Legislature(2009 - 2010)SENATE FINANCE 532
02/22/2010 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Effect of Key Tax Components on Government Take and Tax Rates | |
| Alaska's Oil and Gas Regime Relative to Other Global Systems. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
February 22, 2010
9:00 a.m.
9:00:53 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:00 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Joe Paskvan, Senator John Coghill, Pat Galvin,
Commissioner, Department of Revenue; Dan Stickel, Economist,
Tax Division, Department of Revenue; Rich Ruggiero,
Consultant, Gaffney, Cline and Associates Inc.
PRESENT VIA TELECONFERENCE
None
SUMMARY
EFFECT OF KEY TAX COMPONENTS ON GOVERNMENT TAKE and TAX
RATES
ALASKA'S OIL & GAS TAX REGIME REALATIVE TO OTHER GLOBAL
SYSTEMS
^Effect of Key Tax Components on Government Take and Tax
Rates
9:01:02 AM
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, explained
that the presentation employs an interactive model referred
to as a "dashboard design" that allows manipulation of
variables within the production tax calculation. The tool
allows a person to view the impact of tax calculation on
state revenue, the producer's share, and the federal
government. He explained that the model provides an overview
of the various representations.
DAN STICKEL, ECONOMIST, TAX DIVISION, DEPARTMENT OF REVENUE,
reviewed the model "One Year Snapshot of a Change to
Production Tax" (Copy on File). Using the model, one can set
parameters for given scenarios by adjusting the oil price,
transportation costs, royalty rates, and lease expenditures.
Potential changes to Alaska's Clear and Equitable Share
(ACES) can also be made. The model also allows one to look
at two different progressivity rates. The model allows one
to adjust the capital credit rate and the production as part
of the base scenario. He provided an example where under the
current ACES system, the producer receives 32 percent of the
income and the state takes 50 percent. Under the
modification, the producer takes 37 percent and the state
takes 43 percent.
9:06:27 AM
Co-Chair Stedman asked if the current tax structure was a
fixed frozen allocation on the model, or is the structure
dynamic. Commissioner Galvin responded that the current tax
structure is fixed at the current ACES. Commissioner Galvin
interjected that if the price, royalty rate, or the upstream
cost is changed, then the columns will adjust accordingly.
The current system is fixed in terms of the parameters for
the tax rate, progressivity, and the current royalty.
Senator Olson asked about the terms contractor versus
producer. Commissioner Galvin replied that the copy of the
model given to Senator Olson was an earlier version and the
terms contractor and producer are interchangeable.
Mr. Stickel reviewed the total profit across the entire
fiscal system. Under the existing scenario the state
receives $7.3 billion in oil revenue and $6.3 billion under
the adjustment. Co-Chair Stedman corrected the chart's
spelling of "billion." Mr. Stickel reviewed the cost
recovery component as shown in the interactive chart. The
share of the revenue is allocated to the lease expenditures
and the transportation cost as it relates to the profit
component of the oil revenue.
9:08:57 AM
Mr. Stickel moved to the set of charts titled "Share of the
Total Production Tax Value". The chart shows the amount
received by the government, with a broad range of oil prices
using the tax regime set into the model.
Senator Thomas revisited the share of total profits in
dollars under the current and the modified charts. He asked
if the amounts provided were an average or fixed number. He
explained that he continues to read in periodicals that the
state takes as much as 80 percent. Mr. Stickel responded
that the chart illustrates the share of profit at the given
price production lease expenditure scenario input into the
model. Credits are included in the calculation.
Commissioner Galvin added that the chart exemplifies the
share of the take across a wide spectrum of prices. Given
the assumptions for lease expenditures and production, an 80
percent government take figure is not seen. The marginal tax
rate may be the amount quoted in the periodicals. Mr.
Stickel responded that he had a chart illustrating the
marginal government take at a range of oil prices. He stated
that under the current regime, approximately $120 per
barrel, the marginal government take is greater than 90
percent.
Commissioner Galvin clarified that the term "marginal tax
rate" references one additional dollar of profit or the
share between the various parties. Senator Thomas opined
that the clarification is necessary for the public's
understanding.
9:14:27 AM
Mr. Stickel moved on to the "Share of Total Production Tax
Value with Modifications" explaining that the state ranges
from 38 percent to 55 percent depending on the modified tax
scenario.
Co-Chair Stedman asked if particular areas within this model
are parsed out with a hypothetical ringfencing of Prudhoe
Bay and Kuparuk. Mr. Stickel replied that the model does
allow adjustment, but the tax in actuality is calculated on
a company as opposed to a field basis. Commissioner Galvin
pointed out that the inputs for the fields listed in a prior
presentation are added to the resulting revenue for the
state along with the combined total.
Senator Egan asked if the credits and the modifications
apply to Prudhoe Bay alone or to the entire North Slope.
Commissioner Galvin responded that the credits depend on the
modification used. The modification is a reference to
compare the parameters set in the box versus the current
production tax values for those assumptions. With regard to
credits, if they are modified and raised to 30 percent the
application would span the entire 650 thousand barrels per
day. The parameters for production are representation of the
current North Slope. The comparison between current and
modified would show the difference if change in the tax
system were applied to the entire system. If the production
level is modified to reflect or replicate Prudhoe Bay, then
the change between the current system and the modified
system could be created for the one field. The model is
flexible and the purpose is for the user to replicate a
certain scenario.
9:20:07 AM
Co-Chair Stedman asked about the cost shown in the input. He
asked how an upstream cost of $16 is arrived at. Mr. Stickel
replied that the $16 dollars was indicative of the upstream
cost in one of the historical years, but the upstream cost
can be set to the preferred amount for the scenario
analysis.
Co-Chair Stedman recalled that the department used $25 per
barrel for the presentation on upstream and downstream costs
last week.
Commissioner Galvin acknowledged that generally $25 per
barrel is used as the combined transportation and upstream
cost, but the model is designed to change the variables. He
explained that the department has one input for upstream
costs and in order to derive the credits, you must parse the
upstream cost between operating and capital. The model sets
50 percent of the upstream cost as capital and 50 percent as
operating, which may not be the experience that any
particular tax payer has.
Co-Chair Stedman noted that the state is heavier on capital
costs than operating costs. Mr. Stickel agreed that the
forecast is for capital costs to increase while operating
costs will decline in FY10 and remain steady. The 50 percent
assumption can be modified in the model's calculations.
Co-Chair Stedman explained that the data on the screen is
sometimes perceived as truth regarding the listed outputs.
If the inputs are left over, it sometimes leads to
confusion.
Mr. Stickel pointed out various charts produced by the
model. One chart illustrates the nominal tax rate across the
range of oil prices under the current system. The
modification and the tax system can then be compared.
Mr. Stickel concluded that the tool allows examination of
the effects of various changes to the existing tax
structure.
9:27:41 AM
Commissioner Galvin concluded that the presentation
illustrates the "dashboard" model as a tool employing
different modifications to the current tax system and the
share of revenue. The model is not set up to for any
particular proposal, but is available for people who want to
use it.
Co-Chair Stedman asked if the algorithm models the standard
deduction. Mr. Stickel replied that the model uses an
assumption for total costs with or without the standard
deduction.
Co-Chair Stedman asked if the department modeled the
standard deduction in anticipation of the cost over the
three year life. He asked if the department classified the
standard deduction three years ago and how close the outcome
was to the projection.
Commissioner Galvin responded that there was not a model
using an anticipated operating expenditure representing
Prudhoe Bay and Kuparuk versus the three percent allowed
under the standard deduction. The department did not project
a foreword looking operating expenditure level primarily
because there was not historical data to base a forecast on.
9:31:12 AM
Co-Chair Stedman noted that the revenue projections last
week from the Department of Revenue show the North Slope
development units costing the treasury an estimated $434
million. Prudhoe Bay and Kuparuk generate $2 billion. He
noticed different comfort levels depending on what part of
the base a particular operator used. The development arena
has a high comfort level with the new entrants. The concern
is raised by industry. How can a model like this
synthetically ringfence Prudhoe Bay and Kuparuk allowing for
policy calls that maximize the Basin's value?
Commissioner Galvin responded that the model as presented
provides a reflection of individual fields. The production
assumptions and the lease expenditure assumptions with
modifications illustrate the impact of Prudhoe Bay versus
the other producing fields simply by changing the inputs.
Co-Chair Stedman noticed that the downstream and the
shipping costs combined equal $22 dollars. He pointed out
that marginal decision making affects the industry's
process. He explained that the model represents the ACES
policy perspective.
Commissioner Galvin explained that the department observes
revenue investment opportunities that may exist on the North
Slope. He observed that the different investment metrics
from a marginal decision making standpoint will drive the
decision regarding the investment. The internal rates of
return and the present values must be viewed and analyzed
from the overall perspective and the marginal investment
standpoint.
9:38:18 AM
Co-Chair Stedman assumed that the model availability would
remain "in house." Commissioner Galvin stated that the
interactive model would be given to Co-Chair Stedman and he
could decide about further availability.
Co-Chair Stedman stated that he wanted to keep the
administration and consultants "corralled up" on the inputs
received from the model.
9:39:26 AM AT EASE
9:42:49 AM RECONVENED
^Alaska's Oil and Gas Regime Relative to Other Global
Systems.
9:43:38 AM
RICH RUGGIERO, CONSULTANT, GAFFNEY, CLINE AND ASSOCIATES
INC. delivered the PowerPoint presentation "Fiscal System
Benchmarking" (Copy on File). He opined that it is important
to understand the basis by which a fiscal comparison is made
because it is easy for presentation results to be
misinterpreted. Very few studies span a full cycle.
9:45:25 AM
Mr. Ruggiero reviewed Slide 5: "Reviewing Fiscal
Comparisons"
fiscal comparison is being made.
for which they were intended.
o Full cycle including Exploration?
o From point of development investment decision?
o Remaining life?
o High price or low price scenario? etc.
Mr. Ruggiero detailed Slide 6: "Fiscal Take Also Depends
o In the early 1980's, prices were escalating, but
the places to invest were limited
ƒThe UK had a 90+% government take and
investment activity level was high
o By the late 1990's prices had remained low for
most of the decade and upwards of 70 countries
were holding license rounds in search of
"revenues'.
ƒThe UK had eliminated all taxes but Corporate
Income Tax in an attempt to attract
investors.
their ability to explain why regimes change or the need
for fiscal regime changes.
Mr. Ruggiero detailed the map on Slide 7: "The 1980's-
Companies in Search of Countries." The areas in the map
shown in green were open to foreign investment in the energy
sector. The red zones had limited access to foreign
investment in the energy sector. The 1980s were
characterized as a decade of companies in search of
countries.
Mr. Ruggiero discussed Slide 8: "The early 2000's-Countries
in Search of Companies."
Mr. Ruggiero detailed Slide 9: "The 2010's-Returning
Nationalism, Transparency." Some countries have raised their
tax take or have inserted themselves as a majority equity
partner in every venture in their country.
9:49:45 AM
Mr. Ruggiero explained Slide 10: "Contract Awards in Recent
Iraq Bidding Rounds". Of the four columns shown, the first
indicates the field or contract area. The second column
shows the group of companies that bid as a consortium. The
third column is the plateau production reached. The fourth
column is the fee bid per barrel if all contractual
conditions are met.
Co-Chair Stedman asked why the fee is bid per barrel. Mr.
Ruggiero answered that the fee is subject to the terms
offered for the properties' licensing. Co-Chair Stedman
asked when the two bidding rounds occurred. Mr. Ruggiero
answered that round one happened in June and round two in
December of 2009.
Co-Chair Stedman noted the comments made about the
similarity between Iraq and Saudi Arabia's oil reserves. He
asked if there was a substantial amount of oil in Iraq
versus that of Alaska. Mr. Ruggiero explained that he could
not draw a comparison between Alaska and Iraq.
Co-Chair Stedman stated that he attended conferences in
London last summer where firm representatives expressed
interest in the vast oil reserves in Iraq.
Mr. Ruggiero agreed that countries in the Middle East
contain the vast amount of oil and gas reserves in the
world. All of the entities in the Middle East have large
government take and yet the international oil companies are
there because of the scope of reserves available.
Co-Chair Stedman recalled that one oil company offered a
similar type of contract in Southeast Asia. Discussions
hinged on a similar type of scenario regarding negotiations
to enter the market. Mr. Ruggiero agreed that technical
service contracts have existed for quite some time.
9:56:39 AM
Senator Thomas pointed out the final column in the table
illustrating the cost per barrel. Mr. Ruggiero stated that
he did not wish to appear evasive about Iraq, but Gaffney,
Cline, and Associates were the advisors to the ministry of
oil and did draft the agreements. He stated that he could
only speak about the information on the slides in the public
domain.
Mr. Ruggiero detailed Slide 11: "Creating Best Fiscal
Systems"
their world-wide competitive position to set
hydrocarbon fiscal terms.
o Attract Investment
o Generate revenue for the treasury
o Create jobs, increase local skill base
countries with petroleum legislation.
o Many areas of similarity
o Many areas of difference
o Different "vintages" can be active at the same
time
Mr. Ruggiero detailed Slide 12: "Countries Adapting to
Higher Prices." The slide demonstrates that from 2002 to
2007 the various people and countries look at the fact that
prices are rising and more profit was going to the oil
companies, so terms were increased. The graph provides an
idea about the response to a rise in oil prices.
10:00:05 AM
Mr. Ruggiero discussed Slide 13: "Industry "Take"
Assessments"
typically based on:
o Marginal Government Take
o Average Government Take
o Total Government Take
o Risk
o Stability
fiscal regimes that these studies do not cover or rank
can at times be more important.
Mr. Ruggiero addressed Slide 14: "What these studies tend to
ignore."
Many of the above have a significant financial impact and
if included might generate a different ranking outcome.
Mr. Ruggiero described Slide 15: "New Players Today--the
International National Oil Companies"
internationally
o The focus of their expansion includes Middle East,
Former Soviet Union, Africa, and Latin America
o For example, China-Africa trade; $4 billion in
1995, $40 billion in 2005, expected to be over
$100 billion in 2010.
o Different (lower?) investment criteria
o Different drivers
o Government to government deals
ƒChina and India to cooperate on energy
acquisitions
ƒEmergence of the BRIC (Brazil, Russia, India,
China) alliance.
Mr. Ruggiero pointed out Slide 16: "Then there are the
Hidden Drivers"
o Compensation packages drive decision making
o Good deals are sometimes passed up to do deals
that score more bonus points
o These are usually not obvious nor acknowledged
o Maintaining reserve replacement/growth
o Reducing cost per barrel
o Increasing market share
10:05:14 AM
Co-Chair Stedman asked a question about Slide 10. He
recalled one country that had a failed round approximately
one year ago, but then had a successful round this fall
after some adjustments. Mr. Ruggiero was not familiar with
the situation.
Senator Thomas asked how the money is tracked in Nigeria.
Mr. Ruggiero reported that tracking money relies on the
contract information.
10:08:02 AM
Mr. Ruggiero continued with Slide 19: "Time Value of Money"
compare the time value of benefits in one regime versus
another.
all eligible costs to be deducted immediately from
revenue (and even receive cash back" plus provides
capital and exploration credits for the same expenses.
Mr. Ruggiero discussed Slide 20: "Simplified Field Model"
that provides an example of the impact of time value. The
hypothetical field created in the slide shows an investment
of $1 billion dollars in one year with a ten year period to
pay taxes and recover the capital investment.
Mr. Ruggiero detailed the table on Slide 23: "Tax Impact of
Depreciation" which shows the significance of time value and
countries' preferences in respect to recovering capital.
10:13:43 AM
Mr. Ruggiero illustrated Slide 24: "Impact of 20% investment
credits over two years." Slide 25 illustrates the same
information in table form. A fiscal regime with a
combination of immediate write off and investment credits
can compete favorably on select financial metrics with
regimes with lower Government Takes.
Mr. Ruggiero addressed Slide 27 "Ringfencing"
type fields or stand alone existing fields.
"ringfenced."
o Implication: The same producer, in the same
country, can have a highly profitable project but
be unable to offset or deduct losses from another
project.
o One of the biggest surges of activity in the UK
offshore occurred when the ringfence around PRT
(their special petroleum tax) was removed.
10:17:35 AM
Mr. Ruggiero continued with Slide 28: "Why Ringfencing
Matters"
opportunities as a standalone project.
o Market price lower than NS crude based on quality
o Higher development and operating costs
o Ignores fact that project is connected (fiscally)
to existing operations.
Mr. Ruggiero detailed Slide 29: "Simple Ringfence Example".
o Production 650,000 bpd
o Market oil price $70/bbl
o Transportation costs of $7/bbl
o Upstream costs $18/bbl (50% opex, 50% capex)
o Production 250,000 bpd
o Market oil price 90% of NS oil price (quality)
o Transportation costs of $7/bbl
o Upstream costs twice as high as oil project
$36/bbl
Mr. Ruggiero Slide 30: "Heavy oil and Alaska Tax"
of the Alaska tax in two cases:
o Project ringfence
o North Slope-wide ringfence as allowed under
Production Tax Law
Heavy Oil developments
Mr. Ruggiero noted Slide 31: "Stand Alone-Project Ringfence"
regimes, existing oil tax rate would be 30 % and heavy
oil would be 25%
blended portfolio
Mr. Ruggiero Slide 32: "North Slope-wide Ringfence."
portfolio, the heavy oil project will effectively be
taxed at 5% instead of 25%.
oil prices.
Co-Chair Stedman asked about the cost on the $30 dollar per
barrel incremental cost. He asked for an example using $50
per barrel.
10:21:26 AM
Mr. Ruggiero described Slide 33: "Heavy Oil Effective Tax
Rates." Co-Chair Stedman clarified that he was interested in
production cost. Mr. Ruggiero answered that he would run the
production cost for Co-Chair Stedman and provide it at a
later date.
Mr. Ruggiero noted Slide 33: "Heavy Oil Effective Tax Rates"
The blue line represents the production tax rate if a
standalone tax rate. The green line represents the effective
Alaska tax rate-heavy oil.
Co-Chair Stedman asked about the theoretical analysis and
modeling for Prudhoe Bay and Kuparuk on heavy oil to
determine whether the state is receiving an encouraged
response from the industry. Mr. Ruggiero replied that the
first thing to observe is the heavy oil project, the size of
the project, timing and the rate plugged into the formula to
show the effect of the tax rate over the full life of the
project rather than a one year snapshot.
Co-Chair Stedman reminded that one of the state's goals is
to get to heavy oil. Mr. Ruggiero agreed.
10:24:48 AM
Mr. Ruggiero detailed Slide 35: "Selection of Benchmarks"
are investing
o Production Sharing Contract, Royalty, Technical
Services Contract, Special Taxes
o US, South America, Europe, Africa, Middle East,
Asia Pacific
Mr. Ruggiero noted Slide 37: "GCA Analysis Assumptions"
Revenue forecasts (no gas pipeline case)
o 4.4 billion barrels of oil produced
o $23/bbl Capex + Opex + Tariffs (non indexed)
o Inclusive of all nuances that are part of a
particular regime including many ignored by
other regimes
Co-Chair Stedman asked about the map shown on Slide 36:
"Benchmarks: Selected "hotspots." He noted the two
successful rounds in Iraq. He asked if the countries
highlighted on the map had experienced failed rounds. Mr.
Ruggiero stated none that he was aware of.
Senator Thomas asked about Norway as a hot spot. He
remembered that Norway was considered one of the worst
places based on their tax structure. He asked if the
government take in Norway had changed. Mr. Ruggiero stated
that nothing has changed in Norway.
Mr. Ruggiero Slide 38 and the "Remaining NS oil Profile
Total Government Take" The graph uses a remaining North
Slope profile. The Alaska take ranges from approximately 67
to 77 percent as the overall state and federal take. The
graph illustrates other countries that fall into the same
category as Alaska. The government take in Iraq is between
98 and 99 percent. In Norway the government take is between
78 and 88 percent.
Co-Chair Stedman asked about the Gulf of Mexico and the
discussion about deep water as it affects Alaska. He asked
how the region can reach 47 to 49 percent. He asked about
the corporate income tax and federal royalties. Mr. Ruggiero
replied that federal royalties and US federal income tax
make up the 47 to 49 percent.
Co-Chair Stedman asked about differences regarding deep
water Gulf of Mexico.
Mr. Ruggiero explained that the fiscal terms were applied to
the North Slope. The value adjustments were not made for
deep water, but instead the same Alaska profile was applied
with the fiscal terms of the different regimes.
10:30:46 AM
Co-Chair Stedman asked if the committee should pay attention
to deep water Gulf of Mexico due to its high cost factor
relative to the North Slope. Mr. Ruggiero referenced Slide
39 and "Industry Profit NPV 10 (US$B)" He provided the
comparison of the various nations and prices per barrel.
Mr. Ruggiero noted that the same conclusion is reached
regarding government take. Government take is competitive
with the hydrocarbon prolific areas. The government takes in
recent Iraq contracts show very low producer Net Present
Value (NPV) and may exist in anticipation with what can be
done in the future following establishment.
10:33:11 AM
Mr. Ruggiero suggested potential important questions
regarding the data presented. He selected Slide 42:
Government Take Studies.
requires knowing the basis on which comparisons are
being made:
o IRR or rate of return
o NPV? Undiscounted? What discount rate?
o Marginal take at the absolute worse "spot" in the
fiscal regime or averaged across a range of
expected outcomes?
o Single fields or portfolios?
o High rate oil developments versus extended plateau
gas developments?
Mr. Ruggiero Slide described Slide 43: "Vintage"
of different vintage agreements.
o Most of the older agreements are specific to the
field(s) being produced. A comparison to these
would be misleading and unfair.
o Even if older agreements provide opportunity for
new exploration, the new projects may be
ringfenced.
o New investors can't receive the terms of the older
agreements.
vintage agreement are they using?
10:38:16 AM
Mr. Ruggiero moved to Slide 47: "Which Gulf of Mexico (GOM)?
and different government terms
o Shallow water, paid for platforms, producing
fields from relatively low depths, low operating
cost structure and relatively inexpensive
transportation to market.
o Recent deep water developments, new state-of-the-
art platforms, producing from deep horizons,
challenging technology, high cost to drill, high
cost to operate, long distance to market.
o Recent ultra deep drilling from the shallow water
shelf, middle range costs, close to shore and
market.
royalty.
Mr. Ruggiero detailed Slide 48: "At what Oil Price"
o Progressive systems take the minimum
o Regressive systems take a larger bite
o Comparison studies of the progressive Alaska tax
regime would cast Alaska in a better light
o Progressive systems take a big bite
o Regressive systems look favorable
o Comparison studies of Alaska would cast Alaska in
a worse light
reasonable range so that the workings of the fiscal
system can be adequately assessed.
10:40:48 AM
Mr. Ruggiero described Slide 49: "Does it include all
Government Take"
o Even though these can vary from lease to lease,
are they included?
o Recent $1Bn bonuses paid in Angola
o Sizeable bonuses paid in other regimes as well
o Has the requirement to provide a portion of the
oil and gas to the local market with a discount
been taken into account?
o Has the government participation been included,
even if it is as a full paying equity partner?
Co-Chair Stedman asked if Angola is French speaking. Mr.
Ruggiero answered yes.
Co-Chair Stedman asked for a time reference for the recent
$1 billion bonus round in Algeria. Mr. Ruggiero answered
2008. Co-Chair Stedman asked if Angola had any failed
rounds. Mr. Ruggiero stated that Angola did not have failed
rounds that he was aware of.
10:42:31 AM
Mr. Ruggiero addressed Slide 50 and "Available Investment
Capital"
o Mandatory-loss of license if they don't
o Should-monetary penalties/loss of production if
they don't
o Discretionary
fallen and global economy is in a recession. How much
of the lack of new discretionary spending in Alaska is
because the "tax is too high" versus significant
spending being directed to the top two categories
above.
Mr. Ruggiero discussed Slide 51: "Wrap Up"
before you draw conclusions
signature bonuses are often left out.
and capital credits in balancing differences between
Alaska and other regimes that may lack these, but have
lower government take.
hydrocarbon prolific areas.
10:45:52 AM
Senator Ellis noted surprise about Alaska's representation
as a "hot spot." Mr. Ruggiero explained that Alaska was not
technically placed on the hotspot list. Alaska was instead
compared to countries on the "hot spot" list. Annual reports
including investor relation presentations, led to the
decision about which countries were on the list.
Senator Thomas referred to Slide 38 and the reference to
Gulf of Mexico. He asked if the reference included "deep
water." Mr. Ruggiero replied that an average of the three
gulfs was used.
Senator Thomas asked about the situation for Alaska's tax
regime and government take if the range was $2-6 a barrel.
Mr. Ruggiero asked if Senator Thomas was referring to
government take. Senator Thomas answered yes; he is
interested in government take when oil is running $75 per
barrel. Co-Chair Stedman responded $500 million.
ADJOURNMENT
The meeting was adjourned at 10:50 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2010 02 22 DOR Effect of Key Tax Components on Gov. Take and Tax Rates SFC.pdf |
SFIN 2/22/2010 9:00:00 AM |
|
| 2010 02 22 DOR Global Systems Gaffney Cline International Benchmark SFC.pdf |
SFIN 2/22/2010 9:00:00 AM |
Oil and Gas Production Tax Review |