund and permanent fund. Take some and establish a public Bank of Alaska. Banks do not lend deposits. They create credit with the deposits. Then lend credit and make interest on money created. Think about Alaska making money on credit created by a public bank. That is what the private banks do.

Seafarer
1147
Points
Seafarer 12/13/13 - 11:13 pm
0
0
Who's Losing that 200,000 Barrels a Day?

Am I? My neighbor? Neither of us are in the oil biz, so who ain't pumping that there 200,000 barrels a day? It's apparently available, but our horrid taxes keeps "them" from their own dang money? Who came up with that figure anyway?

These are people who negotiate all over the world, and to think our supposedly new tax structure will bring 200, 000 gallon a day thru the pipeline. That is one for the Ya Sure Club! Don't bet on Parnell! He's a "shoe in", if you catch my drift.

These guys step over dollars to pick up a dime. Do they really think we buy this lie? Gawd, Parnell, et al, is so against Alaska, they would simply throw away the 49th State.

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