Legislature(2013 - 2014)SENATE FINANCE 532

03/06/2013 03:00 PM FINANCE


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03:05:27 PM Start
03:05:34 PM SB21
05:14:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 21 OIL AND GAS PRODUCTION TAX TELECONFERENCED
-- Public Testimony --
                 SENATE FINANCE COMMITTEE                                                                                       
                       March 6, 2013                                                                                            
                         3:05 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
3:05:27 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Vice-Chair  Fairclough called  the Senate  Finance Committee                                                                    
meeting to order at 3:05 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Valerie Brooks, Self;                                                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jim  Sykes, Self,  Palmer;  Keith  Silver, Self,  Anchorage;                                                                    
Steve  Pratt, Executive  Director, Consumer  Energy Alliance                                                                    
Alaska,  Anchorage;  Brendan  Babb, Self,  Anchorage;  Scott                                                                    
Thorson,  Self,  Anchorage;   Jim  Plaquet,  Alaska  Support                                                                    
Industry   Alliance,   Fairbanks;   Rich   Seifert,   Alaska                                                                    
Citizenry,  Fairbanks;  Brad   Faulkner,  Self,  Homer;  Wes                                                                    
Newcomb,  Self, Homer;  Bob  Shavelson, Executive  Director,                                                                    
Cook  Inlet Keeper,  Homer; Carl  Portman, Deputy  Director,                                                                    
Resource Development Council,  Anchorage; Tom Maloney, Self,                                                                    
Anchorage;   Stephanie   MacSwain,  Self,   Anchorage;   Jim                                                                    
Udelhoven, Udelhoven Oil  Field Services, Anchorage; Phillip                                                                    
Furbush, Self,  Palmer; Mary  Toutorghiu, Self,  Kenai; Paul                                                                    
Metz, Self, Fairbanks; Jerry  Ahiwnona, Self, Anchorage; Tom                                                                    
Lakosh,  Self, Anchorage;  Cathy Duvburrn,  Self, Anchorage;                                                                    
Mike  Heiring,  Self,  Anchorage; Michael  Jesperson,  Self,                                                                    
Anchorage;  Peter  Machsey,  Self, Anchorage;  Dirk  Nelson,                                                                    
Self, Fairbanks; Michele Vasquez,  Self, Kenai; Ray Metcalf,                                                                    
Self,  Anchorage; Priscilla  Simmons,  Self, Anchorage;  Eli                                                                    
Stine, Self,  Anchorage; Andy Rogers, Self,  Anchorage; Bill                                                                    
Warren,  Self,  Kenai;  Reed Christensen,  Self,  Anchorage;                                                                    
Jeff Acton,  Self, Anchorage;  Val Hanley,  Self, Anchorage;                                                                    
Maynard  Tapp,   Self,  Anchorage;  Bernie   Hoffman,  Self,                                                                    
Fairbanks;  Peter  Stokes,  Self,  Anchorage;  James  Price,                                                                    
Self, Kenai;  Ben Mohr,  Self, Anchorage;  Nick Pepperworth,                                                                    
Self, Anchorage;  Mary Nanuwak,  Self, Anchorage;  Nick Moe,                                                                    
Self,   Anchorage;  Judy   Patrick,  Self,   Wassila;  Laura                                                                    
Fagnani, Self,  Anchorage; Marleanna Hall,  Self, Anchorage;                                                                    
Phillis Spencer-Belz, Self, Anchorage;                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 21     OIL AND GAS PRODUCTION TAX                                                                                            
                                                                                                                                
          SB 21 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SENATE BILL NO. 21                                                                                                            
                                                                                                                                
     "An  Act relating  to  appropriations  from taxes  paid                                                                    
     under the  Alaska Net Income  Tax Act; relating  to the                                                                    
     oil and gas  production tax rate; relating  to gas used                                                                    
     in the state; relating  to monthly installment payments                                                                    
     of the oil and gas  production tax; relating to oil and                                                                    
     gas  production  tax  credits for  certain  losses  and                                                                    
     expenditures; relating  to oil  and gas  production tax                                                                    
     credit  certificates; relating  to nontransferable  tax                                                                    
     credits based  on production; relating  to the  oil and                                                                    
     gas tax  credit fund; relating to  annual statements by                                                                    
     producers and explorers;  relating to the determination                                                                    
     of annual  oil and gas production  tax values including                                                                    
     adjustments  based on  a percentage  of gross  value at                                                                    
     the  point   of  production  from  certain   leases  or                                                                    
     properties;    making   conforming    amendments;   and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
Vice-Chair Fairclough OPENED public testimony.                                                                                  
                                                                                                                                
3:05:34 PM                                                                                                                    
                                                                                                                                
JIM SYKES, SELF, PALMER  (via teleconference), believed CSSB
21(RES)  may be  successful after  the inclusion  of several                                                                    
changes. He  recommended that the  committee reduce  the GRE                                                                    
rate below  20 percent  with a  5 or 6  year cap.  He opined                                                                    
that  the net  operating  loss interest  rate  needed to  be                                                                    
reduced  substantially. He  thought the  CS would  work well                                                                    
for new areas of development;  however, he believed the bill                                                                    
needed  to  be  carefully  crafted to  ensure  that  maximum                                                                    
profits  were not  given  away to  oil  companies while  the                                                                    
companies  continued  to  make  maximum  profits  on  legacy                                                                    
fields. He stressed that the  legacy fields were some of the                                                                    
most reliable  and profitable fields  in the world  and that                                                                    
they  should remain  under the  current  Alaska's Clear  and                                                                    
Equitable Share  (ACES) system.  He sent  in a  handout that                                                                    
was passed  out to committee members;  it showed projections                                                                    
of offshore  production that would  occur in 8 to  10 years.                                                                    
He believed offshore production  would provide a significant                                                                    
amount of oil into  the Trans-Alaska Pipeline System (TAPS).                                                                    
He pointed  to concerns  related to throughput;  he believed                                                                    
throughput would increase  and come close to  levels seen in                                                                    
1988. He  discussed revenue earned  by the state  at various                                                                    
times. He  emphasized the issue  was primarily  about price.                                                                    
He  referenced  a  book  by John  Miller  titled  "The  Last                                                                    
Barrel." He  asked the committee  to consider the  amount of                                                                    
state revenue that  would be lost under  the legislation and                                                                    
how much production  would be required to  offset the costs.                                                                    
He  emphasized that  the state  deserved to  tax its  oil at                                                                    
full  value; the  state should  not hope  it would  get more                                                                    
revenue  later  based  on  promises  that  may  or  may  not                                                                    
materialize. He  mentioned Alaska's  tax rates could  not be                                                                    
reduced enough to stop oil  production in other areas of the                                                                    
world.                                                                                                                          
                                                                                                                                
Vice-Chair  Fairclough   asked  that  written   comments  be                                                                    
provided to Co-Chair Meyer's office.                                                                                            
                                                                                                                                
3:08:50 PM                                                                                                                    
                                                                                                                                
KEITH   SILVER,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
discussed  that Alaska  had  the highest  tax  rates in  the                                                                    
nation. He  remarked that corporate capital  was limited and                                                                    
only the  most profitable projects in  a company's portfolio                                                                    
would  be funded.  He discussed  that investors  were taking                                                                    
their  money  elsewhere  to receive  a  greater  return.  He                                                                    
believed the state needed a  new policy that would encourage                                                                    
long-term  planning and  investment  in  new production.  He                                                                    
emphasized  that the  amount of  throughput in  the pipeline                                                                    
did matter; he stated that  current level was within 100,000                                                                    
to 200,000 barrels per day of reaching the practical limit.                                                                     
                                                                                                                                
3:10:37 PM                                                                                                                    
                                                                                                                                
STEVE  PRATT, EXECUTIVE  DIRECTOR, CONSUMER  ENERGY ALLIANCE                                                                    
ALASKA,  ANCHORAGE (via  teleconference), vocalized  support                                                                    
for  the legislation.  The  organization  believed the  most                                                                    
significant  threat   to  the   state  was   declining  TAPS                                                                    
throughput and increased spending.  He opined that Americans                                                                    
had an  interest in obtaining competitively  priced domestic                                                                    
energy  and  robust economic  activity.  He  stated that  at                                                                    
least 30 percent  of working Alaskans were  dependent on oil                                                                    
and  gas  exploration  and development  for  employment.  He                                                                    
pointed  to  declining  oil  production  in  the  state.  He                                                                    
believed  that Alaska's  contribution to  the energy  supply                                                                    
would  continue  to decline  without  changes  in state  and                                                                    
federal policies.  He relayed that increased  prices and new                                                                    
technologies  had  led  to   substantial  increases  in  oil                                                                    
production in other states. He  believed the state needed to                                                                    
be  more  competitive.  He  stressed  that  an  increase  of                                                                    
throughput to 50 percent of  the TAPS capacity would add $18                                                                    
billion per  year to U.S.  economic activity; it  would also                                                                    
reduce the export of U.S.  money to other nations. He stated                                                                    
that   increased  economic   activity   would  benefit   all                                                                    
Alaskans.                                                                                                                       
                                                                                                                                
3:12:53 PM                                                                                                                    
                                                                                                                                
BRENDAN BABB,  SELF, ANCHORAGE (via  teleconference), voiced                                                                    
opposition to the bill. He  believed the reduced tax rate in                                                                    
the legislation catered to the  oil industry. He supported a                                                                    
reduction in tax rates only  after oil production increased.                                                                    
He  noted  that   oil  companies  were  some   of  the  most                                                                    
profitable organizations  in the  world; he  believed Alaska                                                                    
needed  to  provide  a   more  challenging  negotiation.  He                                                                    
discussed that oil  companies could get a  $2 billion profit                                                                    
per year  on a  $2 million  investment if  the tax  rate was                                                                    
lowered. He noted  that oil fields had  been declining since                                                                    
1988. He  stated that  ACES had not  caused the  decline. He                                                                    
pointed to  record high  employment on  the North  Slope; he                                                                    
expressed  disappoint that  50 percent  of the  workers were                                                                    
from outside  of Alaska.  He was in  favor of  incentives to                                                                    
increase jobs  for Alaskans. He  supported the  current ACES                                                                    
system. He  equated reducing the tax  rate before production                                                                    
increased to a teenager who  never took out the trash asking                                                                    
for an increase in allowance  with a promise to start taking                                                                    
the trash out.                                                                                                                  
                                                                                                                                
3:15:49 PM                                                                                                                    
                                                                                                                                
SCOTT   THORSON,  SELF,   ANCHORAGE  (via   teleconference),                                                                    
pointed  to the  competitive  situation  between Alaska  and                                                                    
North Dakota. He stated that  the 80 percent government take                                                                    
on  a $100  per barrel  of oil  was high.  He discussed  the                                                                    
process in  North Dakota and  stated that it was  simple due                                                                    
to privately owned land. He  believed the high cost of doing                                                                    
business  and the  difficulty  of  accessing resources  made                                                                    
Alaska uncompetitive.  He believed  that the only  thing the                                                                    
state could control was the tax environment.                                                                                    
                                                                                                                                
3:18:19 PM                                                                                                                    
                                                                                                                                
JIM  PLAQUET, ALASKA  SUPPORT  INDUSTRY ALLIANCE,  FAIRBANKS                                                                    
(via teleconference),  supported the legislation.  He agreed                                                                    
that the  government take remained  too high under  the ACES                                                                    
system.  He  stated that  much  oil  remained on  the  North                                                                    
Slope.  He   opined  that  high   oil  prices   should  spur                                                                    
investments  in new  oil, but  the new  investments had  not                                                                    
occurred to  date. He listed comparisons  between Alaska and                                                                    
other states. He stressed that  ACES did not incentivize new                                                                    
investment.  He reiterated  that  the  high government  take                                                                    
would  encourage oil  production in  other areas  outside of                                                                    
Alaska. He urged increasing competition.                                                                                        
                                                                                                                                
3:21:45 PM                                                                                                                    
                                                                                                                                
RICH    SEIFERT,    ALASKA   CITIZENRY,    FAIRBANKS    (via                                                                    
teleconference),  vocalized opposition  to the  legislation.                                                                    
He  referred  to claims  that  ACES  was responsible  for  a                                                                    
decline  in  production.  He  stated   that  a  natural  and                                                                    
expected  decline   had  been   occurring  since   1988.  He                                                                    
maintained that unless other oil  production came online the                                                                    
legacy fields were the most  significant and a source of the                                                                    
easiest oil  the state  would ever get.  He did  not believe                                                                    
ACES  had a  significant impact  on the  decline. He  opined                                                                    
that  decisions  made by  the  state  would have  been  much                                                                    
easier  if it  had  audited the  process  and exercised  due                                                                    
diligence  in   accounting  oversight  for   production.  He                                                                    
stressed that it  was not possible to know  that promises to                                                                    
increase  production would  actually occur  if the  tax rate                                                                    
was decreased. He reiterated that  a better investment would                                                                    
be auditing  production and production costs  by company. He                                                                    
believed a better  case could be made for  making changes to                                                                    
the tax structure if reliable audit data was obtained.                                                                          
                                                                                                                                
3:24:43 PM                                                                                                                    
                                                                                                                                
BRAD FAULKNER,  SELF, HOMER (via  teleconference), testified                                                                    
in opposition of SB 21. He  shared that he had worked in the                                                                    
industry. He opposed  any additional tax breaks  for new oil                                                                    
pools found in legacy fields.  He said that field management                                                                    
was the  problem and that  there were known reserves  of oil                                                                    
that  were easily  available  and  surrounded by  sufficient                                                                    
infrastructure. He  noted that the natural  decline had been                                                                    
anticipated. He said that there  was untapped oil sitting on                                                                    
the North Slope that no  one was recognizing or admitting to                                                                    
that would keep  the pipeline full. He  mentioned that under                                                                    
the  Economic Limit  Factor  (ELF), 80  percent  of the  oil                                                                    
leaving Kuparuk and Prudhoe Bay had no production tax.                                                                          
                                                                                                                                
3:27:06 PM                                                                                                                    
                                                                                                                                
WES  NEWCOMB,  SELF,   HOMER  (via  teleconference),  voiced                                                                    
support for  SB 21.  expressed concern  that that  the state                                                                    
would fall  behind in its fiduciary  responsibilities should                                                                    
oil  production  continue  to decline.  He  understood  that                                                                    
Alaska's people,  particularly Native Alaskans,  depended on                                                                    
oil   revenues.  He   testified   in   support  of   further                                                                    
production.                                                                                                                     
                                                                                                                                
3:28:17 PM                                                                                                                    
                                                                                                                                
BOB SHAVELSON, EXECUTIVE DIRECTOR,  COOK INLET KEEPER, HOMER                                                                    
(via teleconference),  testified in opposition to  SB 21. He                                                                    
believed  that  under the  legislation  the  state would  be                                                                    
giving  away  billions  of dollars  to  the  industry  while                                                                    
squandering Alaska's finite wealth.  He felt that the public                                                                    
deserved a  better return on  their resources, as well  as a                                                                    
better  understanding of  the  fiscal landscape  surrounding                                                                    
the  issue. He  urged for  maintaining progressivity  in the                                                                    
tax  regime.   He  contended  that   ACES  was   creating  a                                                                    
renascence  in Cook  Inlet  of  exploration and  development                                                                    
that  he  had witnessed.  He  believed  that Alaska  had  an                                                                    
obligation to  future generations  to manage the  oil wealth                                                                    
responsibly.                                                                                                                    
                                                                                                                                
3:30:40 PM                                                                                                                    
                                                                                                                                
CARL   PORTMAN,   DEPUTY  DIRECTOR,   RESOURCE   DEVELOPMENT                                                                    
COUNCIL,  ANCHORAGE (via  teleconference), spoke  in support                                                                    
of SB  21. He believed  that there  was oil stranded  in the                                                                    
ground because the state was  looking to maximize short term                                                                    
revenue  at the  expense of  encouraging investment  and new                                                                    
production. He stressed  that since 2007 the  state had lost                                                                    
over 210 million barrels per  day with a point of production                                                                    
gross value  of over  $17 billion.  He said  that if  a less                                                                    
aggressive  tax regime  cut  the decline  in  half it  would                                                                    
result in  over $8  billion circulating  in the  economy. He                                                                    
believed  that the  state  was giving  away  the future  for                                                                    
short  term, unsustainable  tax  revenue. He  said that  the                                                                    
business community  was fearful of what  continued declining                                                                    
TAPS  throughput would  do to  the  economy as  a whole.  He                                                                    
expressed  support  for   Governor  Parnell's  approach.  He                                                                    
stressed  that there  was an  urgent need  for the  state to                                                                    
compete  in  order  to  stem   the  production  decline  and                                                                    
increase investment.  He relayed that the  resources were in                                                                    
the  ground and  that all  Alaska needed  was the  right tax                                                                    
policy to  begin production. He encouraged  the committee to                                                                    
further  hone  the  legislation to  make  Alaska  even  more                                                                    
attractive to the industry.                                                                                                     
                                                                                                                                
3:33:57 PM                                                                                                                    
                                                                                                                                
TOM MALONEY, SELF, ANCHORAGE  (via teleconference), spoke in                                                                    
support  of  SB  21.  He quoted  the  former  Department  of                                                                    
Revenue  Commissioner  Pat  Galvin   from  a  2007  Resource                                                                    
Development  Council  resource   review  publication,  which                                                                    
spoke to the fact that  ACES had not improved the investment                                                                    
climate of the  state. He said upon the advent  of ACES, the                                                                    
North Slope  was producing 739,000  barrels of oil  per day.                                                                    
He  gave a  brief history  of the  decline over  the past  5                                                                    
years. He  stated that in  2012 the highest  producing month                                                                    
was  lower  than the  lowest  producing  month in  2007.  He                                                                    
stated  that the  reduction of  production  had resulted  in                                                                    
massive revenue  loss for  the state.  He added  that Alaska                                                                    
needed more jobs for future generations.                                                                                        
                                                                                                                                
3:37:38 PM                                                                                                                    
                                                                                                                                
STEPHANIE  MACSWAIN, SELF,  ANCHORAGE (via  teleconference),                                                                    
spoke in support of SB 21.  She expressed the myriad of ways                                                                    
that  the  oil  industry  had benefited  her  directly.  She                                                                    
expressed concern  that the decline in  oil production would                                                                    
result in  fewer opportunities  for future  generations. She                                                                    
testified that  her friends were relocating  to other states                                                                    
because of the waning oil production.                                                                                           
                                                                                                                                
3:39:12 PM                                                                                                                    
                                                                                                                                
JIM UDELHOVEN, UDELHOVEN OIL  FIELD SERVICES, ANCHORAGE (via                                                                    
teleconference),  testified   in  support   of  SB   21.  He                                                                    
testified  that  his  family and  employees  had  stayed  in                                                                    
Alaska,  rather than  to  follow the  boom  in North  Dakota                                                                    
several years  ago, out  of a  belief that  production would                                                                    
improve. He  said that  now, one year  later, he  was moving                                                                    
employees  from Alaska  to  shale fields  in  Texas and  was                                                                    
negotiating contracts in North  Dakota. He stated that every                                                                    
year the  tax regime remained  the same, change  became more                                                                    
and more unlikely.                                                                                                              
                                                                                                                                
3:42:13 PM                                                                                                                    
                                                                                                                                
PHILLIP  FURBUSH, SELF,  PALMER (via  teleconference), spoke                                                                    
in  opposition to  SB 21.  He stated  that the  main problem                                                                    
with  the   Alaskan  economy  was   the  lack   of  economic                                                                    
diversification  and  irresponsible spending  practices.  He                                                                    
believed that  the non-renewable resources  would definitely                                                                    
run out.  He stressed that  instead of spending  billions in                                                                    
the  extraction of  oil, the  state should  be investing  in                                                                    
more diverse ways.  He suggested that the  state examine the                                                                    
saving and  spending practices of  Norway. He  believed that                                                                    
the state  should examine alternative  energy possibilities.                                                                    
He  said  that the  "extract  and  spend quickly"  mentality                                                                    
would bankrupt state.                                                                                                           
                                                                                                                                
3:45:32 PM                                                                                                                    
                                                                                                                                
MARY   TOUTORGHIU,   SELF,   KENAI   (via   teleconference),                                                                    
testified  in opposition  to SB  21.  She expressed  concern                                                                    
with the  spending practices of  the state. She  stated that                                                                    
the industry was holding back  on production in order to get                                                                    
a better deal  from the state. She felt  that the governor's                                                                    
proposed  plan  was  a  giveaway. She  noted  that  the  oil                                                                    
companies had not made any  promises for the tax breaks. She                                                                    
believed that  the proposed  legislation offered  a donation                                                                    
to industry and not an incentive for production.                                                                                
                                                                                                                                
3:48:41 PM                                                                                                                    
                                                                                                                                
PAUL METZ,  SELF, FAIRBANKS (via  teleconference), testified                                                                    
in support of SB 21.  He referred to previous testimony that                                                                    
related  to  the high  cost  for  industry  to work  in  the                                                                    
Alaskan terrain.  He believed that the  tax structure should                                                                    
make  the  state  more competitive  with  other  states.  He                                                                    
opined that  the state was  the highest  taxing jurisdiction                                                                    
in the industry.                                                                                                                
                                                                                                                                
3:50:34 PM                                                                                                                    
                                                                                                                                
JERRY  AHIWNONA,   SELF,  ANCHORAGE   (via  teleconference),                                                                    
testified  in opposition  to  SB 21.  He  believed that  the                                                                    
industry was "strong arming" the  state. He thought that the                                                                    
time spent  on the  legislation was  a waste  of legislative                                                                    
time  and taxpayer  money. He  believed  that oil  companies                                                                    
should   have  separate   accounting   rather  than   global                                                                    
apportionment.                                                                                                                  
                                                                                                                                
3:52:23 PM                                                                                                                    
                                                                                                                                
TOM LAKOSH, SELF,  ANCHORAGE (via teleconference), testified                                                                    
in opposition  to SB  21. He hoped  that he  committee would                                                                    
craft policy that  avoided exploitation of the  state by the                                                                    
oil industry. He felt that  the bill was the Alaskan version                                                                    
of  the   federal  sequester   legislation,  and   that  the                                                                    
combination  of the  two  would cut  the  state's budget  so                                                                    
severely   that  recovery   and  diversification   would  be                                                                    
impossible. He  stressed that the  state needed to  focus on                                                                    
long-term production  of oil, not  filling the  pipeline for                                                                    
the short-term.  He believed that  the recession of  sea ice                                                                    
on the  North Slope would  make it  easier for the  state to                                                                    
ship  oil  directly  from  the  slope  making  the  pipeline                                                                    
obsolete.                                                                                                                       
                                                                                                                                
3:55:47 PM                                                                                                                    
                                                                                                                                
CATHY  DUVBURRN,   SELF,  ANCHORAGE   (via  teleconference),                                                                    
testified  in  support  of  ACES   reform  and  SB  21.  She                                                                    
highlighted   that  ACES   had  been   unsuccessful  because                                                                    
throughput  had  decreased  over   the  past  5  years.  She                                                                    
expressed hope  that her family  would be able to  find work                                                                    
in the  state and not be  forced to move to  North Dakota or                                                                    
Texas.                                                                                                                          
                                                                                                                                
3:57:24 PM                                                                                                                    
                                                                                                                                
MIKE   HEIRING,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
testified in support of SB  21. He stressed that the passage                                                                    
of ACES had  created the decline in  throughput. He believed                                                                    
that tax reform was necessary  in order to ensure the future                                                                    
of Alaska.                                                                                                                      
                                                                                                                                
3:58:45 PM                                                                                                                    
                                                                                                                                
MICHAEL  JESPERSON,  SELF, ANCHORAGE  (via  teleconference),                                                                    
testified in support of SB 21.  He felt that the state could                                                                    
be  more attractive  to  industry. He  thought  the cost  of                                                                    
doing business  in the arctic environment,  coupled with the                                                                    
tax  system,  made  the state  highly  unattractive  to  the                                                                    
industry. He said  that he feared that his  family would not                                                                    
be able to find work because of the decline.                                                                                    
                                                                                                                                
4:00:41 PM                                                                                                                    
                                                                                                                                
PETER   MACHSEY,  SELF,   ANCHORAGE  (via   teleconference),                                                                    
expressed support  for SB  21. He testified  to the  lack of                                                                    
public  outcry  when  Alaska's  Clear  and  Equitable  Share                                                                    
(ACES)  was  passed in  2007.  He  believed that  the  large                                                                    
investment in  infrastructure, and  the jobs created  in the                                                                    
state  had  earned  the  industry  a  financial  return.  He                                                                    
queried   the   manufacturing   credit  written   into   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  stated that Mr. Machsey  could submit                                                                    
questions   concerning    the   legislation    directly   to                                                                    
legislative offices.                                                                                                            
                                                                                                                                
4:02:42 PM                                                                                                                    
                                                                                                                                
DIRK   NELSON,   SELF,   FAIRBANKS   (via   teleconference),                                                                    
testified against  SB 21. He  stated that the cost  of doing                                                                    
business on the  North Slope was often based  on net profits                                                                    
and not gross,  and offered that BP was  probably looking at                                                                    
net profits also.  He pointed out that  ConocoPhillips had a                                                                    
profit  of  nearly $28  per  barrel  of  oil in  Alaska  the                                                                    
previous year and opined that  this profit margin was higher                                                                    
than  anywhere  else in  North  America.  He suggested  that                                                                    
Governor Parnell  was not defending his  own legislation. He                                                                    
discussed  charts that  compared  decline  in throughput  to                                                                    
revenue   rates  and   asserted   that   there  was   little                                                                    
correlation between the  two. He pointed out  that even when                                                                    
15 out  of 19 fields on  the North Slope were  severance tax                                                                    
free  throughput had  already been  in decline.  He wondered                                                                    
why throughput would have been  in decline when there was no                                                                    
tax  if the  problem  was  revenue. He  stated  that BP  and                                                                    
ConocoPhillips  had not  "necessarily" been  forthright with                                                                    
its position  or its finances  and that there was  no forced                                                                    
disclosure. He  discussed a  BP memo  from 2004  and related                                                                    
that  it did  not sound  like  a commitment  to reinvest  in                                                                    
Alaska.  He stated  that there  was no  evidence that  SB 21                                                                    
would increase  throughput or revenue. He  concluded that he                                                                    
would like supporters  of SB 21 in Juneau  to sign contracts                                                                    
that  guaranteed that  if the  bill passed,  they would  not                                                                    
seek employment with the oil producers for 15 years.                                                                            
                                                                                                                                
4:06:06 PM                                                                                                                    
                                                                                                                                
MICHELE   VASQUEZ,   SELF,   KENAI   (via   teleconference),                                                                    
expressed  strong  opposition to  SB  21.  She offered  that                                                                    
larger tax breaks  for companies to drill  Alaska's oil made                                                                    
no  sense.  She pointed  out  that  oil companies  had  made                                                                    
billions off of  the state's oil and that they  did not need                                                                    
an  incentive to  do the  business  that they  were in.  She                                                                    
stated that  Alaska should not  give away its  oil resources                                                                    
with broader  tax breaks and  that doing so would  take away                                                                    
from  other  much-needed  programs.  She  supported  leaving                                                                    
Alaska's Clear and Equitable Share (ACES) in place.                                                                             
                                                                                                                                
4:07:31 PM                                                                                                                    
                                                                                                                                
RAY   METCALF,   SELF,   ANCHORAGE   (via   teleconference),                                                                    
testified  against  SB 21.  He  related  that he  had  heard                                                                    
testimony, which  stated that  it was  not as  profitable to                                                                    
drill and produce  oil in Alaska as it was  in other places;                                                                    
however, ConocoPhillips reported a  $29 per barrel profit in                                                                    
Alaska   the  previous   year.  He   offered  that   neither                                                                    
ConocoPhillips, ExxonMobil, or BP  made that much per barrel                                                                    
anywhere else in the world.  He discussed the terms for Iraq                                                                    
contracts that BP,  ExxonMobil, and Shell Oil  had signed in                                                                    
the past two years and  related that none of those contracts                                                                    
gave those  companies even  as little as  $2 per  barrel. He                                                                    
mentioned  the  discussion  about losing  workers  to  North                                                                    
Dakota and  stated that there  were more people  employed on                                                                    
the North  Slope than  there ever had  been. He  pointed out                                                                    
that tankers were  coming back from the West  Coast with oil                                                                    
still   onboard   because   they  could   not   unload   it;                                                                    
furthermore,  BP was  currently producing  at the  rate that                                                                    
its   market  consumed   the  oil   that   it  refined   and                                                                    
distributed. He offered that there  would be no place to put                                                                    
another 100,000  barrels a day  in the pipeline.  He related                                                                    
that  oil companies  would produce  enough oil  from Prudhoe                                                                    
Bay to meet  their market share and would  continue the same                                                                    
strategy even  if the  oil was  given to  them for  free. He                                                                    
pointed  out that  the state  should  not cater  to the  oil                                                                    
companies and that Alaska was  not the highest taxing entity                                                                    
in the  U.S. or the  world, but was below  the international                                                                    
average.                                                                                                                        
                                                                                                                                
4:12:49 PM                                                                                                                    
                                                                                                                                
PRISCILLA  SIMMONS,  SELF, ANCHORAGE  (via  teleconference),                                                                    
expressed support of  more jobs. She discussed  the oil boom                                                                    
in  Texas, through  which  that state  had  doubled its  oil                                                                    
production since  2010. She  shared that  Texas had  been in                                                                    
the oil production business for  decades prior to the Trans-                                                                    
Alaska  Pipeline System  (TAPS) and  that she  had witnessed                                                                    
co-workers leaving  Alaska for  North Dakota and  Texas. She                                                                    
wondered  why  Texas  was   increasing  production  and  job                                                                    
opportunities while  Alaska's production was  declining. She                                                                    
offered   that    Alaskans   like   herself    wanted   more                                                                    
opportunities  for oil  production  and expressed  disbelief                                                                    
that the Alaska's  huge resource base had  resulted in about                                                                    
a  26  percent  decline,  or 200,000  barrels  per  day,  of                                                                    
production over  the last  five years.  She stated  that she                                                                    
wanted to stay and live  in Alaska. She concluded that Texas                                                                    
had many advantages  over Alaska, but that  the state should                                                                    
not make job opportunities one of the advantages.                                                                               
                                                                                                                                
4:15:01 PM                                                                                                                    
                                                                                                                                
ELI STINE,  SELF, ANCHORAGE (via  teleconference), testified                                                                    
in  support of  more oil  and gas  production in  Alaska. He                                                                    
related  that  he  had  recently  moved  to  Anchorage  from                                                                    
Colorado  because  of   Anchorage's  job  opportunities.  He                                                                    
discussed  the  decrease  in investment  and  production  in                                                                    
Alaska. He  pointed out that  over the last five  years, the                                                                    
state had  seen a 25  percent decline in oil  production. He                                                                    
shared that  Alaska was partly  a great place to  be because                                                                    
of its tax revenue from  oil production. He related that the                                                                    
state needed  to be  sure that Alaska  and its  citizens got                                                                    
their fair  share, while still creating  an environment that                                                                    
opened competitive  opportunities for new investment  in the                                                                    
oil  and gas  industry.  He concluded  that  he was  worried                                                                    
about  his  future  in  Alaska  due  to  the  declining  oil                                                                    
production and expressed  a desire to stay in  the state. He                                                                    
urged  the  state not  to  continue  down  the path  it  was                                                                    
currently on.                                                                                                                   
                                                                                                                                
4:17:35 PM                                                                                                                    
                                                                                                                                
ANDY   ROGERS,   SELF,   ANCHORAGE   (via   teleconference),                                                                    
testified in support  of SB 21, but offered that  it was not                                                                    
competitive enough.  He was concerned that  younger Alaskans                                                                    
had the same cynical concerns  that people over 40 years-old                                                                    
usually  had.   He  discussed   the  comments   of  previous                                                                    
testifiers  and  expressed   concern  that  several  Alaskan                                                                    
employers had stated that they  were taking their businesses                                                                    
outside of Alaska. He urged the committee to improve SB 21.                                                                     
                                                                                                                                
4:19:39 PM                                                                                                                    
                                                                                                                                
BILL  WARREN,   SELF,  KENAI  (via   teleconference),  spoke                                                                    
against SB 21 and in  favor of "tweaking" Alaska's Clear and                                                                    
Equitable Share  (ACES). He stated  that there was a  lot of                                                                    
"fear  based"  drama  currently going  on.  He  shared  that                                                                    
Alaska's economy  was cyclical and  that he had made  a good                                                                    
living  in the  state. He  discussed the  legacy fields  and                                                                    
offered that if  you poured water out of a  bucket, it would                                                                    
soon be depleted.  He opined that if the  "big three" wanted                                                                    
to drill deeper or laterally,  the state should let them. He                                                                    
mentioned  that the  independent  oil  companies would  help                                                                    
"save"  Alaska   and  that  the  state   was  currently  not                                                                    
competing with North  Dakota and Texas. He  pointed out that                                                                    
local  hires would  be a  good thing  to ask  from the  "big                                                                    
three" and  reported that the  North Slope was full  of out-                                                                    
of-state  workers.  He  opined   that  the  high  aspect  of                                                                    
progressivity  was set  during  a period  of corruption  and                                                                    
concluded  that changing  the state's  oil policy  too often                                                                    
would  lower its  credibility. He  was hopeful  for Alaska's                                                                    
future and  shared that  the big  oil companies  would leave                                                                    
Alaska  when   Prudhoe  Bay   was  depleted;   however,  the                                                                    
"independents" would  take over  and make  the state  a good                                                                    
living.                                                                                                                         
                                                                                                                                
VALERIE  BROOKS,  SELF,  expressed support  of  funding  for                                                                    
education.  She  related that  the  oil  industry in  Alaska                                                                    
provided  income   for  many,  but  that   education  served                                                                    
everyone  in  the  state.  She  discussed  the  benefits  of                                                                    
education and offered that Alaskan  students had not seen an                                                                    
increase in the  base student allocation (BSA)  of funds for                                                                    
public  education for  the prior  three years;  furthermore,                                                                    
without  an increase  in  the current  year,  the BSA  would                                                                    
remain the same  for a fourth year. She  contrasted the lack                                                                    
of  an  increase in  student  funding  to an  $11.9  billion                                                                    
profit that "one oil company"  had made several years prior.                                                                    
She  offered   that  the  funding  that   the  proposed  tax                                                                    
incentives granted  big oil companies  could be  better used                                                                    
to maintain and  improve the public education  system in the                                                                    
Alaska to the benefit of everyone in the state.                                                                                 
                                                                                                                                
4:26:15 PM                                                                                                                    
                                                                                                                                
REED  CHRISTENSEN,  SELF,  ANCHORAGE  (via  teleconference),                                                                    
testified in  support of  SB 21, but  related that  the bill                                                                    
did not  go far enough. He  urged the need to  make Alaska's                                                                    
oil  and gas  climate more  competitive. He  shared that  he                                                                    
worked for a business that  manufactured products for use on                                                                    
the North Slope  and stated that the  company's business had                                                                    
declined  by  over  40  percent  since  Alaska's  Clear  and                                                                    
Equitable   Share  (ACES)   was  passed;   furthermore,  the                                                                    
alarming  downward  trend  appeared  to  be  continuing.  He                                                                    
pointed  out that  the downturn  in production  was due,  in                                                                    
large part,  to the fiscal  environment created by  ACES. He                                                                    
offered  that  oil companies  could  get  better returns  on                                                                    
their investments in other areas  of the world. He expressed                                                                    
that  Alaska needed  more private  sector jobs,  investment,                                                                    
and more  oil in the  pipeline and stated that  the pipeline                                                                    
was two-thirds  empty. He opined that  ACES was accelerating                                                                    
the decline  and was  bringing the  eventual shut  down date                                                                    
closer. He urged  that ACES should be fixed  and shared that                                                                    
the  effects of  the  production decline  could  be felt  in                                                                    
state  jobs,  education,  public  services,  charities,  and                                                                    
construction.                                                                                                                   
                                                                                                                                
4:28:42 PM                                                                                                                    
                                                                                                                                
JEFF ACTON,  SELF, ANCHORAGE (via teleconference),  spoke in                                                                    
support of  SB 21. He discussed  the oil boom in  Alaska and                                                                    
shared that  he had worked 20  years on the North  Slope. He                                                                    
stated that  in recent years,  the oil environment  in North                                                                    
Dakota, Texas,  and the  Gulf of Mexico  was similar  to the                                                                    
boom that  Alaska had experienced.  He pointed out  that the                                                                    
Alaska's Clear  and Equitable  Share's (ACES)  tax structure                                                                    
had  coincided with  the steady  decline  in production  and                                                                    
also  resulted in  fewer capital  projects. He  offered that                                                                    
Alaska  was competing  in all  corners of  the U.S.  and the                                                                    
world. He observed that the  discussion was different in the                                                                    
Lower 48 than it was in  Alaska. He explained that the Lower                                                                    
48's  regimes  did  not  focus  on  the  short-term  or  tax                                                                    
gimmicks,  but  had  a  primary  concern  of  improving  the                                                                    
business  environment. He  offered that  without adopting  a                                                                    
new policy  that promoted the development  of resources, the                                                                    
state's production decline would continue.                                                                                      
                                                                                                                                
4:31:11 PM                                                                                                                    
                                                                                                                                
VAL HANLEY, SELF,  ANCHORAGE (via teleconference), expressed                                                                    
his support for  SB 21. He stated that he  worked for an oil                                                                    
company  in  Anchorage  and related  that  he  worked  human                                                                    
resources for  that company; furthermore,  standby employees                                                                    
were  asking him  when  the company  would  be opening  more                                                                    
positions in  its Texas branch and  when it would go  to the                                                                    
Dakotas.  He   stated  that  the   company  he   worked  for                                                                    
considered itself  an Alaskan  company and  had been  in the                                                                    
state  since the  1970s; its  board members  had decided  to                                                                    
wait  and listen  to promises  to bring  more production  to                                                                    
Alaska's  oil fields,  as well  as assurances  that Alaska's                                                                    
Clear and Equitable  Share (ACES) would be  fixed. He stated                                                                    
that  the company  he worked  for was  starting to  get more                                                                    
contracts in Texas  and was now looking at  contracts in the                                                                    
Dakotas. He  continued to  discuss losing  standby employees                                                                    
to the  Lower 48,  but shared  that some  of them  wanted to                                                                    
return to Alaska once more  work was available. He urged the                                                                    
state to  fix ACES in  order to allow private  businesses to                                                                    
hire in Alaska and get the state's economy going again.                                                                         
                                                                                                                                
4:33:14 PM                                                                                                                    
                                                                                                                                
MAYNARD   TAPP,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
expressed his  support of removing progressivity  from SB 21                                                                    
and  fixing Alaska's  Clear and  Equitable Share  (ACES). He                                                                    
offered  that SB  21 should  be split  into two  pieces; one                                                                    
piece would  get rid of  progressivity and the  second piece                                                                    
would fix everything  else. He was unsure if  the tax system                                                                    
could  be fixed  in one  step and  opined that  breaking the                                                                    
bill  into pieces  might help.  He stated  that Canada,  the                                                                    
Gulf  of  Mexico,  and  North   Dakota  were  Alaska's  real                                                                    
competitors. He offered  that it had been  proven that money                                                                    
taken from oil  companies in the form of  taxes had impacted                                                                    
investment for new production. He  stated that a 50/50 split                                                                    
seemed fair  in terms of  total government take.  He offered                                                                    
that  the  state  needed  to  level  production  at  600,000                                                                    
barrels per  day and limit  spending based on a  $100 barrel                                                                    
of oil  "to that  revenue that comes  in." He  addressed the                                                                    
comments of  earlier testifiers that  claimed the  state was                                                                    
spending  more on  capital  expenditures  and reported  that                                                                    
anything  that  cost  over  $2,400 that  was  not  an  exact                                                                    
replacement was considered a  capital expenditure. He shared                                                                    
that the state had a  30 year-old plant, which was producing                                                                    
mostly water; furthermore, a lot  of the capital investments                                                                    
that were currently  being made were purposed  to handle the                                                                    
water.                                                                                                                          
                                                                                                                                
4:36:52 PM                                                                                                                    
                                                                                                                                
BERNIE  HOFFMAN,   SELF,  FAIRBANKS   (via  teleconference),                                                                    
testified against  SB 21 and  pointed out that the  audit on                                                                    
Alaska's  Clear  and Equitable  Share  (ACES)  had not  been                                                                    
completed yet.  She offered that  the ACES audit  was needed                                                                    
to  determine if  the  tax  system was  working  or not  and                                                                    
observed that  good data would  lead to good  decisions. She                                                                    
pointed out that the oil companies  had called SB 21 "a good                                                                    
start" and  opined that the  companies would want  even more                                                                    
in order to  incentivize them and accomplish  what the state                                                                    
wanted. She offered  that ACES was working and  that she had                                                                    
not heard  convincing evidence that  it needed to  be fixed.                                                                    
She  reported  that the  state  should  treat its  oil  like                                                                    
savings and should  not give it away  without good, unbiased                                                                    
data  to make  decisions with.  She related  that the  state                                                                    
needed to  diversify its economy and  expressed concern that                                                                    
if  SB  21  was  passed,   the  state's  services  would  be                                                                    
impacted; as a  result, there would be  a future possibility                                                                    
of  a  state-income tax.  She  opined  that the  Legislature                                                                    
should go back to a 120-day session.                                                                                            
                                                                                                                                
4:40:19 PM                                                                                                                    
                                                                                                                                
PETER  STOKES, SELF,  ANCHORAGE (via  teleconference), urged                                                                    
the passage  of SB 21.  He pointed  out that the  bill would                                                                    
allow  new investments  and would  increase production  from                                                                    
the  North   Slope.  He  stated  that   Alaska's  Clear  and                                                                    
Equitable  Share  (ACES)  had resulted  in  extracting  much                                                                    
higher  taxes from  the oil  companies and  that Alaska  had                                                                    
become very uncompetitive in  attracting new oil investment,                                                                    
particularly at higher oil prices.  He stated that the CS to                                                                    
SB  21 was  good  start for  achieving  new investments  and                                                                    
expressed appreciation at  the elimination of progressivity.                                                                    
He suggested  that a tax  rate, with revenue  exclusions and                                                                    
credits, to  allow for a  constant 60 percent to  63 percent                                                                    
government take  at all price  ranges. He observed  that PFC                                                                    
Energy  and  Roger  Marks  could   work  with  EconOne,  the                                                                    
Department  of  Natural  Resources, and  the  Department  of                                                                    
Revenue.  He  wanted  to  incentivize  development  for  new                                                                    
production within  existing PAs that would  not be recovered                                                                    
until a company  spent the new investments.  He offered that                                                                    
the existing PAs were the  areas where the state could bring                                                                    
the  quickest and  largest increases  in new  production for                                                                    
the   short-term.   He    stated   that   exploration-credit                                                                    
modifications  should   be  left  in  place   to  allow  new                                                                    
explorers to continue to explore.  He concluded that without                                                                    
new exploration and continued  development of new production                                                                    
within the  existing PAs,  the efforts  to lower  of flatten                                                                    
the production decline would not occur.                                                                                         
                                                                                                                                
4:43:39 PM                                                                                                                    
                                                                                                                                
JAMES PRICE, SELF, KENAI  (via teleconference), testified in                                                                    
opposition to  SB 21  and in support  of Alaska's  Clear and                                                                    
Equitable  Share (ACES).  He pointed  out that  before ACES,                                                                    
the state  had the  Economic Limit  Factor (ELF).  He stated                                                                    
that the  ELF was justified  by claiming that  the producers                                                                    
on  the North  Slope  were  economically disadvantaged,  but                                                                    
pointed out  that oil companies  had billions of  dollars in                                                                    
profit  under  the  ELF.  He  offered  that  ACES  was  good                                                                    
legislation  and that  SB  21  was taking  us  in the  wrong                                                                    
direction. He stated that BP had  a contract with Iraq for a                                                                    
profit of  $2 per  barrel, but that  company was  making $28                                                                    
per barrel  in Alaska.  He stated that  Alaska did  not have                                                                    
access  to  its  resources,  which needed  to  be  addressed                                                                    
before the  state gave oil  companies more money.  He shared                                                                    
that he  did not see  how SB  21 would benefit  Alaskans. He                                                                    
related  that he  had worked  on  the North  Slope for  many                                                                    
years  and that  most of  the  workers there  were not  from                                                                    
Alaska. He concluded that nothing  would be solved by giving                                                                    
Alaskan profit to the producers.                                                                                                
                                                                                                                                
4:47:06 PM                                                                                                                    
                                                                                                                                
BEN  MOHR, SELF,  ANCHORAGE (via  teleconference), expressed                                                                    
support of SB  21. He stated that the Alaska  needed to "put                                                                    
out a little  bit more" in order to have  the best "players"                                                                    
come and  maximize the  returns to  the state.  He expressed                                                                    
concern  that the  state's resource  management strategy  of                                                                    
getting  what  it could  while  it  could was  shortsighted,                                                                    
unsustainable,  and was  not a  good philosophy.  He pointed                                                                    
out that the  state was managing its oil policy  like it was                                                                    
on "life  support" and opined that  this was not a  good way                                                                    
to run  a business.  He encouraged  the committee  to action                                                                    
and  concluded  that  the  decline  rate  and  the  lack  of                                                                    
competitiveness would  make people leave Alaska.  He refuted                                                                    
the testimony of a previous  testifier and related that Cook                                                                    
Inletkeeper was an environmental  organization that had been                                                                    
trying to  shutdown oil  and gas  development in  Cook Inlet                                                                    
for decades.                                                                                                                    
                                                                                                                                
4:49:24 PM                                                                                                                    
                                                                                                                                
NICK  PEPPERWORTH,  SELF,  ANCHORAGE  (via  teleconference),                                                                    
expressed  support  for  SB 21.  He  discussed  his  history                                                                    
working and  living in Alaska.  He believed that  Alaska did                                                                    
not have the  opportunity to diversify and  pointed out that                                                                    
oil was  the driver for  the budget. He observed  that there                                                                    
had not been  any school major school projects  built in the                                                                    
last  few years  because there  was no  money. He  mentioned                                                                    
that the military was not  spending money in 2013 because of                                                                    
a lack  of funding.  He read  the governor's  key principles                                                                    
for tax reform.  He discussed North Dakota  and related that                                                                    
the infrastructure there  could not keep up  with the amount                                                                    
of  work. He  pointed out  that there  was currently  no new                                                                    
production or  new wells being  drilled on the  North Slope.                                                                    
He concluded  that the recession  was just "catching  up" in                                                                    
Alaska and that reform was  needed to avoid it. He concluded                                                                    
that some places were offering  "craft people" a higher per-                                                                    
hour wage than Alaska was for workers on the North Slope.                                                                       
                                                                                                                                
4:53:30 PM                                                                                                                    
                                                                                                                                
MARY   NANUWAK,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
testified   in  support   of  prioritizing   education.  She                                                                    
believed that  it did not  take a "rocket scientist"  to get                                                                    
things going  and stated that  oil affected every  aspect of                                                                    
life  in Alaska.  She pointed  out that  education would  be                                                                    
more  likely to  solve  the state's  problems than  anything                                                                    
else  and   related  that  education  should   start  before                                                                    
preschool.  She offered  that early  education stuck  with a                                                                    
person for the  rest of their lives and  that culture, race,                                                                    
religion, sex, or anything else  should not stand in the way                                                                    
of an  education because they were  impediments to progress.                                                                    
She noted that oil affected  every aspect of life in Alaska.                                                                    
She recalled listening to legislative  sessions on the radio                                                                    
since she  was young  and offered that  the majority  of the                                                                    
unsolved  issues that  were being  discussed were  the same.                                                                    
She discussed  a testimony  the prior  day and  related that                                                                    
the testifier did not mean  to offend anyone; she empathized                                                                    
with  the  sentiments  of the  testifier  and  related  that                                                                    
sometimes  people got  impatient for  things to  get rolling                                                                    
and  solved.  She  stated  that  immigrants  to  the  Alaska                                                                    
claimed that  a piece of  land was theirs, but  offered that                                                                    
the  whole of  Alaska belonged  primarily to  the indigenous                                                                    
people. She  offered that the  rules, laws,  and regulations                                                                    
that were  proposed every  year were  based on  the personal                                                                    
interests of those  who passed them. She  opined that Native                                                                    
peoples were the  smartest people in the  world because they                                                                    
did not keep knowledge for  their own selfish interests, but                                                                    
shared what  they learned with  the world in order  to solve                                                                    
problems.                                                                                                                       
                                                                                                                                
4:59:36 PM                                                                                                                    
                                                                                                                                
NICK  MOE, SELF,  ANCHORAGE (via  teleconference), testified                                                                    
against  SB 21.  He agreed  with the  governor's principles,                                                                    
but not with the approach  to accomplishing them. He related                                                                    
that Alaska needed infrastructure  and that funding would be                                                                    
better  served for  that purpose.  He  observed that  Alaska                                                                    
needed  to look  at the  issue like  a business  and offered                                                                    
that for every dollar that  was given away, the state should                                                                    
demand more  than a  dollar back. He  opined that  the state                                                                    
should have a  complete picture before making  a decision on                                                                    
this legislation. He furthered  that a complete audit should                                                                    
be done  on Alaska's  Clear and  Equitable Share  (ACES), as                                                                    
well as a  complete assessment of what  oil resources Alaska                                                                    
had.  He observed  that the  state should  know what  it was                                                                    
working with in  order to plan out its  long-term future and                                                                    
make informed decisions. He  expressed appreciation for what                                                                    
oil had  done for  Alaska and  pointed out  that he  did not                                                                    
fault anyone for advocating for  the bill. He stated that it                                                                    
was an oil company's job  to maximize its profits in Alaska;                                                                    
likewise,  it was  Alaska's job  to  keep in  mind the  best                                                                    
interests  of the  whole state.  He offered  that SB  21 had                                                                    
been  rushed and  that the  state  should take  its time  to                                                                    
examine the  details of the  legislation. He  concluded that                                                                    
Alaska needed to diversify its economy.                                                                                         
                                                                                                                                
5:03:39 PM                                                                                                                    
                                                                                                                                
JUDY PATRICK,  SELF, WASSILA (via teleconference),  spoke in                                                                    
support  of SB  21  and  offered that  the  state could  not                                                                    
continue  with Alaska's  Clear and  Equitable Share  (ACES).                                                                    
She  stated that  the goal  was  more oil  in the  pipeline,                                                                    
which  would  not  happen  with  the  state's  punitive  tax                                                                    
structure.  She opined  that the  state could  not wait  for                                                                    
another  legislative session  to  take action  and that  new                                                                    
projects took a  long time to sanction. She  agreed with the                                                                    
governor's    proposed    changes   and    preferred    that                                                                    
progressivity  be removed  from  SB 21.  She concluded  that                                                                    
ACES was  not working and  encouraged the committee  to pass                                                                    
legislation in the current session.                                                                                             
                                                                                                                                
5:05:22 PM                                                                                                                    
                                                                                                                                
LAURA   FAGNANI,  SELF,   ANCHORAGE  (via   teleconference),                                                                    
testified  in  support  of  SB  21.  She  related  that  oil                                                                    
production levels were directly  tied to well-paying jobs in                                                                    
the oil  and gas industry.  She pointed out that  almost all                                                                    
of  the  state's  revenues  were  tied  to  oil  production;                                                                    
similarly, her  employees' futures  were tied  to production                                                                    
levels  in the  pipeline. She  stated that  her company  was                                                                    
indirectly reliant on the oil  and gas industry. She pointed                                                                    
out that her  company received most of its  revenue from the                                                                    
oil and  gas industry and  that the decisions  the committee                                                                    
made  affected her  employees and  people across  the state.                                                                    
She observed that she operated  in a very competitive market                                                                    
place  and discussed  the nature  of staying  competitive in                                                                    
business in relation to Alaska's  oil issue. She stated that                                                                    
Alaska had a "pricing" problem  and that changing ACES was a                                                                    
step in  the right  direction to increasing  production. She                                                                    
opined that  Alaska had lost  its competitive position  in a                                                                    
global playing field  and that the state's  future relied on                                                                    
taking action now.                                                                                                              
                                                                                                                                
5:08:05 PM                                                                                                                    
                                                                                                                                
MARLEANNA HALL, SELF,  ANCHORAGE (via teleconference), spoke                                                                    
in support  of SB 21,  but related  that it was  not enough.                                                                    
She discussed her education in  Alaska. She related that her                                                                    
son  was  currently  in  public   school,  which  was  being                                                                    
subsidized  by  the  taxes  paid by  the  oil  industry  and                                                                    
pointed out that his future  education would be paid for the                                                                    
Permanent  Fund  Dividend,  which  was a  royalty  from  oil                                                                    
production.  She urged  the committed  to end  progressivity                                                                    
and  asked  them  to  encourage  investment  in  the  future                                                                    
development  of Alaska's  natural  resources. She  concluded                                                                    
that the Alaska needed to  keep the locally owned businesses                                                                    
open and  expressed that  the state  needed to  consider the                                                                    
long-term over the short-term.                                                                                                  
                                                                                                                                
5:09:24 PM                                                                                                                    
                                                                                                                                
PHILLIS SPENCER-BELZ, SELF,  ANCHORAGE (via teleconference),                                                                    
expressed that the  oil belonged to the  Inupiat people. She                                                                    
related that she  was Inupiat and was a member  of the Tribe                                                                    
of Barrow.  She pointed out that  her tribe had been  in the                                                                    
region  far  longer than  statehood  or  oil production  but                                                                    
received very  little money  from the  oil. She  pointed out                                                                    
that  her  tribe  did  receive money  from  one  oil  field;                                                                    
however, they  had to  give 70 percent  of the  revenue from                                                                    
that  field to  other native  corporations. She  pointed out                                                                    
that the corporations her tribe  gave oil revenue to did not                                                                    
give shares  to their children,  take care of  their elders,                                                                    
and did  not have  jobs. She  discussed the  Native homeless                                                                    
situation in Anchorage  and related that there  were too may                                                                    
dead, homeless  Natives who had no  disability or dividends.                                                                    
She  stated that  Alaska's oil  came from  Inupiat land  and                                                                    
that if her tribe had to  give 70 percent of its oil revenue                                                                    
to   other  corporations,   the   current  Native   homeless                                                                    
situation should not  exist. She observed that  three of the                                                                    
Native corporations in Alaska  were the largest private land                                                                    
owners  in the  nation. She  relayed  that she  was for  oil                                                                    
production if it was fair,  but opined that it was currently                                                                    
not fair.  She explained that  the oil was from  the Inupiat                                                                    
Tribal Region  and was  not from  the other  tribal regions.                                                                    
She offered  that Alaska  did not  enforce the  Indian Child                                                                    
Welfare Act and stated that there  were a lot of low quality                                                                    
schools. She stated  that there was a lack  of Native hires,                                                                    
Native job  training, and Native job  respect. She expressed                                                                    
dismay at the  treatment of Natives in  Alaska. She recalled                                                                    
how  Alaska Natives  had been  forced into  boarding schools                                                                    
and  that in  the  schools, the  students  were forced  into                                                                    
sexual  slavery,  forced to  speak  English,  and endured  a                                                                    
number of  abuses. She offered  that Natives had  been taken                                                                    
away  from their  tribes, cultures,  and parents  and opined                                                                    
that the  generational abuse  had gone  on to  create people                                                                    
that did not  know how to manage their  own tribes properly.                                                                    
She  concluded  that  without   the  Arctic  Slope  Regional                                                                    
Corporation, there would be no oil development in Alaska.                                                                       
                                                                                                                                
5:13:47 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
5:14:04 PM                                                                                                                    
                                                                                                                                
Senator Bishop expressed appreciation  to the testifiers. He                                                                    
acknowledged that  most people agreed that  something needed                                                                    
to  be  done,  but  that some  thought  ACES  was  currently                                                                    
working.  He  discussed  the   need  to  diversify  Alaska's                                                                    
economy  and  noted that  the  comments  of testifiers  were                                                                    
taken to heart.                                                                                                                 
                                                                                                                                
5:14:58 PM                                                                                                                    
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 5:15 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 21 Letter Opposition - Westgard.pdf SFIN 3/6/2013 3:00:00 PM
SB 21
SB 21 Opposition - Ron Johnson.pdf SFIN 3/6/2013 3:00:00 PM
SB 21
SB 21 Opposition Letter - Veh.pdf SFIN 3/6/2013 3:00:00 PM
SB 21
SB 21 Sykes Testimony Slide Rick Harper HB110 presentation 032411-AOGA-OCS.pdf SFIN 3/6/2013 3:00:00 PM
HB 110
SB 21
SB 21 Opposition Testimony of Andrew M.docx SFIN 3/6/2013 3:00:00 PM
SB 21
Sb 21 Letter of Opposition Tengs.pdf SFIN 3/6/2013 3:00:00 PM
SB 21
SB 21 Support Letter - Osowski.msg SFIN 3/6/2013 3:00:00 PM
SB 21
SB 21 Letter of Support Stokes.docx SFIN 3/6/2013 3:00:00 PM
SB 21