Legislature(2013 - 2014)SENATE FINANCE 532
03/06/2013 03:00 PM Senate FINANCE
| 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 | |
SENATE BILL NO. 21
"An Act relating to appropriations from taxes paid
under the Alaska Net Income Tax Act; 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; relating to the determination
of annual oil and gas production tax values including
adjustments based on a percentage of gross value at
the point of production from certain leases or
properties; making conforming amendments; and
providing for an effective date."
Vice-Chair Fairclough OPENED public testimony.
3:05:34 PM
JIM SYKES, SELF, PALMER (via teleconference), believed CSSB
21(RES) may be successful after the inclusion of several
changes. He recommended that the committee reduce the GRE
rate below 20 percent with a 5 or 6 year cap. He opined
that the net operating loss interest rate needed to be
reduced substantially. He thought the CS would work well
for new areas of development; however, he believed the bill
needed to be carefully crafted to ensure that maximum
profits were not given away to oil companies while the
companies continued to make maximum profits on legacy
fields. He stressed that the legacy fields were some of the
most reliable and profitable fields in the world and that
they should remain under the current Alaska's Clear and
Equitable Share (ACES) system. He sent in a handout that
was passed out to committee members; it showed projections
of offshore production that would occur in 8 to 10 years.
He believed offshore production would provide a significant
amount of oil into the Trans-Alaska Pipeline System (TAPS).
He pointed to concerns related to throughput; he believed
throughput would increase and come close to levels seen in
1988. He discussed revenue earned by the state at various
times. He emphasized the issue was primarily about price.
He referenced a book by John Miller titled "The Last
Barrel." He asked the committee to consider the amount of
state revenue that would be lost under the legislation and
how much production would be required to offset the costs.
He emphasized that the state deserved to tax its oil at
full value; the state should not hope it would get more
revenue later based on promises that may or may not
materialize. He mentioned Alaska's tax rates could not be
reduced enough to stop oil production in other areas of the
world.
Vice-Chair Fairclough asked that written comments be
provided to Co-Chair Meyer's office.
3:08:50 PM
KEITH SILVER, SELF, ANCHORAGE (via teleconference),
discussed that Alaska had the highest tax rates in the
nation. He remarked that corporate capital was limited and
only the most profitable projects in a company's portfolio
would be funded. He discussed that investors were taking
their money elsewhere to receive a greater return. He
believed the state needed a new policy that would encourage
long-term planning and investment in new production. He
emphasized that the amount of throughput in the pipeline
did matter; he stated that current level was within 100,000
to 200,000 barrels per day of reaching the practical limit.
3:10:37 PM
STEVE PRATT, EXECUTIVE DIRECTOR, CONSUMER ENERGY ALLIANCE
ALASKA, ANCHORAGE (via teleconference), vocalized support
for the legislation. The organization believed the most
significant threat to the state was declining TAPS
throughput and increased spending. He opined that Americans
had an interest in obtaining competitively priced domestic
energy and robust economic activity. He stated that at
least 30 percent of working Alaskans were dependent on oil
and gas exploration and development for employment. He
pointed to declining oil production in the state. He
believed that Alaska's contribution to the energy supply
would continue to decline without changes in state and
federal policies. He relayed that increased prices and new
technologies had led to substantial increases in oil
production in other states. He believed the state needed to
be more competitive. He stressed that an increase of
throughput to 50 percent of the TAPS capacity would add $18
billion per year to U.S. economic activity; it would also
reduce the export of U.S. money to other nations. He stated
that increased economic activity would benefit all
Alaskans.
3:12:53 PM
BRENDAN BABB, SELF, ANCHORAGE (via teleconference), voiced
opposition to the bill. He believed the reduced tax rate in
the legislation catered to the oil industry. He supported a
reduction in tax rates only after oil production increased.
He noted that oil companies were some of the most
profitable organizations in the world; he believed Alaska
needed to provide a more challenging negotiation. He
discussed that oil companies could get a $2 billion profit
per year on a $2 million investment if the tax rate was
lowered. He noted that oil fields had been declining since
1988. He stated that ACES had not caused the decline. He
pointed to record high employment on the North Slope; he
expressed disappoint that 50 percent of the workers were
from outside of Alaska. He was in favor of incentives to
increase jobs for Alaskans. He supported the current ACES
system. He equated reducing the tax rate before production
increased to a teenager who never took out the trash asking
for an increase in allowance with a promise to start taking
the trash out.
3:15:49 PM
SCOTT THORSON, SELF, ANCHORAGE (via teleconference),
pointed to the competitive situation between Alaska and
North Dakota. He stated that the 80 percent government take
on a $100 per barrel of oil was high. He discussed the
process in North Dakota and stated that it was simple due
to privately owned land. He believed the high cost of doing
business and the difficulty of accessing resources made
Alaska uncompetitive. He believed that the only thing the
state could control was the tax environment.
3:18:19 PM
JIM PLAQUET, ALASKA SUPPORT INDUSTRY ALLIANCE, FAIRBANKS
(via teleconference), supported the legislation. He agreed
that the government take remained too high under the ACES
system. He stated that much oil remained on the North
Slope. He opined that high oil prices should spur
investments in new oil, but the new investments had not
occurred to date. He listed comparisons between Alaska and
other states. He stressed that ACES did not incentivize new
investment. He reiterated that the high government take
would encourage oil production in other areas outside of
Alaska. He urged increasing competition.
3:21:45 PM
RICH SEIFERT, ALASKA CITIZENRY, FAIRBANKS (via
teleconference), vocalized opposition to the legislation.
He referred to claims that ACES was responsible for a
decline in production. He stated that a natural and
expected decline had been occurring since 1988. He
maintained that unless other oil production came online the
legacy fields were the most significant and a source of the
easiest oil the state would ever get. He did not believe
ACES had a significant impact on the decline. He opined
that decisions made by the state would have been much
easier if it had audited the process and exercised due
diligence in accounting oversight for production. He
stressed that it was not possible to know that promises to
increase production would actually occur if the tax rate
was decreased. He reiterated that a better investment would
be auditing production and production costs by company. He
believed a better case could be made for making changes to
the tax structure if reliable audit data was obtained.
3:24:43 PM
BRAD FAULKNER, SELF, HOMER (via teleconference), testified
in opposition of SB 21. He shared that he had worked in the
industry. He opposed any additional tax breaks for new oil
pools found in legacy fields. He said that field management
was the problem and that there were known reserves of oil
that were easily available and surrounded by sufficient
infrastructure. He noted that the natural decline had been
anticipated. He said that there was untapped oil sitting on
the North Slope that no one was recognizing or admitting to
that would keep the pipeline full. He mentioned that under
the Economic Limit Factor (ELF), 80 percent of the oil
leaving Kuparuk and Prudhoe Bay had no production tax.
3:27:06 PM
WES NEWCOMB, SELF, HOMER (via teleconference), voiced
support for SB 21. expressed concern that that the state
would fall behind in its fiduciary responsibilities should
oil production continue to decline. He understood that
Alaska's people, particularly Native Alaskans, depended on
oil revenues. He testified in support of further
production.
3:28:17 PM
BOB SHAVELSON, EXECUTIVE DIRECTOR, COOK INLET KEEPER, HOMER
(via teleconference), testified in opposition to SB 21. He
believed that under the legislation the state would be
giving away billions of dollars to the industry while
squandering Alaska's finite wealth. He felt that the public
deserved a better return on their resources, as well as a
better understanding of the fiscal landscape surrounding
the issue. He urged for maintaining progressivity in the
tax regime. He contended that ACES was creating a
renascence in Cook Inlet of exploration and development
that he had witnessed. He believed that Alaska had an
obligation to future generations to manage the oil wealth
responsibly.
3:30:40 PM
CARL PORTMAN, DEPUTY DIRECTOR, RESOURCE DEVELOPMENT
COUNCIL, ANCHORAGE (via teleconference), spoke in support
of SB 21. He believed that there was oil stranded in the
ground because the state was looking to maximize short term
revenue at the expense of encouraging investment and new
production. He stressed that since 2007 the state had lost
over 210 million barrels per day with a point of production
gross value of over $17 billion. He said that if a less
aggressive tax regime cut the decline in half it would
result in over $8 billion circulating in the economy. He
believed that the state was giving away the future for
short term, unsustainable tax revenue. He said that the
business community was fearful of what continued declining
TAPS throughput would do to the economy as a whole. He
expressed support for Governor Parnell's approach. He
stressed that there was an urgent need for the state to
compete in order to stem the production decline and
increase investment. He relayed that the resources were in
the ground and that all Alaska needed was the right tax
policy to begin production. He encouraged the committee to
further hone the legislation to make Alaska even more
attractive to the industry.
3:33:57 PM
TOM MALONEY, SELF, ANCHORAGE (via teleconference), spoke in
support of SB 21. He quoted the former Department of
Revenue Commissioner Pat Galvin from a 2007 Resource
Development Council resource review publication, which
spoke to the fact that ACES had not improved the investment
climate of the state. He said upon the advent of ACES, the
North Slope was producing 739,000 barrels of oil per day.
He gave a brief history of the decline over the past 5
years. He stated that in 2012 the highest producing month
was lower than the lowest producing month in 2007. He
stated that the reduction of production had resulted in
massive revenue loss for the state. He added that Alaska
needed more jobs for future generations.
3:37:38 PM
STEPHANIE MACSWAIN, SELF, ANCHORAGE (via teleconference),
spoke in support of SB 21. She expressed the myriad of ways
that the oil industry had benefited her directly. She
expressed concern that the decline in oil production would
result in fewer opportunities for future generations. She
testified that her friends were relocating to other states
because of the waning oil production.
3:39:12 PM
JIM UDELHOVEN, UDELHOVEN OIL FIELD SERVICES, ANCHORAGE (via
teleconference), testified in support of SB 21. He
testified that his family and employees had stayed in
Alaska, rather than to follow the boom in North Dakota
several years ago, out of a belief that production would
improve. He said that now, one year later, he was moving
employees from Alaska to shale fields in Texas and was
negotiating contracts in North Dakota. He stated that every
year the tax regime remained the same, change became more
and more unlikely.
3:42:13 PM
PHILLIP FURBUSH, SELF, PALMER (via teleconference), spoke
in opposition to SB 21. He stated that the main problem
with the Alaskan economy was the lack of economic
diversification and irresponsible spending practices. He
believed that the non-renewable resources would definitely
run out. He stressed that instead of spending billions in
the extraction of oil, the state should be investing in
more diverse ways. He suggested that the state examine the
saving and spending practices of Norway. He believed that
the state should examine alternative energy possibilities.
He said that the "extract and spend quickly" mentality
would bankrupt state.
3:45:32 PM
MARY TOUTORGHIU, SELF, KENAI (via teleconference),
testified in opposition to SB 21. She expressed concern
with the spending practices of the state. She stated that
the industry was holding back on production in order to get
a better deal from the state. She felt that the governor's
proposed plan was a giveaway. She noted that the oil
companies had not made any promises for the tax breaks. She
believed that the proposed legislation offered a donation
to industry and not an incentive for production.
3:48:41 PM
PAUL METZ, SELF, FAIRBANKS (via teleconference), testified
in support of SB 21. He referred to previous testimony that
related to the high cost for industry to work in the
Alaskan terrain. He believed that the tax structure should
make the state more competitive with other states. He
opined that the state was the highest taxing jurisdiction
in the industry.
3:50:34 PM
JERRY AHIWNONA, SELF, ANCHORAGE (via teleconference),
testified in opposition to SB 21. He believed that the
industry was "strong arming" the state. He thought that the
time spent on the legislation was a waste of legislative
time and taxpayer money. He believed that oil companies
should have separate accounting rather than global
apportionment.
3:52:23 PM
TOM LAKOSH, SELF, ANCHORAGE (via teleconference), testified
in opposition to SB 21. He hoped that he committee would
craft policy that avoided exploitation of the state by the
oil industry. He felt that the bill was the Alaskan version
of the federal sequester legislation, and that the
combination of the two would cut the state's budget so
severely that recovery and diversification would be
impossible. He stressed that the state needed to focus on
long-term production of oil, not filling the pipeline for
the short-term. He believed that the recession of sea ice
on the North Slope would make it easier for the state to
ship oil directly from the slope making the pipeline
obsolete.
3:55:47 PM
CATHY DUVBURRN, SELF, ANCHORAGE (via teleconference),
testified in support of ACES reform and SB 21. She
highlighted that ACES had been unsuccessful because
throughput had decreased over the past 5 years. She
expressed hope that her family would be able to find work
in the state and not be forced to move to North Dakota or
Texas.
3:57:24 PM
MIKE HEIRING, SELF, ANCHORAGE (via teleconference),
testified in support of SB 21. He stressed that the passage
of ACES had created the decline in throughput. He believed
that tax reform was necessary in order to ensure the future
of Alaska.
3:58:45 PM
MICHAEL JESPERSON, SELF, ANCHORAGE (via teleconference),
testified in support of SB 21. He felt that the state could
be more attractive to industry. He thought the cost of
doing business in the arctic environment, coupled with the
tax system, made the state highly unattractive to the
industry. He said that he feared that his family would not
be able to find work because of the decline.
4:00:41 PM
PETER MACHSEY, SELF, ANCHORAGE (via teleconference),
expressed support for SB 21. He testified to the lack of
public outcry when Alaska's Clear and Equitable Share
(ACES) was passed in 2007. He believed that the large
investment in infrastructure, and the jobs created in the
state had earned the industry a financial return. He
queried the manufacturing credit written into the
legislation.
Vice-Chair Fairclough stated that Mr. Machsey could submit
questions concerning the legislation directly to
legislative offices.
4:02:42 PM
DIRK NELSON, SELF, FAIRBANKS (via teleconference),
testified against SB 21. He stated that the cost of doing
business on the North Slope was often based on net profits
and not gross, and offered that BP was probably looking at
net profits also. He pointed out that ConocoPhillips had a
profit of nearly $28 per barrel of oil in Alaska the
previous year and opined that this profit margin was higher
than anywhere else in North America. He suggested that
Governor Parnell was not defending his own legislation. He
discussed charts that compared decline in throughput to
revenue rates and asserted that there was little
correlation between the two. He pointed out that even when
15 out of 19 fields on the North Slope were severance tax
free throughput had already been in decline. He wondered
why throughput would have been in decline when there was no
tax if the problem was revenue. He stated that BP and
ConocoPhillips had not "necessarily" been forthright with
its position or its finances and that there was no forced
disclosure. He discussed a BP memo from 2004 and related
that it did not sound like a commitment to reinvest in
Alaska. He stated that there was no evidence that SB 21
would increase throughput or revenue. He concluded that he
would like supporters of SB 21 in Juneau to sign contracts
that guaranteed that if the bill passed, they would not
seek employment with the oil producers for 15 years.
4:06:06 PM
MICHELE VASQUEZ, SELF, KENAI (via teleconference),
expressed strong opposition to SB 21. She offered that
larger tax breaks for companies to drill Alaska's oil made
no sense. She pointed out that oil companies had made
billions off of the state's oil and that they did not need
an incentive to do the business that they were in. She
stated that Alaska should not give away its oil resources
with broader tax breaks and that doing so would take away
from other much-needed programs. She supported leaving
Alaska's Clear and Equitable Share (ACES) in place.
4:07:31 PM
RAY METCALF, SELF, ANCHORAGE (via teleconference),
testified against SB 21. He related that he had heard
testimony, which stated that it was not as profitable to
drill and produce oil in Alaska as it was in other places;
however, ConocoPhillips reported a $29 per barrel profit in
Alaska the previous year. He offered that neither
ConocoPhillips, ExxonMobil, or BP made that much per barrel
anywhere else in the world. He discussed the terms for Iraq
contracts that BP, ExxonMobil, and Shell Oil had signed in
the past two years and related that none of those contracts
gave those companies even as little as $2 per barrel. He
mentioned the discussion about losing workers to North
Dakota and stated that there were more people employed on
the North Slope than there ever had been. He pointed out
that tankers were coming back from the West Coast with oil
still onboard because they could not unload it;
furthermore, BP was currently producing at the rate that
its market consumed the oil that it refined and
distributed. He offered that there would be no place to put
another 100,000 barrels a day in the pipeline. He related
that oil companies would produce enough oil from Prudhoe
Bay to meet their market share and would continue the same
strategy even if the oil was given to them for free. He
pointed out that the state should not cater to the oil
companies and that Alaska was not the highest taxing entity
in the U.S. or the world, but was below the international
average.
4:12:49 PM
PRISCILLA SIMMONS, SELF, ANCHORAGE (via teleconference),
expressed support of more jobs. She discussed the oil boom
in Texas, through which that state had doubled its oil
production since 2010. She shared that Texas had been in
the oil production business for decades prior to the Trans-
Alaska Pipeline System (TAPS) and that she had witnessed
co-workers leaving Alaska for North Dakota and Texas. She
wondered why Texas was increasing production and job
opportunities while Alaska's production was declining. She
offered that Alaskans like herself wanted more
opportunities for oil production and expressed disbelief
that the Alaska's huge resource base had resulted in about
a 26 percent decline, or 200,000 barrels per day, of
production over the last five years. She stated that she
wanted to stay and live in Alaska. She concluded that Texas
had many advantages over Alaska, but that the state should
not make job opportunities one of the advantages.
4:15:01 PM
ELI STINE, SELF, ANCHORAGE (via teleconference), testified
in support of more oil and gas production in Alaska. He
related that he had recently moved to Anchorage from
Colorado because of Anchorage's job opportunities. He
discussed the decrease in investment and production in
Alaska. He pointed out that over the last five years, the
state had seen a 25 percent decline in oil production. He
shared that Alaska was partly a great place to be because
of its tax revenue from oil production. He related that the
state needed to be sure that Alaska and its citizens got
their fair share, while still creating an environment that
opened competitive opportunities for new investment in the
oil and gas industry. He concluded that he was worried
about his future in Alaska due to the declining oil
production and expressed a desire to stay in the state. He
urged the state not to continue down the path it was
currently on.
4:17:35 PM
ANDY ROGERS, SELF, ANCHORAGE (via teleconference),
testified in support of SB 21, but offered that it was not
competitive enough. He was concerned that younger Alaskans
had the same cynical concerns that people over 40 years-old
usually had. He discussed the comments of previous
testifiers and expressed concern that several Alaskan
employers had stated that they were taking their businesses
outside of Alaska. He urged the committee to improve SB 21.
4:19:39 PM
BILL WARREN, SELF, KENAI (via teleconference), spoke
against SB 21 and in favor of "tweaking" Alaska's Clear and
Equitable Share (ACES). He stated that there was a lot of
"fear based" drama currently going on. He shared that
Alaska's economy was cyclical and that he had made a good
living in the state. He discussed the legacy fields and
offered that if you poured water out of a bucket, it would
soon be depleted. He opined that if the "big three" wanted
to drill deeper or laterally, the state should let them. He
mentioned that the independent oil companies would help
"save" Alaska and that the state was currently not
competing with North Dakota and Texas. He pointed out that
local hires would be a good thing to ask from the "big
three" and reported that the North Slope was full of out-
of-state workers. He opined that the high aspect of
progressivity was set during a period of corruption and
concluded that changing the state's oil policy too often
would lower its credibility. He was hopeful for Alaska's
future and shared that the big oil companies would leave
Alaska when Prudhoe Bay was depleted; however, the
"independents" would take over and make the state a good
living.
VALERIE BROOKS, SELF, expressed support of funding for
education. She related that the oil industry in Alaska
provided income for many, but that education served
everyone in the state. She discussed the benefits of
education and offered that Alaskan students had not seen an
increase in the base student allocation (BSA) of funds for
public education for the prior three years; furthermore,
without an increase in the current year, the BSA would
remain the same for a fourth year. She contrasted the lack
of an increase in student funding to an $11.9 billion
profit that "one oil company" had made several years prior.
She offered that the funding that the proposed tax
incentives granted big oil companies could be better used
to maintain and improve the public education system in the
Alaska to the benefit of everyone in the state.
4:26:15 PM
REED CHRISTENSEN, SELF, ANCHORAGE (via teleconference),
testified in support of SB 21, but related that the bill
did not go far enough. He urged the need to make Alaska's
oil and gas climate more competitive. He shared that he
worked for a business that manufactured products for use on
the North Slope and stated that the company's business had
declined by over 40 percent since Alaska's Clear and
Equitable Share (ACES) was passed; furthermore, the
alarming downward trend appeared to be continuing. He
pointed out that the downturn in production was due, in
large part, to the fiscal environment created by ACES. He
offered that oil companies could get better returns on
their investments in other areas of the world. He expressed
that Alaska needed more private sector jobs, investment,
and more oil in the pipeline and stated that the pipeline
was two-thirds empty. He opined that ACES was accelerating
the decline and was bringing the eventual shut down date
closer. He urged that ACES should be fixed and shared that
the effects of the production decline could be felt in
state jobs, education, public services, charities, and
construction.
4:28:42 PM
JEFF ACTON, SELF, ANCHORAGE (via teleconference), spoke in
support of SB 21. He discussed the oil boom in Alaska and
shared that he had worked 20 years on the North Slope. He
stated that in recent years, the oil environment in North
Dakota, Texas, and the Gulf of Mexico was similar to the
boom that Alaska had experienced. He pointed out that the
Alaska's Clear and Equitable Share's (ACES) tax structure
had coincided with the steady decline in production and
also resulted in fewer capital projects. He offered that
Alaska was competing in all corners of the U.S. and the
world. He observed that the discussion was different in the
Lower 48 than it was in Alaska. He explained that the Lower
48's regimes did not focus on the short-term or tax
gimmicks, but had a primary concern of improving the
business environment. He offered that without adopting a
new policy that promoted the development of resources, the
state's production decline would continue.
4:31:11 PM
VAL HANLEY, SELF, ANCHORAGE (via teleconference), expressed
his support for SB 21. He stated that he worked for an oil
company in Anchorage and related that he worked human
resources for that company; furthermore, standby employees
were asking him when the company would be opening more
positions in its Texas branch and when it would go to the
Dakotas. He stated that the company he worked for
considered itself an Alaskan company and had been in the
state since the 1970s; its board members had decided to
wait and listen to promises to bring more production to
Alaska's oil fields, as well as assurances that Alaska's
Clear and Equitable Share (ACES) would be fixed. He stated
that the company he worked for was starting to get more
contracts in Texas and was now looking at contracts in the
Dakotas. He continued to discuss losing standby employees
to the Lower 48, but shared that some of them wanted to
return to Alaska once more work was available. He urged the
state to fix ACES in order to allow private businesses to
hire in Alaska and get the state's economy going again.
4:33:14 PM
MAYNARD TAPP, SELF, ANCHORAGE (via teleconference),
expressed his support of removing progressivity from SB 21
and fixing Alaska's Clear and Equitable Share (ACES). He
offered that SB 21 should be split into two pieces; one
piece would get rid of progressivity and the second piece
would fix everything else. He was unsure if the tax system
could be fixed in one step and opined that breaking the
bill into pieces might help. He stated that Canada, the
Gulf of Mexico, and North Dakota were Alaska's real
competitors. He offered that it had been proven that money
taken from oil companies in the form of taxes had impacted
investment for new production. He stated that a 50/50 split
seemed fair in terms of total government take. He offered
that the state needed to level production at 600,000
barrels per day and limit spending based on a $100 barrel
of oil "to that revenue that comes in." He addressed the
comments of earlier testifiers that claimed the state was
spending more on capital expenditures and reported that
anything that cost over $2,400 that was not an exact
replacement was considered a capital expenditure. He shared
that the state had a 30 year-old plant, which was producing
mostly water; furthermore, a lot of the capital investments
that were currently being made were purposed to handle the
water.
4:36:52 PM
BERNIE HOFFMAN, SELF, FAIRBANKS (via teleconference),
testified against SB 21 and pointed out that the audit on
Alaska's Clear and Equitable Share (ACES) had not been
completed yet. She offered that the ACES audit was needed
to determine if the tax system was working or not and
observed that good data would lead to good decisions. She
pointed out that the oil companies had called SB 21 "a good
start" and opined that the companies would want even more
in order to incentivize them and accomplish what the state
wanted. She offered that ACES was working and that she had
not heard convincing evidence that it needed to be fixed.
She reported that the state should treat its oil like
savings and should not give it away without good, unbiased
data to make decisions with. She related that the state
needed to diversify its economy and expressed concern that
if SB 21 was passed, the state's services would be
impacted; as a result, there would be a future possibility
of a state-income tax. She opined that the Legislature
should go back to a 120-day session.
4:40:19 PM
PETER STOKES, SELF, ANCHORAGE (via teleconference), urged
the passage of SB 21. He pointed out that the bill would
allow new investments and would increase production from
the North Slope. He stated that Alaska's Clear and
Equitable Share (ACES) had resulted in extracting much
higher taxes from the oil companies and that Alaska had
become very uncompetitive in attracting new oil investment,
particularly at higher oil prices. He stated that the CS to
SB 21 was good start for achieving new investments and
expressed appreciation at the elimination of progressivity.
He suggested that a tax rate, with revenue exclusions and
credits, to allow for a constant 60 percent to 63 percent
government take at all price ranges. He observed that PFC
Energy and Roger Marks could work with EconOne, the
Department of Natural Resources, and the Department of
Revenue. He wanted to incentivize development for new
production within existing PAs that would not be recovered
until a company spent the new investments. He offered that
the existing PAs were the areas where the state could bring
the quickest and largest increases in new production for
the short-term. He stated that exploration-credit
modifications should be left in place to allow new
explorers to continue to explore. He concluded that without
new exploration and continued development of new production
within the existing PAs, the efforts to lower of flatten
the production decline would not occur.
4:43:39 PM
JAMES PRICE, SELF, KENAI (via teleconference), testified in
opposition to SB 21 and in support of Alaska's Clear and
Equitable Share (ACES). He pointed out that before ACES,
the state had the Economic Limit Factor (ELF). He stated
that the ELF was justified by claiming that the producers
on the North Slope were economically disadvantaged, but
pointed out that oil companies had billions of dollars in
profit under the ELF. He offered that ACES was good
legislation and that SB 21 was taking us in the wrong
direction. He stated that BP had a contract with Iraq for a
profit of $2 per barrel, but that company was making $28
per barrel in Alaska. He stated that Alaska did not have
access to its resources, which needed to be addressed
before the state gave oil companies more money. He shared
that he did not see how SB 21 would benefit Alaskans. He
related that he had worked on the North Slope for many
years and that most of the workers there were not from
Alaska. He concluded that nothing would be solved by giving
Alaskan profit to the producers.
4:47:06 PM
BEN MOHR, SELF, ANCHORAGE (via teleconference), expressed
support of SB 21. He stated that the Alaska needed to "put
out a little bit more" in order to have the best "players"
come and maximize the returns to the state. He expressed
concern that the state's resource management strategy of
getting what it could while it could was shortsighted,
unsustainable, and was not a good philosophy. He pointed
out that the state was managing its oil policy like it was
on "life support" and opined that this was not a good way
to run a business. He encouraged the committee to action
and concluded that the decline rate and the lack of
competitiveness would make people leave Alaska. He refuted
the testimony of a previous testifier and related that Cook
Inletkeeper was an environmental organization that had been
trying to shutdown oil and gas development in Cook Inlet
for decades.
4:49:24 PM
NICK PEPPERWORTH, SELF, ANCHORAGE (via teleconference),
expressed support for SB 21. He discussed his history
working and living in Alaska. He believed that Alaska did
not have the opportunity to diversify and pointed out that
oil was the driver for the budget. He observed that there
had not been any school major school projects built in the
last few years because there was no money. He mentioned
that the military was not spending money in 2013 because of
a lack of funding. He read the governor's key principles
for tax reform. He discussed North Dakota and related that
the infrastructure there could not keep up with the amount
of work. He pointed out that there was currently no new
production or new wells being drilled on the North Slope.
He concluded that the recession was just "catching up" in
Alaska and that reform was needed to avoid it. He concluded
that some places were offering "craft people" a higher per-
hour wage than Alaska was for workers on the North Slope.
4:53:30 PM
MARY NANUWAK, SELF, ANCHORAGE (via teleconference),
testified in support of prioritizing education. She
believed that it did not take a "rocket scientist" to get
things going and stated that oil affected every aspect of
life in Alaska. She pointed out that education would be
more likely to solve the state's problems than anything
else and related that education should start before
preschool. She offered that early education stuck with a
person for the rest of their lives and that culture, race,
religion, sex, or anything else should not stand in the way
of an education because they were impediments to progress.
She noted that oil affected every aspect of life in Alaska.
She recalled listening to legislative sessions on the radio
since she was young and offered that the majority of the
unsolved issues that were being discussed were the same.
She discussed a testimony the prior day and related that
the testifier did not mean to offend anyone; she empathized
with the sentiments of the testifier and related that
sometimes people got impatient for things to get rolling
and solved. She stated that immigrants to the Alaska
claimed that a piece of land was theirs, but offered that
the whole of Alaska belonged primarily to the indigenous
people. She offered that the rules, laws, and regulations
that were proposed every year were based on the personal
interests of those who passed them. She opined that Native
peoples were the smartest people in the world because they
did not keep knowledge for their own selfish interests, but
shared what they learned with the world in order to solve
problems.
4:59:36 PM
NICK MOE, SELF, ANCHORAGE (via teleconference), testified
against SB 21. He agreed with the governor's principles,
but not with the approach to accomplishing them. He related
that Alaska needed infrastructure and that funding would be
better served for that purpose. He observed that Alaska
needed to look at the issue like a business and offered
that for every dollar that was given away, the state should
demand more than a dollar back. He opined that the state
should have a complete picture before making a decision on
this legislation. He furthered that a complete audit should
be done on Alaska's Clear and Equitable Share (ACES), as
well as a complete assessment of what oil resources Alaska
had. He observed that the state should know what it was
working with in order to plan out its long-term future and
make informed decisions. He expressed appreciation for what
oil had done for Alaska and pointed out that he did not
fault anyone for advocating for the bill. He stated that it
was an oil company's job to maximize its profits in Alaska;
likewise, it was Alaska's job to keep in mind the best
interests of the whole state. He offered that SB 21 had
been rushed and that the state should take its time to
examine the details of the legislation. He concluded that
Alaska needed to diversify its economy.
5:03:39 PM
JUDY PATRICK, SELF, WASSILA (via teleconference), spoke in
support of SB 21 and offered that the state could not
continue with Alaska's Clear and Equitable Share (ACES).
She stated that the goal was more oil in the pipeline,
which would not happen with the state's punitive tax
structure. She opined that the state could not wait for
another legislative session to take action and that new
projects took a long time to sanction. She agreed with the
governor's proposed changes and preferred that
progressivity be removed from SB 21. She concluded that
ACES was not working and encouraged the committee to pass
legislation in the current session.
5:05:22 PM
LAURA FAGNANI, SELF, ANCHORAGE (via teleconference),
testified in support of SB 21. She related that oil
production levels were directly tied to well-paying jobs in
the oil and gas industry. She pointed out that almost all
of the state's revenues were tied to oil production;
similarly, her employees' futures were tied to production
levels in the pipeline. She stated that her company was
indirectly reliant on the oil and gas industry. She pointed
out that her company received most of its revenue from the
oil and gas industry and that the decisions the committee
made affected her employees and people across the state.
She observed that she operated in a very competitive market
place and discussed the nature of staying competitive in
business in relation to Alaska's oil issue. She stated that
Alaska had a "pricing" problem and that changing ACES was a
step in the right direction to increasing production. She
opined that Alaska had lost its competitive position in a
global playing field and that the state's future relied on
taking action now.
5:08:05 PM
MARLEANNA HALL, SELF, ANCHORAGE (via teleconference), spoke
in support of SB 21, but related that it was not enough.
She discussed her education in Alaska. She related that her
son was currently in public school, which was being
subsidized by the taxes paid by the oil industry and
pointed out that his future education would be paid for the
Permanent Fund Dividend, which was a royalty from oil
production. She urged the committed to end progressivity
and asked them to encourage investment in the future
development of Alaska's natural resources. She concluded
that the Alaska needed to keep the locally owned businesses
open and expressed that the state needed to consider the
long-term over the short-term.
5:09:24 PM
PHILLIS SPENCER-BELZ, SELF, ANCHORAGE (via teleconference),
expressed that the oil belonged to the Inupiat people. She
related that she was Inupiat and was a member of the Tribe
of Barrow. She pointed out that her tribe had been in the
region far longer than statehood or oil production but
received very little money from the oil. She pointed out
that her tribe did receive money from one oil field;
however, they had to give 70 percent of the revenue from
that field to other native corporations. She pointed out
that the corporations her tribe gave oil revenue to did not
give shares to their children, take care of their elders,
and did not have jobs. She discussed the Native homeless
situation in Anchorage and related that there were too may
dead, homeless Natives who had no disability or dividends.
She stated that Alaska's oil came from Inupiat land and
that if her tribe had to give 70 percent of its oil revenue
to other corporations, the current Native homeless
situation should not exist. She observed that three of the
Native corporations in Alaska were the largest private land
owners in the nation. She relayed that she was for oil
production if it was fair, but opined that it was currently
not fair. She explained that the oil was from the Inupiat
Tribal Region and was not from the other tribal regions.
She offered that Alaska did not enforce the Indian Child
Welfare Act and stated that there were a lot of low quality
schools. She stated that there was a lack of Native hires,
Native job training, and Native job respect. She expressed
dismay at the treatment of Natives in Alaska. She recalled
how Alaska Natives had been forced into boarding schools
and that in the schools, the students were forced into
sexual slavery, forced to speak English, and endured a
number of abuses. She offered that Natives had been taken
away from their tribes, cultures, and parents and opined
that the generational abuse had gone on to create people
that did not know how to manage their own tribes properly.
She concluded that without the Arctic Slope Regional
Corporation, there would be no oil development in Alaska.
5:13:47 PM
Vice-Chair Fairclough CLOSED public testimony.
5:14:04 PM
Senator Bishop expressed appreciation to the testifiers. He
acknowledged that most people agreed that something needed
to be done, but that some thought ACES was currently
working. He discussed the need to diversify Alaska's
economy and noted that the comments of testifiers were
taken to heart.
5:14:58 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 21 Letter Opposition - Westgard.pdf |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| SB 21 Opposition - Ron Johnson.pdf |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| SB 21 Opposition Letter - Veh.pdf |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| SB 21 Sykes Testimony Slide Rick Harper HB110 presentation 032411-AOGA-OCS.pdf |
SFIN 3/6/2013 3:00:00 PM |
HB 110 SB 21 |
| SB 21 Opposition Testimony of Andrew M.docx |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| Sb 21 Letter of Opposition Tengs.pdf |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| SB 21 Support Letter - Osowski.msg |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |
| SB 21 Letter of Support Stokes.docx |
SFIN 3/6/2013 3:00:00 PM |
SB 21 |