Alaska continues to face a critical challenge because of our state’s oil production tax structure. Alaska’s Clear and Equitable Share (ACES) is impeding our competitiveness and putting our future in jeopardy. Our economic bedrock is at stake because our oil and gas industry is being severely crippled.
Our current tax structure greatly concerns me as the head of the largest Alaska-owned employer in the state. ASRC Energy Services (AES) is a subsidiary of Arctic Slope Regional Corporation, and we employ thousands of Alaskans, many of whom are in their early and mid-20s and many of whom are Alaska Native. These young people are the future leaders of our companies and our state. They want to know that their company, one that is a service provider to the oil and gas industry, is going to remain in business.
Lately, other states that welcome the oil industry are thriving while Alaska is failing to keep up. The professional jobs such as petroleum and drilling engineers, geologists, geophysicists, air permitters, field biologists, architects, cultural resource specialists, project managers, as well as high paying construction jobs for managers, builders, logistics managers, supply chain personnel, etc., and many businesses supporting the industry are headed south to more welcome climes. Our current tax system, that only took a few weeks to implement and seems next to impossible to change, is complex and uninviting to investment.
With oil prices more than $120 a barrel, and rising, Alaska has an opportunity, and an obligation, to position ourselves now and also for a prosperous future—a future that ensures both young and old are set with a viable pipeline and revenue from an industry that is sustainable. In order to accomplish this, our state government and our legislators need to put their heads together and meaningfully change and improve the tax structure this session to welcome growth.
As an Alaska-born Inupiaq, I resolve to give our youth a strong future. Together we must make our voices heard and get the message to our legislators who are making decisions on our behalf. Standing by and watching the pipeline, which employs thousands of Alaskans and supports countless businesses, continue to lag is unacceptable. Together, let’s send a clear message to Juneau—change ACES today. Taikuu Sunna.
• Kinneeveauk is the President/CEO of ASRC Energy Services (AES). AES is the largest Alaska-based oil and gas service company in the state, and is a wholly-owned subsidiary of the Arctic Slope Regional Corporation.
Comments (10)
Add commentThe Oil Lobby
Well, it seems the powerful oil lobby now has Native corps speaking for them? I doubt they represent Alaska Natives as a whole.
I don't believe his claims that jobs are flooding south. Parnell made the same claim, and that was debunked. Jobs are up on the north slope since the implementation of ACES.
Tell me, Jeff...
Do you think the price of oil is going to go down? What's the rush to pump it all out now?
The State has plenty of revenue coming in. It doesn't need more right now. In ten years, oil will be $300 per barrel, and we'll be wishing that we hadn't pumped so much of it when it was $120 per barrel. The pipeline is doing fine - Parnell's claims of a pipeline shutdown were demonstrated to be a(nother) lie.
Your employees who are in their 20's...what will they be living on when they're in their 40's and 50's? What will their children be living on?
That oil is worth more in the ground than in our politicians' hands right now. Stop shilling for Big Oil.
Spend it all now....
Latitude58,
Spot on...
Eventually the rate of return on the North Slope will become viable to drill the new wells. Let the other stakeholders that need the money today sell themselves short. If our purse holders don't stop spending money like druken legislators we may have to give it up. As long as the oil companies are making $15 Bil a quarter they can be picky about what wells to drill.
Facts No Opinion
You are allowed your own opinion but not your own facts. Oil volume in TAPS is 1/3 of capacity. Annual volume decline is 6-7% per year. Oil pays 90% of state government - schools, public safety, etc. The one thing propping up our broken system is high oil prices, driven up by speculators and instability in the Middle East. If we are not proactive and find a way to stimulate new production, the whole thing comes crashing down. You naysayers won't know what hit you, if the system comes unraveled. You couldn't raise state income or sales taxes high enough to replace the revenues we get from oil. It's basic math. Don't let your emotions cloud your judgment.
Big oil is not the only
Big oil is not the only solution. Dont like our tax structure? Goodbye, oh and you forfeit your infrastructure you put on OUR land. Bye bye. Next! Lots of other smaller companies would love to get handed those leases.
@informed one - so how come
@informed one - so how come these so-called Republicans in the Legislature won't get on board with Parnell?
oil taxes
Alaska's oil tax structure is bringing in mountains of cash but will kill potential for future growth in discovery and development of remote, smaller fields, shale-oil, shale-gas, and other resources that don't have the mega-field economics of Prudhoe and Kuparuk. We need different fiscal regimes (tax structures) for different resources. I came to Alaska in 1973 and am now working on pipelines in Pennsylvania and Ohio because there is no work and few prospects for significant pipeline construction in Alaska.
Current Legacy Fields are a Bridge
Jeff is spot on. This is not about Big Oil or who is working in their interest. A perquisite to vote in our state should be required reading and basic understanding of the Revenue Resources Book prepared by the Department of Revenue. Take time to read it, understand the implications of oil tax revenue in our state, the future without increased investment in legacy fields, the lack of tax base from any other source, and the projections of oil production decline. If you stick to just the non-inflammatory reality that we need to bridge our way to gas, offshore production, and maybe access to other prolific oil producing areas on land by offering a competitive investment climate with our existing fields you can see this is about Alaskans and not oil companies. We are in the weeds with job numbers, where the workers live, facility capacity, facility access, TAPS life span, etc. All of those issues are irrelevant after you understand a basic state publication that can be downloaded for free. If you live anywhere in the state you are part of this issue and cannot be sheltered from the financial impact of low volume production through TAPS. At what point do we start to cut the state budget? We should have started last year and we should be discussing income tax by 2014. It is hard to look in the mirror but we are all on the entitlement train and it needs to be derailed.
@Doug Smith - Thank you for
@Doug Smith - Thank you for such a great post based on reality and free of political posturing.
How do you or I reach the ideologues that can't see the forest for the trees?
Alaska is lagging just a few short years behind the dismal economics that most states are facing today.
It's embarrassing to read the simple-minded rants that vilify big oil or the governor or even fellow posters that happen to disagree.
So I guess, in the end, it's all political...
AAARRRRRRRRRRRR!
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