Senator French Calls on Governor Parnell to Stop Touting '$5 Billion Promise'
Testimony from BP reveals two significant flaws in proposed investment
JUNEAU-Senator Hollis French, D-Anchorage, sent a letter to Governor Sean Parnell this morning concerning testimony from BP Alaska’s Head of Finance Damian Bilbao yesterday in the Senate Resources Committee. In the letter, Senator French asks Governor Parnell to stop touting the promise of $5 billion from industry if 'meaningful' tax reform is passed.
Senator French points out that in his testimony, Mr. Bilbao admitted to two significant shortcomings of the $5 billion investment promise. First, Mr. Bilbao acknowledged that the industry would spread the $5 billion investment over a period of up to 10 years. That means under the governor's proposal, the state would give up close to $18 billion in revenue for $5 billion in increased investment.
Second, Mr. Bilbao conceded that under the Prudhoe Bay Operating Agreement, ConocoPhillips, BP and ExxonMobil must all approve any significant investments. Any one owner can veto the investment proposals of the others. So far, only representatives from ConocoPhillips and BP have testified that the $5 billion may be invested.
"It seems premature, if not reckless, for anyone to be putting too much reliance on statements about future investments made by ConocoPhillips and BP Alaska alone," Senator French said his letter. "Their plans are subject to the approval of ExxonMobil. More to the point, their plans are also subject to ExxonMobil’s disapproval."
ExxonMobil submitted a letter instead of appearing in person in front of the Senate Resources Committee. In the letter, ExxonMobil makes no specific reference to the $5 billion investment. To read that letter, click here.
"Since ExxonMobil is notably silent on the ‘promise’ of $5 billion in new investment, I urge the governor to desist from using any mention of a future increase of $5 billion in capital spending on the North Slope, at least without also mentioning the veto power held by ExxonMobil," said Senator French.
To read Senator French's letter to Governor Parnell, please click here.
To watch Mr. Bilbao testify, please click here.
For more information, please contact Lisa Weissler in Senator French's office at (907) 465-3892.
Posted: March 4, 2012