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change in tax environment going back to ACES will not be positive,” Jepsen said of the company’s plans should SB21 be repealed this August.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.