Legislature(2017 - 2018)HOUSE FINANCE 519

03/23/2017 01:30 PM FINANCE

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01:33:42 PM Start
01:34:33 PM HB111
03:58:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 23, 2017                                                                                            
                         1:33 p.m.                                                                                              
1:33:42 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster called the House Finance Committee meeting                                                                      
to order at 1:33 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Steve Thompson                                                                                                   
ALSO PRESENT                                                                                                                  
Rich Ruggiero, Consultant, Castle Gap Advisors, LLC;                                                                            
Christina Ruggiero, Consultant, Castle Gap Advisors, LLC;                                                                       
Representative Jennifer Johnston.                                                                                               
HB 111    OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS                                                                             
          HB 111 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair Foster addressed the meeting agenda.                                                                                   
HOUSE BILL NO. 111                                                                                                            
     "An Act  relating to  the oil  and gas  production tax,                                                                    
     tax  payments,   and  credits;  relating   to  interest                                                                    
     applicable to  delinquent oil  and gas  production tax;                                                                    
     and providing for an effective date."                                                                                      
1:34:33 PM                                                                                                                    
RICH  RUGGIERO,   CONSULTANT,  CASTLE  GAP   ADVISORS,  LLC,                                                                    
introduced himself.                                                                                                             
CHRISTINA  RUGGIERO, CONSULTANT,  CASTLE GAP  ADVISORS, LLC,                                                                    
introduced herself.                                                                                                             
Mr.  Ruggiero  provided  a  PowerPoint  presentation  titled                                                                    
"Petroleum Fiscal Design HB 111"  dated March 23, 2017 (copy                                                                    
on   file).  He   addressed  slide   2   and  reviewed   the                                                                    
presentation   agenda.   He    intended   to   address   his                                                                    
professional  background, oil  patch stage  setting concepts                                                                    
pertaining  to  fiscal taxation,  and  to  provide time  for                                                                    
questions.  He planned  to  address  interactive Castle  Gap                                                                    
models the following day. He shared  that he had 40 years of                                                                    
energy industry experience.  He characterized his experience                                                                    
as a three-legged  stool. He had two decades with  big oil -                                                                    
running operations  and commercial and big  projects. He had                                                                    
spent  a  decade  helping  to  run  a  consultancy  and  had                                                                    
primarily provided  sovereign advice for  governments around                                                                    
the  world.  He  continued  that the  consultancy  had  been                                                                    
purchased  and he  had  then  served as  an  executive at  a                                                                    
service company.                                                                                                                
Mr. Ruggiero reported  that he had gained  a new perspective                                                                    
on the  business while working  for the service  company. He                                                                    
referenced  that  the state  was  dealing  with credits.  He                                                                    
relayed  that  the  service   company  had  gotten  involved                                                                    
because it  was an  unpaid creditor in  a couple  of company                                                                    
bankruptcies in Alaska. The big  issue was where the credits                                                                    
went - to  the companies' financier or the trade  - when the                                                                    
companies got paid the credits.  Most of the credits had not                                                                    
gone to the trade.                                                                                                              
Mr. Ruggiero  addressed his fiscal background.  He shared he                                                                    
had been  involved with  designing or  redesigning petroleum                                                                    
fiscal   systems    for   multiple    countries   (including                                                                    
legislation, regulation, and  associated contracts involving                                                                    
license  rounds  (seismic)  to get  maximum  value  for  the                                                                    
government).  He  had  worked with  new  emerging  countries                                                                    
including East Timor  in 2002 - at the time  the country had                                                                    
no prior energy development  or experience. Additionally, he                                                                    
had worked on foreign company  re-entry for Saudi Arabia and                                                                    
Kuwait  -  two of  the  more  sophisticated players  in  the                                                                    
business.  He noted  that  working with  a  wide variety  of                                                                    
clientele required  a broad toolbox.  As an operator  he had                                                                    
spent substantial  time testifying to bodies  like the House                                                                    
Finance Committee  with respect  to competition,  opening of                                                                    
markets,  and fair  third-party access  to pipelines  in the                                                                    
U.S. and Europe.                                                                                                                
1:39:46 PM                                                                                                                    
Mr.  Ruggiero  continued that  he  had  been on  both  sides                                                                    
(governments and  companies) of the table  negotiating large                                                                    
contracts. He  briefly highlighted slides  5 and 6.  Slide 6                                                                    
showed a range of consulting  clients he had worked with and                                                                    
the associated scope of work  provided. He turned to slide 7                                                                    
and discussed his current role  in Alaska. He had been hired                                                                    
by  Legislative   Budget  and  Audit  (LB&A)   to  help  the                                                                    
legislature make  needed decisions, to analyze  proposed oil                                                                    
and  gas legislation  (HB 111),  and to  provide advice  and                                                                    
recommendations. He  credited the House  Resources Committee                                                                    
for allowing  him to share what  he did and did  not believe                                                                    
in. He  noted that based  on a  variety of reasons  valid to                                                                    
the legislature,  many times legislators did  not agree with                                                                    
his  recommendations,  which was  fine.  Based  on what  the                                                                    
legislature  decided, his  job  was  to highlight  potential                                                                    
pros and  cons for  consideration when  forming legislation.                                                                    
He  did not  advocate  for one  side or  the  other; he  was                                                                    
merely bringing experience to the  table for the legislature                                                                    
to consider.                                                                                                                    
1:41:59 PM                                                                                                                    
Representative  Wilson appreciated  Mr. Ruggiero's  analysis                                                                    
on HB  111 and she asked  if he had spent  time analyzing SB
21 and other  to determine how it had met  the state's goals                                                                    
and how HB 111 may or may not fit into proposed changes.                                                                        
Mr.  Ruggiero answered  that he  had  worked extensively  on                                                                    
Alaska's  Clear  and  Equitable   Share  (ACES),  which  had                                                                    
required reading and  understanding the Petroleum Production                                                                    
Tax (PPT) and  the Economic Limit Factor  (ELF) tax systems.                                                                    
Following those  systems there  had been  work putting  in a                                                                    
step progressivity instead of  continuous, which he had been                                                                    
involved  with. He  spoke to  the Alaska  Gasline Inducement                                                                    
Act (AGIA)  and the gas  line discussion and relayed  he had                                                                    
missed SB 21, but he had reviewed  much of the work on SB 21                                                                    
and HB 247 [from the prior year].                                                                                               
1:43:26 PM                                                                                                                    
Co-Chair Seaton  noted Representative Jennifer  Johnston was                                                                    
in the audience.                                                                                                                
Mr.  Ruggiero moved  to slide  9  and addressed  how he  saw                                                                    
Alaska's  priorities.  He   detailed  there  were  long-term                                                                    
drivers and  short-term drivers that needed  to be balanced.                                                                    
Long-term  drivers   included  gas  for   Southcentral  (for                                                                    
heating, industry,  and utility),  more from  legacy fields,                                                                    
and  the  development of  new  big  North Slope  fields.  In                                                                    
recent years  there had been  testimony that with  the right                                                                    
investment and incentives there  was several billion barrels                                                                    
remaining in  legacy oil  fields. He  stated that  the long-                                                                    
term  drivers were  balanced against  the state's  financial                                                                    
shortfall. Alaska  was a government with  high dependency on                                                                    
oil-based revenues.                                                                                                             
Mr. Ruggiero  addressed his recommendations on  slide 10. He                                                                    
had  presented  a model  in  the  House Resources  Committee                                                                    
showing  a stepped  total net  system, which  would make  it                                                                    
possible  to  eliminate  90  percent  of  the  gas  taxation                                                                    
language in  the current legislation;  it would  deliver the                                                                    
same results  in terms of  the net tax  paid by a  player at                                                                    
given  price  at a  given  production  tax value  (PTV).  He                                                                    
furthered  that  removing  all the  different  levels  would                                                                    
simplify  and  would remove  many  of  the issues  involving                                                                    
audits  and   the  time   it  took   to  get   things  done.                                                                    
Simplification would  make it easier  for everyone  to model                                                                    
and understand whether  they wanted to invest  in Alaska and                                                                    
by how much.                                                                                                                    
Mr. Ruggiero  discussed simplification  of the  multitude of                                                                    
special terms  in the current  legislation. He  listed terms                                                                    
including special  Cook Inlet, Middle Earth,  and oil versus                                                                    
gas  in-state versus  gas  going  out-of-state. He  remarked                                                                    
that  the   distinctions  had  been  included   because  the                                                                    
legislation had  relative values,  or it had  been discussed                                                                    
that something remaining  in-state may have more  or less in                                                                    
value than something going out-of-state.  If the state had a                                                                    
system  based  on  unit  profit, it  was  not  necessary  to                                                                    
include all  the different exceptions  or conditions  in the                                                                    
Mr. Ruggiero  addressed that to achieve  the state's desired                                                                    
objectives  (much more  oil on  the North  Slope that  would                                                                    
continue  to keep  the Trans-Alaska  Pipeline System  (TAPS)                                                                    
above its minimum operating limit),  oil companies should be                                                                    
allowed  to  recover 100  percent  of  their costs  and  net                                                                    
operating losses (NOLs).  He remarked he had  been quoted as                                                                    
saying  it  would  move  the  state to  the  bottom  of  the                                                                    
rankings  if  it  did  not   allow  the  cost  recovery.  He                                                                    
confirmed his belief  that it would move the  state close to                                                                    
the bottom of the list of comparative systems.                                                                                  
1:47:30 PM                                                                                                                    
Mr.  Ruggiero  clarified  that   in  most  tax  and  royalty                                                                    
systems, costs became  a deduction, much like  interest on a                                                                    
home mortgage.  It was  possible to  deduct the  amount paid                                                                    
and it  saved a company from  paying tax on the  amount. For                                                                    
example,  if someone  was in  a 25  percent bracket  and had                                                                    
$1,000 of  mortgage interest, the  deduction would  save the                                                                    
person $250 in  tax. In production sharing  contracts it was                                                                    
a  full  recovery of  the  amount,  not  a deduction.  In  a                                                                    
production sharing  contract, if  there was $1,000  in cost,                                                                    
the entity  could recover  the $1,000  of income  before any                                                                    
tax was  assessed. He  relayed it was  the reason  there was                                                                    
substantial investment in countries  with marginal tax rates                                                                    
greater than  Alaska - the countries  allowed full recovery.                                                                    
He explained  that options  included full  recovery, partial                                                                    
deduction, and no deduction. It  took an entity from the top                                                                    
of class to the bottom of class.                                                                                                
Mr. Ruggiero  explained that every  regime he had  worked in                                                                    
either allowed companies to deduct  or recover all the costs                                                                    
spent  on  developing  the  oil   and  gas.  He  recommended                                                                    
eliminating  all  cashable  credits except  for  the  failed                                                                    
explorers. If  the state was giving  companies incentives to                                                                    
invest in  Alaska, the incentive  was to get  to development                                                                    
and  get  into  production.  By making  it  deductible  only                                                                    
against  the  income  from  produced  barrels,  it  provided                                                                    
motivation to get production underway as soon as possible.                                                                      
1:49:58 PM                                                                                                                    
Representative  Ortiz  observed  the option  recommended  on                                                                    
slide 10  was clear  and would be  simpler for  everyone. He                                                                    
wondered what  would prevent the state  from simply choosing                                                                    
that route.                                                                                                                     
Mr. Ruggiero  responded that there  was not always  the will                                                                    
of the two legislative bodies  to make something happen. The                                                                    
issue came down  to what there was support for  and what the                                                                    
legislature  could  get  done.  He stated  that  like  every                                                                    
system he  had worked with,  at any point  in time it  was a                                                                    
combination of what had all  been good decisions at the time                                                                    
they  had been  made. After  being out  of Alaska  for about                                                                    
four or  five years, he had  not seen it for  the individual                                                                    
things he  had helped  work on,  but as  a whole.  He stated                                                                    
that the whole looked very  messy and confusing. He referred                                                                    
to various items  in the bill including  per barrel credits,                                                                    
the  gross value  reduction (GVR),  the hard  floor or  soft                                                                    
floor, and other. He had observed  there had to be a simpler                                                                    
way. If  there was  the legislative  will to  do it  and the                                                                    
time to do it in, there  was a solution that eliminated many                                                                    
of the little "one offs."                                                                                                       
Mr. Ruggiero  provided scenario where  there were  two items                                                                    
in HB  111 and the  legislature could  elect to do  option A                                                                    
but  not option  B;  however,  option B  had  been based  on                                                                    
moving  forward  with  both options.  Therefore,  it  became                                                                    
necessary to go back to fix  option A to ensure it accounted                                                                    
for the  fact that option B  had not been included.  He used                                                                    
the carnival game "whack-a-mole" as  an example - every time                                                                    
one issue was solved, two  more popped up. He explained that                                                                    
was  what took  place  with  a system  with  so many  moving                                                                    
1:52:28 PM                                                                                                                    
Representative Guttenberg  stated that some people  tried to                                                                    
convince  legislators  that  every  decision it  made  on  a                                                                    
project,  tax base,  or other,  would  determine the  entire                                                                    
outcome  of a  company's  project down  the  road. Over  the                                                                    
years he had  heard that it was just one  factor when people                                                                    
went into the board room to  try to sell a project. He spoke                                                                    
about  high prices,  need for  production, the  economy, and                                                                    
Alaska's  own set  of variables.  He  asked about  important                                                                    
factors  for organizations  making decisions  on whether  to                                                                    
invest in a location.                                                                                                           
Mr.  Ruggiero shared  his personal  experience taking  large                                                                    
projects to  the board of  a company  had had worked  for in                                                                    
the  past.  He  explained  that   the  tax  system  was  one                                                                    
component.  But there  were  also  various associated  risks                                                                    
that the  company would  consider how  to mitigate.  In some                                                                    
regimes or locations  it was very difficult  or not possible                                                                    
to  mitigate   certain  things.   The  company   would  also                                                                    
determine how  the investment  fit into  the diversification                                                                    
of  its desired  portfolio. Many  companies published  their                                                                    
target  of  investment  in  long-term  projects,  short-term                                                                    
projects, and  midstream or  downstream projects.  There was                                                                    
never just one  factor, it was a combination  of factors. He                                                                    
referred to the fable the  Princess and the Pea. He detailed                                                                    
that certain  things had bothered  a management team  to the                                                                    
point where very good projects  had not been done because of                                                                    
that  one little  "pea  under the  mattress."  He could  not                                                                    
specify what  the issue would  be for any  company; however,                                                                    
there  would  be  certain  things  that  merely  bothered  a                                                                    
management team  looking to make  the decision to  invest or                                                                    
Representative  Grenn asked  Mr. Ruggiero  to address  where                                                                    
the bill put Alaska on  the competitive spectrum and how the                                                                    
state compared to other locations.                                                                                              
1:55:58 PM                                                                                                                    
Mr. Ruggiero  answered the presentation contained  a section                                                                    
related  to the  traditional comparative  studies that  were                                                                    
Vice-Chair  Gara stated  he would  be amenable  to rewriting                                                                    
the law along  the lines Mr. Ruggiero  had addressed earlier                                                                    
in  the  meeting.  However, he  recognized  the  legislative                                                                    
reality that it  was possible to make some  changes that fit                                                                    
within  people's  willingness  and  some that  did  not.  He                                                                    
assumed it  would not be possible  to do a new  rewrite that                                                                    
increased  the  tax  rate based  on  company  profitability.                                                                    
Currently oil prices were low,  and he was not interested in                                                                    
making big tax changes when  companies were operating in the                                                                    
red.  He asked  how Mr.  Ruggiero  would view  a proxy  that                                                                    
raised  the  gross tax  rate  slightly  at price  points  as                                                                    
company profitability increased. He  noted that according to                                                                    
the  Department  of Revenue  (DOR),  the  average field  was                                                                    
profitable  at about  $41 to  $42  per barrel  on the  North                                                                    
Slope.  The  tax  rate  would  be  5  [percent]  at  $50,  6                                                                    
[percent] at  $56, and  7 [percent]  at $62  - it  would let                                                                    
companies take  in extra money,  but would give the  state a                                                                    
share at the low prices.                                                                                                        
Mr.  Ruggiero replied  that the  first question  that needed                                                                    
answering  was  whether they  were  talking  about the  hard                                                                    
floor. He referred to Vice-Chair  Gara's suggestion of going                                                                    
from 4  to 5  [percent] at  a price  point and  from 5  to 6                                                                    
[percent]  at  a  price  point. He  stated  that  1  percent                                                                    
increments  would  be a  20  to  25  percent growth  in  the                                                                    
minimum  tax,   but  when  compared  to   a  company's  cost                                                                    
structure, the percentage  would be around 1  percent of the                                                                    
company's operating  cost, which  was not  that big.  If the                                                                    
conversation  was  merely about  the  increment  it was  one                                                                    
thing,  but  if the  conversation  was  about hardening  the                                                                    
floor and raising the tax,  it became a fairly large number.                                                                    
Individual  projects  would  impact  them  differently.  For                                                                    
example,  a  larger project  with  a  low  unit cost  and  a                                                                    
relatively low  tariff would  not be  significantly impacted                                                                    
because  the  net  tax  would  be  greater  than  the  gross                                                                    
minimum.  Alternatively,  new   or  high-cost  fields  would                                                                    
probably  be impacted  much more  significantly. The  change                                                                    
would be much  more onerous to companies at the  high end of                                                                    
the cost spectrum.                                                                                                              
1:59:12 PM                                                                                                                    
Vice-Chair Gara spoke  to the three percentage  points for a                                                                    
high-cost  field,  which  could   be  eligible  for  royalty                                                                    
relief. He wondered how it would impact the analysis.                                                                           
Mr.  Ruggiero answered  that if  the legislature  decided to                                                                    
increase  the  gross  minimum, fields  that  were  adversely                                                                    
impacted  would  have  the  ability  to  apply  for  royalty                                                                    
relief. Raising the  tax by up to three points  was the same                                                                    
as  raising  the company's  royalty  by  that much.  If  the                                                                    
increase was  enough to extremely  and adversely  impact the                                                                    
economics  of  an  operator, they  could  always  apply  for                                                                    
royalty  relief with  the  Department  of Natural  Resources                                                                    
(DNR).  That  way, instead  of  trying  to pick  and  choose                                                                    
language to fit everyone in  the state, it would be possible                                                                    
to pick  and choose  what the legislature  chose to  vote on                                                                    
and pass forward; if there  was an outlier that was impacted                                                                    
they could apply for relief under royalty relief.                                                                               
2:00:38 PM                                                                                                                    
Representative Wilson  asked if  all fields  were profitable                                                                    
at prices of  $42 per barrel. She noted that  each field was                                                                    
different  and  had  different  oil. She  asked  if  it  was                                                                    
possible to  specify that  a certain  price would  always be                                                                    
Mr. Ruggiero answered that all  fields were profitable at an                                                                    
oil price  of $200 per barrel;  however, at a $42  price, he                                                                    
had  no idea  which fields  were profitable  and which  were                                                                    
Mr. Ruggiero moved to slide  12 titled "Philosophy of Fiscal                                                                    
Design."  The slide  included a  chart showing  a breakdown,                                                                    
split 1  and split 2.  The gray bar  on the left  showed the                                                                    
various components that went into  the determination of what                                                                    
each  player  in  the  system   got  -  it  began  with  the                                                                    
exploration  and   finding  costs   and  moved   up  through                                                                    
operations and  cost of capital.  The gray bar  included the                                                                    
various components  that nonproducer  entities took  such as                                                                    
royalty,  corporate taxes,  petroleum taxes,  and other.  He                                                                    
pointed  to "split  1" and  explained that  everything below                                                                    
the  red line  pertained to  producers (shown  in blue)  and                                                                    
everything  above   pertained  to  nonproducers   (shown  in                                                                    
green).  The bar  also included  a piece  pertaining to  the                                                                    
return on  capital. He  noted that  what constituted  a fair                                                                    
return on  capital was  subject to  a spectrum  of differing                                                                    
views.  He  pointed to  "split  2"  and specified  that  the                                                                    
yellow  portion  represented  the   recovery  of  cost,  the                                                                    
remainder was  the profit  oil (shown in  red); there  was a                                                                    
split on  profit. The profit  oil was generally more  on the                                                                    
nonproducer  side  versus  the   producer  side,  which  was                                                                    
reflective of almost every jurisdiction worldwide.                                                                              
Mr.  Ruggiero   relayed  that   the  internal   capital  was                                                                    
sometimes  called  the internal  rate  of  return (IRR).  He                                                                    
advanced to slide  13 and addressed what  constituted a fair                                                                    
split  of  profit from  the  perspective  of a  company.  He                                                                    
explained it  was necessary for  a company to get  back what                                                                    
it  spent on  a project.  There were  generally extras  that                                                                    
went  into the  consideration  of the  desired IRR.  Factors                                                                    
included  the location  or  situational  risk (e.g.  whether                                                                    
there were hostilities  staff had to deal with, if  it was a                                                                    
country that  was easy  to get  goods into  and out  of, and                                                                    
other).  Certain  companies  would have  risk  premiums  for                                                                    
different  locales   of  the   world.  Another   factor  was                                                                    
exploration  success.  He  remarked that  producers  had  to                                                                    
account for  the fact that it  may have taken three  or four                                                                    
exploration plays to  be successful; the dry  hole costs had                                                                    
to be  paid for somewhere.  The company had to  generate the                                                                    
capital  to continue  to explore.  Additionally, there  were                                                                    
research and development costs for  new technology. He noted                                                                    
that over  half the oil  currently produced in the  Lower 48                                                                    
was due to technology that did not exist in 2000.                                                                               
Mr.  Ruggiero stated  that one  of the  biggest factors  was                                                                    
what constituted  a non-allowed  expense. He  specified that                                                                    
the  idea   that  expenses  could  either   be  deducted  or                                                                    
recovered   was  not   universal;   different  regimes   put                                                                    
different limits on what  constituted a recoverable expense.                                                                    
He elaborated  that in some  places the  exploration counted                                                                    
and  in  other places  only  development  counted; and  some                                                                    
places  allowed  writing  off  abandonment  and  carry  back                                                                    
costs, while other places did  not. He spoke about the break                                                                    
between  direct and  indirect  costs (what  was  out in  the                                                                    
field  versus  what   may  be  in  an   office).  All  those                                                                    
components were factored into what  an oil company estimated                                                                    
a fair  IRR to be; it  was necessary to make  enough to keep                                                                    
growing and be profitable.                                                                                                      
Mr. Ruggiero relayed that companies  he had worked with that                                                                    
were new  to energy wanted  the money right away  and wanted                                                                    
to  put people  to  work.  He continued  it  really did  not                                                                    
matter  if   the  company  was   merely  running   the  food                                                                    
concession outside the  workplace - it was  something and it                                                                    
was more  than the company  had at present.  Those companies                                                                    
generally  approached the  workings of  their fiscal  system                                                                    
with  that  type  of  concept   in  mind.  More  experienced                                                                    
companies were  focused on how  to maintain constant  work -                                                                    
continued  rigs   running  and  fields   under  development.                                                                    
Periods of high activity and  low activity were not good for                                                                    
economies.  More  experienced  companies  also  became  more                                                                    
interested  in multigenerational  wealth  and growth.  Local                                                                    
content had migrated to local  ownership - in many countries                                                                    
instead of the  requirement for 10 percent to  be spent with                                                                    
local  companies,  it  had  become required  to  have  a  10                                                                    
percent local company as a partner.                                                                                             
2:07:48 PM                                                                                                                    
Mr. Ruggiero continued  to address slide 13.  He referred to                                                                    
his  prior  example  of  a company  running  a  food  vendor                                                                    
outside the workplace  - it had been a  LNG Trinidad project                                                                    
he  had been  involved with  as part  of Amoco.  At present,                                                                    
Trinidad  had  advanced as  a  country  that built  offshore                                                                    
platforms.  In the  past  the company  had  been worried  it                                                                    
would  not  find  enough  tradespeople  to  meet  the  local                                                                    
content rules. As governments  found themselves on different                                                                    
spots on the  spectrum, the idea of what  constituted a fair                                                                    
return for the company and the government changed.                                                                              
Mr.  Ruggiero addressed  slide 14  titled "The  100,000 Foot                                                                    
Overview"  pertaining to  the  oil  business worldwide.  The                                                                    
only constant in the oil patch  was change. He shared he was                                                                    
in the fifth  down cycle of his career in  the oil patch. He                                                                    
explained that  the industry changed  based on the  price of                                                                    
its commodity and the amount  of work occurring at any given                                                                    
time. He explained that downturns  were good because changes                                                                    
in  technology  occurred  during   those  times,  which  had                                                                    
allowed  the  oil  patch  to  emerge and  grow  out  of  the                                                                    
downturn even  during low  prices. There  would be  times of                                                                    
low and  high prices in  the future. He urged  the committee                                                                    
to not tie anything to one  specific view of what the future                                                                    
would be. He guaranteed the  idea would be wrong. Change did                                                                    
not necessarily  mean instability,  but change in  the wrong                                                                    
direction  did.  He addressed  the  right  versus the  wrong                                                                    
direction.  He  believed  the  legislature  had  heard  from                                                                    
companies  about   what  currently  constituted   the  wrong                                                                    
direction. As a government, he  believed the state needed to                                                                    
decide  on its  needs as  well and  what sort  of change  it                                                                    
wanted. He  stated that fiscal  systems built  for predicted                                                                    
future outcomes  failed sooner  or later.  Alternatively, it                                                                    
led  to situations  that were  not  intended or  considered,                                                                    
which  could result  in someone  getting too  little or  too                                                                    
much, meaning adjustments were necessary.                                                                                       
Mr.  Ruggiero   continued  that   the  new  trend   and  his                                                                    
recommendation  was   that  something  based  on   net  unit                                                                    
profitability  could be  self-correcting. Wherever  triggers                                                                    
were set could  be set to self-correct so  when profits went                                                                    
lower the system  would correct one way and  if profits went                                                                    
high it  would correct  another way. If  the terms  were set                                                                    
accurately,  it would  provide  a  durable long-term  system                                                                    
that could  accomplish the desired outcomes.  He cautioned a                                                                    
myopic view related to the  present problem, which could put                                                                    
future long-term  goals at risk. He  underscored finding the                                                                    
right balance.                                                                                                                  
2:12:21 PM                                                                                                                    
Mr. Ruggiero advanced  to slide 15 and provided  a DOR table                                                                    
as an example of Alaska change.  He noted the table had been                                                                    
provided by DOR to the  House Resources Committee. The table                                                                    
included  data for  2007 to  2016 and  the per  barrel costs                                                                    
were highlighted in red, which had  gone from $17 up to over                                                                    
$40 and  back down as costs  had come down. To  the right of                                                                    
the  table he  had added  when various  oil legislation  had                                                                    
passed.  During the  time of  Alaska's  Clear and  Equitable                                                                    
Share  (ACES) and  PPT,  people  had said  that  at $30  per                                                                    
barrel  progressivity  started,  but  he noted  it  was  not                                                                    
accurate. He elaborated  that ACES had been  based on profit                                                                    
per barrel,  not price. All  the thinking and work  that had                                                                    
followed in  subsequent sessions and bills  treated things a                                                                    
bit  differently.  Things  were  run based  on  the  assumed                                                                    
profitability at a point in time  and price, but as the cost                                                                    
structures went  up and down, profitability  changed at that                                                                    
price. For example,  if in 2007 oil prices had  been $60 per                                                                    
barrel  with almost  $40 in  profit, the  $60 per  barrel in                                                                    
2015  only had  $20 in  profit per  barrel. There  were very                                                                    
different situations  when firm  taxes were  set at  a price                                                                    
instead of profitability.  One thing that may  make sense at                                                                    
a $40  profit did not  make the  same sense when  making $20                                                                    
profit at a $60 price of  oil. He stressed the importance of                                                                    
ensuring  underlying parameters  and assumptions  could move                                                                    
when setting a mechanism based on a set of circumstances.                                                                       
2:14:52 PM                                                                                                                    
Vice-Chair Gara addressed that not  all fields were the same                                                                    
- not  every field on the  North Slope was profitable  at an                                                                    
oil price of  $41 per barrel (some were  profitable at lower                                                                    
prices, while  others were profitable at  higher prices). He                                                                    
noted that $41 had been  DOR's average estimate. He spoke to                                                                    
royalty relief in Alaska - not  all fields were the same and                                                                    
outlier  fields could  see their  royalty reduced.  He asked                                                                    
how much the state could  reduce a company's royalty and how                                                                    
effective it  may be.  He surmised  that the  tax had  to be                                                                    
somewhat the same for fields,  but royalty relief provided a                                                                    
relief mechanism. He asked for detail.                                                                                          
Mr. Ruggiero  understood that the state  had royalty ranging                                                                    
from 12-plus  percent to 16-plus  percent. New  fields could                                                                    
get  relief down  to 5  percent -  7 to  11 percent  royalty                                                                    
relief could be granted. He noted  it was the same as saying                                                                    
7 to  11 percent gross  tax. He believed mature  fields were                                                                    
allowed to go  down to 3 percent. He noted  that many things                                                                    
presented to  the legislature always used  averages. Looking                                                                    
at the average  did not consider the two  extremes on either                                                                    
end and whether  the standard deviation was  small or large.                                                                    
He stated  that building to  averages became a  problem, but                                                                    
as a legislature that was  all it had; therefore, terms were                                                                    
built on  averages. If terms  did not work for  an operator,                                                                    
it had the ability to apply for royalty relief.                                                                                 
Vice-Chair  Gara believed  it allowed  for developing  a tax                                                                    
system  a government  believed was  fair and  if the  system                                                                    
overshot  on one  field,  a company  was able  get  7 to  13                                                                    
percent royalty relief.  He asked about the  accuracy of his                                                                    
Mr. Ruggiero replied it sounded right.                                                                                          
2:17:56 PM                                                                                                                    
Representative Wilson  remarked on  varying prices  over the                                                                    
years  and how  some fields  had  peaked and  gone down  and                                                                    
others  were  peaking at  present.  She  observed they  were                                                                    
trying to have  a one-size-fits-all tax regime.  When it did                                                                    
not fit  all, the  state tried  options like  royalty relief                                                                    
and tax  credit incentives.  She thought the  bigger picture                                                                    
was trying to  fix a tax regime. She believed  the issue was                                                                    
that one size did not fit  all. She referred to slide 15 and                                                                    
noted that  the table showed  the barrels but not  the price                                                                    
or what  fields tried  to come online  and what  their costs                                                                    
were compared to legacy fields.  She asked what specifically                                                                    
the committee should glean from the table.                                                                                      
Mr.  Ruggiero made  clarifying remarks  about  the table  on                                                                    
slide 15.  He wanted members to  take away that if  a regime                                                                    
chose to set  a mechanism in its petroleum  fiscal policy at                                                                    
$80  per  barrel -  at  the  time  the  amount was  set  the                                                                    
government had  a view  of what  $80 per  barrel represented                                                                    
(i.e.  an amount  of profit  or  activity) -  three or  four                                                                    
years  down the  road most  of the  original assumptions  no                                                                    
longer held at a price of  $80 per barrel. He furthered that                                                                    
assumptions  may hold  at $98  or $110  per barrel  instead.                                                                    
However, legislation tied to a  specific price as opposed to                                                                    
the concept the  state was trying to achieve  meant that the                                                                    
legislation did  not move with  changes in the  industry. He                                                                    
continued that costs would  change, unit profitability would                                                                    
change,  different fields  would  be discovered.  He used  a                                                                    
potential unconventional development  by Great Bear compared                                                                    
to a  standard development  by ConocoPhillips or  Caelus. He                                                                    
stated it  was the  things that were  not considered  at the                                                                    
time something was fixed at  a price. He recommended against                                                                    
fixing  on  a price,  but  fixing  on  a concept  like  unit                                                                    
profitability  where regardless  when underlying  parameters                                                                    
changed, whether $10 per barrel was  made at an oil price of                                                                    
$100 per  barrel or $10 per  barrel at an oil  price of $40,                                                                    
the profit was still $10 per barrel.                                                                                            
Representative  Wilson  believed  trying  to  fix  an  issue                                                                    
because of a  fiscal gap was the wrong reason  to change the                                                                    
oil  tax  structure  compared  to  what  was  best  for  the                                                                    
industry at the time.                                                                                                           
Mr. Ruggiero  believed it was necessary  to consider whether                                                                    
the current system was good  for the industry - the industry                                                                    
may  say the  current  system  was fine  and  should not  be                                                                    
changed. He thought  it was also necessary  to consider that                                                                    
things at  present were  very different  than they  had been                                                                    
when  the existing  parameters had  been set,  which brought                                                                    
different  results than  anticipated. He  believed that  was                                                                    
the reason for the legislation.                                                                                                 
Representative Wilson  asked if  the legislation  would have                                                                    
been introduced if  the state was not in  the current fiscal                                                                    
2:22:00 PM                                                                                                                    
Mr. Ruggiero replied that he had no idea.                                                                                       
Representative Wilson believed she knew the answer.                                                                             
Mr. Ruggiero  turned to  slide 16  related to  fiscal design                                                                    
takeaways.  He  relayed there  was  no  ideal structure  for                                                                    
taxing oil and gas - if  there was the legislature would not                                                                    
have to  continue to address the  issue and he would  be out                                                                    
of  a job.  Every tax  regime was  unique because  a country                                                                    
always  tweaked general  concepts to  meet its  needs. There                                                                    
were  certain durable  tools that  tended to  work well  and                                                                    
other  things that  came and  went.  He shared  that he  had                                                                    
recently  advised  a  client against  doing  several  things                                                                    
because other  countries had tried  them, and they  had been                                                                    
unsuccessful; it  was possible to benefit  from the mistakes                                                                    
of others.  He reiterated  that countries all  had different                                                                    
internal  drivers   and  reasons   for  doing   something  a                                                                    
particular way.                                                                                                                 
Mr.  Ruggiero  continued  that regimes  generally  tried  to                                                                    
provide  as much  balance as  possible between  existing and                                                                    
new players.  New players always brought  fresh thinking and                                                                    
were positive for incumbents. Regimes  also tried to provide                                                                    
the  right  incentives  to   encourage  new  production  and                                                                    
additional production  from existing fields. Early  on, some                                                                    
conventional fields may have only  produced 20 to 25 percent                                                                    
of the  oil in place  before the  company moved on  and left                                                                    
the  remainder for  someone  else; some  of  those fields  -                                                                    
through new techniques and technology  - were currently over                                                                    
60 percent recovery of the oil in place.                                                                                        
Mr. Ruggiero  addressed the  last bullet  point on  slide 16                                                                    
and relayed that  every system would create  some biases. He                                                                    
detailed  that  companies  would optimize  their  operations                                                                    
within  those biases  to maximize  their  profits. He  noted                                                                    
that people [law makers] may  react to companies' actions by                                                                    
saying "look  what they're doing  to me." He  clarified that                                                                    
the companies  were not  doing anything to  the state  - the                                                                    
state  gave  them a  law  and  they  were getting  the  best                                                                    
benefit for their  shareholders within the law.  He had done                                                                    
the same thing as an operator;  his job had been to maximize                                                                    
the  returns  for  the  company  within  a  country's  legal                                                                    
2:25:50 PM                                                                                                                    
Representative  Pruitt appreciated  the  point. He  believed                                                                    
there was the idea that  the system would be fixed; however,                                                                    
no matter  what was  done, there  would always  be different                                                                    
ways to  analyze things and  a different way that  a company                                                                    
would  use  the  current  structure  to -  do  what  it  was                                                                    
supposed to do - bring  a benefit to shareholders. He stated                                                                    
that  legislators  needed  to   remind  themselves  that  as                                                                    
Alaskans  they were  shareholders. There  was a  substantial                                                                    
amount  invested  in  the   various  companies  through  the                                                                    
Permanent  Fund. There  would  always seem  like there  were                                                                    
loopholes even  if they were  not glaring. He stated  it was                                                                    
the way to handle it with  a very complex tax structure like                                                                    
a net structure with the  various other incentives the state                                                                    
wanted to  bring to  balance. He asked  for the  accuracy of                                                                    
his understanding.                                                                                                              
Mr. Ruggiero  responded that  Representative Pruitt  was not                                                                    
wrong. He  referred to his  past personal objectives  or the                                                                    
objectives  of the  company he  had worked  for and  relayed                                                                    
that  employees had  asked  why they  had  elected option  A                                                                    
versus option  B when they  had been identical.  He answered                                                                    
that option  A had fit  his bonus and  option B had  not. He                                                                    
referenced the  term "punish by  reward" and  explained that                                                                    
everyone would  work to optimize within  whatever system was                                                                    
implemented.  States  built  systems around  the  objectives                                                                    
they  had  and that  they  were  trying to  accomplish.  The                                                                    
takeaway was the state would  do some design based on things                                                                    
that  were important  for Alaska,  which  would create  some                                                                    
biases in  the system. He  hoped to help the  legislature by                                                                    
identifying biases were that were  being created in whatever                                                                    
option  it elected  and whether  the results  were something                                                                    
the  legislature  could live  with  or  to determine  if  an                                                                    
additional change was necessary.                                                                                                
2:28:30 PM                                                                                                                    
Mr.  Ruggiero  advanced  to  slide   17  and  addressed  why                                                                    
companies invested in high take regimes.                                                                                        
     Great Rock                                                                                                                 
       ·   Size of potential reservoirs and projects                                                                            
        ·   Economies of scale                                                                                                  
        ·   Degree of control                                                                                                   
        ·   Project Management                                                                                                  
     Shape of the production curve                                                                                              
        ·   i.e. slow declines, long life                                                                                       
     "Durable" terms                                                                                                            
    Incentives that mitigate or minimize largest risks                                                                          
Mr.  Ruggiero  elaborated on  slide  17.  He explained  that                                                                    
countries with  good rock charged  more than  countries with                                                                    
bad rock.  He continued  that generally good  reservoirs led                                                                    
to  larger  size  project.  Another  factor  was  degree  of                                                                    
control - how  much of the world the  oil company controlled                                                                    
versus how  much a government  agency controlled  in project                                                                    
development and day-to-day operations.  The ability to bring                                                                    
skill  sets and  manage large  and complex  projects to  get                                                                    
maximum  value was  important.  Good rock  also  led to  the                                                                    
shape  of the  production curve.  He stated  that shale  was                                                                    
"hot," but  in the five or  six shale bases in  the U.S., in                                                                    
the first  18 months anywhere from  60 to 80 percent  of the                                                                    
total  hydrocarbon  was  recovered. Whereas,  reservoirs  in                                                                    
countries with  high government take  may last for 40  or 50                                                                    
years -  many fields  found decades  ago had  been producing                                                                    
that long or longer.                                                                                                            
Mr.  Ruggiero  addressed durable  terms  on  slide 17.  Many                                                                    
investments  were  under  contract,  which  made  them  more                                                                    
durable.  There  were  also  places  where  the  regime  had                                                                    
changed  frequently,  but  as  long  as  companies  received                                                                    
better terms when prices were  low and took more when prices                                                                    
were high, the  system was durable and a  bit predictable to                                                                    
the  industry. The  things that  were not  visible were  the                                                                    
number  of  different  incentives that  helped  mitigate  or                                                                    
minimize the largest risks of the project.                                                                                      
2:30:59 PM                                                                                                                    
Vice-Chair   Gara  referred   to  high   take  regimes.   He                                                                    
understood  that  at  high  prices   North  Dakota  was  not                                                                    
considered  a high  take regime,  but  they were  considered                                                                    
high take at current  prices. He relayed that ConocoPhillips                                                                    
had testified the  previous day that it  was still investing                                                                    
in North Dakota. He wondered  how North Dakota's tax related                                                                    
to Alaska's  at the current  price regime. He referred  to a                                                                    
Conoco  report on  profits  - Conoco  was  the only  company                                                                    
investing in  Alaska that reported  its Alaska  profits. The                                                                    
committee had been told the  previous day that Conoco earned                                                                    
roughly a  quarter-billion dollars  in Alaska in  the fourth                                                                    
quarter the previous year and had  not done as well in other                                                                    
locations (it  had lost money  in the Lower 48  and Canada).                                                                    
He  asked if  that said  anything about  Alaska in  terms of                                                                    
competitiveness and  why the company be  investing in places                                                                    
it  was losing  a large  amount of  money. He  believed that                                                                    
with low oil prices in 2015  that Conoco had lost $2 billion                                                                    
in the Lower 48.                                                                                                                
Mr.  Ruggiero  addressed  the question  about  North  Dakota                                                                    
first.  He knew  there  had been  substantial discussion  of                                                                    
comparing  Alaska to  several of  the Lower  48 states.  The                                                                    
reality is that all projects  compete against each other for                                                                    
capital. He explained that companies  broke up their capital                                                                    
into  strategic  buckets.  One   of  the  buckets  for  many                                                                    
companies   included    high-dollar,   high-reserve,   high-                                                                    
production,  long-life fields  with long  lead times,  which                                                                    
was the category Alaska fell  within. There were also quick-                                                                    
in, quick-out, quick-profit fields  onshore in the Lower 48.                                                                    
He did not believe that  overall the onshore Lower 48 fields                                                                    
competed  significantly   with  Alaska  because   they  were                                                                    
different  buckets   of  capital.  He  continued   that  the                                                                    
investments in  Alaska compared  to the  Lower 48  were very                                                                    
different  worlds -  worlds that  both needed  to exist  for                                                                    
companies to have diverse  portfolios. The diversity enabled                                                                    
companies  to  live  through  the  highs  and  lows  of  the                                                                    
Mr.  Ruggiero  continued  to  speak   to  North  Dakota  and                                                                    
specified  there was  a difference  between  legacy and  new                                                                    
leases.  He  estimated  the royalty  on  legacy  leases  was                                                                    
probably  one-eighth  or  12.5  percent  royalty  just  like                                                                    
Alaska. On  top of that  companies paid  10 percent -  an ad                                                                    
valorem and  extraction tax  with a  trigger to  add another                                                                    
0.5  or  1  point.  He  estimated the  gross  tax  would  be                                                                    
approximately 22  percent in North Dakota.  Gross taxes were                                                                    
regressive at low prices - the  share of the oil prices paid                                                                    
in taxes  went way up  or became infinite when  costs exceed                                                                    
"what you're getting  out there" and it went  down as prices                                                                    
went up.                                                                                                                        
Mr.  Ruggiero  stated  that at  present  there  were  people                                                                    
paying as much as $12,000  to $15,000 an acre. He considered                                                                    
160 spacing on  Bakken wells to the  Middle Forks formation,                                                                    
which added  about $2 million  to each 160-acre  section. He                                                                    
added  the  $2 million  to  a  $7  million  well -  a  total                                                                    
investment of $9 million. He  continued that generally about                                                                    
400,000  barrels of  economically recoverable  reserves were                                                                    
generated - at $40 per  barrel, the revenue was $16 million.                                                                    
He factored in the royalty  and severance taxes and noted it                                                                    
became difficult to make money.  He noted that new royalties                                                                    
were  typically in  the  range of  20-plus  percent for  new                                                                    
acreage.  He  combined the  20-plus  percent  royalty, a  10                                                                    
percent severance  (extraction and  ad valorem tax),  and an                                                                    
acreage acquisition charge  became expensive. When comparing                                                                    
two tax  regimes it  was important to  include all  the same                                                                    
items for  each system.  He added  that in  a few  slides he                                                                    
would  discuss a  comparison that  did not  include all  the                                                                    
items needed to compare to regimes.                                                                                             
2:37:15 PM                                                                                                                    
Mr. Ruggiero  addressed the second  portion of  the question                                                                    
related to the profitability  of ConocoPhillips. He remarked                                                                    
that  because  Conoco  reported Alaska  separately,  it  was                                                                    
possible  to see  that the  company had  been profitable  in                                                                    
Alaska.   A  Conoco   representative   had  referenced   the                                                                    
company's  analyst  presentation  the  previous  day,  which                                                                    
included two  slides specific to  Alaska. One of  the slides                                                                    
showed that  in an all-in, all-inclusive  basis, the company                                                                    
could make money for a 10  percent return at an oil price of                                                                    
$40 per barrel at present  because the company had been able                                                                    
to reduce its  cost by 40 percent in Alaska.  He guessed the                                                                    
company had been  losing money terribly 1.5 years  back at a                                                                    
$40 oil  price. Due  to reduced costs,  the company  was now                                                                    
able to weather  the storm in a lower  price environment. He                                                                    
stated  the shift  had  come with  substantial  work by  the                                                                    
company and its employees.                                                                                                      
Mr. Ruggiero moved  to slide 18 and  addressed that standard                                                                    
regime  comparisons  were   not  necessarily  predictors  of                                                                    
producer investment  activity. He shared  that he was  not a                                                                    
believer  in  any  charts that  purportedly  ran  economics,                                                                    
because of having  to really understand what  went into each                                                                    
of the  curves. He used the  chart by Daniel Johnston  as an                                                                    
example to  show that  although things  looked great  in one                                                                    
spot and  bad in  another, where  activity was  taking place                                                                    
was  much different  than  the graph  may  imply. The  chart                                                                    
related to  marginal dollars.  He considered  the government                                                                    
take under a  profit mode scenario with $1  more in revenue.                                                                    
The scale on the graph was  lower on the right and increased                                                                    
to  be  higher  on  the   left.  The  implication  was  that                                                                    
everything up to the right was  good because it showed a low                                                                    
take,  while  everything to  the  bottom  and left  was  bad                                                                    
because  it reflected  high take.  The arrows  on the  graph                                                                    
indicated  where things  were  in 1997,  while  the box  and                                                                    
arrow showed  2007. The graph  included 2017 and  provided a                                                                    
10 to 10 to 10-year  comparison. The graph also implied that                                                                    
the  companies on  the  top portion  would  receive all  the                                                                    
investment  because  they  had  very  low  government  take,                                                                    
meaning  most  of  the  money would  go  into  the  producer                                                                    
pocket.  However, that  was not  the issue.  He spoke  about                                                                    
where the industry invested.                                                                                                    
2:41:01 PM                                                                                                                    
Mr.  Ruggiero  advanced to  slide  19  titled "Regimes  with                                                                    
Government  Take  Lower  than Alaska."  The  slide  excluded                                                                    
locations that appeared  under Alaska in the  graph on slide                                                                    
18. Alaska was plotted  at approximately 62.5 percent, which                                                                    
was  the  ACES  marginal  rate. Countries  where  large  oil                                                                    
companies were  investing were highlighted  with a  red box.                                                                    
Large  companies  included  the  three on  the  North  Slope                                                                    
[ExxonMobil,  BP, and  ConocoPhillips]  and  about 15  other                                                                    
companies.  He  highlighted  several  locations  with  lower                                                                    
government take than Alaska.                                                                                                    
2:41:51 PM                                                                                                                    
Vice-Chair Gara asked if the  chart was older (from the ACES                                                                    
regime) or reflective of the current year.                                                                                      
Mr.  Ruggiero  responded  that the  chart  was  from  Daniel                                                                    
Johnston and presented  where things stood in  2007. He used                                                                    
Colombia  as an  example and  explained government  take was                                                                    
about 48 percent in 2007, whereas  in 1997 it had been above                                                                    
70 percent. The chart reflected 1997 through 2007.                                                                              
Mr. Ruggiero advanced to slide  20 which showed regimes with                                                                    
government take greater  than Alaska (a large  number of the                                                                    
countries with overall nonproducer  take greater than Alaska                                                                    
getting investment  from the major oil  companies). He noted                                                                    
that he  had added Iraq to  the bottom of the  chart (it had                                                                    
not been present in 2007).  He stated that basically "Iraq's                                                                    
round one and  round two" was a government take  of about 98                                                                    
percent. He  referenced an aspect  of the Iraq  contract and                                                                    
detailed that  if an  oil company  invested $1  billion, the                                                                    
oil company received its $1  billion back prior to the split                                                                    
of profits.                                                                                                                     
Representative Wilson asked about  the acronym "PSC" [in the                                                                    
charts on slides 18 through 20].                                                                                                
Mr.  Ruggiero  clarified  that   PSC  stood  for  production                                                                    
sharing  contract. He  elaborated that  the charts  included                                                                    
three  different types  of oil  patch contracts,  which were                                                                    
reflected  in the  legend  [on the  lower  right side].  The                                                                    
first  was  a  royalty/tax system  indicated  with  diagonal                                                                    
lines and was  equivalent to the Lower 48,  Alaska, and some                                                                    
other  regimes.  The black  box  reflected  a PSC  contract,                                                                    
which  was present  in  myriad countries.  The  third was  a                                                                    
service contract reflected by  a checkerboard box, which was                                                                    
similar  to a  PSC, but  typically the  company helping  the                                                                    
government was not allowed to  take ownership of barrels. He                                                                    
noted the company did not  book reserves, but it may receive                                                                    
value as though it had.                                                                                                         
2:44:52 PM                                                                                                                    
Representative  Grenn asked  for a  number or  percentage of                                                                    
countries looking for  the same type of  large fields Alaska                                                                    
was. He  asked if all the  countries on the list  [slides 18                                                                    
through 20] were looking for the same type of fields.                                                                           
Mr.  Ruggiero responded  that many  countries would  love to                                                                    
discover a  mega field,  or an "elephant"  as termed  by the                                                                    
oil  industry.  A  large  field  always  brought  associated                                                                    
development, jobs, and  work. Everyone would love  to have a                                                                    
large field, but geology did not make it so.                                                                                    
Representative Grenn asked if  Ireland was expecting to find                                                                    
an elephant field. He asked for more detail.                                                                                    
Mr.  Ruggiero replied  that Ireland  was at  the top  of the                                                                    
list  for the  lowest government  take;  it had  a very  low                                                                    
petroleum tax. Over several decades  there had been attempts                                                                    
to find  oil in and  around Irish onshore and  offshore with                                                                    
limited success.  In order to  keep the industry  going, the                                                                    
country charged  very little government  take. He  used Iraq                                                                    
as  another  example  and  explained that  it  knew  it  had                                                                    
elephant  fields prior  to the  conflict that  shut its  oil                                                                    
fields down;  therefore, it had  designed its  fiscal system                                                                    
around the large fields.                                                                                                        
Vice-Chair  Gara wondered  if there  were regions  that were                                                                    
more  similar  to  Alaska  that could  be  used  to  compare                                                                    
government take. He wondered if  there were locations Alaska                                                                    
was in higher competition with.                                                                                                 
Mr. Ruggiero answered that when  considering the top four or                                                                    
five places that  would be truly competitive  with Alaska he                                                                    
thought  about  the offshore  eastern  coast  of Alaska  and                                                                    
compared  it to  places  like Nova  Scotia and  Newfoundland                                                                    
with  high-cost, big  reservoirs, harsh  winter environment,                                                                    
and other. Other locations  included Norway, Australia (with                                                                    
long  lead-time projects  and its  offshore projects  only),                                                                    
subsalt  basins  in  Brazil, and  West  Africa's  deep-water                                                                    
reserves. The  examples were all large  reservoirs with long                                                                    
lead-time  projects.  He  specified   Angola  as  a  primary                                                                    
location in  West Africa with  all the  same characteristics                                                                    
of high-cost development with  long lead-time and long-lived                                                                    
Vice-Chair Gara stated there were  countries with high taxes                                                                    
or low taxes  that were nothing like  Alaska where companies                                                                    
went in  knowing they may be  nationalized (e.g. Venezuela).                                                                    
He wondered if  companies were willing to pay a  bit more to                                                                    
invest in safe locations.                                                                                                       
Mr. Ruggiero replied that he  did not want to oversimplify a                                                                    
decision  down to  only one  metric  because decisions  were                                                                    
always based  on a  host of metrics.  He detailed  that when                                                                    
coming up with a  company's anticipated return on investment                                                                    
for a project, the company  upped their expectation prior to                                                                    
choosing  to invest  in countries  on the  worst end  of the                                                                    
metrics,  whereas  they  may  have  a  lower  threshold  for                                                                    
investing in countries on the better end of the scale.                                                                          
2:50:42 PM                                                                                                                    
Representative Guttenberg asked for  Mr. Ruggiero to discuss                                                                    
a comparison  between Alaska and  Norway. He  discussed that                                                                    
Norway  is  a  northern  country with  cold  weather  and  a                                                                    
challenging  environment.   Norway  had   significant  [oil]                                                                    
activity with a higher government take.                                                                                         
Mr. Ruggiero  answered that the  information would be  a bit                                                                    
dated, but he  had personal experience from  being posted in                                                                    
the  North Sea.  The one  thing  Norway had  brought to  the                                                                    
table was that  it had a very involved  government. He noted                                                                    
he had not liked that at first,  but had come to like it. He                                                                    
elaborated that  the government was involved  with potential                                                                    
designs, timing, and acted as  a gatekeeper on what projects                                                                    
got  to  come  online  because it  wanted  to  minimize  the                                                                    
offshore  pipe  infrastructure.  The country  staged  fields                                                                    
based  on  when  capacity  would be  available,  instead  of                                                                    
building new  lines; however, when  there were four  or five                                                                    
discoveries  Norway would  commission a  new line.  He added                                                                    
that the country  had been the gatekeeper in  terms of doing                                                                    
things  that were  positive.  Norway's  government take  was                                                                    
roughly 78 percent,  but it allowed rapid  recovery of money                                                                    
spent  and had  an investment  credit/uplift companies  were                                                                    
able  to get  in  the  first four  years  of  coming on  and                                                                    
spending  money. There  were numerous  nuances that  made it                                                                    
attractive   for   companies  to   invest.   Norwegian-owned                                                                    
companies also had a substantial  share of each project. The                                                                    
reason  numerous companies  chose to  do business  in Norway                                                                    
involved a combination of things  involving how business was                                                                    
done, how easy  it was to work with the  government, and how                                                                    
well things got done.                                                                                                           
Representative  Guttenberg  discussed   that  Norway  had  a                                                                    
nationalized corporation  functioning as a  coordinator that                                                                    
decided  what  projects  to do  and  when.  The  corporation                                                                    
parsed sections  out to  different companies  with different                                                                    
specialties.  He believed  the  corporation coordinated  the                                                                    
activity for the benefit of  the country and everyone took a                                                                    
piece. He asked if he was accurate.                                                                                             
Mr. Ruggiero replied that it  was an accurate representation                                                                    
of what had taken place while he had been there.                                                                                
2:54:13 PM                                                                                                                    
Mr. Ruggiero  moved to slide  21 and discussed  where Alaska                                                                    
currently stood against  the Lower 48. He  stated that apart                                                                    
from  offshore,  deep  water  in  the  Gulf  of  Mexico  the                                                                    
locations were  not comparative.  He addressed  a comparison                                                                    
beginning with  only tax terms  and explained  that Alaska's                                                                    
royalty was  comparable to  old royalties,  but it  was much                                                                    
more   favorable  compared   to  new   royalties  and   high                                                                    
acquisition  prices  in  the Lower  48.  Even  though  newer                                                                    
leases had higher  royalties in the Lower 48,  many of those                                                                    
leases came with  "drill or drop" clauses.  He detailed that                                                                    
some of  the early leases  signed in the Lower  48 contained                                                                    
clauses that  if a company  drilled one well (many  times it                                                                    
was one well per square  mile), the company could hold every                                                                    
reservoir above  and below ground  in perpetuity as  long as                                                                    
the one well continued to  produce. Royalty owners and their                                                                    
representatives  had learned  quickly  that development  may                                                                    
take place on adjoining sections  where they may drill three                                                                    
or four wells, but they could  not force the person to drill                                                                    
another well  because all  the acreage was  held as  long as                                                                    
the one drill continued to produce.                                                                                             
Mr. Ruggiero  explained that royalty owner  associations had                                                                    
gotten smarter  and had developed  clauses specifying  if an                                                                    
leasee had not drilled at least  one well in a set amount of                                                                    
time, they  had to  pay an  annual rental  on the  lease. He                                                                    
noted it became  very expensive to hold onto  property if no                                                                    
development occurred. After a period  of five to seven years                                                                    
the  leasee  lost the  land  if  no activity  had  occurred.                                                                    
Leases also  specified that the  leasee had to keep  up with                                                                    
the tightest  spacing - if  neighboring leasees  had drilled                                                                    
four wells per  square mile, it was necessary  to drill four                                                                    
wells  instead of  four. Although  Alaska may  say it  had a                                                                    
lower  and  superior  royalty,  the Lower  48  had  a  penal                                                                    
financial  obligation  to  ensure  obligations  were  filled                                                                    
under the new  leases even though they  were more expensive.                                                                    
He  noted  that the  charts  from  Daniel Johnston  did  not                                                                    
include anything about  "drill or drop" or  about PSCs where                                                                    
countries  gave companies  rights to  in perpetuity  whereas                                                                    
others required activity on a  property within three to five                                                                    
years  or  the property  was  leased  to another  party.  He                                                                    
explained  those  were  nuances  that  never  showed  up  in                                                                    
comparative tables.                                                                                                             
Mr. Ruggiero addressed  how Alaska compared to  the Lower 48                                                                    
based on the  effective tax rate (slide 21).  At current oil                                                                    
prices  Alaska's  tax  rate  was  low  relatively  speaking,                                                                    
because they were  all gross taxes, which  were regressive -                                                                    
the lower the  price went, the worse the  effective tax rate                                                                    
came  on the  Lower 48  locations. He  addressed exploration                                                                    
and  production credits  - many  had expired  or had  sunset                                                                    
clauses. He  discussed that Alaska  had been unique  when it                                                                    
had the credits  and it had been very  valuable to companies                                                                    
- he believed  the credits had been responsible  for some of                                                                    
the activity levels  in Alaska. Alaska also had  a number of                                                                    
unique  aspects that  operators did  not run  into in  other                                                                    
locations  -  operators did  not  have  to worry  about  gas                                                                    
versus oil  or Cook Inlet  versus Middle Earth or  the North                                                                    
Slope. There were  some credits for horizontal  wells or for                                                                    
secondary  recovery where  there  was  some separation,  but                                                                    
primarily  that type  of  separation did  not  exist in  the                                                                    
Lower 48.  Alaska was unique  in some positive ways,  but it                                                                    
was the only location he  knew of that did monthly taxation.                                                                    
Others collected monthly, but the taxes were annual.                                                                            
2:59:19 PM                                                                                                                    
Vice-Chair Gara referred to a  memo from Ken Alper (director                                                                    
of the Tax Division,  Department of Revenue) that translated                                                                    
the  effect of  the actual  profits  tax rate  in Alaska  at                                                                    
various  prices.  Mr.  Alper specified  that  older  non-GVR                                                                    
[gross  value reduction]  fields had  a 4  percent tax  rate                                                                    
until about  $70 to  $73 per  barrel and  GVR fields  had no                                                                    
minimum tax.  The state  had a  zero percent  production tax                                                                    
until about $70  per barrel. He stated that  some GVR fields                                                                    
were post 2003  and some were new. He wondered  if the state                                                                    
was giving  away too much  with its  GVR tax rate.  He noted                                                                    
that Point Thomson was one of the fields.                                                                                       
Mr. Ruggiero  wanted to address  the question  the following                                                                    
day when he  presented a model. He would show  a chart later                                                                    
in the presentation and explained  that the table Vice-Chair                                                                    
Gara was referencing had been run  with one set of costs. As                                                                    
cost structures  change -  there was a  wide range  of costs                                                                    
across fields  - at different  prices different  people were                                                                    
subject to the minimum or  net tax. He believed the question                                                                    
would be better answered with the model.                                                                                        
Representative   Wilson   remarked   that  it   seemed   the                                                                    
discussion  always  pertained  to  only  one  piece  of  the                                                                    
puzzle. She  believed that when  the committee  talked about                                                                    
the state's share, the  discussion should include production                                                                    
tax, royalties, severance tax, property  tax, and other. She                                                                    
thought the items  should all be discussed at  one time. She                                                                    
asked  if it  was  fair  to try  to  fix  one piece  without                                                                    
considering the whole structure.                                                                                                
Mr.  Ruggiero  agreed that  the  whole  structure should  be                                                                    
considered. He detailed that when  one-off issues were dealt                                                                    
with  separately it  could cause  issues somewhere  else. In                                                                    
making  the  decision  to  fix one  piece,  he  assumed  the                                                                    
legislature was considering the structure as a whole.                                                                           
Representative Wilson asked if  the discussion the following                                                                    
day would look  at the entire scenario and would  show how a                                                                    
change to one component would  shift things or bring in more                                                                    
or less oil.                                                                                                                    
Mr.  Ruggiero  replied  in the  affirmative.  The  committee                                                                    
would be  able to modify  sliding scales, minimum  tax, GVR,                                                                    
and other items  to view the immediate impact  [in the model                                                                    
the  following day].  He stated  the model  would allow  one                                                                    
change at a time or multiple changes to view the impacts.                                                                       
Representative  Wilson asked  if  the model  would show  how                                                                    
much oil down the line  the state could expect under various                                                                    
scenarios.  Mr. Ruggiero  replied he  could not  predict the                                                                    
Representative Wilson  stated that  was her point.  Her goal                                                                    
was to  see more oil down  the line. She stated  that if the                                                                    
component was not part of  the modeling, they had missed the                                                                    
mark.  She  surmised   they  may  get  more   money  at  the                                                                    
beginning,  but   the  change   would  mess  things   up  in                                                                    
perpetuity if  it resulted  in less oil  down the  line. She                                                                    
thought it had to be a part of the puzzle.                                                                                      
3:04:07 PM                                                                                                                    
Mr. Ruggiero  agreed it  was important to  find the  way. He                                                                    
thought  it was  a place  the oil  companies could  help the                                                                    
committee to  understand existing oil that  could be brought                                                                    
on  and the  most significant  hurdles facing  companies and                                                                    
preventing them from investing.                                                                                                 
Representative Ortiz  referred to  slide 9  that highlighted                                                                    
the state's  overall goal. He  asked about the  relevance of                                                                    
slide 21 pertaining to how  Alaska compared to the Lower 48.                                                                    
He asked if  it was a critical question for  the state to be                                                                    
asking  itself.  Alternatively,  he  wondered  if  the  more                                                                    
significant question should be  about how competitive Alaska                                                                    
was with countries with similar regimes and reserves.                                                                           
Mr. Ruggiero  recommended looking at the  regimes Alaska was                                                                    
competing against. The arguments  pertaining to the Lower 48                                                                    
were included  because they  were easy, and  it was  easy to                                                                    
draw a conclusion that may  not be accurate. For example, he                                                                    
did not believe  Alaska should match the  structure in North                                                                    
Dakota  just  because it  was  producing  more oil.  He  had                                                                    
included  the slide  in response  to the  numerous questions                                                                    
that had  arisen about the Lower  48. He added that  a graph                                                                    
of North Dakota production over  a 30-year period would look                                                                    
pretty flat  for 30  years. He noted  that North  Dakota had                                                                    
not  changed  its fiscal  system,  the  change had  been  in                                                                    
technology.  The state  had  gone  from having  average/sub-                                                                    
average  rock  to great  rock  in  terms of  development  at                                                                    
present due to shale that was easily accessible.                                                                                
Mr.  Ruggiero  continued  to answer  Representative  Ortiz's                                                                    
question. He  shared that he  had done  a study a  couple of                                                                    
years  earlier  that looked  at  the  top 75  non-major  oil                                                                    
companies in the  U.S. Between 1990 and 2008  they had taken                                                                    
on plus or  minus $80 billion from private  equity and hedge                                                                    
funds.  After the  2008 financial  crash they  had taken  on                                                                    
$110 billion  between 2009 and  2014. They had gone  from an                                                                    
average debt to equity ratio of  40/60 to 90/10. He noted at                                                                    
that time the  price of oil had been above  $100 per barrel.                                                                    
He  continued  that the  country  had  been in  a  prolonged                                                                    
period  of zero  percent federal  interest. Many  industries                                                                    
had  been struggling  and  were not  growing,  but when  the                                                                    
price of  oil collapsed  with the  financial crisis  in 2008                                                                    
and 2009 everyone had bet the  price of oil would come back,                                                                    
which it had  done with a fury. Subsequently,  all the money                                                                    
poured  in and  continued to  pour in  even after  the price                                                                    
peaked at $120 to $130 per  barrel. Much of the activity and                                                                    
barrels  were there  because  the money  had  been easy  and                                                                    
quick to receive.                                                                                                               
Mr. Ruggiero continued that a  couple of economists had done                                                                    
as  study that  of all  the money  spent in  North Dakota  -                                                                    
almost 10,000 wells  had been drilled at an  average cost of                                                                    
$8  million   per  well  ($80  billion   invested)  -  after                                                                    
royalties and  severance taxes  were subtracted,  only about                                                                    
$50 or so billion had been  recovered. He added that most of                                                                    
the wells were beyond their  production peak. He stated that                                                                    
they may  have produced  1 million barrels  of oil,  but the                                                                    
jury was  still out as  to how much  money would be  made in                                                                    
North Dakota.                                                                                                                   
3:08:54 PM                                                                                                                    
Representative Guttenberg pointed to  slide 21. He addressed                                                                    
the  last  bullet  on  the  right of  the  slide  under  the                                                                    
relative  risks category  pertaining  to competitive  access                                                                    
for all  producers. He asked  if the statement was  true. He                                                                    
asked for detail about unpredictable tariff levels.                                                                             
Mr. Ruggiero answered by  referencing his experience working                                                                    
in the  North Sea. He relayed  that in the U.S.  he had been                                                                    
taught  about all  the things  that could  and could  not be                                                                    
done under SEC rules and  what governments should and should                                                                    
not do.  He recalled being  told by  Norway to wait  in line                                                                    
for  a development  he brought  forward.  He explained  that                                                                    
Norway had  seen all the problems  with overbuilt facilities                                                                    
and because  its regime  allowed the  recovery of  any money                                                                    
spent  (any unnecessary  dollar spent  was a  dollar out  of                                                                    
Norway's  treasury),  the  country  controlled  and  ensured                                                                    
access. He continued that if  the parties involved could not                                                                    
come to  an agreement Norway deemed  reasonable, the country                                                                    
would intervene. He noted the  country had direct, indirect,                                                                    
and  passive aggressive  ways of  intervening. He  explained                                                                    
that Alaska  had one  main pipeline  and if  the goal  was a                                                                    
long-term future  on the  North Slope,  the state  needed to                                                                    
ensure  that whatever  needed to  be in  place and  whatever                                                                    
needed to  be done was done  to ensure any new  player could                                                                    
get access into the pipeline at fair and reasonable rates.                                                                      
Representative Guttenberg  shared that  he had  introduced a                                                                    
facilities  access bill  in the  past.  He recalled  meeting                                                                    
with an independent  CEO who had said that when  he had been                                                                    
young the facilities  had been antiquated and if  he had not                                                                    
been  given a  good rate,  it  had been  more economical  to                                                                    
build his  own facility. He  reasoned that not  everyone had                                                                    
the opportunity or  economy of scale. He asked  if there was                                                                    
a way to show a history of  access fees and who had paid for                                                                    
what  and how  competitive it  was for  various partners  or                                                                    
independents.  He  asked how  restrictive  it  had been  for                                                                    
Mr. Ruggiero  replied that  he did not  have access  to that                                                                    
data. He added  it would be a good question  to ask the TAPS                                                                    
3:12:24 PM                                                                                                                    
Mr. Ruggiero  moved to slide  22 and addressed  more regimes                                                                    
using  self-correcting   mechanisms.  He  referred   to  his                                                                    
recommendation  to use  a net  tax system  with brackets  to                                                                    
mimic  what   the  state  currently  had.   He  spoke  about                                                                    
historical actions resulting in  different outcomes, many of                                                                    
the  outcomes  were  due  to firm  triggers  at  prices.  He                                                                    
relayed  that  more  and  more   regimes  were  using  self-                                                                    
correcting   mechanisms.   In   order  to   get   additional                                                                    
production  and new  developments, a  self-correcting system                                                                    
could predict what was going  to happen. He explained that a                                                                    
self-correcting   system   would   know  exactly   how   low                                                                    
profitability  in the  current year,  a high  write off,  or                                                                    
great  profits  the following  year  would  treat them.  The                                                                    
economics could  be set  up and  run. He  acknowledged there                                                                    
would still  be the risk  that any legislature  could change                                                                    
legislation  at  any  time,  but   it  would  be  much  more                                                                    
predictable.  He provided  a hypothetical  scenario where  a                                                                    
system  was not  predictable -  an entity's  costs would  be                                                                    
high, the  trigger would be at  $90 and costs would  be $75,                                                                    
and the entity  wondered if it could move the  trigger up so                                                                    
the costs were not as onerous.                                                                                                  
Mr. Ruggiero  continued to  address the  benefit of  a self-                                                                    
correcting mechanism.  He detailed  that in  practice, taxes                                                                    
were set ahead of time  (i.e. guessing about the future). He                                                                    
stated  that oil  patches changed  often  and regularly  and                                                                    
there was  not the ability  to set  a tax regime  with 20:20                                                                    
hindsight.  A number  of mechanisms  had been  developed and                                                                    
put  in  practice  to  allow  fiscal  systems  to  adapt  to                                                                    
changing  markets.  He  listed  numerous  options  including                                                                    
profit per barrel,  overall rate of return,  and an R-Factor                                                                    
(the  amount   of  money  received  versus   the  investment                                                                    
amount). All  the options could be  set up with one  or more                                                                    
brackets and provided different ways to establish a long-                                                                       
term durable system.                                                                                                            
Mr.  Ruggiero  addressed  slide 23  titled  "Why  use  Self-                                                                    
Correcting Mechanisms."  He explained that  every government                                                                    
and legislature had  thought it was doing the  best it could                                                                    
at the  time they agreed to  something in a bill.  He agreed                                                                    
the action lasted for a while,  but because of the biases of                                                                    
every  system,  the  future   would  bring  some  unintended                                                                    
results  (either because  prices were  higher or  lower than                                                                    
anticipated or  there were interdependencies where  a fix to                                                                    
one   area  inadvertently   impacted   other   areas  in   a                                                                    
3:16:08 PM                                                                                                                    
Mr.  Ruggiero addressed  the flaw  of averages  and avoiding                                                                    
unintended consequences on  slide 24. He shared  that in his                                                                    
past  experience with  ACES and  later, the  average numbers                                                                    
had tended to be  used. He did not know of  a field that had                                                                    
the  average transportation  or  cost rate  -  they all  had                                                                    
either  lower  or higher  rates  than  the average.  When  a                                                                    
system  was designed  around averages  did  not address  the                                                                    
outliers. He  pointed to a  cartoon on slide 24  depicting a                                                                    
stream that  was three  feet deep on  average, but  that did                                                                    
not address the  20-foot hole partway across  the stream. He                                                                    
stated  it was  acceptable to  use the  average for  general                                                                    
descriptions, but  it was important  to consider  the range.                                                                    
He  referred to  a slide  provided the  previous day  by DOR                                                                    
related to  tariffs. The slide had  included tariffs ranging                                                                    
from $9 to  almost $30 per barrel. He  underscored that when                                                                    
building  all the  models  and  systems, the  use  of a  $10                                                                    
average  would  be wrong.  He  spoke  to the  importance  of                                                                    
testing systems as they were built.                                                                                             
Mr. Ruggiero moved  to slide 25 and  addressed effective tax                                                                    
rate at  costs of $40,  $55, and  $65 per barrel.  The graph                                                                    
showed the  existing system under  SB 21. He  explained that                                                                    
the three  sets of  lines resembling the  shape of  a hockey                                                                    
stick used  a total tariff  and operating cost of  $40, $55,                                                                    
and $65  per barrel. The  lowest point came down  at roughly                                                                    
$73 per barrel  - it included a 4 percent  minimum tax. When                                                                    
average numbers  were used,  at $73  per barrel,  instead of                                                                    
paying the  gross minimum, a  net basis  was used. At  a $55                                                                    
per barrel  cost, the  number moved  up to  somewhere around                                                                    
$76 to $77.  At a $65 per barrel cost,  the number increased                                                                    
to over $85 per barrel where  the minimum gross tax would be                                                                    
paid at every price below  that number ($65). He pointed out                                                                    
that the top  end did not move because a  stake had been set                                                                    
at a specific  price. As cost structures went  up over time,                                                                    
the tax increased. He stressed  that the cost structure used                                                                    
in  a  model  would  give a  different  answer  about  where                                                                    
something  should or  should not  be done.  He advised  that                                                                    
during  his  modeling  presentation the  following  day  the                                                                    
committee should consider  low and high ends to  go with the                                                                    
average to see all three.                                                                                                       
Vice-Chair Gara asked for verification  the slide showed the                                                                    
non-GVR  fields, not  the GVR  fields that  did not  pay the                                                                    
minimum tax.                                                                                                                    
Mr.  Ruggiero replied  in the  affirmative. He  detailed the                                                                    
fields on the slide all paid  the minimum tax (it did not go                                                                    
to zero).  The graph  had been  run with a  4 and  5 percent                                                                    
minimum gross tax.                                                                                                              
3:20:09 PM                                                                                                                    
Representative Wilson  asked for a brief  description of GVR                                                                    
versus non-GVR fields.                                                                                                          
Mr. Ruggiero  replied that  within the  current legislation,                                                                    
for  fields that  met certain  criteria to  be deemed  a new                                                                    
field, companies could take a  20 percent deduction from the                                                                    
gross value  at the  wellhead. He  noted another  10 percent                                                                    
could be  added as well. It  was a deduction for  new fields                                                                    
along with  a $5 per  barrel credit.  The graph on  slide 25                                                                    
showed  a  minimum tax  being  payable  at very  low  prices                                                                    
because the per  barrel credits could not  pierce the floor,                                                                    
but  the GVR  fields  could  (meaning the  tax  could go  to                                                                    
Representative Wilson asked if the  slide related to the big                                                                    
three oil companies or other.                                                                                                   
Mr.  Ruggiero  answered  that  slide   25  did  not  reflect                                                                    
specific  companies.  He  elaborated the  slide  provided  a                                                                    
representation  of what  would  happen when  the total  cost                                                                    
structure  of non-GVR  eligible  fields  changed. The  chart                                                                    
indicated  the point  when fields  switched from  paying the                                                                    
gross  minimum to  paying the  net  tax. He  referred to  an                                                                    
earlier  question of  what happened  at 7,  8, or  9 percent                                                                    
[taxes]  and  relayed he  would  model  the information  the                                                                    
following  day to  see the  impact.  As long  as there  were                                                                    
anchor points  (the sliding barrel credit  had anchor points                                                                    
at $150, $140, and $130) on  the right side, but costs moved                                                                    
the  left side  of the  graph. He  would provide  additional                                                                    
detail the following day.                                                                                                       
3:22:27 PM                                                                                                                    
Mr. Ruggiero addressed  slide 27 pertaining to  the value of                                                                    
extending the life  of legacy fields. He  had heard numerous                                                                    
people  say  that  Alaska  had  numerous  giveaways  to  new                                                                    
fields.  He used  the following  assumptions shown  on slide                                                                    
        ·   Assumptions                                                                                                         
            o 250,000 bpd physical shut in rate                                                                                 
             o 50,000 economic shut-in rate                                                                                     
             o New oil sufficient to keep pipeline running                                                                      
               into the future                                                                                                  
             o 6% decline on legacy from 250k to 50K                                                                            
             o Prices $50 to $100 ANSWC                                                                                         
             o Net tax rates from 5% to 35%                                                                                     
Representative Ortiz  asked what  the physical  shut-in rate                                                                    
Mr.  Ruggiero answered  that the  physical shut-in  rate was                                                                    
the  rate  where  there  would  be so  little  flow  in  the                                                                    
pipeline  that  it  could  not keep  running.  There  was  a                                                                    
minimum  rate required  to keep  the  pipeline running.  The                                                                    
economic limit shut-in  rate would be for  the legacy fields                                                                    
- once  production got down,  given the number of  wells and                                                                    
facilities,  the costs  would probably  start to  outrun the                                                                    
revenue.  There  was a  large  fixed  cost for  running  the                                                                    
fields.  He noted  that  the assumptions  on  slide 27  were                                                                    
guesses. The  third assumption listed  on the slide  was the                                                                    
development  of  sufficient new  oil  to  keep the  pipeline                                                                    
running. He had used a 6  percent decline rate on the legacy                                                                    
fields "from 250k  to 50k." He had looked  at prices between                                                                    
$50  and $100  and at  net tax  rates from  5 percent  to 35                                                                    
Mr.  Ruggiero estimated  that extending  the life  of legacy                                                                    
fields could result in additional  revenue to Alaska ranging                                                                    
from $5  billion to $50  billion in petroleum  tax, royalty,                                                                    
and property  tax. He  stressed there  was value  in keeping                                                                    
the legacy  fields operating. He remarked  that if companies                                                                    
knew  the pipeline  would have  a  long life,  there may  be                                                                    
additional work they would be  encouraged to do because they                                                                    
had  the other  fields  keeping  the flow  going  at a  high                                                                    
enough rate.  He noted that  Caelus's Smith Bay  project had                                                                    
extremely  light  oil and  light  oil  relative to  all  the                                                                    
heavier oil would help tremendously  in the operation of the                                                                    
pipeline; it  would enable much  heavier oil to  be produced                                                                    
and blended out.                                                                                                                
3:25:42 PM                                                                                                                    
Mr. Ruggiero addressed the time  value of money on slide 29.                                                                    
He   had  modeled   a  hypothetical   field  that   bore  no                                                                    
resemblance  to any  existing field.  The model  included an                                                                    
investment of  $100 in year-one,  $400 in years  two through                                                                    
ten,  $100 in  cost recovery  to the  producer, and  $300 of                                                                    
profit  split  between  the   producer  and  government.  He                                                                    
underscored  that it  was the  same amount  of money  in the                                                                    
same years.  The only alteration  to the model would  be who                                                                    
received the money when.                                                                                                        
Mr. Ruggiero  turned to slide  30 and  addressed differences                                                                    
in  cost  recovery based  on  the  hypothetical scenario  on                                                                    
slide  29.   The  graphs  on   the  left   showed  immediate                                                                    
deductibility recovery with (with  no uplift). The top graph                                                                    
on both sides  used the total available money  within a year                                                                    
and showed the percentage  split between the producer (blue)                                                                    
and the  non-producer (green). The  plot on the  bottom left                                                                    
and right showed  the actual dollars during  the period. The                                                                    
example on the  left showed accelerated cost  recovery - the                                                                    
small  amount of  non-producer recovery  in years  three and                                                                    
four mirrored receiving a royalty,  with the remainder going                                                                    
to the  producer. The lower left  chart showed an IRR  of 20                                                                    
percent.  If the  recovery was  spread out  over five  years                                                                    
(the  amount  of  costs  to  be  recovered  was  limited  by                                                                    
spreading it  across the  five-year period),  the producer's                                                                    
economics  on  the project  worsened  and  dropped to  a  14                                                                    
percent IRR. The  net present value (NPV) was  almost cut in                                                                    
3:28:51 PM                                                                                                                    
Mr. Ruggiero  moved to slide  31 and addressed  cash credits                                                                    
versus 50  percent NOL.  He explained  the chart  would show                                                                    
why  many  companies  were interested  in  cashable  credits                                                                    
ahead  of  time versus  waiting  for  production and  taking                                                                    
deductions later.  The chart  on the  lower left  showed the                                                                    
state  as an  investor in  year-one of  35 percent  cashable                                                                    
credits. The  producer IRR went  to 27 percent.  He reminded                                                                    
the committee  the scenario  had provided  a 20  percent IRR                                                                    
with accelerated recovery and a  14 percent IRR with delayed                                                                    
recovery. He  pointed to the  charts on the right  where the                                                                    
company was only allowed to  recover 50 percent of its costs                                                                    
- the IRR  decreased to 6 percent and the  NPV was negative;                                                                    
it  was   a  "definite  no-go  project."   Taking  the  same                                                                    
hypothetical  field and  applying various  ways of  handling                                                                    
the  recovery  or  deductibility of  cost,  provided  vastly                                                                    
different results.                                                                                                              
Mr. Ruggiero  referred to  an earlier  question about  why a                                                                    
company  may  chose  to  invest   in  a  78  to  90  percent                                                                    
government  take country,  while  questioning investment  in                                                                    
Alaska at a  60 percent government take. The  answer was due                                                                    
to things like the items presented  on slides 30 and 31 - it                                                                    
was the  things that were  hidden that were not  always seen                                                                    
when  graphical comparisons  of regimes  were conducted.  He                                                                    
noted that each  of the graphs could  represent countries A,                                                                    
B, C, and D  as well. He had run an  analysis of an existing                                                                    
field in  seven different  countries, which had  resulted in                                                                    
an IRR ranging  from 4 to 38 percent. The  counties used all                                                                    
had very  different tax regimes. He  stressed the importance                                                                    
of considering  the system as  a whole, and looking  at real                                                                    
possible fields. Even  though the same royalty  and tax rate                                                                    
was  applied in  his hypothetical  example, there  were very                                                                    
different results (slides  30 and 31). He spoke  to the goal                                                                    
of filling  the pipeline  and noted that  the state  did not                                                                    
have 100 different  operators or 100 potential  fields to be                                                                    
developed. The number  of operators could be  counted on one                                                                    
or two hands  and the number of potential  fields that could                                                                    
be  developed  to keep  the  pipeline  running was  minimal.                                                                    
Those facts would need to  be considered when making changes                                                                    
to the tax system.                                                                                                              
3:32:22 PM                                                                                                                    
Mr. Ruggiero  spoke to slide  32 titled "Impact  of Interest                                                                    
Rate  on Time  Value of  Money." He  had included  the slide                                                                    
based  on discussions  about uplift  and interest  rates and                                                                    
what  it  was worth  or  not  worth. The  y-axis  (vertical)                                                                    
showed a number of years  and the x-axis (horizontal) showed                                                                    
an  interest rate  starting  at 4  percent  increasing in  2                                                                    
percent increments  up to 20 percent.  The boxes highlighted                                                                    
in yellow  indicated the  number of years  it would  take to                                                                    
double your money. In a  conversation about providing uplift                                                                    
to an  NOL or  other, the  chart would  be a  quick interest                                                                    
rate guide (if  money had never been deducted).  He used the                                                                    
2 percent interest  (highlighted in yellow) as  an example -                                                                    
if an 8  percent uplift was offered, the  money would double                                                                    
in size in  nine years. He detailed if the  NOL was $100 and                                                                    
it was not  deducted during that nine-year  period, it would                                                                    
be worth $200 in the ninth year.                                                                                                
3:34:05 PM                                                                                                                    
Mr. Ruggiero concluded his presentation  on slide 34 related                                                                    
to  question  topics  that  had come  up  in  testimony.  He                                                                    
mentioned questions  pertaining to what other  countries and                                                                    
other  regimes did,  how  different  mechanisms worked,  and                                                                    
what may be perceived as good or bad in various countries.                                                                      
Representative Ortiz  relayed that  the previous day  he had                                                                    
asked about  the concept  of hardening  the [tax]  floor. He                                                                    
asked if hard floors were common in other regimes.                                                                              
Mr. Ruggiero answered  that any regime that  has royalty, by                                                                    
definition, has  a hard floor.  The gross tax in  Alaska was                                                                    
no different than royalty; it  could have just been added to                                                                    
the  royalty and  it would  work  the same  way. There  were                                                                    
other  countries with  somewhat of  a net-based  system that                                                                    
would put in  a minimum. Countries or  regimes that depended                                                                    
on  oil revenue  for 30  or more  percent of  their treasury                                                                    
intake, had  mechanisms including  hard floors  within their                                                                    
fiscal  regime,  to  get revenue  every  year.  Others  only                                                                    
depended  on oil  for 2  to 3  percent of  their treasury  -                                                                    
those  companies  typically  had  an  absence  of  floor  or                                                                    
minimum  because  they  were  not reliant  on  oil  to  keep                                                                    
government running.                                                                                                             
Representative Ortiz  surmised that  a floor  in terms  of a                                                                    
production  or  severance  tax  was  not  very  common.  Mr.                                                                    
Ruggiero responded that with  the clarification that royalty                                                                    
acted as  a floor,  it was very  common because  royalty was                                                                    
very common.                                                                                                                    
Representative  Guttenberg referred  to information  sharing                                                                    
in other regimes  and what information was  shared in Alaska                                                                    
versus what was not. He  referenced the ability to know what                                                                    
was going on to make a decision. He asked for detail.                                                                           
Mr.  Ruggiero  addressed  his experience  working  with  the                                                                    
Netherlands, UK,  and Norway  in the  North Sea.  He relayed                                                                    
that before he ever recommended  moving forward on a project                                                                    
to executive  management he  had two  to five  meetings with                                                                    
different  governmental  agencies  to go  over  the  project                                                                    
(i.e.  to address  the reservoir,  how much  money would  be                                                                    
spent, how many drills would  be needed, what pipeline would                                                                    
be  used, and  other). He  continued that  during the  first                                                                    
meeting they may  discuss numbers plus or  minus 50 percent,                                                                    
but by  the end, the  agencies would  know where and  how he                                                                    
planned  to drill  and  what  he expected  to  earn. He  had                                                                    
involved   parties  ranging   from  engineers   to  treasury                                                                    
officials. By the  time he received internal  approval to go                                                                    
forward, filing the petition for  the right to develop would                                                                    
be a foregone conclusion.                                                                                                       
Mr.  Ruggiero  explained  the process  had  been  beneficial                                                                    
because  government agencies  may  have  suggested moving  a                                                                    
well a  bit to  the north  or talking  to a  company because                                                                    
capacity may have been opening  in its facility. The process                                                                    
had also  been the governments'  way of ensuring  an optimum                                                                    
amount  of facilities  were built.  In regimes  that allowed                                                                    
companies to recover or deduct  costs, every dollar that was                                                                    
deducted or recovered was a dollar  that did not go into the                                                                    
treasury (it was not exactly  dollar for dollar, but close).                                                                    
He stated that  those countries were much  more involved and                                                                    
much  more   information  was  shared.  He   had  worked  on                                                                    
development projects  in other countries where  the agencies                                                                    
basically  saw everything  the company  had  except for  the                                                                    
sales contracts.  The North Sea countries  were beginning to                                                                    
take it  to a further  extreme. He could provide  some links                                                                    
at a  later time.  He detailed  that it  was possible  to go                                                                    
into  Norway,  look into  a  field  and find  the  ownership                                                                    
history,  the production,  the annual  capital expenditures,                                                                    
the  five-year  forward forecast,  what  rig  had drilled  a                                                                    
well,  and  other  information.   The  information  was  all                                                                    
accessible online.                                                                                                              
3:40:31 PM                                                                                                                    
Representative  Guttenberg discussed  that  Alaska had  some                                                                    
significant  credits. He  explained  that  the numbers  were                                                                    
aggregated, and  it was  not possible to  see the  impact of                                                                    
the  credits   and  where  they   had  been   successful  or                                                                    
unsuccessful.  He  asked  if   there  were  similar  regimes                                                                    
(outside of  taxes) where  it was  possible to  analyze what                                                                    
was  effective  and  what  was working.  The  goal  was  for                                                                    
credits  to  result in  increased  production.  He asked  if                                                                    
[visibility into the data] was a reasonable thing to ask.                                                                       
Mr.  Ruggiero answered  there was  a  significant amount  of                                                                    
available data  that would not  be a violation of  SEC rules                                                                    
if disclosed.  He noted there  was a fine line  between when                                                                    
that  line  was  crossed;  however,  there  was  substantial                                                                    
information that could be made  available. He noted that the                                                                    
state  did  not  necessarily  need   to  have  the  taxpayer                                                                    
information. He  explained that much  of the data  that went                                                                    
into a  tax return was  also very basic data  on production,                                                                    
amounts of  oil in pipelines,  wells drilled, and  other. He                                                                    
believed there were numerous things  the state could ask for                                                                    
and see without  putting the state or oil  companies at risk                                                                    
of violating any laws. He  added that companies provided the                                                                    
information internationally.                                                                                                    
3:42:37 PM                                                                                                                    
Representative  Wilson asked  how many  regimes had  changed                                                                    
their tax structure as often as Alaska.                                                                                         
Mr.  Ruggiero replied  it depended  on the  timeframe. There                                                                    
was a survey that went  out to company executives that rated                                                                    
the  attractiveness of  fiscal  regimes. One  of the  places                                                                    
that  had always  been  near the  top of  the  list was  the                                                                    
United  Kingdom. He  relayed that  from 1981  going forward,                                                                    
the UK had changed its  fiscal regime more than any location                                                                    
in the  world, yet it  was considered  one of the  top three                                                                    
stable places to conduct business.  The country was quick to                                                                    
remove terms and lower rates  when prices went way down, but                                                                    
it  was equally  quick to  raise rates  and government  take                                                                    
when prices increased.                                                                                                          
Representative Wilson  asked if  the state was  doing damage                                                                    
to its  reputation. She  believed the  state appeared  to be                                                                    
constantly looking at its fair share as being more.                                                                             
Mr. Ruggiero  replied that  it all came  down to  timing and                                                                    
direction.  He  elaborated  that  if it  was  in  the  right                                                                    
direction  at the  right  time it  would  be overlooked  and                                                                    
people would  move on; however,  it became  more problematic                                                                    
if change was perceived to be  in the wrong direction or was                                                                    
late to the game.                                                                                                               
Representative Wilson  referred to Mr.  Ruggiero's testimony                                                                    
to the  importance of ensuring  the barrels  flowing through                                                                    
the  pipeline  in Alaska  did  not  fall much  farther.  She                                                                    
observed that it was not possible  to change how cold it was                                                                    
or  difficult it  was to  operate  on the  North Slope.  She                                                                    
asked  if it  was  the right  time and  move  to change  the                                                                    
state's tax structure in HB 111.                                                                                                
Mr.  Ruggiero replied  it  depended on  how  the system  was                                                                    
Representative Wilson  asked looked  at HB 111  as currently                                                                    
written.  She  asked  if  the  bill  would  be  positive  or                                                                    
negative for the state if it passed in its current form.                                                                        
Mr. Ruggiero  believed there were  aspects in the  bill that                                                                    
would make a change in the wrong direction.                                                                                     
3:45:39 PM                                                                                                                    
Representative  Pruitt stated  that  he  had a  conversation                                                                    
with  some  Scottish  investors several  years  earlier.  He                                                                    
recalled   that   the   individuals  had   complained   that                                                                    
Westminster had increased the rates  too high. He noted that                                                                    
the  individuals had  thought  the change  had occurred  too                                                                    
quickly.  Subsequently, there  had been  a change  back that                                                                    
recognized prices  were low. He  surmised the issue  was not                                                                    
necessarily that Alaska was changing  the tax structure, but                                                                    
it  was what  the  state did  when it  made  the change.  He                                                                    
looked at the  fiscal note and observed that  the bill asked                                                                    
for a tax increase. He did  not believe it was the direction                                                                    
the  UK would  go under  the current  price environment.  He                                                                    
asked for comment on his statement.                                                                                             
Mr.  Ruggiero was  not aware  of what  the UK  was currently                                                                    
doing.  He believed  Representative Pruitt's  point was  the                                                                    
bill would  result in  a revenue increase  to the  state. He                                                                    
recommended looking  at the state's goals  and determining a                                                                    
balance.  He  returned  to slide  9  regarding  the  state's                                                                    
priorities. He  explained the state  had opposing  drivers -                                                                    
the  long-term  indicated the  state  needed  to go  in  one                                                                    
direction, while the short-term indicated  the need to go in                                                                    
a different  direction. The state  needed to decide  how far                                                                    
to tilt  to the right  before causing significant  damage to                                                                    
the left.  It was necessary  to determine the goal  prior to                                                                    
making decisions  on taxation.  Too many times  changes were                                                                    
made to  fix a problem that  had no relation to  the overall                                                                    
goals.  If the  goals  were used  as a  guide,  it became  a                                                                    
matter of the  balance and how far it was  tilted one way or                                                                    
the other.                                                                                                                      
Representative  Pruitt  appreciated  the  recommendation  to                                                                    
begin with  the state's goals  to determine how to  make the                                                                    
policy.  He added  that the  current bill  was not  the only                                                                    
bill the legislature should use that recommendation for.                                                                        
3:48:45 PM                                                                                                                    
Representative  Tilton  spoke  to Mr.  Ruggiero's  testimony                                                                    
about changing regimes  in the right way at  the right time.                                                                    
She  noted that  HB 111  would increase  government take  in                                                                    
Alaska. She referred to slide 21  from an Alaska Oil and Gas                                                                    
Association (AOGA)  presentation from the previous  day. She                                                                    
detailed  the slide  had  specified  that regimes  worldwide                                                                    
were  looking   at  more   fiscal  incentives   rather  than                                                                    
increasing  government take.  She asked  Mr. Ruggiero  if he                                                                    
believed HB 111 was being considered at the right time.                                                                         
Mr. Ruggiero  answered that  looking at  the AOGA  chart and                                                                    
one he had used as  well, government take tended to increase                                                                    
when  oil  prices  rose  and   decrease  when  prices  fell.                                                                    
However, about one-third of the  locations on the chart were                                                                    
in  the  opposite direction.  He  returned  to slide  9  and                                                                    
relayed that  although those governments  were going  in the                                                                    
opposite direction,  there had been  a reason that  had been                                                                    
specific to that location. The  locations had been trying to                                                                    
balance out  their goals. He  agreed that when a  tax regime                                                                    
went in the wrong direction  industry would let a government                                                                    
know.  He  added  that  it  definitely  did  not  help  when                                                                    
companies  had  to  pay  more  taxes.  He  believed  it  was                                                                    
necessary for  the legislature look  at the  state's overall                                                                    
situation and to look at goals  and priorities as a state to                                                                    
find the right balance.                                                                                                         
Representative Pruitt  stated that  during discussion  on SB
21 they  had heard comments  that ACES had not  been modeled                                                                    
at higher numbers. Similarly,  the legislature was currently                                                                    
hearing that  SB 21 had  not been modeled at  lower numbers.                                                                    
He asked if  it was possible create a  system that addressed                                                                    
both ends.  He noted Mr.  Ruggiero had mentioned  that other                                                                    
regimes adjusted  as prices  increased. He  asked if  it was                                                                    
possible  to  implement  something that  would  not  require                                                                    
consistent alteration.                                                                                                          
Mr.  Ruggiero  corrected  that   during  ACES  he  had  been                                                                    
requested by  the House Finance  Committee to run  prices up                                                                    
to $400  per barrel.  He had presented  prices from  zero to                                                                    
$400. He  shared that thousands  of scenarios had  been made                                                                    
based  on  requests  from  the committee  at  the  time.  He                                                                    
addressed   how  to   make  something   self-correcting.  He                                                                    
recommended   basing  trigger   points  (when   changing  an                                                                    
incentive, credit,  or tax rate) on  something calculated at                                                                    
that time based  off profitability, not price  or gross. The                                                                    
profitability could  be unit profitability  - ACES  had been                                                                    
based  off unit  profitability. He  clarified that  ACES did                                                                    
not  do anything  at  prices  of $60  per  barrel. He  could                                                                    
predict what ACES had done at  $60 of profit per barrel, but                                                                    
not  at  a  price  of  $60 per  barrel.  He  had  seen  many                                                                    
presentations misrepresent  ACES. He  spoke to  getting into                                                                    
understanding things  based on net and  profitability versus                                                                    
things based  on gross or  fixed points. He referred  to one                                                                    
of his recommendations of a  bracketed net system, which was                                                                    
based off  unit profitability. Currently, there  were people                                                                    
at the very low end of  unit profitability (e.g. gas in Cook                                                                    
Inlet) and  people at the  higher end of  unit profitability                                                                    
(e.g.  large   legacy  fields).  A  system   that  taxed  or                                                                    
approached companies  based on their profitability  was much                                                                    
more responsive and predictable going forward.                                                                                  
Representative  Pruitt noted  that he  had not  been present                                                                    
during ACES  and had  only heard  the conversation  about SB
21. Mr.  Ruggiero replied that  he had also been  blamed for                                                                    
the 0.4  percent progressivity,  but it  had been  the other                                                                    
Co-Chair  Seaton referred  to  the 10  percent  GVR for  any                                                                    
field  above 12.5  percent royalty.  He had  been trying  to                                                                    
figure out why it would  be reasonable to use the production                                                                    
tax  system to  reverse  royalties when  people  bid on  oil                                                                    
fields  based  on timing  and  bid  terms higher  than  12.5                                                                    
percent royalty.  He surmised the  provision took  away more                                                                    
royalty than would be reasonable.  He asked Mr. Ruggiero had                                                                    
comment or would address the issue the following day.                                                                           
3:56:13 PM                                                                                                                    
Mr. Ruggiero answered it was  something that could be shown.                                                                    
He added  that he had  been dumbfounded by the  concept that                                                                    
if  a  company  had  just  accepted 2  more  points  in  its                                                                    
royalty, it  would get  a 10  percent royalty  reduction. He                                                                    
did not  understand why the  provision had come  into being.                                                                    
He  explained that  the  10  percent extra  on  the GVR  was                                                                    
applied to  the same  dollars as  the royalty.  He expounded                                                                    
that if a  company agreed to 2 more points  upfront it would                                                                    
get 10 off the back end, meaning  it would be a net 8 points                                                                    
better off. If  that type of relief was necessary  for a new                                                                    
field,  the state  already had  royalty relief  in place  in                                                                    
statute and  regulation; when  needed companies  could apply                                                                    
for the relief and could show  why and for how long it would                                                                    
be needed.                                                                                                                      
Co-Chair  Seaton  stated  he was  concerned  about  how  the                                                                    
provision  impacted the  entire  [tax]  regime. He  believed                                                                    
that going to  a 30 percent GVR  would significantly distort                                                                    
everything that had been attempted.                                                                                             
HB 111 was HEARD and HELD in committee for further                                                                              
Co-Chair Foster provided the schedule for the following                                                                         
3:58:14 PM                                                                                                                    
The meeting was adjourned at 3:58 p.m.                                                                                          

Document Name Date/Time Subjects
HB 111 032317 HFIN HB111 Castle Gap (003).pdf HFIN 3/23/2017 1:30:00 PM
HB 111
HB 111 Alaska Sedimentary Basins.pdf HFIN 3/23/2017 1:30:00 PM
HB 111
HB 111 3.22.17 Gara ConocoPhillips Earnings.PDF HFIN 3/23/2017 1:30:00 PM
HB 111