My reason for pursuing meaningful oil tax reform has been consistent: To turn around declining production and create Alaskan opportunity.
This requires investment, the kind that other oil-producing regions in the Western hemisphere attract during a high-priced environment. Alaska’s North Slope lacks this investment.
We have a world-class hydrocarbon basin: the North Slope. Yet unlike these other oil-rich areas — places such as North Dakota, Alberta, Texas — our production decline continues.
Tax reform is about maximizing our resources for the benefit of all Alaskans. It’s about moving the needle on production because Alaska’s oil production decline is real.
Last year’s daily North Slope production average for February was 634,000 barrels; this year’s average for February fell to 610,000.
According to the U.S. Department of Energy, Alaska’s production is down 22 percent in the last four years.
Conversely, Lower 48 crude oil production has spiked 17 percent during that same period, but Alaska’s declining production helps drag the nation’s overall sum down six percentage points.
Alaska encourages exploration investment with tax credits, while simultaneously discouraging production and legacy field investment with a production surcharge as oil prices climb. That needs to change.
Tax policy affects business decisions — and Alaska’s oil tax at high prices is too high. We are pricing ourselves out of business. Alaska needs to get back into the game, and grow the economic pie for our people.
That’s what I’m doing, and that’s what I’ve done with House Bill 110, which passed the House last year and never received serious public consideration from the Senate.
I’ve put forth the only proposal that’s generated a response from North Slope operating partners willing to invest at least an additional $5 billion.
It’s also the only plan for which these North Slope leaseholders identified projects for development — including one with about 80 million barrels additional reserves.
BP Alaska’s Chief Financial Officer Claire Fitzpatrick last November told an Anchorage crowd: “BP and our partners are poised to invest billions of dollars in new projects that will result in billions of barrels of new oil from known sources that will sustain throughput in the pipe and generate billions of dollars for the state, but we are poised for that when Alaska has got a more competitive business climate.”
HB 110 moves toward my one million barrels per day of production goal. This achievable target is part of a greater vision to keep Alaska strong and make us a leader in securing energy for America. Why not produce more American energy for Americans?
I find it unacceptable that Americans face such dramatic fuel price hikes underscored by unstable foreign governments providing our nation’s energy needs when Alaska has so much to offer our nation.
Reaching one million barrels requires more than significant state tax change. It also calls for federal agencies to focus on growing America’s economy by tapping Alaska’s energy storehouses.
But reaching that one million barrel target starts with creating a business climate that changes investment behavior.
The Senate’s tax proposal — Senate Bill 192 — the Senate Resources Committee’s thin response to HB 110 — fails to do that.
SB 192 requires no new investment, fails to produce new commitments, and induces and no meaningful new production would come from this bill.
It’s a minor tax reduction that has the oil producers saying no thank you. SB 192 is a timid reduction that will not jump start projects identified by the companies.
Alaskans see status quo decline as unsustainable and unacceptable. Long-term Alaskan opportunity and prosperity require more oil in the pipeline.
Game-changing tax reform will do that. Small attempts won’t.
• Sean Parnell is the governor of the state of Alaska.
Comments (30)
Add commentThe only thing needed
is a New Governor Please!
This one is defective!
That's a real game changer !!
Pers 11 billion in debt
and this give away is all you are worried about? Why would big oil negotiate when they obviously own you?
Someone, please...
Show this governor Hubbert's Curve.
He's either ignorant or lying. In either case, he's not fit to be our governor.
Too much Tax's? Huh.My
Too much Tax's? Huh.
My first thought is ANWR and the Coastal Plain coupled with save the whale(s), polar bear, caribou, the birds, and a bunch of people who seem to have nothing better to do but be part of this movement to shut us down.
Isn't it more of a problem of our southern neighbors who seem to think that Alaska is their problem? Our laws enable people who have no clue to get involved with our state mostly because they are sick of their own. Tax them!
Parnell doesn't want to confuse you with the facts
Parnell says: Oil companies poised to spend $5 billion.
Parnell doesn't say: Oil companies are going to spend __ billion anyway. For him to say every dollar of oil company investment is a result of a huge tax reduction is disingenuous.
Parnell says: Oil companies poised to spend $5 billion.
Parnell doesn't say: The oil companies say they will start spending in about 3 years, and it will be over a 6 year period. So $5 billion divided by 9 is how much?
Parnell says: Oil companies need a $2 billion annual tax reduction. We'll pay for it out of "savings."
Parnell doesn't say: The savings totalled about $11 billion last year. Parnell has failed to answer one question: Where he will cut $2 billion out of the state budget in 5.5 years, as he and the oil companies agree that state revenues from increased oil production will not significantly offset the loss from the tax reduction for many years- if ever.
"Game-changing tax reform will do that."
Parnell must be planning to watch Game Change on HBO Saturday at 8 PM to find out what Sarah would do.
Parnell
Your irresponsible and self-serving $2 billion giveaway to the oil companies has Alaskans saying "no thank you".
@Rough Cut
The consistency in your Parnell-related posts is admirable...but sometimes I fear you might be lonely.
Are you Parnell's PR director? If you aren't, you should call him and make a new friend. He's probably lonely, too and you guys could start a two-man Parnell Fan Club.
Taxes too high?
BP is free to leave! If there's really oil down there then somebody will be willing to drill for it, maybe somebody a little less greedy than Parnell's good buddies.
I wonder how much BP spent to put this lying sack of $h!t in the governors seat...$2 billion would probably be a nice return on investment for them.
I agree that oil tax reform is needed
But I trust our legislators, especially the coalition Senate much more than I trust vague promises, with no signed agreement to actually do anything as proposed by the Governor.
Hang in there Senators -you got some good advice and information now and I hope you come up with a good piece of legislation. It may not be perfect, but I think it will be on the right track
shameless
Pretty shameless spreading the same old manure and still no mention of the recent report about the oil industry SEC filings or anything about the testimony from tax and oil experts to the senate recently.
People finally seem to be on to Gov. Parnell, December 2014 can't come soon enough.
Sean doesn't...
want to hear the many facts that have come out regarding HB110. HB110 is not just a bad deal for Alaskans, but is a downright crummy deal. Sean does not have Alaskan's interest as his priority on this one. Seeing first-hand the alarming right-wing nightmare that the national GOP has turned into, and hearing Parnell trot out these false, Chicken Little sound-bites as to why we Alaskans must give away the store to his oil industry superiors is irritating to say the least. PERS/TERS is down 11 Billion. Education is underfunded by this Governor, and he is in favor of further reducing public education funding via Vouchers. Normally I would say he's toast for re-election, but this is Alaska... Oh for a governor the likes of Jay Hammond or a Bill Egan... or at least one who isn't working against our interests.
Parnell
RECALL RECALL
Dear Governor, Please stop
Dear Governor,
Please stop blackmailing the state senate.
Please stop holding this state and its interests hostage.
Please stop playing to the big three oil companies...Conocco in particular.
Please stop feeding us lies about ACES and how competitive we need to be.
Please stop denying our children and our public workers such as teachers, police, firefighters and state employees the right to a secure future.
Please CHOOSE to RESPECT the people of this state and stop working for the big 3!
Respectfully and Sincerely,
The People of Alaska
(Your Employers)
Sean Parnell is misleading
Sean Parnell is misleading Alaskans because more drilling will not bring our gas prices down. Speculation and world markets have more to do with high gas prices.
Also securing energy for America would be putting more investment in clean energies not investing more of our public monies into oil companies.
Sean Parnell's Tax Reform plan is also selling out future generations of Alaskans to maximize profits for oil companies today.
We need a new Governor. Our state will never get good policy from an oil lobbyist. Having an oil lobbyist as Gov. is a big conflict of interest and a huge waste of our time.
"Reaching one million barrels
"Reaching one million barrels requires more than significant state tax change. It also calls for federal agencies to focus on growing America’s economy by tapping Alaska’s energy storehouses"
Why should the federal Gov. prop. up and buy-down the risks for private oil companies when they are seeing record profits??? Why should anyone want their public lands and tax payer dollars used in this way?
We need to move away from fossil fuels. Our public investments should be in new, safe, and cleaner technologies, not dirty fossil fuels.
Oil drilling
Summer is approaching, and oil prices ALWAYS go up so the big oil companies can reap more dollar into their coffers
How about a business contract solution?
When I hire a plumber, electrician, auto mechanic or anyone else, I don't pay them ahead of time based on their simply telling me what they will do. I wait until the job is done, and if it is done right and they have delivered what they promised or said they would do, I pay them.
How about a deal with the oil companies? I don't mean just giving them tax credits, but if as our Governor says they will do, when they increase oil production and delivery to a million barrels a day, if they do the exploration for new sources of oil, if they hire Alaskans and not non-residents, then the State will agree to pay them or give them a tax break.
I don't accept the idea of "give me the money now and wait and hope that I do what I said without any written contract or assurance.
Open Minded Thinking
My problem with the Govenor is that he seems to have been programmed to think one way and does not appear to have the ability to think outside of what he learned as a representative for a big oil company. His bias has clouded his judgement in terms of what is best for the State of Alaska.
Bad Role Model
I never thought it possible but Parnell is making $arah look good.
His arguments make no sense!
Governor, why does big oil need our dollars to provide investment in their infrastructure? Why can't they use their own billions? They have more than we do.
Your smokescreen is nothing more than a $2 billion giveaway to your buds.
Everyone sees this.
If you want to incentivize more production, I suggest we tell the oil companies to produce 20% more within in the next two years. If they don't, we give their leases to their competitors.
And if they produce more than 20%, then and only then will we consider tax cuts.
And one last thing gov, you never mention the timeframe the oil companies intend to invest $5 billion, nor do you say if it is to be invested here in Alaska.
We have the oil. They have the infrastructure. They will not abandon either. As such, we can charge whatever we want.
ACES IS WORKING! LEAVE IT ALONE!
Rough Cut
First, thanks for bringing your peanut sized brain to the table. Second, Saudi Arabia modulates their oil production based on a number of factors, including market price. They can ramp up production relatively quickly to balance world supply and demand.
This is different than opening new areas to exploration with the possiblity of production in 5-10 years.
There's a long-view and a short-view at play, the long-view contains many ideas better than destructive drilling of our backyards.
Rough
Isn't that exactly what we have going on here, on a smaller scale? Parnell wants his way, and NOW, and the legislators (thank goodness they're not diving in the deep end before checking for water first) have a different take. Kinda how it's designed to function...
Please take note...
of your Juneau delegation and how they have voted on this issue. Munoz voted for HB110 before all the facts were in. I'd like to hear that Cathy has thought better, and no longer supports HB110 as it stands.
we need a new governor
As a 39 year resident I've seen a lot of politicians sell out to big oil. But Parnell is nothing less than a traitor to the Alaskan people. We own the oil, but big oil own's the governor's office!
@Gov. Parnell
How do you explain a handshake deal with some of the dirtiest greediest corporations on the planet for "BILLIONS" of dollars???
Oh wow... They'll supposedly invest 5 Billion in 3 years time... But at the same time they'll be saving 2 Billion annually, so by the time they actually decide to start investing they'll be in the black!!!
HB 110 is a joke and I've come to realize so are you...