Who are the 'Faces of ACES'?: Industry's advertising campaign centers on new hires, execs

Posted: Sunday, February 14, 2010

The oil industry's "Faces of ACES" advertising campaign is seeking to win oil tax reductions with assertions the law forced widespread layoffs, but the stories behind those faces say differently.

The ads in newspapers, on TV and on the Internet show Alaskans who claim to have suffered becasue of the state's oil tax law. The ads are sponsored by Alaska Support Industry Alliance, an indsutry trade group based in Anchorage. The group is hoping to convince the Legislature that lower taxes will bring more jobs to the state.

In the TV ad, running frequently on the Gavel-to-Gavel network that is ubiquitous in legislative offices, a bell tolls ominously as close-up pictures of those said to be affected by ACES fill the screen.

Industry allies such as Rep. Craig Johnson, R-Anchorage, are citing the group's advertisements as evidence of the negative impact of ACES on the state as they try to convince fellow lawmakers to lower taxes.

"If you look at the Alliance (ads), the Faces of ACES, they're saying these jobs are lost, they're gone," Johnson said this week.

Sen. Hollis French, D-Anchorage, though, denounced the ads on the Senate floor last week, saying the ads were "not constrained by facts."

An Empire inquiry into the stories behind the ads show they relied entirely on either recent hires or company executives who had not been laid off at all.

Alaska's Clear and Equitable Share Act passed in 2007, after then-Gov. Sarah Palin called on the Legislature to take a new look at the the state's corruption-tainted Petroleum Profits Tax that was passed the previous year.

The Faces of ACES subjects who were laid off were hired after that point, a period when oil prices soared to more than $140 a barrel, and then plunged to $30 a barrel. Prices in the last year have since steadied at more than $70 a barrel.

Skeptical legislators point to record oil and gas industry employment in the state during 2008 and in 2009. Department of Labor statistics show industry employment peaking at 13,000 workers last year.

The stories behind those faces raise questions about the Alliance's claims that the state's tax law is driving jobs away.

Gov. Sean Parnell and House Republican legislators have introduced legislation boosting tax credits for the industry as well as rolling back tax increases contained in the ACES.

Who are the Faces of ACES?

* Lisa Reinhart of Anchorage left a job at the Alaska State Chamber of Commerce to begin work for CH2M Hill about a year and a half ago, at the height of oil industry employment in Alaska. She was laid off sometime last year, the Alliance said.

Colorado-based CH2M Hill bought out the operations of the former VECO Corp., and is one of the state's largest contractors to the oil industry. Company spokesman John Corsi declined to confirm Reinhart's account of her layoff as being related to ACES.

* Jimmy Methven of Wasilla has worked for two years for Cruz Construction building ice roads on the North Slope, after previously working construction jobs elsewhere.

* Bob Stinson of Anchorage is president of Conam Construction in Anchorage, a subsidiary of a multi-billion dollar Houston, Texas construction company. He remains employed, but his company is doing less work now, the Alliance said.

* Chris Johansen of Fairbanks was a project manager for industry contractor NORCON Inc., an Alaska-based subsidiary of CH2M Hill. Johansen said his company faced declining contracts the North Slope.

"There was just no work so I asked to be laid off about a month ago so I could start collecting unemployment," Johansen said.

* Richard Schok of Fairbanks is president of Flowline Alaska, a Fairbanks company that insulates oil lines. His company has less business this year, which he believes from reading Petroleum News and other trade publications is due to the ACES tax increases adopted by the Alaska Legislature.

"They need to stop spending money and let private industry have some jobs," he said.

Alliance Executive Director Paul Laird defended the ads, saying it was clear in the ads that those profiled either either lost their jobs or business.

The Alliance stands behind the ads, Laird said, but he acknowledged it was difficult to find people who were willing to appear in the advertising campaign, and had hoped to use more rank-and-file workers instead of top executives in the ads.

"It was really not very hard finding people who were laid off in the last few months," he said. "The challenge was finding people who were willing to appear."

While some of the people in the ads were hired after ACES took effect, he said, they would currently be working in the industry if not for the tax increase.

The ads are facing a receptive audience from some legislators who opposed the ACES law when it was passed, and say their fears have been borne out by the recent decline in development activity.

"It's hugely important that we drill more wells and do whatever we can to up production," said Sen. Charlie Huggins, R-Wasilla.

But others have been skeptical, including House Democrats who held a press conference last week, saying the ads contained "lies" because the oil industry has continued to bring in strong Alaska profits.

Sen. Fred Dyson, R-Eagle River, said he supported Gov. Sean Parnell's position, asking for proof that declining oil company activity is caused by Alaska's taxes and not larger economic factors.

"(Parnell) said, 'Show me the books, and show me that our tax structure is keeping you from doing the exploration, production and development and we'll consider it,'" Dyson said.

"As I undersand it, no one has taken him up on it," he said.

Sen. Tom Wagoner, R-Kenai, questioned whether recent layoffs were part of typical seasonal operation or were the result of the state tax system.

"Until I see some facts and figures, I'm going to reserve judgement," he said.

Sen. John Coghill, R-North Pole, said that much of the recent decline in jobs may well come from declining oil prices.

"Is it because oil ramped up to $147 (per barrel) and settled back down to $75 or $73?" Coghill asked.

Methven, one of the "Faces of ACES," said he doesn't know how the oil companies make their investment decisions, but lowering oil taxes can only help, and that's why he appeared in the ad.

"I'm hoping that it would help get the taxes down so they can get some more work going on up there so everybody can have more work," he said.

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