HB 206-OIL AND GAS DATA  2:30:28 PM CO-CHAIR BURKE announced that the final order of business would be HOUSE BILL NO. 206, "An Act relating to disclosure of oil and gas production tax information." 2:30:52 PM COREY ALT, Staff, Representative Donna Mears, Alaska State Legislature, continued his PowerPoint from the House Resources Standing Committee on May 14, 2025, regarding HB 206 [hard copies in the committee packet]. He explained that he would begin with slide 7 titled "Alaska's Unique Structure," which showed a graph comparing gross and net tax comparisons between $70 oil and $65 oil. The description read as follows [original punctuation provided]: Under a net tax, the public has a greater interest in transparency because of the higher revenue volatility inherent in the system. He explained why under a net tax system such as in Alaska, the public has more interest in the producer tax information than they have in some other jurisdictions. He called the committee's attention to the difference in the taxable volume column which compared the values of a net tax versus a gross tax system. He posited that economists describe a net tax as more efficient over the long term, leading to greater investment in oil and gas. He pointed to the bottom of the chart which shows a change in the taxable value of $70 oil and $65 oil and explained that the assumption of a net tax system by the state of Alaska increases a degree of risk sharing between the oil producers and the state in a way that is not seen in producing jurisdictions such as Oklahoma and Texas. 2:33:33 PM MR. ALT responded to a question from Representative Coulombe by explaining that the chart on slide 7 was a hypothetical example that he produced. He explained that the numbers were close to those used by the state of Alaska, pointing out that gross taxes in states across America are usually in the 4 to 7 percent range. 2:34:20 PM MR. ALT addressed several concerns posed by Representative Rauscher regarding risks to the oil companies and the state, explaining that HB 206 itself makes no changes to oil and gas tax law, the collection of taxes, or the structure of the tax system, and there would be no impact on revenue. The bill is meant to give insight into the question of whether the tax system is performing up to the goals we set for it. He assured the committee there was no intention to create a situation causing competitive damage. Also, the intention of the bill was not to force disclosure that was not already provided. For example, the production tax value that would be required by this bill is already disclosed by some oil companies in other jurisdictions around the world that use net tax systems, including some that operated in Alaska. 2:39:21 PM REPRESENTATIVE DONNA MEARS, Alaska State Legislature, addressed several questions from Representative Rauscher, explaining that one of the reasons the bill was crafted late in the session was to enable conversations with the industry prior to releasing the bill. In addition, they wanted it to sit over the interim, so those conversations could continue. She agreed that data can be commercially sensitive and would not want sensitive information to be exposed. 2:40:21 PM MR. ALT responded to a question from Representative Rauscher by clarifying that some data would come from information disclosed by companies depending on their status in the marketplace as well as disclosures from the American stock exchange and the SEC. Continuing adjustments would be made to the bill's language to ensure it doesn't include competitively damaging information. 2:42:06 PM MR. ALT answered a series of back-and-forth questions from Representative Saddler regarding hypotheticals, tax rates, and disclosures which narrowed down to one specific statement and whether that was what he had said. Mr. Alt said he would have to listen to the tape to confirm a direct quote. He explained that the intention of the legislation was not to force disclosure of information that is not disclosed already by companies. 2:44:46 PM CO-CHAIR BURKE responded to Representative Saddler's demand for an answer by asking Representative Mears to respond. REPRESENTATIVE MEARS maintained that Mr. Alt had provided the relevant information Representative Saddler asked for and that there was information disclosed in other districts that was not disclosed in Alaska. She said Mr. Alt had provided a good background about that level of detail, but they could follow up with additional specifics. 2:45:46 PM REPRESENTATIVE BURKE addressed Representative Saddler on the record to say he had the right to ask questions but not to badger staff. 2:46:17 PM MR. ALT moved to slide 8, titled "Alaska's Unique Structure," which showed several graphs regarding tax disclosure requirements, and which read as follows [original punctuation provided]: • Some oil-producing states have stronger disclosure requirements. • In Texas and North Dakota, producers' tax returns are public He explained that there is a disparity in the disclosure requirements between other gas and oil producing states and Alaska. The bottom left graph was put out by the Alaska Department of Revenue regarding the level of investment on the North Slope. He pointed out that details are not provided about every unit. He discussed the graph on the right which showed an example of a tax history document from the Texas comptroller which had been provided after requesting tax information about a specific oil producer. The example showed the first page of a 4,000-page volume from one month in 2024 concerning Hilcorp Energy company. This is an example of the level of detail other jurisdictions provide. He noted that, unlike Alaska, tax officials from other states would compile this information into usable data sets for policy makers and the public. 2:48:08 PM MR. ALT proceed to slide 9, titled "Alaska's Unique Structure," which read as follows [original punctuation provided]: History: • In 2006, Alaska transitioned from a gross (ELF) to a net tax under the Petroleum Profits Tax (PPT) • The PPT system lacked sufficient disclosure, both to the Department of Revenue and the public. • ACES (2007) implemented the current disclosure statute, AS 43.55.890, to provide for some disclosure of producer data. 2:49:22 PM MR. ALT moved to slide 10, titled "Alaska's Unique Structure," which showed a graph detailing lease expenditures and capital expenditures over time. The slide read as follows [original punctuation provided] Weakening Disclosure: • In 2016, DOR published information on four North Slope units. Today Prudhoe is the only one. • Units have very different production and economic profiles depending on geology and development 2:50:26 PM MR. ALT explained that the quality of disclosure the Department of Revenue (DOR) is allowed to provide under law has deteriorated. He proceeded to slide 11, titled "What's the Problem?" which read as follows [original punctuation provided]: Without insight into the profitability of oil individual producers in particular fields, the legislature could beunknowingly: 1. Holding back industry to the detriment of all Alaskans through complex and onerous tax rates 2. Unfairly advantaging some producers over others 3. Incentivizing development of federal land over state land, decreasing royalty income 4. Allowing the maximum benefit of Alaska's resources to flow to out-of-state oil producers instead of Alaskans themselves He described each of those points in more detail and then turned to slide 12, titled "What's our solution?" which simply stated, "Increased transparency." 2:52:25 PM MR. ALT moved to slide 13, slide 14, and slide 15, titled "What's our solution?" which read as follows [original punctuation provided]: HB 206 would require DOR to publish information about producers at the unit level upon request: 1. The amount of oil or gas produced by each working interest owner (WIO) in a unit 2. The gross value at the point of production (GVPP) by WIO 3. Transportation costs attributable to the product by WIO 4. Production tax value (PTV) by WIO 5. Tax due by WIO 6. State royalty by WIO This data is to be released with monthly resolution. • Most of this information is already public • Royalty information is produced by DOR • Production data is available from AOGCC Transportation costspipeline tariffs and shipping ratesare largely public • GVPP is roughly calculable from production data and public price information. • What's not? • Production Tax Value • Tax Paid • Some companies publish this information voluntarily. Others don't. This proposal would level the playing field. • HB 206 would provide: • Transparency for the public and policymakers • Consistent disclosure in substance and format across producers • A meaningful dataset for analysis • Parity in disclosures between producers He emphasized that information disclosed by the proposed law would not be damaging to the companies. 2:54:26 PM MR. ALT response to a question from Representative Elam regarding the level of administrative burden this would create. He referred this question to Mr. Dale Yancy of DOR. 2:57:00 PM DALE YANCEY, Tax Director, Department of Revenue, answered questions regarding whether HB 206 would create additional administrative burden. He explained that DOR did not have that level of detail available, and it would require additional staff to aggregate the data. He described the information oil companies provided on their tax returns and how the aggregation of data would change with HB 206. He explained that the monthly filings provided by the oil companies detailed the amount of oil produced but not how much tax was being paid. 2:59:35 PM REPRESENTATIVE MEARS pointed out that purpose of bill is to remedy the fact that this data is only available to legislators with a signed non-disclosure agreement, and it is not available to the public. The data exists within the state of Alaska, but it is not useful. M. ALT, in response to a comment by Representative Elam, said that he would defer to the DOR to generate a fiscal note that would accurately account for data aggregation. 3:01:24 PM CO-CHAIR BURKE announced that HB 206 would be held over.