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Alaska: ConocoPhillips' government and profit center

Posted: April 6, 2013 - 11:06pm

Every time former Constitutional Delegate and Statesman, Vic Fischer, hears the ConocoPhillips’ ad declaring them, “Alaska’s Oil and Gas Company” he cringes because of the affront the ad makes to our constitutional values. He knows better than any living Alaskan, that “utilization, development, and conservation of all natural resources for the maximum benefit of its people” was never intended to maximize the benefit to an oil company in such a way that they could claim to be our company. “We are owners of our natural resources, not shareholders beholden to Outside corporate interests,” asserts Fischer.

As if this wasn’t insulting enough, now we have a situation with Senate Bill (SB) 21 where ConocoPhillips has taken over our government. SB 21 is the slightly revised version of Governor Parnell’s oil tax bill that will give highly profitable oil companies anywhere from $5 to $6 billion over the next six years in tax breaks in exchange for only the hope that they will increase production on the North Slope. Not one of the three major oil companies, including supposedly “Alaska’s oil and gas company”, ConocoPhillips, has made any commitment to increase production. In fact, ConocoPhillips executives told the House Resources Committee that SB 21 is a “positive start” but it might not be enough. “The bill is at the high end of the middle of the pack,” said Bob Heinrich, Conoco’s vice president for finance in Alaska, saying the company might need even lower taxes to persuade its board to invest even more in Alaska.

Since the Senate voted down all of the proposed amendments to link tax reduction to actual production, SB 21 is correctly labeled a tax giveaway. And who is at the helm, steering this giveaway through the Alaska Legislature? A Governor who is a former lobbyist for ConocoPhillips and legislators who either have very close ties with the oil industry or are actual employees of ConocoPhillips.

Here is the lay of the political bedroom according to Pat Forgey, reporter for the Alaska Dispatch. Forgey notes in his investigative article on March 27th that SB 21 first went to the Senate’s Special Committee on Pipeline Throughput. That committee was chaired during the bill’s consideration by Sen. Peter Micciche, R-Soldotna. He is an employee of ConocoPhillips, working as superintendent of ConocoPhillips’ Kenai LNG facility. Next, Senate Bill 21 went to the Senate Resources Committee, chaired by Sen. Cathy Giessel, R-Anchorage, whose husband’s consulting company touts its petroleum ties on his firm’s website. Third, the bill went to the Senate Finance Committee led by Sen. Kevin Meyer, R-Anchorage. Senator Meyer works for ConocoPhillips and takes a leave of absence during the legislative session. Meyer’s state financial disclosures show he made $50,000-$100,000 last year working for ConocoPhillips when the legislature wasn’t in session. Meyer has a co-chair, but Meyer chose to personally handle the bill debate instead of letting his co-chair take over.

Senate Bill 21 passed the full Senate by a vote of 11-9, with Micciche, Giessel and Meyer voting in favor. It is now before the House of Representatives where the ties with big oil and ConocoPhillips continue. SB 21 just passed out of House Resources Committee, chaired by Rep. Eric Feige, R-Chickaloon. According to reporter Forgey, he’s a pilot who has flown oil-industry passengers to the North Slope. When it reaches the House floor for a vote, more representatives connected to ConocoPhillips will have an opportunity to vote for it as Representatives Mike Hawker, R-Anchorage, and Lora Reinbold, R-Eagle River, are married to ConocoPhillips employees.

Considering the fact that 1) the push for the oil tax giveaway comes from a Governor who used to lobby for ConocoPhillips, 2) SB 21 would not have passed the Senate without two current employees of ConocoPhillips voting for it and 3) none of the legislators married to employees of ConocoPhillips intend to recluse themselves from voting, it appears that our government has been taken over by ConocoPhillips. ConocoPhillips is not Alaska’s Oil and Gas Company rather Alaska has become ConocoPhillips’ government.

This is extremely difficult to swallow when we Alaskans, as owners of the resource, have a constitutional right to receive the maximum benefit from the development of our oil and gas resources. So why are we doing this? The answer given by our industry friendly legislators and the governor is to make Alaska more attractive to investment by big oil. However, the facts do not square up with this reported need. For example, in 2009, ConocoPhillips’ operations in Alaska accounted for 12 percent of its worldwide production but 29 percent of its corporate profits. Furthermore, the Aug. 1, 2010 edition of “Petroleum News” examined ConocoPhillips’ 2010 earnings and concluded that “ConocoPhillips’ exploration and production activities continue to be more profitable in Alaska than across the entire Lower 48.” As such, not only is Alaska, ConocoPhillips’ government; it is their primary profit center.

Although ConocoPhillips’ ads suggest we are shareholders, we are not. This means that if SB 21 passes the House without any linkage to actual production, Alaskans will be losers on both the front and back end of a $5 to $6 billion giveaway, and will confirm that we no longer have a government working for the people of Alaska. Next time you hear ConocoPhillips’ ad, you might be cringing right along with Constitutional Delegate Vic Fischer.

Troll is a long-time Alaskan with more than 22 years of experience in fisheries, coastal policy and energy policy. She resides in Douglas.

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