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Ballot question carries big ramifications

Oil executive: Repeal would mean reevaluating investments

Posted: April 11, 2014 - 12:10am
Scott Jepsen, Vice President of External Affairs, ConocoPhillips, gives an update on their North Slope activities during the Juneau Chamber of Commerce luncheon at the Hangar Ballroom on Thursday.  Michael Penn | Juneau Empire
Michael Penn | Juneau Empire
Scott Jepsen, Vice President of External Affairs, ConocoPhillips, gives an update on their North Slope activities during the Juneau Chamber of Commerce luncheon at the Hangar Ballroom on Thursday.

Juneau - ConocoPhillips’ Scott Jepsen painted a pretty picture of the current activity and future plans on the North Slope to the Juneau Chamber of Commerce Thursday — investment is high and projections indicate production will soon follow.

But everything he told the chamber lunch crowd hinged on a big “if.”

If Alaskans vote not to repeal SB21 this fall, the $1.7 billion capital budget will stay in place and the company will continue to expect up to 50,000 barrels of new production per day within the next four years.

If Alaskans opt to do away with the Republicans’ tax plan from the 2013 legislative session, that all gets put into jeopardy, said Jepsen, the vice president of external affairs for ConocoPhillips Alaska.

“We will go back and we will look at all the projects we’ve got, all the investments we’re thinking about making, and the change in tax environment going back to ACES will not be positive,” Jepsen said of the company’s plans should SB21 be repealed this August.

“It will be a negative in terms of these projects, and the kinds of projects we’re going to invest in,” he said.

He added that if the business climate changes due to a repeal of SB21, there could be ramifications for the proposed Alaska Liquefied Natural Gas project currently being discussed by the Legislature.

“It would certainly be a negative signal for the LNG plant — it would not be positive,” he said. “It would make it more difficult to move ahead on the project.

“SB21 creates a positive business climate, a positive investment climate. Going backwards does not.”

ConocoPhillips is one of the three oil producers along with BP and ExxonMobil partnering in the project, which is expected to cost somewhere between $45 billion and $65 billion.

Sen. Bill Wielechowski, D-Anchorage, told the Empire that the change in tax structure from the old system — which increased the tax rates as the price of oil rose — is not what caused the boon in investment this year.

“You had all-time highs in jobs under ACES — it increased every single year,” Wielechowski said, adding that the spike in investment this year is a political move.

“I think there has been an effort to increase in the short term to keep the oil tax bill in place,” said Wielechowski, who has often spoken against SB21. “If you look at next year’s oil production numbers, they plummet.”

He attributes the declining production over the past several years to the amount of “easy oil” — that is, oil with low amounts of water and other products that have to be filtered out before shipping through the pipeline — being nearly exhausted on the North Slope.

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Karl Ashenbrenner
Karl Ashenbrenner 04/11/14 - 09:02 am
A veiled

threat from Conoco...nothing more, nothing less. He forgot that just a short month ago they testified that production would not increase "for the foreseeable future, at least ten years". That was in testimony to the legislature. Now we have production that would plummet if the tax giveaway was repealed. Sounds like total BS to me. They are running scared that they will be called out on their bullcrap. Vote Yes on 1, don't let scare tactics sway you!

John McDowell
John McDowell 04/11/14 - 07:28 pm
notice he didn`t say "even

notice Mr. Jepsen didn`t say "even though it would still be extremely profitable for Seanoco under ACES 2.0 if we did return".
Just as the TAPS pipeline would still be an enormously profitable venture to build today, (court testimony by BP) even though the powers that be continue to portray Alaska as a declining old wrinkled oil province who takes too much for being the owner, Conoco isn`t going anywhere. They won`t lose their leases for anything. If we buy that baloney again in SB138, like we bought ELF and SB21 and almost bought HB77, well then we can`t say we were not warned by the presented facts,..and not hubris and huff as Jepsen is doing. There is a reason they pay him the big bucks to be the lobbying, benchwarming tool he is.

Tom Leston
Tom Leston 04/12/14 - 08:27 am
There are health consequences with increased production

All we are hearing about is "business climate changes" What about the health consequences of increased production? In oil/gas boom Texas people are sick and the oil and gas industry executives are not even interested in discussing it

On NPR yesterday: South Texas Oil Brings Boom – As Well As Pollution’s Toxic Soup
listen to the story, or read transcript at:

" the oil boom in South Texas along the Eagle Ford Shale. The drilling and fracking have brought an influx of industry and cash to formerly impoverished communities. But there's a serious environmental and health toll as well, according to an investigative team that looked into pollution from the boom"

"UNIDENTIFIED MAN #1: It's progress. It has provided opportunity beyond belief, beyond what anybody could've imagined.

BLOCK: But there's a serious environmental and health toll as well, according to an investigative team that looked into pollution from the boom. The reporters decided to focus not on water pollution but on what they consider an equally serious problem that gets less attention: air pollution. Jim Morris is senior investigative reporter with the Center for Public Integrity and he led the eight-month investigation along with InsideClimate news and the Weather Channel. Morris describes the emissions as a toxic soup of chemicals being released into the air day in and day out along the Eagle Ford Shale.

JIM MORRIS: It's a combination of what's called volatile organic compounds and that's carcinogens like benzene would be an example. Formaldehyde would be another. There's a long list of these chemicals. On top of that you've got sulphur dioxide, which is a component of smog. It's a respiratory irritant so people who already have or are prone to asthma for example, if they're exposed to sulphur dioxide it gets immeasurably worse.

MORRIS: The complaints we heard were very common. We reviewed about 300 complaints that had been filed by citizens of the Eagle Ford with the Texas Commission on Environmental Quality, and just saw a lot of common threads, headaches, nausea, breathing difficulties, nosebleeds. And when you look at the science on some of the chemicals that are coming out of these operations, you see those are the very symptoms that would be expected to be associated with emissions from the oil and gas industry."

Another aspect to all this was:
"MORRIS: I think what surprised us is that it's even more powerful than we realized. We did an analysis as part of our reporting and found legislators or their spouses had direct financial interest in the Eagle Ford. In other words, either got royalties from or held stock in companies that were actively drilling in the Eagle Ford Shale."

Bottom line is the people in the communities are sick and the "industry executive are not even interested in discussing it.

Tom Leston
Tom Leston 04/12/14 - 08:24 am
These companies don't care

These companies don't care about health.
They just want our resources.

Vote Yes on Prop 1 and repeal SB 21

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