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The Oil Tax Reform Debate Lives On…



Halcro: ACES ‘a train wreck waiting to happen’

Anchorage Chamber President Andrew Halcro, right, and Sen. Bill Wielechowski debate the issue of oil tax reform at the Make it Monday forum on Feb. 25. Photo provided courtesy of the Anchorage Chamber of Commerce. - © 2013 Lisa Seifert

The “Great Oil Tax Debate” played to a sold-out Anchorage Chamber of Commerce Luncheon at the Dena’ina Convention Center Monday. But as State Sen. Bill Wielechowski and Andrew Halcro, chamber president and a former State House member, debated the pros and cons of amending Alaska’s oil tax structure, it was apparent that without reform to the current system, known as “ACES,” the clear loser would be all Alaskans.

Wielechowski, one of the most vocal supporters of the current oil tax structure and a critic of Gov. Sean Parnell’s plans to overhaul the system, relied heavily upon slides and graphs. His presentation, normally an hour-long affair, was crammed into 15 minutes in which he claimed that under ACES, employment and investment on the North Slope are at all-time highs.

In contrast, Halcro’s presentation was composed as he referenced movies and pop culture, while still emphatically stressing the urgency of the oil tax situation. He charged that Wielechowski failed to mention the forecasted shortfalls due to increased State spending, and that much of the North Slope jobs and investments are in maintenance, not new production.

Halcro described ACES as “a train wreck waiting to happen,” claiming that the Legislature jacked up tax rates more than three times in a “fit of emotion, anger and just plain get-evenness.” Halcro argued that now is the time to lean on the State’s $16.5 billion savings and make Alaska competitive so oil companies will invest in new production. Halcro pointed out that North Slope oil production dropped below 600,000 barrels per day a full decade before 2020 as ACES supporters predicted.

Wielechowski insisted that he does want to see oil production rise, but that tax breaks should be tied to more investment, alluding to the idea that the State would be recklessly giving away billions of dollars with no strings attached. Halcro replied that the State, as a sovereign power, can always increase taxes again if the tax reform does not result in more oil production.

Bill Corbus

Bill Corbus, a member of the MACC Steering Committee, submitted a strong response to an op-ed published in the Juneau Empire on Feb. 5.

‘Doesn't add up’

“Somehow the numbers in a recent opinion piece just don’t add up. No matter how you spin it, there is a huge difference between North Dakota’s 11.5 percent production tax and Alaska’s, which begins at 25 percent and soars to as much as 70 percent during high oil prices.”

Click here to read the entire piece.

Thank you Alaska for speaking up for your future

Ivalu Eric Fox

Wednesday was a great night for Alaska.

Thirty-three Alaskans – from seven regions of the state – took the time to present public testimony before the Senate Resources Committee. Only five people spoke against ACES reform and one was conditional.

A special shout out to Teamsters Local 959 who turned five testifiers, including Daniel Finney who told committee members to “choose Alaska, choose Alaskans and make us competitive again.”

Kudos to CH2M HILL who had three employees testify – and NANA Development Corp. where Ivalu Eric Fox, vice president of operations for camp services at NMS, who told committee members that “NMS has opened a Houston office to pursue work in Texas. Alaska’s investment climate is driving away business. We do not have a lack of oil in Alaska. We have a lack of investment.”

Testimony came from Kodiak, Seward, Fairbanks, Anchorage, Juneau, Eagle River and the Matanuska-Susitna Borough.

  Memorable quotes

“Alaska is an educational process … that requires VERY patient capital.”

Bart Armfield, chief operating officer, Brooks Range Petroleum Corp.

"I want my grandchildren to have the ability to live, work and play as adults in their home state. None of this is possible without a good piece of legislation for oil tax reform."

Renee Schofield, chair, Alaska State Chamber of Commerce


“Progressivity is the single biggest ‘fear factor’ externally about Alaska’s oil and gas production taxes. It’s negative PR Outside.”

Ken Thompson, co-owner, Alaska Venture Capital Group


Montana debates tax holiday

They’re talking taxes in Montana, too.

Sen. Christine Kaufmann, a democrat from Helena, introduced SB 295, which would terminate the 12-month and 18-month reduced tax rates for new oil and natural gas production and would use those proceeds to address oil and gas impact projects and promote renewable energy sources.

The drilling incentive that SB 295 eliminates was put in place in 1993, says Montana Petroleum Association Executive Director Dave Galt. The incentive made it possible to convince companies to come to the Elm Coulee field, “where the Bakken all started.”

There is a belief, he continues, that because of the increased activity in North Dakota, the same thing is happening in Montana. But he says that is not the case. “Montana wells struggle with operators' economic thresholds for investment, and this small incentive tips the scales to entice capital investment.”

Galt says there is exploration going on in many places in Montana, and the loss of this incentive will be a “show stopper” for many of these exploratory efforts. “The drilling incentive is an example of a business-friendly decision made by the Montana Legislature and it works. There is an old saying, 'If it ain’t broke, don’t fix it.'"

North Dakota sets new production record

Map shows extent of Bakken shale

Meantime, in neighboring North Dakota, production hit a new high of 768,853 barrels of oil per day (bpd), an increase of 33,791 bpd or 4.6 percent over November.

In December 2011, North Dakota average daily oil production was 535,088 bpd. The December 2012 production of 768,853 bpd represents a year-to-year increase of 233,805 bpd, an increase of nearly 44 percent.

In contrast, Alaska production averaged 547,866 bpd in 2012, a decline of 35,029 bpd over 2011.

In addition to production volumes, the number of producing wells in North Dakota increased by 123 in December to a total of 8,224, another record high. Rig count stood at 184. More than 95 percent of drilling in North Dakota targets the Bakken and Three Forks formations.



MACC provides speakers to meet your needs

MACC can dispatch speakers to all parts of Alaska to talk to groups and employees about the need to meaningfully reform Alaska’s oil taxes. To schedule a presentation, contact Julianne at MSI Communications.

Action is needed now

With the legislative session in full-swing, action is needed now to move oil tax reform forward. Call your legislator, call into talk shows and write letters to the editor of your local newspaper and encourage the Legislature to move oil tax reform forward now.

Here are sample letters to the editor and information on how to submit.

Here is information on how to call into talk radio shows.

Like MACC on Facebook

Make sure to “like” us on Facebook for daily updates. We encourage you to join the conversation.

This week’s calendar - Week of 3/1/13 – 3/8/13

Energy Council Annual Conference March 5-8, Washington, D.C.

Friday, Mar. 1
1 p.m. – House Resources Committee, HB72, Gavel-to-Gavel or alaskalegislature.tv

Monday, Mar. 4
9 a.m. – Senate Finance Committee, SB21, Gavel-to-Gavel or alaskalegislature.tv
1 p.m. – House Resources Committee, HB72, Gavel-to-Gavel or alaskalegislature.tv

Tuesday, Mar. 5
9 a.m. – Senate Finance Committee, SB21, Gavel-to-Gavel or alaskalegislature.tv

Wednesday, Mar. 6
9 a.m. – Senate Finance Committee, SB21, Gavel-to-Gavel or alaskalegislature.tv
1 p.m. – House Resources Committee, HB72, Gavel-to-Gavel or alaskalegislature.tv

Thursday, Mar. 7
9 a.m. – Senate Finance Committee, SB21, Gavel-to-Gavel or alaskalegislature.tv
Friday, Mar. 8
9 a.m. – Senate Finance Committee, SB21, Gavel-to-Gavel or alaskalegislature.tv
Make Alaska Competitive Coalition
3501 Denali Street #202, Anchorage, AK 99503 : 907.569.7070 : © 2013 Make Alaska Competitive Coalition
MACC accepts no money from oil producers.

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