Make Alaska Competitive Urges Alaskans to Act on ACES
February 28, 2012
It’s time to speak up to take control of our future
The Senate Resources Committee will take public testimony on oil and gas taxation today and tomorrow from 6 p.m. to 8 p.m.
You can help make the case that Alaska is uncompetitive when it comes to attracting the billions of dollars we need to increase oil production. Senate Resources is holding two public hearings so constituents can weigh in on the debate:
How is Alaska doing compared to other oil-producing regions? Here’s one example that shows how Alaska is falling behind when it comes to attracting new investments.
"Alaska’s oil and gas company" ConocoPhilips 2012 capital budgets
Capital investment is the key to more oil production. One of Alaska’s major oil producers recently announced its capital budgets for 2012. Take a look at how Conoco’s planned spending in Alaska stacks up with its Lower 48 and international commitments:
DOWN more than 35 percent
UP nearly 85 percent
UP more than 40 percent
Source: Petroleum News, Feb. 26, 2012
Pedro van Meurs, oil and gas consultant to the Alaska Legislature, recently testified that the maximum rate of ACES combined with other state and federal taxes creates a "combined tax rate of 85.25 percent under high prices."
"Such an excessive tax rate reduces significantly the incentive for companies to be efficient because they can only keep $.1475 of every dollar saved," said van Meurs.
He also testified that in order to attract new investment in a "major way," Alaska must adopt two significant political changes in addition to actual fiscal changes:
Alaska has to define competitive fiscal terms for the entire range of oil and gas resources, so investors know what the terms are.
Alaska has to offer fiscal stability on these terms for large new projects, so investors know that Alaska will honor these terms for a significant duration.
Source: Pedro Van Meurs presentation to Alaska Senate Finance Committee, Feb. 13-14, 2012.