My turn: What's Alaska's plan for 'Beyond BP'?

Posted: Tuesday, June 15, 2010

There's a storm front on Alaska's horizon. It's blowing in from the Gulf of Mexico, and the sooner we get ready for it, the better we'll be able to successfully weather it.

The spill in the Gulf has changed the BP that Alaska knows, weakening one of the pillars in the oil patch.

Already rumors of takeovers, asset sales, federal seizure and even bankruptcy are spreading. Imagine the consequences for Alaska. Aside from rumors, the reality is that BP has to pay for damages and containment, and it probably won't have the ability to operate or develop in Alaska tomorrow the way it did yesterday.

Preparing for that contingency means attracting new companies and new investments to Alaska, insuring that our business climate is competitive and that concentration of assets and corporate power do not create insurmountable barriers to entry. It means demonstrating a new commitment to safe oil and gas production.

We've got declining production on the North Slope, and we need an oil revenue system that takes a long-term view, something better than the existing ACES. I've proposed an "All Royalty" solution to keep oil flowing through the pipeline - where we negotiate the state's take from oil (and hopefully gas) on a field-by-field, project-by-project basis. The state of Alaska would gain by generating increased royalties from those projects that can produce while customizing royalties for marginal fields. This will also help because Alaskans would get jobs and Alaskan businesses would have the opportunity to prosper. The "All Royalty" approach is flexible, nimble and fair. It lets the market dictate the value to the producers and the state. There would be other advantages as well. For instance, because it is royalty as opposed to tax, under the Alaska constitution the "All-Royalty" solution adds money to the Permanent Fund, not the General Fund, putting dividends in Alaskan pockets and enforcing budget discipline in Juneau.

The next step is protecting Alaska's interests and positioning the state to set terms for any merger, acquisition or disbursement of BP's Alaska assets. Alaska needs healthy competition in the oil patch or we will become subject to monopolizing forces. At the time of the BP-ARCO merger, more than 10 years ago, Alaska's approach ultimately protected competition and prevented consolidation that would have cost development and jobs. That's why today we have to be prepared to enforce the state's anti-trust laws should Exxon or Conoco seek too much of the market share in Alaska. We must seek out and attract new participants to acquire such assets and insist on protecting BP employees who live in Alaska.

Finally, we have to remember that Alaskan oil is an Alaskan resource and an Alaskan responsibility. We've learned the hard way that you just can't count on the oil companies to self-police their own behavior. Being independent and self-reliant, being the sovereign owner-state, means we have affirmative obligations and can't simply trust others to do the right thing, or not be negligent, when Alaska's fate is tied up in their actions. We protect our oil, our environment and our options with sensible oversight and vigorous oil field inspections. Interruptions and spills from broken pipes make it harder for us to make our own development decisions and play into the hands of those who would stop Alaska from moving forward with developing ANWR and other projects.

Successful navigation of Alaska beyond BP requires a proactive strategy. If we keep doing what we've been doing, we'll get what we've got - declining oil production, no gas from the North Slope and diminished control over our economic future. We can do better. With the right decisions, we can point Alaska in the right direction: strong, successful and independent.

• Ethan Berkowitz is a former Democratic leader in the State House and has been working with the Arctic Cable Company, a large broadband infrastructure project. He is currently a candidate for governor.



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