Legislature(2013 - 2014)BARNES 124
04/01/2013 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB21 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 21-OIL AND GAS PRODUCTION TAX
DRAFT
1:05:59 PM
CO-CHAIR FEIGE announced that the only order of business is CS
FOR SENATE BILL NO. 21(FIN) am(efd fld) "An Act relating to the
interest rate applicable to certain amounts due for fees, taxes,
and payments made and property delivered to the Department of
Revenue; providing a tax credit against the corporation income
tax for qualified oil and gas service industry expenditures;
relating to the oil and gas production tax rate; relating to gas
used in the state; relating to monthly installment payments of
the oil and gas production tax; relating to oil and gas
production tax credits for certain losses and expenditures;
relating to oil and gas production tax credit certificates;
relating to nontransferable tax credits based on production;
relating to the oil and gas tax credit fund; relating to annual
statements by producers and explorers; establishing the Oil and
Gas Competitiveness Review Board; and making conforming
amendments." [Before the committee was HCS CSSB 21, Version B,
labeled 28-GS1647\B, Nauman/Bullock, 3/29/13, adopted as the
working document on 3/29/13.]
CO-CHAIR FEIGE opened public testimony on the proposed committee
substitute, HCS CSSB 21, Version B.
1:07:10 PM
BILL CORBUS noted he served as commissioner of the Department of
Revenue under Governor Frank Murkowski from 2003-2006. He
participated in the decision on the economic limit factor (ELF)
aggregation, formulation of the production profits tax (PPT),
and watched with dismay in 2007 when the legislature passed
Alaska's Clear and Equitable Share (ACES). He offered his
support for CSSB 21(FIN) am(efd fld) that includes removal of
the extreme progressive tax increase at higher oil prices,
inclusion of the gross revenue exclusion (GRE), modification of
the tax credit system that will result in credits being granted
when oil is produced, and encouragement of new production in the
old legacy fields where a large proportion of total reserves is
located. He said this legislation is needed to increase the
investment by the petroleum industry to stem the declining oil
production. It is also necessary if Alaska is to continue the
prosperity it has experienced in the past.
1:09:11 PM
REPRESENTATIVE P. WILSON inquired whether Mr. Corbus was
discussing CSSB 21(FIN) am(efd fld) or the proposed committee
substitute, Version B.
MR. CORBUS replied he is not up to speed on the proposed
committee substitute, but he is up to speed through the Senate's
action.
1:09:55 PM
GARY MILLER asked who would buy a $30,000 car without a
guarantee and then asked why the oil companies would be given
billions of dollars with no guarantee. Alaska's citizens are
well aware of progressivity, he said, because when they pay
their federal taxes the more they earn the higher the percentage
they pay in taxes. The citizens of Alaska pay a progressivity
tax and the oil companies should also. The State of Alaska has
been given more income by ACES to serve its citizens, while at
the same time giving the oil companies $35 billion in profits.
But that is not enough for them, he charged, they want more and
to get it they have to have the State of Alaska give up services
to its citizens, which would be shortchanging the citizens of
Alaska. He urged that this not be done.
1:11:08 PM
JACKIE STEWART testified she began working in Alaska in 1975 and
retired from her state work in 2008. She expressed her concern
about the state's unfunded liability for retirees and about
education in the state. Her son is in the school system and
plans to continue through the Alaska university system. She
understood that education is flat funded and that pre-
kindergarten has lost about one-third of its funding. She
pointed out that these are usually the at-risk children, not the
children whose parents can afford good pre-schools. She asked
whether these children will be helped to be productive citizens
of the state or will the state scrimp on their education so more
money can be put into the coffers of the oil companies. The
bill is ineffective because there are no guarantees, she said.
If legislators want to reduce oil taxes it should be done in a
way that gets some kind of guarantee of production, not a
promise or a hope. If this bill is passed, the committee
members' constituents will be looking to see how their
representative voted and once they realize what a horrific
financial mistake it was, they will not vote members back in.
The motives of the governor and senators who passed the
legislation are being questioned by the people. She urged that
the bill not be passed out of committee.
1:14:01 PM
DAVID PERRY questioned why state government would want to reduce
the taxing on these large corporations at a time when they are
posting record profits and yet the state is moving into the area
of reduced funding. He expressed his concern about reduced
education and about unfunded liabilities since he is a state
employee working for the Alaska Marine Highway System (AMHS).
He related that while at sea, crew members are discussing why
the state is doing this at a time when the state has so many
needs. He is bothered that there is no commitment from the oil
companies that they are indeed going to increase production if
their tax liability is reduced. Given the state's situation he
would think the state would be looking for a commitment from the
oil companies to increase production.
1:16:10 PM
BRAD FAULKNER said he is an Alaska resident of 55 years,
starting to work on construction of the Trans-Alaska Pipeline
System (TAPS) in 1975 and working a number of jobs on the North
Slope off and on since then. He strongly opposes the bill as
written because he fears that excluding new areas of the legacy
fields will have a fiscal impact three to four times what is
being predicted. A reason for his fear, he explained, is that
much four-dimensional seismic work has been done throughout the
legacy fields in the last few years. In Kuparuk that work has
been combined with coiled tube directional drilling and Conoco
has been able to drill as many as eight separate small pockets
of oil off the same hole. When ELF was passed the unintended
consequence was that 80 percent of the oil from Kuparuk and
Prudhoe was excluded. This same unintended consequence will be
found with this bill, he warned, particularly in Kuparuk where
the oil is in micro-pools rather than larger pools. It is known
that a huge pool of oil sits just off the eastern portion of
Prudhoe that has never been tapped and the "end game" has been
to figure out how to use this field that would put as much as
165,000 barrels of oil in the pipeline for ten years from the
time it is tapped. Unfortunately, those well logs remain
proprietary even though they have been known about for years.
These 600 million barrels of oil have been warehoused for 35-40
years and now the state is going to give a tax break to develop
it while cutting school funding and every other bit of state
funding to do it. As a lifelong Alaskan that does not set well
with him. When tweaking the bill, it does not matter whether
[the base rate] is 30 or 35 percent because it is all about new
areas of legacy fields and that is going to make the cost of
this bill go up three or four times.
1:19:17 PM
CO-CHAIR SADDLER inquired why that pool of 600 million barrels
of oil has not been produced by the industry when prices are now
so high. He further asked where this information about the pool
of oil comes from.
MR. FAULKNER responded it has not been drilled at high prices
because it is not their first oil field in the world. Every oil
field has a predictable decline curve and they built themselves
a 48-inch pipeline. So, at some point, to get the last bit of
oil out of this massive oil field they found they were going to
have to put a minimum amount of oil in order to suck the last of
the oil out of the Prudhoe field; remember when they came up
with this plan they did not have Kuparuk pegged out yet. An
individual retirement account (IRA) is putting money aside to
have money for living off during old age - and this is an oil
field IRA. He said he cannot tell the committee how he knows
this, but he can say time will prove him right. In further
response, he posited there are many oil geologists within the
state and industry who understand this.
CO-CHAIR SADDLER surmised that what is being said is an
unsubstantiated allegation.
MR. FAULKNER answered, "It is kind of unsubstantiated like the
gains that the oil companies plan to give you are
unsubstantiated. So, that is correct."
1:21:12 PM
KEVIN WALKER noted Mr. Faulkner wrote an editorial in a Homer
newspaper about the 600 million barrels of oil, which is enough
oil to keep the pipeline open for 10 more years. The pipeline
was built for a 30-year life, but is already 35 years old and in
need of being fixed or rebuilt. Expressing concern about
conflict of interest, he said the governor is an oil lobbyist
and [Senator] Micciche is a superintendent for ConocoPhillips.
Why rush getting oil out of the ground now at $110 a barrel when
in 10-30 years it will be worth $2,000 a barrel, he asked. The
state does not need to go into debt; the oil is like a bank
account and can be withdrawn when needed. The state is getting
by and does not need to give the oil companies billions of
dollars in tax breaks at this time.
1:23:18 PM
JOSEPH SEBASIAN, a commercial fisherman, said he opposes the
bill. He related that Governor Parnell is a former oil lobbyist
who has said that if this bill is passed something will happen
in three to five years. He further related that Ms. Rehfeld of
the Office of Management & Budget has said the hope is that
production will increase. So, he continued, there is a "maybe"
and a "hope", but nothing in black or white or legal factual
response from the oil companies. He related that President
Calvin Coolidge said, "It is much more important to kill bad
bills than pass good ones." Inquiring whether committee members
remember "Chuck Hamel or Wackenhut Detective Agency or the
Alyeska Pipeline Consortium", he charged that the oil companies
have a history of being notorious liars. He reminded members
that one of Alaska's most trusted oil advisors, Pedro van Meurs,
has said this oil tax giveaway is unnecessary and wrong. He
urged the state stay the course for the next three to five years
and wait until there is a solid, factual, and legal commitment
from the oil companies before Alaskans consider changes. There
is no rush or emergency at this time; let the bill die the death
it deserves. He shared that his family, children, friends, and
people he meets on the street are concerned about the bill.
1:25:58 PM
ROGER BURGGRAF supported CSSB 21(FIN) am(efd fld), saying Alaska
is almost totally dependent on oil reserve revenues to cover the
costs of government and capital improvements that must be made
for the state to survive. Failure to increase oil production
will destroy the economic viability of Alaska's economy, its
villages, towns, and cities, and the opportunity for the state's
people, both in government and private industry, to provide for
their families. The legislature in the past has failed to
address this problem, ignoring the signs of reduced oil
production. While he is no expert on oil and gas taxation, he
said he knows something must be done to get the oil companies to
continue to invest in Alaska and find more oil for production.
He offered his hope that the interests of those who feel that
oil is bad and who do not want more production will not prevail
again this year. Meaningful oil tax reform is needed to
encourage investment in Alaska by the oil companies. Alaska, if
it is going to grow and develop, must build out its
infrastructure to gain access to its resources to allow Alaskans
to live in Alaska and industries to provide jobs. He said ACES
has not done its job; he urged there be a plan that will allow
Alaska to survive into the twenty-first century.
1:29:05 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough, President,
Alaska Conference of Mayors, thanked the committee for its
consideration of community revenue sharing being tied back to a
specific source of tax revenue. He urged the committee to
support the governor's language in SB 21 that ties the source of
community revenue sharing to the corporate income tax since the
revenue sharing program has always had a particular source of
funding called out in legislation. The Senate removed that
language, which is of concern to many of the mayors he has
spoken to. Many of his fellow mayors are concerned as to what
the local community will be experiencing in terms of reduced
fees and state programs that come to local communities. Revenue
sharing is one piece that is very near and dear to his borough's
residents because in his community the mayors have always put
that back into reduced property taxes. He again urged that the
language as written in the governor's legislation for the $60
million in funding be maintained.
1:31:33 PM
REPRESENTATIVE TARR asked whether the Alaska Conference of
Mayors has sent anything to the legislature or passed a
resolution on this.
MAYOR HOPKINS replied the organization has not yet had the
chance to meet by conference call or electronic mail to pass a
resolution. The Alaska Conference of Mayors met with the
governor last week and the conference only has a "white paper"
on the issue about its concern for the source of revenue, which
he offered to send to the committee.
REPRESENTATIVE TARR requested Mayor Hopkins to do so.
1:32:32 PM
CO-CHAIR SADDLER inquired whether Mayor Hopkins is taking a
position on the entire bill in addition to a source for
community revenue sharing.
MAYOR HOPKINS responded the bill has concerns for the mayors;
letters have been sent to the governor and they were copied to
all legislators. Of concern for near-term community level
planning is what happens to those programs that receive state
funding to assist community residents when the state is in a
reduced budget scenario. Nothing very definitive has been heard
and the mayors are hoping that as the conversation goes along
there will be more definition. He would say the mayors are
holding their breath but will have to agree at some point soon
and have that conversation with the legislature. He has had
conversations with the Interior Delegation members on what might
be expected and there is not yet much definition.
1:34:06 PM
CO-CHAIR SADDLER concluded Mayor Hopkins is appreciative of the
linkage with revenue sharing, is concerned about the possible
loss of revenue, but takes no position on the bill.
MAYOR HOPKINS answered he would say, "at this time, yes," with
the understanding that there is a need to have oil flowing and
all those pieces and how to arrive at that. From the
conversations he has had, he is unsure there is going to be a
re-direction of this legislative package and what may happen to
education and other programs that get down to the local level.
1:34:54 PM
REPRESENTATIVE SEATON appreciated the desire to link revenue
sharing and corporate income tax. However, he noted, another
section of the bill gives up to $10 million in corporate income
tax credit to oil service providers. He asked if Mayor Hopkins
has analyzed whether there is going to be a pot of money with
these reductions in corporate income tax that will sufficiently
provide for revenue sharing as well as education tax credits.
MAYOR HOPKINS understood the amount of funding received by the
state for its corporate and oil and gas taxation, separate from
progressivity, is $750 million. So, with the other reductions
that are being talked about, save major reductions in corporate
income taxes, there should be enough money for $60 million every
year to be set aside for revenue sharing.
1:36:52 PM
REPRESENTATIVE SEATON presumed Mayor Hopkins has looked at
Version B, the committee substitute, that ties [revenue sharing]
to AS 43.20.030(c), which he believes is just the corporate
income tax. He encouraged Mayor Hopkins to re-analyze this if
the mayor is thinking it is corporate income tax as well as oil
and gas production tax.
MAYOR HOPKINS responded that is why he is asking to go back to
the governor's language which has that larger body of annual tax
revenue for revenue sharing and other items that may be attached
in this legislation, so it is that $750 million pot of money.
1:37:59 PM
KARL GOHLKE, Frontier Supply Company, stated his company is a
member of the Resource Development Council (RDC), Alaska Oil and
Gas Association (AOGC), Alaska Miners Association (AMA),
Associated General Contractors of Alaska (AGC), [Alaska Industry
Support] Alliance, and the Greater Fairbanks Chamber of
Commerce. He maintained the production decline is not because
Alaska is running out of oil, but is in part due to Alaska no
longer being competitive in attracting industry investment for
oil and gas production. High oil prices have expanded industry
investment in production, but not in Alaska. Alaska has dropped
behind North Dakota in production and is at risk of falling
behind California and becoming fourth in the nation. Alaska has
the highest cost in tax rates in the nation. Corporate capital
is limited and only the most profitable projects in a company's
portfolio will get funded. Investors are taking their money
where they get a greater return. Alaska needs a new policy that
is fair to all Alaskans, encourages new production, restores
balance to the system, and is durable far into the future.
Frontier Supply Company does not do a lot of business with the
oil companies, he explained, but it does a lot of business with
employees and companies, like Flowline, ATNS, Universal Welding,
The Welding Shop, Alaska Rubber & Rigging, Airport Equipment
Rental, Lynden Transport, Carlisle Transportation, Alaska West
Express, Sourdough Express, CNR Pipe, Great Northwest, and
plumbers and pipefitters, all of which do a lot of business with
the oil companies. New production would promote growth in the
private sector economy, leading to more economic development,
job creation, and long-term revenue streams. The oil decline
has been discussed far too long; action is needed now to reform
oil production taxes, attract new investment, and increase
production. He urged that there be meaningful reform of oil
production taxes to make Alaska a compelling place to invest.
1:40:30 PM
TIM TILSWORTH noted he is a 42-year resident of Alaska,
professor emeritus of civil and environmental engineering at the
University of Alaska, and a licensed professional engineer for
the State of Alaska. He said he has been analyzing and writing
about this topic since March 2011 and found no evidence that
ACES caused the reduced flow in the pipeline; it is a myth that
someone started and everyone piled on. The oil industry blames
the rate of progressivity in ACES for lack of reinvestment, but
the industry will not guarantee any increased production in
exchange for a tax reduction. He urged SB 21, as well as any
amended versions, not be passed until there is a solid
commitment from the oil industry. If necessary, write a
contract between the State of Alaska and the oil industry that
says if industry produces new or increased oil the state will
give a specific tax break. He urged that ACES be left in place
for the legacy fields. If industry has to be given a carrot,
then reduce the rate of progressivity from 0.4 percent to 0.3
percent for oil above the price of $100 a barrel. Debate should
be focused on new fields and increased production with capital
credits continued for exploration and development of new fields.
While SB 21 has some good parts pertinent to new fields, it is
not enough. He urged that discussion of an oil industry tax
break be tabled to force a special legislative session to ensure
Alaska gets the right tax break; there is too much cash, $6
billion, to pass across the table without in-depth study by
every member of the House. Lastly, he expressed his outrage
that legislative rules allow members with a conflict of interest
to be forced to vote on legislation. The practice is unethical,
immoral, and outrageous behavior of elected representatives, he
charged. Because Representative Hawker's wife is employed by
ConocoPhillips, he urged that Representative Hawker recuse
himself from voting on this issue when it comes to the House
floor. People receiving support from this industry have no
business voting on this issue, he said.
1:45:31 PM
RENEE SCHOFIELD, TSS, Inc., stated TSS does not do business with
oil companies, but does do business with local folks who do
business with the oil companies. She encouraged the committee
to stay with the [governor's] four principles: fairness, new
production, keeping it simple, and ensuring it is durable for
Alaskans. She said her goal in keeping her company going is so
her granddaughters can go to college in Alaska and continue to
work in Alaska. She thanked the committee for working on the
bill. In response to Co-Chair Saddler, she confirmed she is in
favor of the bill as it is before the committee [Version B].
1:46:59 PM
OWEN GRAHAM, Alaska Forest Association, testified that revenue
for the state is important, but said using the state's resources
to incentivize and support economic activity is even more
important. This legislation will hopefully provide both, but if
the state only gets an increase in economic activity and the
related employment, then the legislation will be a success to
him. Increasing state revenue is only worthwhile if the funds
are used effectively. In Southeast Alaska, for example, the
federal government manages over 90 percent of the timberlands,
but the government is currently seeking to replace logging and
manufacturing jobs in the region with federally funded make-work
projects that will disappear when the funding ends. The federal
government should instead fund access to the timber resources so
a self-sustaining industry of manufacturing wood products can
provide jobs. Similarly, the state should be seeking to
stabilize and sustain the oil business rather than seeking
higher revenues. He said he supports SB 21 because a greater
profit incentive for the oil companies will help achieve the
goal of sustaining the oil industry into the future.
1:49:18 PM
SONYA FUNARO said she is employed in project performance
management with an oil services company in Anchorage. Born and
raised in Juneau, she was active in high school student
government and attended college in Massachusetts. From a single
parent home, she worked 20-30 hours a week to pay for her
clothes and school supplies, as well as worked at fund raising
activities so she could participate in college prep activities,
such as attending the Close Up program in Washington, DC. She
looks forward to receiving the annual permanent fund dividend to
help achieve her personal education goals. Since oil production
generates royalties that go into the permanent fund, she is
concerned the dividend will disappear due to the current trend
of production decline. Three years ago worked on the North
Slope as part of an exciting construction project that included
new production, engineering fabrication, and construction, but
that job ended and many of the people working on it had to go
out of state to find jobs. Currently, there is not the same
opportunity for oil and gas jobs in Alaska, she said, a great
problem considering that so many of Alaska's industries depend
on the stability of oil and gas production. She plans to live
in Alaska for the rest of her life and would like for her
children to have the same benefits and financial security that
she had growing up here. A stable economy for years to come is
important, so for this reason she supports any legislation that
encourages increased oil production in a declining industry.
1:51:38 PM
TARA SWEENEY, Senior Vice President, External Affairs, Arctic
Slope Regional Corporation (ASRC), stated her comments are from
the perspective of an employer and a company with an enterprise
involved in the value chain of oil development in Alaska, from
exploration through refining product and all services in
between. She said ASRC is generally in support of CSSB 21(FIN)
am(efd fld), is currently reviewing the committee's working
draft [Version B], and will continue participating in the public
process. On March 27, 2013, ASRC sent a letter to the committee
and still stands by the points raised in that letter about what
it supports in the bill and what needs strengthening. For
today's purposes, she said she will focus on the general area of
gross revenue exclusions (GRE) [called gross value reduction
(GVR) in the current bill version]. While ASRC feels that the
base rate of 35 percent is too high, ASRC could support it if it
were coupled with the following changes. First, remove language
contained in Section 29 that requires the well to be accurately
metered and measured to the satisfaction of the commissioner of
the Department of Revenue. It is unclear what "to the
satisfaction of the commissioner" means and it creates ambiguity
at a time when certainty is needed. This language implies there
is an absence of this practice and as a small producer ASRC
stands by its metering and measuring practices, which are
currently monitored by the Alaska Oil and Gas Conservation
Commission (AOGCC). In [the GVR's] current form, producers do
not have certainty that a new well will be eligible for the 20
percent [GVR]. If the state wants new oil, then any new well
should count for that exclusion. Layering on an additional
approval process between the Department of Revenue and the
Department of Natural Resources for new oil would be onerous and
inefficient. The ASRC supports having new wells eligible for
the [GVR]. Second, remove the language also contained in
Section 29 that would require the producer to demonstrate to the
Department of Revenue the volume of oil or gas produced from
that well. This requirement would be burdensome, expand state
bureaucracy, and would inhibit oil and gas investment. If a
well is drilled and produces oil or gas, simply put it should
qualify. As an employer, service provider, resource owner,
explorer, producer, and developer, ASRC is in a unique position
to provide comments, she opined. While some may be looking at
this issue through a narrow lens, ASRC can see this issue from
several important viewpoints. The ASRC strategically plans for
a sustainable future in Alaska and supports a healthy and robust
oil industry in the state. She thanked the committee for its
work and encouraged that there be continued progress on the bill
as it moves through the House.
1:55:20 PM
REPRESENTATIVE TARR asked when the committee might hear from
ASRC about the changes made in Version B.
MS. SWEENEY replied ASRC will provide additional insight from
its perspective by the end of this week. She pointed out it
takes ASRC a little longer to analyze what the legislature puts
forward due to ASRC's different facets of involvement in the oil
industry as resource owner, producer, explorer, and owner of
companies that are involved in supporting the oil and gas
industry and employing nearly 5,000 Alaskans.
1:56:39 PM
GRAHAM GREEN, a lifelong Alaskan, said anyone wanting to know
what the State of Alaska's policy on oil production has been can
go to the website of the Department of Natural Resources,
Division of Oil & Gas, where the Alaska oil/gas production graph
shows it all. Total production in 2002 was 388 million barrels
and 10 years later in 2012 total production was 211 million
barrels, a 45 percent decline. Since 2007, when the failed
policy of ACES was enacted, production has declined over 26
percent. He asked how this can be when oil prices are at
historically high prices and production has increased in all
other oil producing states. According to the "economic research
group", all other oil producing states had increases in
production in 2012, with the exception of Alaska which was down
over 7 percent. After numerous seasons of production decline
since ACES was enacted, a change has to be made. He urged the
committee's support of SB 21. Responding to Representative
Tarr, he confirmed he works in the oil industry.
1:59:31 PM
MARY BARR declared it is a fact that oil production in Alaska
has steadily been declining since 1989, while the state's
spending has increased. To encourage additional oil and gas
production, the state's spending must be brought under control,
she said, and the state's oil and gas tax structure must be
reformed. Changes to the tax structure should encourage both
additional exploration and additional production. She related
the saying that if less of something is wanted just raise taxes
on it. Saying taxes are negative incentive, she urged the
committee to pass CSSB 21(FIN) am(efd fld).
2:01:04 PM
TOM MALONEY, a long-term resident of south Anchorage,
complimented the governor, administration, consultants, and
legislature for an outstanding job examining Alaska's current
production and tax system. He recalled a recent graph by the
Department of Revenue (DOR) for crude oil production by state
for 2011-2012. Of the 15 locations, the top two oil producing
states were North Dakota and Texas, up over 55 and 34 percent,
respectively, for the year. Every other state was up for the
year as well, except one - Alaska, which was down by 7.1
percent. In fall 2007, the revenue resource review published by
the Resource Development Council contained the following quote
from then commissioner [of DOR] Pat Galvin - "Frankly, we have
not said that ACES improves the investment climate. Clearly
there is going to be a larger state share and that isn't going
to make economics of projects better." Mr. Maloney said this
was a very astute observation that has been proven correct. In
calendar year 2007, North Slope oil production averaged 739,000
barrels a day, but in calendar year 2012 production averaged
just 548,000 barrel a day. Five years ago production was nearly
35 percent higher. Production ranged from a low of 399,000 in
August to a high of 624,000 in January 2012. Thus, in 2012, the
highest producing month was lower than the lowest producing
month in 2007. This is unsustainable for a positive long-term
economy for Alaska. He urged the committee to focus on the
governor's guiding principles and "to not be fine with
production decline." The reduction of 191,000 barrels a day for
a year, at $100 a barrel, results in a reduction of
approximately $7 billion in Alaska's economy in one year alone.
He encouraged the committee to change the course.
2:03:53 PM
RACHAEL PETRO, President and CEO, Alaska State Chamber of
Commerce, noted the Alaska Chamber is a statewide, pro-business
organization comprised of businesses of all types and sizes from
across Alaska. For the third year running, Alaska Chamber
members have selected reform of oil tax policy to encourage new
production as its top legislative priority. This is in addition
to the 13 local chambers of commerce that also support oil tax
reforms: Anchorage, Bethel, Chugach, Eagle River, Fairbanks,
Haines, Juneau, Kenai, Ketchikan, Kodiak, Palmer, Seward, Sitka,
and Wasilla. The Alaska Chamber supports the guiding principles
the governor has outlined for an oil tax bill and believes that
SB 21 is an excellent start at reaching those goals. The Alaska
Chamber looks forward to hearing expert analysis on Version B,
but remains concerned that SB 21 truly makes Alaska competitive.
A competitive oil tax regime will incent new exploration,
development, and production. To that end, the Alaska Chamber
believes SB 21 should address as many different types of
projects as possible. Ending the onerous progressivity within
ACES benefits legacy producers and extension of the small
producer credit until 2022 would benefit newer market entrants.
The Alaska Chamber believes that being competitive means making
Alaska's resource stand out from what is available elsewhere in
the market. Being middle of the pack when it comes to total
government take improves Alaska's competitive position, but is
that enough to move capital investment from another region into
Alaska? Alaska's remoteness from the market, arctic climate,
and high labor and logistical costs cannot be changed by SB 21,
but those factors can and should be considered as the bill is
crafted because Alaska's economic future depends on it.
2:06:56 PM
MAYNARD TAPP offered his appreciation for what has been done by
the Senate and the committee, noting that limiting progressivity
is what is trying to be accomplished. He suggested limiting the
government take to 50 percent and 50 percent for producers
because a fair deal with a friend is 50:50. He urged leveling
of production to 600,000 barrels a day and determining a way to
get to the governor's goal of 1 million barrels per day; for
example, maybe the right number for government take is 50
percent rather than 62 percent. Alaska wants to be first on the
list for investment, not in the middle of the pack. After 40
international years in the oil and gas industry, he has learned
that not everything works out the way it was planned. It may be
mechanically possible to transport oil at 300,000 barrels a day,
but it does not allow for upsets in flow and breakdown in the
facility that is 36 years old. The governor's goal is to
produce 1 million barrels a day from state lands. Determining
the selection of paths to producing the 1 million barrels a day
may not be an easy thing for legislators to do, but getting rid
of progressivity and leveling the production to 600,000 barrels
of day will provide a scenario where it may be possible to
increase oil investment by the producers. Responding to
Representative Tarr, he said his 40 years of work in the oil
industry was mostly in project and project control.
2:09:44 PM
LYNN JOHNSON supported SB 21, saying he is a 40-year resident of
Alaska, a businessman with Dowland-Bach Corporation, and is
involved with many entities throughout town. Alaska needs to
become more competitive with other oil producing basins. North
Dakota and Texas are kicking Alaska's tail in production rate.
Investment flows to regions and projects with the best overall
rate of return, he opined. Alaska is already a high cost basin
due to geography and climate. Alaska is soon to be fourth in
domestic production, behind even California. As said by the
governor, meaningful reform is needed that is fair to Alaskans,
encourages new production, is simple, and is durable. Alaska's
economic future is at stake, oil production needs to be
increased now. This is the third legislative session that
testimony has been taken on ACES reform and during this period
of study and debate TAPS throughput has declined almost 100,000
barrels a day. Saying Alaska cannot afford the decline, he
urged SB 21 be the vehicle for making Alaska competitive again.
2:11:30 PM
REPRESENTATIVE TARR recounted that legislators have repeatedly
asked industry whether it will invest more in Alaska should this
measure pass, but at no point has industry said it will. She
asked whether this gives Mr. Johnson cause for concern.
MR. JOHNSON answered no, industry should be given a chance
because there will be tremendous backlash if that investment
does not come.
2:12:39 PM
JOHN DICKENS, a resident of Bethel, said he is taking vacation
time from his job to testify because he believes the very future
of Alaska is at stake. Alaska is on the very of a financial
catastrophe and apocalypse that nobody seems to get their mind
around. Fifty percent of Alaska's projected future revenue in
2020 is based on other people's money or oil companies' money
that has yet to be invested. Capital is invested to get return
on investment. The committee still has not addressed that the
only place worse than Alaska to invest for oil companies is
North Korea and Venezuela. As a child he had a dream that
someday the oil from the north would be brought to market; every
step of the way was a tough fight. It is ironic that many of
the people whining today about how much money is going to be
given away did not want the pipeline at all. It was a 50-50 tie
in the U.S. Senate and Vice President Spiro Agnew broke that
tie. From 1973 to 1975 the gross domestic product of Alaska
doubled because of oil company investment; it was $7-$8 billion
in 1970 dollars, in today's dollars that would be about $143-
$146 billion. He asked why industry would drill in Alaska with
the way it is treated. He urged the bill be passed right away.
Rather than asking for the oil company's commitment, the
legislature's commitment to quit changing the rules should be
asked for. Regarding testimony that Governor Parnell has a
conflict of interest, he argued that anyone who has cashed a
permanent fund dividend has a conflict of interest.
2:17:51 PM
DEANTHA CROCKETT, Executive Director, Alaska Miners Association
(AMA), noted AMA is a statewide umbrella association that
represents the six large metal mines in Alaska, the one coal
mine, large exploration projects, and hundreds of small placer
miners, contractors, and vendors. She explained this issue has
been one of AMA's top priorities for the third year in a row
because a healthy oil industry is good for the mining industry.
Companies are looking at mineral deposits in Alaska that are
incredible, but a number of things are stacked against mining
companies: a huge lack of infrastructure, very challenging
geography, challenging geology, challenging climate, and the
state's political structure that is not all that stable. How
the state taxes industry is something that can be controlled.
Mining companies looking at coming into Alaska are very
uncertain and are watching this legislation because they know
they could be in this same boat. When constant changes are
being made to a tax structure on a single industry, it does not
matter whether or not they are an oil business. She urged the
committee to exercise this control by passing SB 21 and sending
a better message to anyone wanting to invest in Alaska.
2:20:13 PM
CINDY ROBERTS said she and her husband came to Alaska in 1971
with former Alaska governor and Secretary of the Interior, Wally
Hickel. Legislators swear in their oath of office to support
and defend Article VIII, Section 2 - to act for the maximum
benefit of the people of Alaska - and this ethical pledge looms
over committee members at this moment. Whether the goal of SB
21 is for Alaska to become competitive or attractive, industry
is asking legislators to believe they will respond by increasing
the throughput of North Slope crude oil and also raise state
revenues. She urged members to not forget that in 2006 Alaska's
tax system changed from the economic limit factor (ELF) to the
production profits tax (PPT). Compromised ethics were part of
that deal and the Federal Bureau of Investigation (FBI) stepped
in to help Alaska clean up. In 2007 the ACES tax system was
established, an action of pride to Governor Palin and her
lieutenant governor, Shawn Parnell. At this moment, she opined,
challenges to legislators' ethics and honest pursuit of solid
information are again endangering Alaska's future as owner
state. The committee's colleagues in the Senate have already
been compromised. Two long-term, valued employees of
ConocoPhillips, now serving as Senate members, asked to be
recused from voting on SB 21 due to an undeniable conflict of
interest. Their vote will go down in history as Alaska's "9/11"
- the moment the owner state became tagged as owned by the oil
industry. In two minutes of testimony it is impossible to
discuss the billions of dollars that SB 21 will send across the
table to an industry that has given no commitment to improve the
flow in TAPS or to raise state revenues. She urged committee
members, before it becomes a vote of record, to give their
actions meticulous rather than partisan analysis, to be ethical,
and to not ignore the conflicts of interest among the committee
members' own colleagues. She further urged the committee to
take its time to evaluate and audit the ACES system and then
decide. If members must vote on SB 21 now, she advocated they
vote against it.
2:23:18 PM
CO-CHAIR SADDLER asked whether Ms. Roberts is accusing the
legislature of being corrupt and unethical.
MS. ROBERTS replied no, she was pointing out the exact time that
the Senate ignored an ethical request from two of its members to
recuse themselves from voting where there was a clear conflict
of interest that could be taken from the public's side as
something against all legislators. She added she was urging
committee members to make that same consideration when casting
votes on this very critical issue. A case has not been made
with audits as to what the exact implications have been on ACES.
She has not seen any evaluation of the actual impact in negative
revenue of SB 21 and it was only at 1:00 p.m. today that she
received a copy of the proposed committee substitute [Version
B], which has no fiscal note. She said she is urging committee
members to get all the facts that are pending to ensure that
their honor is not questioned.
CO-CHAIR SADDLER inquired whether Ms. Roberts understands that
the senators in question did declare a potential conflict of
interest and followed the established Senate rules.
MS. ROBERTS responded she understands that, but asked whether
that changed their conflict of interest.
2:25:22 PM
JOHN "JACK" RODERICK, responding to Co-Chair Feige, confirmed he
is the author of the book, Crude Dreams: Oil and Politics in
Alaska. Moving to his testimony, he said he used to be a small
oil explorer in Alaska and taxes was never a consideration;
companies come to Alaska or anywhere to find oil and taxes is
not a big problem for them. He noted he was the Anchorage
borough mayor in the early 1970s, deputy commissioner of the
Department of Natural Resources in the late 1970s, and wrote the
oil and gas leasing law for Alaska. He said the bill is bad
legislation. It is complex and everybody is concerned about
putting more oil in the pipeline, but giving a tax break is not
the answer, particularly when there is no guarantee from the
companies that they will spend the money being given them, or
even some of the money, in Alaska. There must be some
guarantee, preferably in writing, that that will happen. The
largest and most powerful corporations in the world are being
dealt with and legislators cannot take it simply on a handshake.
He recommended the bill be put aside until there is more
information, particularly a guarantee from the companies that
they will do what is wanted. While he does not want to be
personal, the question has been raised - if this bill passes in
almost any form, the result in the national media could be
another "Bill Allen, VECO, corruption tale" in Alaska, something
he would take personal offense at. He has been in Alaska 60
years, involved in public affairs and the oil business. This is
the most important decision legislators will probably ever make
and it should not be made this way. Not enough is known, the
answers are unknown, and the companies will not guarantee that
they will do what they say. This legislation is not the answer.
He has worked with every governor since statehood, except
Governor Palin, and he does not think any of them would go
forward under these conditions without a guarantee from the
other side. If legislators want to work with the industry then
work with the industry, have them provide more information, and
enter into some sort of a partnership arrangement.
2:30:30 PM
REPRESENTATIVE TARR noted some of the concerns are about audit
information that has yet to be teased out. She inquired whether
Mr. Roderick's statement about "more information" is referencing
specific information.
MR. RODERICK qualified he does not know if it is true, but said
he has read that the governor has experts who have not shared
information with the legislation; if true, that is not good. He
said he is targeting the big three oil companies and production
from the legacy fields in particular. He would ask them what
their targets are for profits and while they may not share that,
legislators need to get into the "guts of the economics of this
thing" and get a lot more information. Legislators are
representing the state and the people, and they are dealing with
the most sophisticated, smartest people in the world who know
what their interests are. What bothers him is the attitude
often seen now that legislators are trying to help the industry.
However, he declared, be realistic, industry can help itself.
While filling the pipeline is a concern, the oil companies know
where their oil is and will produce it so long as it is
economic. He disagreed that [change] needs to be done right
away, saying companies have had that oil for 30 years and a lot
more is going to be discovered on the North Slope. The U.S.
Geological Survey's numbers are very conservative, he added.
2:33:28 PM
REPRESENTATIVE P. WILSON, referencing Mr. Roderick's statement
that oil companies will make sure they make a profit, inquired
whether the oil companies will go somewhere else if they can
make a better profit there, or will just stay in Alaska.
MR. RODERICK answered the companies will probably do what
Chevron did in the Cook Inlet - sell to a smaller company that
does not need that much profit. There is no question in his
mind that the oil is going to be taken out of the North Slope.
Not talked about are the tens of billions of barrels of heavy
oil on the North Slope, which will be taken out if and when it
is economic and which BP in particular is working on. He
sympathized with legislators about having to deal with this
long-term problem, but said it is not good business and not good
public policy when there are no guarantees that the other side
is going to perform.
2:34:54 PM
REPRESENTATIVE P. WILSON asked what the state should do in the
meantime, if it waits, when there is not enough revenue to run
the state.
MR. RODERICK replied there is $14 billion in the state's cash
account that will last a while. He concurred the state is
looking at a fiscal problem down the line, but said there is
cash for the next few years so there is time to sort out this
long-term problem of what the state's relationship is with the
oil industry. He recalled two of the major companies stating
that they are going to be in Alaska for the next 50 years; he
maintained that that is because the companies want to get the
heavy oil. Additionally, he said, they are watching offshore,
which has tremendous potential and that oil will have to come
onto land and the state will get a share through the pipeline.
2:36:49 PM
RICK ROGERS, Executive Director, Resource Development Council
for Alaska, Inc. (RDC), encouraged the committee to remain
focused on the ultimate goal of the legislation, which is
increased production from both legacy and new oil fields. He
said RDC understands the tension between balancing the short-
term impacts to the treasury with the long-term benefits to both
the treasury and the economy as a whole. His organization
remains concerned that too much of a short-term focus will
undermine the overall purpose of this legislation to increase
production activity and stem the TAPS throughput decline.
Competitiveness is not a single point, but rather a continuum;
SB 21 is far more competitive than ACES. The degree to which
Alaska's tax policy is modified should keep in mind the
challenges of operating in Alaska - the short operating season,
high cost, lack of infrastructure, and the delay risks
associated with the plethora of federal permits that are often
appealed in the courts. To attract sufficient investment
capital to overcome the state's specific challenges, Alaska
needs to be sufficiently aggressive in its tax reduction to
stand ahead of the competition. Smaller producers have less
resiliency to overcome these challenges and RDC encourages the
committee to consider extending the small producer tax credit to
2022 or beyond, again with the goal of helping existing and
future small producers compete in obtaining the capital to
increase production. This is not about worrying about what is
good for the industry; it is about worrying about what is best
for Alaska in the long term. Regarding the talk about
guarantees, he said the status quo is the guarantee of continued
plus or minus 7 percent decline rates. If that is done for
another five years while trying to obtain more information,
where will Alaska's budget be when it is 35-40 percent less
annual revenue than today? He said RDC has not done a detailed
analysis of the proposed committee substitute [Version B] and
looks forward to hearing from the explorers, producers,
consultants, and administration to get a better sense of the
fiscal impact and how it will lead to more production. In
general, RDC is supportive of changes to this evolving tax
policy as it moves through the House with an emphasis on
increased production from both legacy and new fields.
Commending committee members for its diligence, he said RDC is
encouraged that this legislature will establish an oil and gas
policy this session that leads to a bright future for Alaska.
2:40:01 PM
REPRESENTATIVE SEATON noted an impetus behind the bill is to get
increased volume from the legacy fields, yet a major legacy
producer has testified in the past that to do heavy oil it must
be mixed with light oil to be able to be run down TAPS. He
requested Mr. Rogers' thoughts about how to maximize Alaska's
heavy oil resources if there is a spurt in light oil production.
MR. ROGERS responded he is not qualified to answer and suggested
the question be asked of a petroleum engineer.
REPRESENTATIVE SEATON surmised RDC would not be in favor of
doing something that would make Alaska unable to adequately
develop its heavy oil resources in the future.
MR. ROGERS answered RDC's interest is in maximizing the long-
term production from Prudhoe Bay, both the known reserves of
challenged oil as well as yet to be discovered resources.
2:41:59 PM
CARL PORTMAN offered his support of meaningful oil production
tax reform this session. The legislature has been addressing
this issue for years, but has yet to pass significant reforms
that will move the needle in attracting the investment needed to
reverse the production decline. Given the strong competition in
the Lower 48 and abroad for investment capital, Alaska needs to
be among the very best places for investment. He argued that
taxes do matter and said lower taxes will generate more
investment, which in turn will boost production and lead to more
state revenue over the long term. New investment in production
will stimulate the private sector, create more jobs, grow the
economy, and boost royalty income to the state. Alaska's
current oil production tax structure has generated billions of
dollars in short-term revenues, but he fears it is at the
expense of long-term investment, production, jobs, and a
sustainable economy. "Taxing ourselves to prosperity is a poor
strategy and will undermine our future in the private sector,
the foundation of Alaska's economy," he said. Under the current
tax structure the state is guaranteed lower production,
guaranteed lower revenue, and guaranteed higher budget deficits
over the long term, resulting in a weaker economy and a lower
standard of living for Alaskans. Under ACES the state will face
leaner budgets and challenges to funding state services and
education as production continues in unchecked decline. It is
time for major oil production tax reform because the status quo
of declining production is unacceptable. He said SB 21 is a
step in the right direction and urged committee members to do
sufficient due diligence and to ensure the goals set out in the
legislation are achieved.
2:44:18 PM
KEITH SILVER noted he does not work for an oil company or an oil
service company, but said many of his clients do. No type of
guarantee to the people or to the oil companies was provided in
ACES when it was rushed through in a special session of two to
three weeks, he pointed out. To ask for a guarantee now would
be inappropriate. "To do nothing now would be tantamount to
sticking our collective heads back in the ground while the
pipeline dries up," he said. Any reduction in taxes now would
not be a giveaway, but rather a correction of a taking via ACES.
He urged that meaningful reform in oil production taxes be
achieved to make Alaska a compelling place to invest. Doing so
will prevent a steepening in the decline curve and put more oil
in the pipeline.
2:45:44 PM
SCOTT HAWKINS, President and CEO, Advanced Supply Chain
International, noted his company is a materials management
company that employs over 200 Alaskans in the oil and gas
industry in Alaska. Both he and his company are concerned about
the health of the industry currently and the relentless annual
production declines. Even though employment levels have held up
fairly well in the last few years since ACES, it has mainly been
around maintenance and retrofitting of existing facilities.
There has not been adequate new investment in new production, as
the slope of the production decline curve illustrates. Because
of those concerns, he is encouraged to see SB 21 move out of the
Senate and now be before this committee. While he has not yet
reviewed the proposed committee substitute [Version B], he said
CSSB 21(FIN) am(efd fld) is a major step in the right direction.
He encouraged that the proposed committee substitute be
strengthened further, specifically to make sure it adequately
incentivizes production, both from legacy and new fields. It is
also important the bill make Alaska sufficiently competitive
this time around. Regarding statements about a giveaway, that
mitigating the overreach of ACES is somehow a giveaway to
industry, he would submit that taxation is a takeaway and
mitigating a takeaway is not a giveaway. Failing to institute a
balanced, responsible oil taxation policy that incentivizes new
production, thereby bending the production curve in the right
direction of upwards, is what would be a giveaway. The state
would be giving away future investment capital, future jobs,
future production, as well as the fiscal future of the state.
2:49:25 PM
REPRESENTATIVE TARR stated that according to the employment
charts she has seen, 2012 had the highest number of people
working on the North Slope since 1990. She asked whether Mr.
Hawkins has information to substantiate his statement that many
of those jobs are maintenance jobs because that is something she
has never seen.
MR. HAWKINS replied he does not have data that he can share
today, but imagines it is available from some sources. However,
he knows from having hundreds of people in the industry. Since
his company does materials management for several major oil
fields in Alaska, his company knows what kinds of things are
being ordered and what kinds of projects are being worked on.
Further, his company has a pretty good handle on new project
development and has seen new project activity decline while
maintenance and upgrade activity has remained strong. His other
answer to the question, he added, is to be wary in interpreting
that an increase in employment in the context of production
decline is a good thing. All that means is that the cost per
barrel of producing is going up while production is going down.
If new production is not being seen in the pipeline, rising
employment is not necessarily a long-term sustainable trend.
2:51:33 PM
GAIL PHILLIPS, noting she is a former member of the legislature,
offered her support for the committee's work to find a
reasonable and long-term solution to Alaska's tax conflict.
When she served in the legislature, the state was fortunate in
that it had a stable tax regime and did not have the grave issue
of seriously declining oil production that is faced today. At
that time legislators did not have to worry about Alaska's
competitive stature in the world market; Alaska was strong,
productive, and competitive. Alaska's standing today is totally
different and it is up to committee members to set policy that
will ensure a competitive regime that will turn things around
and make Alaska once again a leader in oil production. Finding
a long-term solution to an economically beneficial tax policy is
critically important to Alaskans, especially to those with
children and grandchildren. She urged the committee stay the
course and find a workable solution this session that will
change the current ACES law. Offering her support for the bill,
she said not much time left is left before it will be too late
to turn around the decline curve and make Alaska competitive
once again.
2:53:40 PM
JEANINE ST. JOHN thanked members for their hard work and said
ACES is flawed. She is glad that there has been recognition of
the problem regarding investments and the difference between
spending and production. The right thing for Alaska is to
incentivize that production. She said she supports SB 21,
subject to the fiscal note information and testimony and
information from the experts. To be sure, she supports the
governor's principles, although the ability to achieve the
simplicity principle may be questionable at this point. She
said she hopes Representative Hawker is not recused from voting
on the bill because he is her representative and she wants his
expert opinion and values his judgment on this bill.
2:56:06 PM
JOE MATHIS, Vice President for External Affairs, NANA
Development Corporation, noted he was the founding president of
the Alaska Support Industry Alliance in 1979. On behalf of NANA
Development Corporation and as board member emeriti of the
alliance, he offered support for passing SB 21 as it is before
the committee today. He said NANA's companies have been meeting
the needs of the oil and gas sector for close to four decades.
In 2012 NANA employed nearly 5,000 Alaskans, of which 1,600 are
NANA shareholders. Through its business operations, NANA
generates income and delivers benefits to its shareholders.
NANA shareholders have made significant investments in the oil
industry over the past 40 years. NANA has held a small
ownership in the Endicott Oil Field for over two decades, has
invested in new facilities and equipment at Deadhorse for NANA
Oil Field Services, and has invested heavily in a new
fabrication facility in the Matanuska-Susitna Valley
specifically designed for oil field modules and construction.
These business activities have afforded NANA's shareholders and
other Alaskans the opportunity to hold good paying jobs as well
as receive extensive job training. Oil industry investments
fuel the contracts for NANA companies and the jobs that those
contracts contract, but NANA is seeing these opportunities go to
the Lower 48, such as North Dakota and Texas, where the oil
industry is booming. A NANA company has opened a Houston,
Texas, office to pursue work in Texas. NANA has had to look at
places outside of Alaska for investment and opportunities in oil
and gas, such as Australia. Alaska's current investment climate
is driving business away. Alaska does not have a lack of oil;
rather it has a lack of investment. NANA has heard that the
industry has billions of dollars in projects that could be done
if Alaska's tax structure was more competitive. Projects would
increase oil production and, more importantly, projects that
NANA's companies have the skills, experience, and expertise to
carry out. NANA has a homegrown workforce from all parts of the
state, urban and rural. People need to pull together to ensure
Alaska has a stable economic climate to serve its citizens today
and into the future and SB 21 will set the stage for continued
development of Alaska's economy. NANA believes the work done by
the Senate and this committee will produce a viable and fair tax
policy for the state, Alaskans, and producers. However, he
would be remiss as the founding president of the alliance if he
did not address one thing he thinks needs emphasis in language
in the bill, which is ensuring that the producers are hiring
competitive Alaska contractors for needed infrastructure and
production and to bring more oil into production. Homegrown
contractors will ensure Alaska content. Alaska has hidden gems
in its vast great land that are waiting to reveal themselves and
their benefits to Alaska's future. Significant oil and gas tax
reform will make that revelation.
3:00:45 PM
MARY ANN PEASE, Owner, MAP Consulting, testified she is a board
member for Commonwealth North, is on the executive committee for
the Alaska State Chamber of Commerce, is past president of the
Anchorage Chamber of Commerce, and is a board member of Consumer
Energy Alliance. She expressed her concern about the staggering
decline in oil production, noting Alaska is down from a peak of
over 2 million barrels a day to just over 500,000 barrels today.
This decline continues at an annual rate of 5-7 percent during a
time of increasing oil prices. While attending a [Consumer
Energy] Alliance meeting last week she learned about the
incredibly rapid growth of production from the Bakken, that
North Dakota has the fourth lowest tax rate at 9.8 percent, and
is on the path of unprecedented prosperity and economic growth
and development. Alaska needs to once again become number one
in oil production. Today, North Dakota is first, Texas is
second, California is third, and Alaska is fourth, which is
unacceptable. The legislature has the opportunity to reform
taxes and enable Alaska's economy to have a prosperous and
sustainable future, and she believes the committee will reach
that conclusion. High oil prices coupled with new technology
have created a boom in the oil and gas industry across the
country and the world. Alaska, however, is missing out on this
boom and it is no secret why - Alaska's taxes are too high and
companies are taking their investment dollars elsewhere. More
oil is needed in the pipeline to maintain jobs and that action
must be taken today; there is no time to continue studying this.
The rates and progressivity structure of Alaska's current tax
regime provide a disincentive to attracting risk capital to the
state, as evidenced by a declining production during increasing
oil prices. Increased investment through increased global
competitiveness will enhance Alaska's ability to fulfill its
constitutional mandate to develop natural resources for the
maximum benefit of the people. When over 90 percent of Alaska's
budget is truly funded by oil revenues, the state does have a
mandate to ensure that it has a sustainable future. The oil and
gas industry needs to be shown that Alaska is open for business
and is serious about keeping, growing, and expanding that
business by making meaningful tax reform happen now.
3:03:58 PM
ADJOURNMENT
CO-CHAIR FEIGE recessed the meeting until 9:00 a.m., April 2,
2013, saying public testimony will be continued at that time.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HRES SB 21 MaryAnn Pease Testimony 4.1.13.pdf |
HRES 4/1/2013 1:00:00 PM |
SB 21 |
| HRES SB 21 NANA Dev. Testimony 4.1.13.pdf |
HRES 4/1/2013 1:00:00 PM |
SB 21 |
| HRES SB21 Brad Keithley Comments.pdf |
HRES 4/1/2013 1:00:00 PM |
SB 21 |
| HRES SB 21 City of Barrow Resolution 4.1.13.pdf |
HRES 4/1/2013 1:00:00 PM |
SB 21 |
| HRES HCS CSSB21 Sykes 4.1.13.pdf |
HRES 4/1/2013 1:00:00 PM |
SB 21 |