Legislature(2017 - 2018)BUTROVICH 205

04/17/2017 05:00 PM RESOURCES

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05:00:14 PM Start
05:00:30 PM HB111
07:07:42 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time --
Heard & Held
-- Public Testimony --
       HB 111-OIL & GAS PRODUCTION TAX; PAYMENTS; CREDITS                                                                   
5:00:30 PM                                                                                                                    
CHAIR GIESSEL  announced the consideration  of HB 111.  She noted                                                               
that  a hearing  with invited  witnesses ended  about 45  minutes                                                               
ago, and now the committee  will hear public testimony. Testimony                                                               
will be limited to two minutes.                                                                                                 
5:01:38 PM                                                                                                                    
CURTIS  THAYER, President  and CEO,  Alaska Chamber  of Commerce,                                                               
Anchorage,  said  the  chamber  is  dedicated  to  improving  the                                                               
environment  for  business  in   Alaska.  Alaska's  oil  and  gas                                                               
industry  contributes $8  for every  $1 invested,  so Alaska  has                                                               
reaped over  $61 billion in  taxes over  the last nine  years. He                                                               
said  current  fiscal  policy  needs to  be  competitive  for  an                                                               
industry that  is right now  discovering huge finds.  The chamber                                                               
has concerns  with HB  111. Alaskans  should understand  what new                                                               
taxes will  mean to their  employers and to the  state's economy.                                                               
Businesses will  not invest in  an undisciplined state,  he said.                                                               
The  fiscal challenge  the state  is  facing is  not new.  Alaska                                                               
needs to provide  a stable fiscal policy  to incentivize industry                                                               
to do business in Alaska.  The state has encouraged new companies                                                               
to explore, but  "we, as the state, needs to  invest in ourselves                                                               
for the long term, not the  short term." Does HB 111 increase oil                                                               
production? "No," he answered.                                                                                                  
5:03:45 PM                                                                                                                    
PETE STOKES, representing himself,  Anchorage, said he is opposed                                                               
to HB  111. He said he  grew up on  the Kenai Peninsula and  is a                                                               
licensed  petroleum  engineer.  He  works   as  an  oil  and  gas                                                               
consultant, and  he has laid  off 40 percent of  his professional                                                               
staff since 2014,  which can be turned around  with increased oil                                                               
prices. He  said HB  111 is  the seventh major  tax change  in 12                                                               
years, and no sovereign changes  its fiscal regime as often. This                                                               
is a very  big increase in oil  and gas taxes. The state  is in a                                                               
budget crisis due to the low  price of oil. Increasing taxes will                                                               
drive away investment  to produce future projects,  such as Smith                                                               
Bay  and  other major  new  developments.  The companies  may  be                                                               
unable  or  unwilling to  invest  because  of the  state's  ever-                                                               
changing position on oil taxes.  They have other places to invest                                                               
that have more fiscal stability,  he opined. Cashable credits are                                                               
not sustainable, but  NOL credits with uplift should  be in place                                                               
to encourage future exploration for  the benefit of all Alaskans.                                                               
Think of  NOLs as investments that  are the future of  Alaska oil                                                               
revenue, he suggested,  and jobs for his  offspring. On Saturday,                                                               
a consultant showed  a chart of future  Caelus Energy development                                                               
that would  result in  extending the lives  of the  pipeline into                                                               
the  2040s and  beyond,  which  could result  in  $50 billion  in                                                               
revenue to the state. The  state made its fiscal terms attractive                                                               
to  investments with  the tax  policy changes  of SB  21, and  it                                                               
resulted in North Slope production having no decline in 2015.                                                                   
5:07:09 PM                                                                                                                    
KARL  HANNEMAN,   CEO,  International  Tower  Hill   Mines  LTD.,                                                               
Fairbanks, said  his company  is working  toward building  a gold                                                               
mine just  north of Fairbanks,  and he is  a board member  of RDC                                                               
[Resource Development Council]. He  understands that HB 111 would                                                               
be the  seventh production  tax change in  twelve years,  and the                                                               
last  policy  change  produced  tangible  results.  The  recently                                                               
announced oil  plays could result in  much needed new oil  in the                                                               
pipeline if Alaska maintains a  stable tax policy that encourages                                                               
additional  investment that  will be  needed for  the next  three                                                               
years. He  said not  to risk  driving away  investment at  a time                                                               
when he  would like to  see a growth  in oil production.  The oil                                                               
industry  pays most  of the  state taxes,  and in  his book,  the                                                               
industry pays  their fair share.  Targeted taxes on  any industry                                                               
would simply be sending the wrong message at the wrong time.                                                                    
5:08:45 PM                                                                                                                    
JAMES  MCMILAN, Teamsters  Local 959,  Fairbanks, said  his union                                                               
represents active and retired members  throughout Alaska. He said                                                               
he appreciates  legislation addressing Alaska's  budget shortfall                                                               
and  the   tough  decision  to  balance   its  budget,  including                                                               
adjustments to  the permanent  fund and  new revenue  sources. He                                                               
expressed  concerns about  negatively  impacting exploration  and                                                               
production of oil.  Increasing the oil in the  pipeline should be                                                               
a  priority;  more production  means  more  revenue for  teamster                                                               
members and more jobs. Consider  the impact of current and future                                                               
production,  especially  during  low oil  prices.  The  teamsters                                                               
supported SB  21 and the  industry invested in  projects. Members                                                               
are working for ConocoPhillips and a  new drill site west of CD5.                                                               
One of the  teamster's largest contractors is  building an eight-                                                               
mile gravel  road and a  pad. The  GMT1 project has  created over                                                               
250  jobs  for  members  and   others.  ConocoPhillips  kept  its                                                               
commitment  to the  project even  with declining  oil prices.  He                                                               
asked the committee not to move HB 111.                                                                                         
5:11:13 PM                                                                                                                    
SANDRA  UDELHOVEN,  representing  herself Wasilla,  said  she  is                                                               
against HB 111  because she has seen the  oil industry contribute                                                               
to the state.  It has grown and gone through  ups and downs, just                                                               
like the  people of Alaska.  If this  bill is not  squashed, more                                                               
and more people  will leave Alaska. The oil and  gas industry can                                                               
go to foreign countries  or to the Lower 48, and  "as a matter of                                                               
fact,  they  have." They  will  continue  to leave  until  Alaska                                                               
becomes a stable  environment that is friendly to  industry. As a                                                               
resident of Wasilla,  she feels that Alaska is  sending the wrong                                                               
message. Of  the companies  that support  the oil  industry, some                                                               
have grown,  and some  have gone  away, and a  lot of  people are                                                               
leery to invest.  "They are waiting to see what  happens with you                                                               
guys in  Juneau." Oil and  gas has a  huge impact on  Alaska, and                                                               
she  finds it  incredible  to  be talking  about  this. From  her                                                               
heart, she is asking the committee not to pass HB 111.                                                                          
5:13:24 PM                                                                                                                    
KATI  CAPOZZI,  representing  herself,   Eagle  River,  said  the                                                               
industry has made it quite clear  that HB 111 would not encourage                                                               
exploration  or production.  The tax  policy in  place has.  When                                                               
industry succeeds,  we all  succeed. She  urged the  committee to                                                               
reject policies that will not  contribute to Alaska success today                                                               
and in the future.                                                                                                              
5:14:45 PM                                                                                                                    
GARVIN BUCARIA,  representing himself,  Wasilla, said  the Alaska                                                               
Department  of Labor  reports  that  petroleum-related jobs  last                                                               
year  suffered   a  decline,  and  state   government  jobs  also                                                               
declined. The  petroleum industry is  the number one  industry in                                                               
Alaska and  the state needs  to encourage  it. House Bill  111 is                                                               
too complex,  and it  must not increase  taxes at  low per-barrel                                                               
prices. He  supports encouraging  production in  newly discovered                                                               
fields and  incentivizing maximum production in  existing fields.                                                               
He said  not to increase  oil taxes and to  fund and pay  oil tax                                                               
credits. Governor  Walker's expenditures  for an LNG  pipeline is                                                               
contrary to economic logic, and  funds should be cut. Natural gas                                                               
has to  be reinjected to  sustain oil  production. He said  he is                                                               
opposed to HB 111.                                                                                                              
5:17:24 PM                                                                                                                    
DAVID SCOTT, representing  himself, Juneau, said he  has lived in                                                               
Alaska for eight  years and is retired after 35  years working on                                                               
oil and  gas infrastructure. He  supports HB 111. Senate  Bill 21                                                               
was  a  cancer and  it  is  time to  cut  it  away. He  expressed                                                               
amazement  of the  people who  support this  bill and  how little                                                               
they really know.                                                                                                               
5:17:36 PM                                                                                                                    
RADA  KHADJINOVA,  representing   herself,  Anchorage,  said  she                                                               
serves on  two boards and  she manages an  engineering consulting                                                               
company.  She cares  about the  wellbeing of  the state,  and her                                                               
family  loves Alaska.  She recently  graduated with  a degree  in                                                               
environmental  permitting.  She  said  she  left  Russia  due  to                                                               
upheaval and unpredictable policies  in the early nineties. House                                                               
Bill  111 passed  the House,  so  there are  legislators who  are                                                               
convinced  that they  are doing  the  right thing  by striking  a                                                               
balance  given  that  oil prices  are  different.  Alaska  cannot                                                               
control the  price of oil, but  it can create a  business climate                                                               
to encourage  investment that will increase  production. She said                                                               
HB 111 is  like cutting open the golden goose  to get eggs before                                                               
they mature in the form of  projects that employ thousands of oil                                                               
workers. What legislators have been  considering up to this point                                                               
is a  tax model, she said.  There is no systematic  analysis, and                                                               
billions of dollars  are at risk of going to  other regions where                                                               
the  price  of doing  business  is  lower and  more  predictable.                                                               
Legislators and citizens should know  the facts before passing HB
5:19:40 PM                                                                                                                    
MAYNARD  TAPP,  representing   himself  Anchorage,  said  Senator                                                               
Giessel  represents him  and does  an amazing  job. He  asked the                                                               
committee  to  defeat any  proposed  taxes  on  the oil  and  gas                                                               
industry  that challenge  production, like  HB 111.  He said  New                                                               
York is advertising  a tax holiday to encourage  investors, so it                                                               
does not make any sense for Alaska  "to tax the people we want to                                                               
stay here." He said SB 21  slowed or stopped the reduction in oil                                                               
production.  Alaskans should  not break  its word.  Alaska cannot                                                               
afford  to  create  an  unending  administrative  bureaucracy  to                                                               
collect  taxes. He  suggested increasing  revenues by  increasing                                                               
production of oil and gas in the pipeline.                                                                                      
5:21:47 PM                                                                                                                    
RENEE  LIMOGE REEVE,  Deputy  Director,  Alaska Support  Industry                                                               
Alliance,  Anchorage, said  the  alliance is  a 40-year-old  oil,                                                               
gas,  and mining  trade association.  Members provide  support to                                                               
those industries, but  explorers, developers, and owner/operators                                                               
cannot  be members  of the  alliance. She  said HB  111 is  a bad                                                               
bill, and the number one policy  statement for her group is to do                                                               
no harm to oil tax  policies. Policies should increase production                                                               
and  attract investment  and development.  The revenue  from that                                                               
activity is  essential to the  state, and the jobs  are essential                                                               
to members of the alliance and  other Alaskans. The bill goes far                                                               
beyond changing cashable  credits, and it is a  tax increase that                                                               
will negatively  impact the  oil and gas  industry. She  said she                                                               
will provide the  committee with training numbers  from the North                                                               
Slope training cooperative  coupled with oil prices  from 2008 to                                                               
2016. She noted  that every operator on the  North Slope requires                                                               
employees to  have a  cooperative card.  The training  number and                                                               
oil price  for 2015  tell the  real story, and  that is  that the                                                               
industry  is hurting  as are  the  members of  the alliance.  Any                                                               
policy that  costs the  industry will have  a negative  impact on                                                               
Alaska and on  the oil industry, she stated.  The training totals                                                               
will likely be  lower with HB 111.  She said to put  HB 111 aside                                                               
and enact  policies that  increase oil  development and  jobs for                                                               
5:24:25 PM                                                                                                                    
DAVID  OTNESS, representing  himself, Cordova,  said he  respects                                                               
the oil industry and what it  has done for Alaska over the years.                                                               
He  is a  lifelong Alaskan  who has  worked on  the pipeline  and                                                               
participated  in a  lot of  other oil-associated  activities, but                                                               
Alaska is hurting as a result of  SB 21. "If we're only taking in                                                               
$0.9  billion  versus  the  $8  billion  that  went  out  to  the                                                               
companies, there's  something wrong  with that equation."  If the                                                               
industry is  taking a  hit, Alaska  is taking one  heck of  a hit                                                               
disproportionately.  As soon  as SB  21 passed,  BP laid  off 200                                                               
people,  and  the oil  companies  knew  what  coming due  to  the                                                               
fracking explosion  and the Saudi  production. "We  set ourselves                                                               
up for  a fall," and  the industry minimized their  pain. Senator                                                               
Stedman and  Representative Gara  were aware  and tried  to bring                                                               
the issue up at the time.  As far as oil companies being impacted                                                               
by this, he said,  they plan ahead a lot further,  and we are all                                                               
aware of that.  People are complaining about  Alaska changing its                                                               
taxes,  but it  was the  industry that  wanted change  last time.                                                               
Rather than tweaking ACES, the  state ended up really hurting. It                                                               
is worth having another look at this.                                                                                           
5:27:11 PM                                                                                                                    
BOB SHAVELSON, representing himself,  Homer, said he is concerned                                                               
about  the wellbeing  of  his children.  He  has heard  arguments                                                               
against  HB  111 that  are  the  same  arguments that  have  been                                                               
repeated for  decades regarding negative  investment environments                                                               
and the  loss of jobs. It  is not a coincidence  that those exact                                                               
arguments are  being used by  the oil companies in  South Dakota,                                                               
Pennsylvania, Texas, and  New York, because that  is the standard                                                               
industry line. Corporations are  expected to vigorously represent                                                               
shareholder interests and to maximize  their return-that is their                                                               
fiduciary duty. At  the same time, as understood  by Jay Hammond,                                                               
it is  the duty of the  legislature to represent Alaskans  as the                                                               
shareholders of  our resources just as  vigorously. Mr. Shavelson                                                               
said he  is willing to pay  an income tax to  support seniors and                                                               
schools but  not before the  oil companies pay their  fair share.                                                               
The profits  of BP  in Alaska are  outrageous. Oil  companies are                                                               
getting some of the highest returns  in Alaska as compared to the                                                               
nation and  the world. That is  not fair; we need  to support our                                                               
kids  and our  seniors. House  Bill 111  is a  step in  the right                                                               
direction. The production tax should increase.                                                                                  
5:29:31 PM                                                                                                                    
MAKO  HAGGERTY, representing  himself, Homer,  said the  previous                                                               
speaker said much of what Mr.  Haggerty wanted to say. He said he                                                               
is willing  to pay  an income  tax, because  he likes  Alaska and                                                               
plans  to spend  the rest  of  his life  in Alaska.  He wants  to                                                               
contribute to the  health of the state. Alaska is  not as healthy                                                               
economically as  it used to  be. It threw  all its eggs  into the                                                               
oil basket. The  oil companies need to step up;  every Alaskan is                                                               
being asked to step up right now,  and there is no reason why the                                                               
industry shouldn't  as well. He said  he supports HB 111,  and he                                                               
is  thankful  Representatives  Josephson   and  Tarr  brought  it                                                               
5:30:57 PM                                                                                                                    
CORAL  HOWE, representing  herself,  Fairbanks, said  she owns  a                                                               
small  events   business  to  bring   joy  to   different  events                                                               
throughout Alaska.  She said  her grandfather  came to  Alaska in                                                               
the gold  rush. She  said she has  children and  grandchildren in                                                               
the state,  and they would all  like to have good  jobs. She said                                                               
HB 111 will  create an environment where her family  will have to                                                               
leave. It  is frightening that  young people will have  to leave.                                                               
She made  her money in  Alaska, but she  cannot say that  will be                                                               
the  case  for  her  offspring.  The  oil  companies  "provide  a                                                               
wonderful  way for  us to  get this  tremendous resource  that we                                                               
have in  the State of Alaska  out and into the  public hands." In                                                               
her business, 70  percent is related, somehow, to  the money that                                                               
comes from the oil industry. In  2016, her "numbers" went down 25                                                               
percent, and most  was due to all sorts of  companies going down.                                                               
She said to not support HB 111.                                                                                                 
5:33:40 PM                                                                                                                    
MARISA   SHARRAH,  President,   Greater   Fairbanks  Chamber   of                                                               
Commerce, Fairbanks, said  the chamber advocates on  a variety of                                                               
issues,  but  job creation  is  the  common thread.  The  chamber                                                               
strongly  opposes  HB  111,  which  would  bring  the  fifth  tax                                                               
increase to  the oil  industry in ten  years. Targeted  taxes are                                                               
not  supported  by the  chamber.  The  oil  industry works  in  a                                                               
challenging and expensive environment,  and a constantly changing                                                               
tax  structure only  compounds those  challenges, she  added. Oil                                                               
companies make  five and  ten-year plans on  where to  take their                                                               
billions  of   dollars,  and  Alaska's   tax  policies   are  not                                                               
attractive to  the oil industry. It  is a global market,  and she                                                               
suggests  comparing policies  with other  regions so  that Alaska                                                               
can compete.  Investors will  choose the  projects with  the best                                                               
returns, and it is the  legislature's responsibility to create an                                                               
environment to yield the maximum  benefit for the state, which is                                                               
increased oil production. A bill like  HB 111 is a step backward.                                                               
The state should  focus on benefits to Alaska's  treasury as well                                                               
as jobs. Industry  has seen a loss of 4,000  jobs. Combining that                                                               
loss with  the loss of  thousands of  indirect jobs shows  that a                                                               
competitive tax structure is in the best interest of the state.                                                                 
5:35:56 PM                                                                                                                    
CARL  PORTMAN,  representing  himself,  Anchorage,  said  he  was                                                               
raised in  Fairbanks. He is  concerned about the economy  and the                                                               
trans-Alaska pipeline,  which is  three quarters empty.  The best                                                               
way to  generate revenue  is to  increase oil  production through                                                               
the pipeline.  Alaska must first attract  the investment required                                                               
to  develop new  prospects, and  Alaska has  to compete  for that                                                               
investment.  He opposes  HB 111,  because it  raises the  cost of                                                               
projects  and  will do  nothing  to  encourage industry  to  move                                                               
forward with new  fields. Higher taxes have a  negative impact on                                                               
investment  in  Alaska and  on  revenue.  The voter-approved  tax                                                               
regime is  working, he  said. Production  is expected  to average                                                               
524,000 barrels per  day, up from the fall  forecast. The numbers                                                               
are 7 percent greater than the  fall forecast and are expected to                                                               
go up  in 2017, which  will mark  the second consecutive  year of                                                               
increased production  on the  North Slope,  the first  time since                                                               
1988. Alaska  could be on the  cusp of an oil  renaissance. There                                                               
are  resources to  grow production.  To  pull Alaska  out of  the                                                               
recession  it needs  a major  injection of  capital to  bring new                                                               
fields  on  line. Unfortunately,  HB  111  will likely  kill  new                                                               
investment  and result  in  fewer jobs.  He said  he  is a  proud                                                               
"pipeliner" from 1975.  The pipeline accounted for  20 percent of                                                               
domestic production  and now the  nearly empty pipe  accounts for                                                               
much  less,  but  with  the   right  policy,  Alaska  can  double                                                               
5:39:13 PM                                                                                                                    
BOBBY REDDELL,  Udelhoven Oil  Field System  Services, Anchorage,                                                               
said he opposes HB 111. Alaska  keeps on shifting its taxes based                                                               
on the  government deficit. Businesses will  find other locations                                                               
to  invest where  they can  work  in stable  conditions. The  oil                                                               
industry needs a  stable tax policy to  make investment decisions                                                               
for the future.                                                                                                                 
5:39:58 PM                                                                                                                    
CYNTHIA  HENRY, representing  herself, Anchorage,  said she  owns                                                               
retail stores  in Fairbanks  and Anchorage.  She opposes  HB 111.                                                               
The Senate  has given her  the confidence  that it will  help the                                                               
state  with the  fiscal challenges.  She is  dismayed that  HB 11                                                               
passed the  House, noting  that it  was by  a razor  thin margin.                                                               
Raising oil  taxes will  weaken Alaska's  ability to  attract new                                                               
investment  and   new  production.  The  North   Slope  increased                                                               
production for the second consecutive  season, and it has been 30                                                               
years since that  has happened. That is a long  time. She said SB
21  is working,  and HB  111  would mean  more job  losses and  a                                                               
deepening recession.  That is  not a recipe  for a  bright future                                                               
for Alaska.                                                                                                                     
5:41:48 PM                                                                                                                    
TERESA  IMM,   Senior  Vice  President,  Arctic   Slope  Regional                                                               
Corporation, Anchorage, said she  manages lands and resources for                                                               
the  Arctic  Slope  Regional Corporation  (ASRC),  which  is  the                                                               
largest  Alaskan-owned  company  and  has  about  5,000  in-state                                                               
employees.  It is  in  a  unique position  as  an [Alaska  Native                                                               
Claims Settlement  Act] corporation. It is  a landowner, resource                                                               
owner, lessor, lessee, producer,  and explorer, and ASRC provides                                                               
services to the oil industry. Passage  of HB 111 will impact ASRC                                                               
in many  ways. The majority of  its revenue is based  on oil, and                                                               
its investments  stay in  the state.  She expressed  concern that                                                               
ASRC's resources will become stranded  with a policy like HB 111.                                                               
There  has been  a  downturn  in revenues  along  with lower  oil                                                               
prices, and ASRC is diversifying  its portfolio to counteract the                                                               
downturn. The decline  in the TAPS throughput  affects the entire                                                               
economy, "so we're at a  pivotal point where we must reinvigorate                                                               
the industry  that we  all depend  on and  not further  burden it                                                               
with higher  oil taxes,"  she said. If  the legislature  fails to                                                               
take a  pragmatic approach toward  the oil industry,  Alaska will                                                               
become an unattractive investment.                                                                                              
5:44:37 PM                                                                                                                    
GEORGE  PIERCE,  representing  himself,  Kasilof,  said  Alaska's                                                               
hostile environment  is similar to Norway's  hostile environment,                                                               
but Norway has made better  decisions with its tax policy. Alaska                                                               
gives one  third of its  general fund to  pay for credits  to oil                                                               
and gas companies.  For every dollar, Alaska gets  back 45 cents.                                                               
"We are so  friendly the Tax Foundation says we  are number three                                                               
in business  friendliness in  all 50 states.  How friendly  do we                                                               
need to  be?" He said Alaska  needs to self-correct its  net base                                                               
system when prices  rise and fall. New oil pays  zero taxes until                                                               
the price is  $75 per barrel. "Net" means negative  to the state,                                                               
he  stated. Why  did our  cost structure  double in  the last  10                                                               
years? What big projects are  coming on line? Bring data forward,                                                               
he said. Alaska  is the only place that does  the flip from gross                                                               
to net in the  world, and HB 111 is against  this pattern, "and I                                                               
agree with  that." He stressed  transparency and fixing  the NOL.                                                               
He said to fix carry-forward losses,  get rid of the credits, and                                                               
harden the floor to the tax. It  takes seven to ten years to come                                                               
on line,  "and they still get  all these credits. That's  bad for                                                               
Alaskans." The  legislature and the  governor took  the permanent                                                               
fund  dividend  and  gave  it  to the  oil  industry  to  develop                                                               
Alaska's  resources. That  is pretty  sad. He  said that  someone                                                               
noted that people  no longer have confidence in SB  21, and it is                                                               
because there  is no revenue, to  speak of, since it  was passed.                                                               
He urged the committee to pass HB 111.                                                                                          
5:47:32 PM                                                                                                                    
DAVE HANSON,  representing himself, Anchorage, said  to step back                                                               
and  not  look  at the  bill  as  "for  or  against," but  as  an                                                               
adjustment. Part  of the  bill is  a tax  increase, he  said, and                                                               
part  of it  is  adjusting  the tax  credit  program.  "I do  not                                                               
support HB 111 tax increases;  I do support HB 111's modification                                                               
of  the  tax   credit  program,  because  I  want  it   to  be  a                                                               
sustainable,  long-term program  as  an economic  tool." The  tax                                                               
credit program  is flawed;  up to  a third  is spent  on projects                                                               
that  have little  or no  chance of  ever leading  to production.                                                               
Cash can be paid for credits  even though a project may never owe                                                               
any  production   taxes,  he  stressed.  Transparency   has  been                                                               
mentioned, and  it is interesting  that we  do not know  who gets                                                               
the money and what it is used for  or how much stays in the state                                                               
or goes  to dividend holders in  New York City. "It's  our money.                                                               
We  have a  right to  know." Transparency  should be  a price  of                                                               
receiving the  credits-a choice  an oil company  can make.  It is                                                               
like a  gift. He said  Alaska cannot afford the  current program.                                                               
The state is accumulating a huge  debt of over $1 billion, and no                                                               
one talks about how  Alaska is going to pay for  it. Some of this                                                               
is  remedied through  HB 111,  and he  encouraged a  more careful                                                               
look at  the bill and  the portions  that improve the  tax credit                                                               
5:52:07 PM                                                                                                                    
BRUCE  BUSTAMANTE,  President,  Anchorage  Chamber  of  Commerce,                                                               
Anchorage,  said  there are  over  920  business members  in  the                                                               
chamber, and  they believe that  investors have to have  a stable                                                               
environment, and  HB 111 does  not provide that. There  have been                                                               
numerous attempts to  change oil taxes in the last  12 years, and                                                               
the  chamber has  always  advocated  for a  fair  and stable  tax                                                               
environment, which  is critical  to Alaska's  economic stability.                                                               
Trying  to  address  the  fiscal   crisis  by  changing  the  tax                                                               
structure will make  matters worse. The chamber  would rather see                                                               
reductions  in  government  jobs   or  the  permanent  fund,  and                                                               
possibly a broad-based tax on  residents. Right now, changing oil                                                               
taxes would discourage investment  in the industry. Alaska should                                                               
encourage investments to  help the economy and  create more jobs.                                                               
"The  Anchorage chamber  will continue  to oppose  targeted taxes                                                               
and  those  targeted  taxes  on  the oil  and  gas  industry  and                                                               
actively advocate  on behalf of  the members." He  said Anchorage                                                               
Chamber of Commerce opposes HB 111 and has written comments.                                                                    
CHAIR GIESSEL encouraged everyone to submit comments in writing.                                                                
5:52:30 PM                                                                                                                    
GAIL PHILLIPS,  Board Member, Keep Alaska  Competitive Coalition,                                                               
Anchorage,  said  the Keep  Alaska  Competitive  Coalition is  an                                                               
organization  with 5,000  members,  including Alaskans,  business                                                               
groups, and Native organizations.  Oil companies are not members,                                                               
and  the group  does not  accept funds  from them.  The group  is                                                               
concerned about  HB 111 as it  reads today. She has  seen many of                                                               
Alaska's  fiscal booms  and busts  and many  versions of  oil tax                                                               
legislation, and  she urged the  committee to amend the  bill and                                                               
focus on  making sure Alaska does  not increase taxes on  the oil                                                               
industry. The  oil tax bill  passed in  2013 opened the  doors to                                                               
Alaska, and  the industry  responded. The  current version  of HB
111 will weaken  the state's competitive position  to develop new                                                               
prospects  and  increase  productions. "We  cannot  increase  oil                                                               
production by increasing taxes," she  stated. The oil industry is                                                               
the  biggest participant  in Alaska's  fiscal plan,  and policies                                                               
must keep the oil industry strong  and growing. The bill does not                                                               
do this. Alaska  can control its business climate  and the future                                                               
of Alaska-a future that encourages  investment in Alaska and puts                                                               
more  oil through  the  pipeline.  She said  she  has a  petition                                                               
signed by  600 Alaskans  to reject  the provisions  that increase                                                               
oil taxes or create unworkable bureaucracy.                                                                                     
5:54:55 PM                                                                                                                    
CATHY  DUXBURY, representing  herself,  Anchorage,  said she  has                                                               
sent many  emails, and she  is very opposed  to HB 111.  She does                                                               
not understand how "you guys go  to Juneau and…the first thing on                                                               
your  agenda is  let's  see how  much  more we  can  tax the  oil                                                               
industry." The legislature  has changed oil taxes  seven or eight                                                               
times in  12 years. "I  think the oil  tax gets changed  every 15                                                               
minutes," she  said. People thought voting  to uphold SB 21  in a                                                               
2014 referendum was  the end of the story.  Production started to                                                               
go up. She said  she has been working a long time,  and she has a                                                               
son with a  new business and grandchildren in  the school system.                                                               
In ten  years, there will  not be anyone  left in Alaska  to tax.                                                               
The  oil industry  is our  bed and  butter, and  she is  tired of                                                               
people who  say they  do not  pay a fair  share, because  the oil                                                               
companies pay  more than their  fair share. Her company  has laid                                                               
off over 500  employees, and it reduced its  charitable giving by                                                               
up to  60 percent. She  had high hopes  for finding new  oil, but                                                               
Alaska seems  like it does  not want new production.  "You cannot                                                               
tax  more  oil into  the  pipeline,  because  if you  could,  our                                                               
pipeline would be full."                                                                                                        
5:57:17 PM                                                                                                                    
JILL  SCHAEFER,  representing  himself,  Kenai,  said  she  is  a                                                               
contractor and an  assembly member in Kenai. She  opposes HB 111.                                                               
Its main goal is to bring money  into the economy, but it will do                                                               
the  opposite. The  main goal  of the  bill is  as a  job killer.                                                               
Without jobs,  people like herself  will move, and there  will be                                                               
no kids in  the school, so Alaskans will not  have to worry about                                                               
paying taxes.  She encouraged  a bill showing  that Alaska  has a                                                               
stable, industry-friendly environment.                                                                                          
5:58:35 PM                                                                                                                    
ALLEN ICET,  representing himself, Anchorage, said  he is opposed                                                               
to HB 111. All legislators would  agree that the solution is more                                                               
oil in  the pipeline and by  raising taxes on something,  you get                                                               
less. Over  the past  few years  he has a  number of  friends who                                                               
work in  the industry, but  they lost jobs,  and HB 111  does not                                                               
encourage the industry to hire more people.                                                                                     
5:59:52 PM                                                                                                                    
KATE  BLAIR,  Government  and   Public  Affairs  Manager,  Tesoro                                                               
Alaska,  Nikiski,  said  Tesoro  Corporation  is  a  Fortune  100                                                               
company  and is  an  independent refinery  marketer of  petroleum                                                               
products.  Tesoro operates  seven refineries  in the  western US,                                                               
with  a combined  capacity  of  895,000 barrels  per  day and  an                                                               
ownership  in a  logistics business,  which includes  interest in                                                               
Tesoro Logistics. Its  first refinery was in Nikiski,  and it has                                                               
a crude capacity of 72,000  barrels per day. Tesoro Alaska assets                                                               
also include  a 69-mile  pipeline from  Nikiski to  Anchorage for                                                               
transporting  its  refined  products,  and that  has  helped  the                                                               
growth  of the  international  air cargo  business. The  refinery                                                               
meets most of  the state's demand for gasoline and  is a reliable                                                               
supply  for Alaskans.  The company  has 250  family-wage jobs  in                                                               
Alaska, with an Alaskan-hire rate  of 97 percent. Tesoro does not                                                               
produce oil  and gas in Alaska,  so it doesn't weigh  in on those                                                               
taxes, but  in-state production matters.  Any loss  in production                                                               
would  affect Tesoro,  because  it uses  Alaska  crude from  Cook                                                               
Inlet and  the North Slope.  "We refine  every drop of  that Cook                                                               
Inlet  crude,  and  we purchase  North  Slope  crude."  Declining                                                               
production  would  hurt  the Tesoro  refinery.  The  transparency                                                               
language in HB 111 would  require Tesoro to disclose confidential                                                               
business  information   and  may  violate  antitrust   laws.  The                                                               
language also requires  the Department of Revenue  to make public                                                               
the  potential monetary  benefits to  the state  of the  projects                                                               
claimed  under the  refinery tax  credit, and  there is  no clear                                                               
mechanism to  calculate benefits, so  it would be  subjective and                                                               
open to  political distortion. She  told the committee  to assess                                                               
how the bill will affect production, because production matters.                                                                
6:03:43 PM                                                                                                                    
KEVIN  DURLING,  President,  Petroleum  Equipment  and  Services,                                                               
Inc.,  Anchorage, said  he is  the past  president of  the Alaska                                                               
Support  Industry Alliance  and a  board member  of the  March of                                                               
Dimes. He  said he  opposes HB  111, and he  asked why  new taxes                                                               
would be levied  on an industry that has paid  more in taxes than                                                               
it  has generated  in  revenue.  Why would  we  penalize the  oil                                                               
industry that spends $3 to $4  billion a year to produce oil with                                                               
little  or  no return  on  investment?  At  what point  does  the                                                               
government look at  the industry that has  flattened a production                                                               
decline that  was projected to  be 5 to  8 percent and  turned it                                                               
around  to  an  increase?  How   will  the  industry  survive  if                                                               
corporations are  required to release well  costs? Many companies                                                               
will be unable  to work on the project, he  said, because it will                                                               
be contrary  to their contracts that  require confidentiality. He                                                               
noted that his business has been  hard hit by low oil prices, and                                                               
his revenue is down 20 percent  and has 10 fewer Alaskans working                                                               
for  him. Oil  prices are  slowly  moving up.  He said  he is  an                                                               
optimist, and Alaska activity levels  will begin an upward trend,                                                               
but by changing  the rules, the upward trend will  be blunted and                                                               
the 7,000 Alaskans  who have lost their jobs will  be looking for                                                               
work in other  states. He said to look to  the permanent fund and                                                               
other sources for funding, including unfilled positions.                                                                        
6:06:53 PM                                                                                                                    
TOM   WALSH,  Managing   Partner  and   Founder,  Petro-technical                                                               
Resources  of Alaska,  Anchorage, said  Petro-technical Resources                                                               
of Alaska (PRA) is an oil  and gas consulting firm and has worked                                                               
with  a number  of entities,  including Native  corporations, the                                                               
government, and  oil and gas  companies. His  business celebrated                                                               
its  20th  anniversary  in  Alaska  last  week.  This  year,  the                                                               
business is  down about  50 percent from  prior years  because of                                                               
the price  of oil. He  expressed hope  that the policies  made in                                                               
Juneau  will  not  exacerbate  the   problem.  The  Lower  48  is                                                               
recovering  handsomely right  now, he  said. He  opposes HB  111,                                                               
which is  a major tax  increase to all  of PRA's clients,  and it                                                               
undoes all  of the progress  to attract new investors  to Alaska,                                                               
including  financial institutions  that  fund  the industry.  The                                                               
bill  represents the  seventh  change  to the  tax  system in  13                                                               
years.  The intent  to reduce  Alaska's cash  credit payments  is                                                               
understandable, but it is flawed  because the state has shared in                                                               
the pain of  the prolonged oil price collapse. He  has heard that                                                               
SB 21  has brought in  more revenue than  ACES would have  in the                                                               
low prices. The  widely-held belief that the  state cannot afford                                                               
to pay  tax credits should be  countered with the question  of if                                                               
it can afford  not to invest in the oil  industry. The concept of                                                               
the credit system did not  cause the state's financial crisis. He                                                               
said he is  baffled by testimony downplaying the  impact of total                                                               
government take on projects. The tax  burden is a major impact to                                                               
net present values and projects. The projects are marginal.                                                                     
6:10:02 PM                                                                                                                    
JEANINE ST.  JOHN, representing herself,  Anchorage, said  she is                                                               
giving personal  testimony today  in opposition to  tax increases                                                               
from  SB 21.  She  said  she understands  the  need to  eliminate                                                               
cashable  credits  for  now,  but  she  believes  in  paying  the                                                               
outstanding credits  as a moral  obligation of the  state. Alaska                                                               
has a  valuable resource, and  it should be encouraging  more oil                                                               
in the pipeline, so Alaska can  have jobs and royalties. She said                                                               
she looks forward  to amendments to HB 111.  She thanked everyone                                                               
for  trying  to understand  complex  tax  policy, and  encouraged                                                               
simplifying the process. Put the jobs  back in place and keep oil                                                               
flowing, she requested.                                                                                                         
6:12:01 PM                                                                                                                    
ALICIA SIIRA,  Deputy Director, Alaska Miners  Association (AMA),                                                               
Anchorage,   said  the   AMA  represents   the  mining   industry                                                               
throughout   Alaska,  with   1,500  members,   including  miners,                                                               
geologists, oil and  gas service companies, and  others. She said                                                               
a healthy  oil and gas  industry is  crucial to a  healthy mining                                                               
industry. One  of the issues  of concern  to AMA is  tax policies                                                               
that incentivize oil  and gas production, and HB 111  is not that                                                               
kind  of policy.  It is  the seventh  change in  12 years  and is                                                               
punitive  to  the  oil  and   tax  industry,  resulting  in  less                                                               
investments and  a deepening  recession. She  said to  abandon HB
111  and look  for  a sustainable  budget  by reducing  spending,                                                               
using  the permanent  fund,  and  instituting broad-based  taxes,                                                               
except for taxes on existing taxpayers  who are already a part of                                                               
the revenue base.                                                                                                               
6:14:10 PM                                                                                                                    
BILL  BREDAR,  representing  himself,  Anchorage, said  he  is  a                                                               
petroleum geologist  and explored for  oil beginning in  1976. He                                                               
is a full-time resident raising  four children, and he is against                                                               
HB  111.   The  investment  timeframe   for  oil   explorers  and                                                               
developers is  30 years, and  Prudhoe Bay will be  celebrating 40                                                               
years in June. When investing, there  are many risks that must be                                                               
taken  into account,  he explained,  including geologic  risk. He                                                               
listed developments he was involved  in. A stable taxation regime                                                               
is  a key  component for  investing in  the long  life of  an oil                                                               
field, and  HB 111 can be  described as ACES for  low oil prices,                                                               
he said. Hardening the minimum  tax floor would increase taxes at                                                               
a  time when  the  oil industry  is hurting  and  will show  that                                                               
Alaska is  not to be  trusted. Changing  the tax regime  now will                                                               
send a negative signal and increase risk.                                                                                       
6:16:38 PM                                                                                                                    
LARRY HOWELL, representing himself,  Anchorage, said he has lived                                                               
in Alaska since  before the pipeline. He said HB  111 is the same                                                               
tax structure of ACES at low  oil prices. When he was the general                                                               
manager of  the Alaska  Support Industry  Alliance, ACES  did not                                                               
work. There  is something wrong with  a state that changes  a tax                                                               
regime  seven  times  in  over  40 years,  which  equates  to  an                                                               
unstable  investment  environment.  Alaska  is  taxing  away  the                                                               
industry. When he was  19 years old, he was out  of money. No one                                                               
had ever attended college in his  family. He left Oregon on funds                                                               
borrowed from  a professor, hitch-hiked  to Fairbanks,  camped on                                                               
the Chena River,  and made the rounds at the  union halls. He was                                                               
hired by the pipeline union and  worked 60 weeks. He sold "booze"                                                               
in the camps and earned a  six-figure income. "I'm the guy in the                                                               
Alaska pipeline movie  that bootlegged that whiskey  north of the                                                               
Yukon  River,"  he  said.  The oil  industry  created  the  first                                                               
college graduate in his family. He  lived the dream with his wife                                                               
and  kids  and  helped  with   community  projects,  including  a                                                               
homeless shelter in Anchorage. He  said his 33-year-old son works                                                               
for Boeing in  Seattle and told him it does  not seem like things                                                               
are going well  in Alaska. He said, "Dad, I'm  thinking Alaska is                                                               
not the land of opportunity that  it was for you and mom." Alaska                                                               
can control its business environment,  but HB 111 will do nothing                                                               
more than discourage investment in oil.                                                                                         
6:20:01 PM                                                                                                                    
MARLEANNA   HALL,   Executive  Director,   Resource   Development                                                               
Council,  Anchorage,  said  her  members  are  the  lifeblood  of                                                               
Alaska's economy.  Raising taxes  on companies during  low prices                                                               
is not  sound fiscal  policy, and it  adds instability.  The bill                                                               
will increase  costs for the  largest private industry  in Alaska                                                               
and will send Alaska to the  bottom of the competitive scale. She                                                               
said  an  oil company  testified  earlier  about its  investments                                                               
since  2013 when  SB  21 was  passed. The  bill  was affirmed  by                                                               
Alaskans   in  2014.   Another  company   spoke  to   the  recent                                                               
opportunities and  reflected on the need  for investor confidence                                                               
with  regard  to prices,  tax  policy,  and other  uncertainties.                                                               
Increasing taxes  on the oil  and gas industry will  not increase                                                               
throughput in  the pipeline or  encourage new development  on the                                                               
North Slope. Taxes will deter  investments and create lower state                                                               
revenue over  the long  run. "When  you incentive  something, you                                                               
get more  of it." She  said to  incentivize drilling and  aim for                                                               
next year's  production to be  higher. She urged rejection  of HB
6:22:32 PM                                                                                                                    
LAURIE  FAGNANI, President,  MSI Communications,  Anchorage, said                                                               
she has  been a small business  owner for over 20  years, and her                                                               
23 employees depend  on the oil and gas industry.  She has seen a                                                               
steady reduction  in the  level of  spending by  the oil  and gas                                                               
sector, and  it is  increasingly difficult to  run a  business in                                                               
this  environment  and keep  Alaskans  on  the payroll.  Low  oil                                                               
prices have  hurt, as have  restrictions on oil and  gas activity                                                               
on  federal  lands.  What  has  hurt even  more  is  the  state's                                                               
changing tax structures,  she stated. When the price  of oil goes                                                               
down and  the cost of  business goes  up, something has  to give.                                                               
When the legislature raises taxes, it  is people like her and her                                                               
staff who shoulder the burden.  She asks herself what the economy                                                               
would  be like  if  instead  of taxing  the  industry, the  state                                                               
worked  with  industry to  increase  production.  She listed  oil                                                               
companies and  said, "they  have given  us hope,"  but HB  111 is                                                               
sending the  wrong signal that  Alaska is  not a stable  place to                                                               
6:24:51 PM                                                                                                                    
ALEX  HALL, representing  himself,  Anchorage, said  he wants  to                                                               
live in Alaska, and "we need jobs." He said he opposes HB 111.                                                                  
6:25:46 PM                                                                                                                    
DAVE CRUZ, President  and CEO, Cruz Companies  of Alaska, Palmer,                                                               
said his firm develops resources and  said that HB 111 is bad for                                                               
the industry.  "We have  no ability to  create stability  when in                                                               
six times  we changed the  rules in 11  years, and we  wonder why                                                               
companies  are not  interested  in doing  business  up here."  He                                                               
spent three  years trying to  get SB 21  passed, so he  is asking                                                               
that the Senate kill HB 111.                                                                                                    
6:27:06 PM                                                                                                                    
CHRISTOPHER BEHNKE,  representing himself, Fairbanks, said  he is                                                               
a third generation  Alaskan and a graduate student  at UAF, which                                                               
has suffered  outrageous cuts  in the last  couple of  years, but                                                               
big oil receives large subsidies. He  said he supports HB 111 and                                                               
rigorous tax  reform. The  Alaska oil industry  does not  pay its                                                               
fair share compared  to the rest of the world,  despite what some                                                               
people  have   said.  "Stability"  seems  to   be  bandied  about                                                               
haphazardly by those  in the industry, but there  is no stability                                                               
in  global  oil  production.  It   is  a  fundamentally  volatile                                                               
industry, and Alaska  needs an adaptive tax  regime that accounts                                                               
for volatility  and does  not require  taking the  permanent fund                                                               
dividend away from Alaskans for  big oil subsidies. The resources                                                               
belong to  Alaskans, not oil corporations.  Alaska's constitution                                                               
allows  for resources  to benefit  Alaskans,  not big  oil. As  a                                                               
fiscal  conservative, he  said  he is  opposed  to subsidies  and                                                               
handouts,  and subsidizing  the most  profitable corporations  in                                                               
the  world  is  offensive.  Next  year,  Alaska  will  pay  three                                                               
quarters  of a  billion dollars  in subsidies  to companies  that                                                               
have slashed  employment. Except for some  independent companies,                                                               
the majors have  virtually ignored exploration. It  is an outrage                                                               
that  oil  subsidies  are  the third  largest  item  in  Alaska's                                                               
budget,  and  the   legislature  will  only  cut   the  PFD,  cut                                                               
university  spending.  Alaska  needs  tax reforms  that  are  not                                                               
designed by oil lobbyists; it  needs aggressive solutions besides                                                               
corporate handouts. He said he supports HB 111.                                                                                 
6:29:06 PM                                                                                                                    
TOM BOUTIN, representing  himself, Juneau, said he  is opposed to                                                               
changing oil  taxes unless it  increases production.  He recalled                                                               
the state  changing from an oil  severance tax to a  profits tax.                                                               
He  said he  went door-to-door  three  years ago  to explain  why                                                               
Ballot Measure  1 was a bad  idea (the referendum on  SB 21). The                                                               
change to a profits tax worked  as intended: when oil prices were                                                               
high, Alaskans  shared in the  upside, and even when  profits are                                                               
low, income flows into the state.  Now that prices are lower, the                                                               
state wants  to renege  on the  deal. Not  paying the  credits is                                                               
wrong and  addresses a problem  that does not exist.  Alaska does                                                               
not  have  a cash  flow  problem,  it  has an  imbalance  between                                                               
amounts  available for  ongoing  appropriations.  The state  came                                                               
close to a  cash flow problem in  2003, but it is  not there now.                                                               
Unless the  Department of  Natural Resources  buys oil  rigs, the                                                               
state will  continue to  depend on the  oil companies.  The state                                                               
should ask the companies what it  can do to help make Alaska more                                                               
6:31:03 PM                                                                                                                    
CYNTHIA DAU,  representing herself,  Juneau, said she  is against                                                               
HB  111 as  written.  She is  "feeling the  pinch"  by living  in                                                               
Juneau, and  she asked  the committee to  remove tax  breaks from                                                               
big oil companies. "We need to  find our footing as residents. We                                                               
need our  senior homes. They are  the very people who  built this                                                               
great state." She  asked that the committee  not overburden their                                                               
constituents with further taxation and  lowering PFDs. She said a                                                               
family friend  is thinking  that Alaska  is not  a place  she can                                                               
afford to  return to. Ms.  Dau suggested looking at  an education                                                               
tax. Alaska  needs oil but not  oil company tax breaks.  She said                                                               
to take another look at HB 111.                                                                                                 
6:32:43 PM                                                                                                                    
KAREN  GLASS, representing  herself,  Douglas,  said her  parents                                                               
were Alaskan homesteaders  in 1946. She strongly  supports HB 111                                                               
because oil  companies must pay  Alaska for the oil  removed from                                                               
the state at huge profits. It  is not fair for Alaskans to suffer                                                               
with  reduced   PFDs,  education   cuts,  increased   taxes,  and                                                               
drastically reduced government services.  The state employs many,                                                               
and  she  is a  public  health  microbiologist. Oil  prices  will                                                               
likely not  increase due  to alternative  energy sources,  so the                                                               
state  will continue  to  pay oil  companies  for their  drilling                                                               
costs. Because of  SB 21, the state pays out  more in oil credits                                                               
than it  is receiving in  production taxes.  This is not  fair to                                                               
Alaskans. "Why  are we  making all Alaskans  suffer to  pay state                                                               
dollars to  the richest companies in  the world?" If HB  111 does                                                               
not change  this, and if oil  prices do not go  up significantly,                                                               
Alaska will  continue to subsidize  oil companies at  the expense                                                               
of residents. Senate Bill 21 is  not working, and that is why the                                                               
state  has  a huge  budget  deficit  with many  vital  government                                                               
services  like the  pioneer  homes and  public  health and  other                                                               
vital services being cut.                                                                                                       
6:35:48 PM                                                                                                                    
WOLFGANG FALKE,  representing himself, Fairbanks, said  he worked                                                               
on the pipeline. It is not a  good idea to throw good money after                                                               
bad. There is  a problem due to  the price of oil.  If oil cannot                                                               
be pumped out  with a reasonable return, leave it  there. It will                                                               
not go bad,  he said. Futures generations may use  it, but others                                                               
think  that the  sun  is a  better source  of  energy. The  state                                                               
should make good  on its promise of tax credits,  but it could be                                                               
changed as it is very bad business sense.                                                                                       
6:37:45 PM                                                                                                                    
WYCHE  FORD, Alaska  General  Manager,  Fluor Alaska,  Anchorage,                                                               
said Fluor Alaska provides  engineering and construction services                                                               
to oil and gas and  mining infrastructure. He urged the committee                                                               
to reject HB 111. Current  tax policy could use some adjustments,                                                               
but  HB  111  imposes  major  changes  once  again.  Particularly                                                               
harmful  to   the  bright  spot   of  helping   independents  and                                                               
differential to  the majors, changing  tax policy  really affects                                                               
the ability  to progress projects.  Unlike the majors,  they rely                                                               
more  on outside  financing. The  long-time horizon  for projects                                                               
makes it  difficult to  use outside  financing. It  increases the                                                               
hurdle for what  really is a bright spot right  now. He suggested                                                               
stability and tweaks to the tax  regime, but the major changes in                                                               
HB  111  will  be  harmful  to  the  bright  spot  of  successful                                                               
exploration by independents.                                                                                                    
6:39:21 PM                                                                                                                    
JUDY  CRONDAHL, representing  himself,  Juneau, said  she is  the                                                               
grandmother of 6th-generation Alaskans. She  spoke in favor of HB
111.  She was  amused to  hear a  testifier say  if her  business                                                               
changed its prices  frequently, she would lose  her business. Ms.                                                               
Crondahl said that every time she  fills the gas tank in her car,                                                               
the price changes,  but she still fills her  tank. Changing price                                                               
does not  have a lot  to do with it.  Without changes to  the oil                                                               
tax and credit  system, the legislature is going  to be demanding                                                               
that every  Alaskan give up  more than $1,000 of  their permanent                                                               
fund  dividend.  Every  Alaskan-from  a newborn  to  the  elderly                                                               
living in poverty,  from students who are saving  for college, to                                                               
students who are  in college-and yet the state  wants to continue                                                               
this favorable tax and credit  policy for the wealthiest industry                                                               
in the world.  These are our resources; we deserve  to get a fair                                                               
price for them. You can change  the price that you charge the oil                                                               
industry. It is our oil. It is our money. You represent us.                                                                     
6:41:27 PM                                                                                                                    
BRYAN  CLEMENZ, Senior  Vice President,  Bristol Bay  Industrial,                                                               
Anchorage,  said he  is  the  past chair  for  the University  of                                                               
Alaska, College of  Engineering and Mines, and he  is the current                                                               
president of the Support Industry  Alliance. He said Alaska needs                                                               
an oil and gas policy  that incentivizes investment with jobs and                                                               
the promise  of economic  diversity at  its very  core. Companies                                                               
that he  has worked for  employ thousands of Alaskans.  Day after                                                               
day, week  after week, he  hears of individuals who  have already                                                               
left Alaska  due to lost  jobs or who are  waiting for a  job, as                                                               
well  as those  who have  jobs  and are  considering leaving  the                                                               
state. We  are telling the  energy and financial  industries that                                                               
Alaska  is  not  a  place  to invest,  and  we  are  telling  our                                                               
neighbors that it may be time to pack up and leave Alaska.                                                                      
6:43:28 PM                                                                                                                    
EDWARD  WITBECK,  representing  himself,  Kenai,  said  he  is  a                                                               
retired oil field worker. He said HB  111 is a good start, and he                                                               
suggested cutting all  of the incentives. The  oil companies will                                                               
not leave; they make money at  $5 a barrel. The industry is lying                                                               
to the legislature. Senator Meyers  is a ConocoPhillips employee,                                                               
as  is Senator  Micciche.  That is  a  conflict of  interest-it's                                                               
cancer within the  body. Don't be fooled, he  said, the companies                                                               
will make money  at $5 per barrel. No incentives  are needed, and                                                               
HB 111 is a good start.                                                                                                         
6:44:59 PM                                                                                                                    
KEITH SILVER,  representing himself, Anchorage, said  he does not                                                               
work for  the oil industry,  but he  has an interest  in resource                                                               
development as  a resident. Resource development  is expensive in                                                               
Alaska, and companies have to deal  with the fiscal policy in the                                                               
jurisdiction  where they  invest  their billions  of dollars.  It                                                               
needs  to  be   fair  and  consistent,  and  HB   111  fails  the                                                               
consistency test, because  it changes taxes for  the seventh time                                                               
in 12  years. It is not  fair, because it eliminates  many of the                                                               
credits. It  is not competitive with  most jurisdictions, because                                                               
of Alaska's  weather and access  issues. Without credits,  he was                                                               
told that  Anchorage would have  to import natural gas,  and that                                                               
is a  perfect example of  how incentive credits can  work. Caelus                                                               
Energy announced a  large oilfield on state land,  as did another                                                               
company,  and  it  would  be   a  costly  mistake  to  discourage                                                               
explorers from developing these prospects.                                                                                      
6:47:00 PM                                                                                                                    
WILLIAM HARRINGTON,  representing himself, Anchorage, said  he is                                                               
retired  and on  a  fixed  income. "What  a  day of  heavy-weight                                                               
public testimony. So many numbers!" He  said he read the bill and                                                               
is more confused.  Everyone is waving a flag saying,  "I want the                                                               
best for  Alaskans," but everyone  is voting along  caucus lines.                                                               
Back  to the  drawing board  with this  measure, because  oil has                                                               
been  paying for  40 years  and legislators  have been  spending.                                                               
Construction workers  say, "Poor planning  on your part  does not                                                               
constitute  an emergency  on mine."  He  said he  hopes that  the                                                               
denizens in the Senate will work  on keeping the state on an even                                                               
keel, otherwise he knows what color his lifejacket it.                                                                          
6:48:14 PM                                                                                                                    
LAURA   BONNER,  representing   himself,   Anchorage,  said   the                                                               
committee  has   a  difficult  job   as  oil  taxes   are  always                                                               
complicated.  Historically, Alaska's  share of  oil revenues  has                                                               
been  about 30  percent  from all  sources, including  royalties,                                                               
corporate  tax, production  tax,  and property  tax.  It did  not                                                               
matter on  the tax structure,  even when  oil was $9  per barrel.                                                               
House Bill  111 will not get  Alaska back to the  30 percent, but                                                               
it  prevents credits  from  being used  to  reduce tax  liability                                                               
below the minimum tax, and  it provides for more transparency and                                                               
reporting, including  credits earned  but not cashed.  Passage of                                                               
this  bill  is an  important  piece  of  a responsible  plan  for                                                               
Alaska's  fiscal stability.  Oil  company welfare  must not  take                                                               
precedence over state  services like public safety.  She said she                                                               
supports  HB  111 and  asked  the  committee  to work  on  shared                                                               
facilities,  so small  producers  will also  have  access to  put                                                               
their oil down the pipeline.                                                                                                    
6:49:55 PM                                                                                                                    
MICHAEL JESPERSEN,  representing himself,  Anchorage, said  he is                                                               
extremely  opposed to  HB  111.  It is  a  joke  that Alaska  has                                                               
already changed  oil taxes six  times in  11 years, and  now "you                                                               
want to go  for seven in twelve?" How can  we say something isn't                                                               
working when  it changes so  often? He  said he has  never worked                                                               
for  an  oil company  or  a  business  that  depends on  the  oil                                                               
industry.  He  works  in  the tourism  industry,  and  his  hotel                                                               
depends on oil industry travel, which  is down, so every hotel in                                                               
Alaska is fighting  for what's left. Rates are  going down, which                                                               
is good for travelers, but it  doesn't do anything for his bottom                                                               
line. "Please kill this bill, it hurts everybody."                                                                              
6:51:39 PM                                                                                                                    
LISA  REIDER, representing  himself,  Anchorage, said  she is  an                                                               
engineer and  a single mom  working for  a contractor to  the oil                                                               
industry. She  said she is opposed  to HB 111 but  believes there                                                               
could be a  compromise. The increase in taxes  reduces the amount                                                               
of money  that oil  companies can pay  employees and  for capital                                                               
work. The credits  mean that companies like  Caelus Energy cannot                                                               
get off  the ground to get  its financing for wells.  She said SB
21 is working,  and work is being generated. With  an increase in                                                               
the tax, she  does not believe that the number  of employees will                                                               
be able  to remain. She  and her family  will move out  of Alaska                                                               
and have  to look for  work elsewhere, as  will a lot  of people.                                                               
"Big oil is little me and  my children; there is no conspiracy or                                                               
greed."  Big oil  contributes  a  lot to  the  state and  charity                                                               
functions, and she encouraged a revised HB 111.                                                                                 
6:53:56 PM                                                                                                                    
JIM PLAQUET,  representing himself, Fairbanks,  said he is  a 43-                                                               
year  member  of  the  operating  engineers  local  302  and  his                                                               
granddaughter is  a sixth-generation Alaskan. He  said he opposes                                                               
HB 111  in its current  form. It goes  too far and  raises taxes.                                                               
Alaska  needs to  attract investment  and  not send  it to  North                                                               
Dakota  or  Texas.  Alaska  cannot  increase  oil  production  by                                                               
increasing taxes. Raising taxes on  oil drives away investment at                                                               
a time when we should be attracting investment.                                                                                 
6:55:19 PM                                                                                                                    
PAUL  D.  KENDALL,  representing himself,  Anchorage,  said  some                                                               
comments so far have been  fictitious. "My dividend money did not                                                               
go to the  oil companies." He said the governor  stole that money                                                               
and will use it to do a $2.5  billion bond sale for PERS and TRS.                                                               
He said he thinks the funds are  located in a New York bank, "and                                                               
those big  boys see lots of  criminals; they see lots  of actions                                                               
and know damn well the state  that Alaska is in." Governor Walker                                                               
is  strategizing  behind  the  scenes trying  to  blame  the  oil                                                               
companies, but  it is "your  fault." The oil companies  could not                                                               
do  this without  Alaska leaders,  "so there  is no  way out  for                                                               
you." He  said the  elephant in  the room is  PERS, TRS,  and the                                                               
public  employee unions.  He said  he is  getting tired  of being                                                               
called  a freeloader,  while the  guy next  to him  is living  on                                                               
$80,000 a  year. "Sixty to  seventy percent of the  population is                                                               
between Homer and  Palmer, and the governor stole  that money and                                                               
you folks  let him get  away with  it; that's about  $920 million                                                               
out of our pocket here." He said legislators need to "do full-                                                                  
time leadership." The  state needs to get ready for  a new future                                                               
with artificial intelligence, nanotechnology, and robotics-.                                                                    
6:58:44 PM                                                                                                                    
ARAS  WORTHINGTON, representing  himself, Anchorage,  said he  is                                                               
opposed to HB 111. He said a friend  has been laid off by the oil                                                               
industry, and  she is  one of many.  It has been  hard to  make a                                                               
living  here. He  left  college in  1992 and  wanted  to work  in                                                               
Alaska, but it  took him a year  to find a good job.  He has been                                                               
in the oil  industry since, but his friends are  not, so he asked                                                               
to vote against the bill.                                                                                                       
6:59:36 PM                                                                                                                    
VERN JOHNSON, representing himself,  Anchorage, said he has lived                                                               
in Alaska for 17  years, and HB 111 is flawed. It  needs a lot of                                                               
work, and increasing  taxes on oil will  create short-term relief                                                               
but will harm  the oil industry in  the long term. This  is not a                                                               
time to limit (unclear) oils, and  a hard floor will also cause a                                                               
problem  for the  small producers.  He  said he  knows that  some                                                               
investment decisions  by the oil  industry were on  the structure                                                               
of SB 21, and it will  be difficult to attract investments if the                                                               
state does not honor those provisions.  Alaska is not going to be                                                               
competitive with the world unless it has a stable environment.                                                                  
7:01:39 PM                                                                                                                    
HARI  DEV SINGH  KHALSA, representing  himself, Juneau,  said the                                                               
last  time  he  worked  for   an  oil  company  was  during  [the                                                               
construction of]  the pipeline. Alaska  has the lowest  oil taxes                                                               
of any first  world country. The oil companies  made $114 billion                                                               
in profit  last year. He said  he does not understand  why Alaska                                                               
needs  to give  them money  as corporate  welfare-it boggles  his                                                               
mind  that the  permanent fund  dividend  goes to  them, and  the                                                               
dividend will  slowly shrink  back to nothing,  and then  all the                                                               
oil resources will be gone.                                                                                                     
7:02:49 PM                                                                                                                    
ABIGAIL  ST.  CLAIR,  representing  herself,  Wasilla,  said  she                                                               
opposes HB  111 because Alaskans  cannot afford it. The  state is                                                               
in a  recession. There are  parts of  the budget where  the state                                                               
can be more resourceful. The  legislature has changed the state's                                                               
production tax  twice since  2013, and it  is attempting  to toss                                                               
the voter-approved SB 21. There  is no reason to make unnecessary                                                               
cuts, "just  because you have  a spending problem." She  said the                                                               
state has  thousands of  paid unfilled  positions, and  she asked                                                               
why the legislature is giving  that money to the departments. She                                                               
does not believe  in micromanaging, but she  believes in spending                                                               
money wisely  and wants to stop  the cycle of waste.  She said HB
111 will weaken the ability  to attract new prospects or increase                                                               
7:04:14 PM                                                                                                                    
JESSICA  WORTHINGTON, representing  herself, Anchorage,  said she                                                               
is a wife and mother. House  Bill 111 will have an adverse impact                                                               
on  the  Alaska economy  and  encourage  responsible citizens  to                                                               
leave  Alaska. Uncertainty  discourages economic  development for                                                               
everyone in the state.                                                                                                          
7:04:51 PM                                                                                                                    
LAUREN MOSS, representing herself,  Soldotna, said she is retired                                                               
and on a fixed income. She said she  is in favor of HB 111. It is                                                               
time for all  participants in Alaska's economy to  pitch in their                                                               
fair  share, and  the  corporate involvement  in  this state  has                                                               
never really  come to its  full potential in contributing  to the                                                               
base economy of  Alaska, even when oil was at  a very high price,                                                               
the  taxes paid  was never  sufficient. She  said she  is not  an                                                               
expert, but  she hesitates to pay  an income tax until  she knows                                                               
that  the  corporations  that  have  benefited  to  the  tune  of                                                               
billions of dollars from this  state's resources are ready to pay                                                               
their fair share.  They have benefited much more  than any single                                                               
citizen of Alaska  from the extraction of  Alaska's resources. It                                                               
is  time for  them  to step  up  so this  state  does not  suffer                                                               
declines  in  education,  public   safety,  public  service,  and                                                               
infrastructure. The damage of SB 26  needs to be repaired, and HB
111 is a step in the right direction.                                                                                           
7:07:03 PM                                                                                                                    
CHAIR  GIESSEL  closed  public  testimony  and  held  HB  111  in                                                               

Document Name Date/Time Subjects
AGENDA - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111 - Assorted Opposition - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - AK General Contractors - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Anchorage Chamber of Commerce - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Steve St Clair - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Thomas Willard - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Thomas Willard - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Keith Silver - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Teamsters Local 959 - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111- Comments - Tesoro Alaska - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - John Lau - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - NANA - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Christian Klotz - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Keep Alaska Competitive - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Josh Peppard - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Various Support - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB 111 - Opposition - Doyon Ltd - 4 - 17 - 17.pdf SRES 4/17/2017 5:00:00 PM
HB 111
HB111 - Opposition - AK Miners Assoc - 4 - 17 - 24.pdf SRES 4/17/2017 5:00:00 PM
HB 111