Wednesday, June 19, 2013
Oil Companies Ask for Tax Breaks, but Offer No Guarantees
Lawmakers hear from oil companies as the debate for changes to ACES drags on in Juneau.
On day 65 of the legislative session in Juneau, the Alaska State House Committee listened to why some oil companies are looking outside of Alaska for exploration opportunities.
AVCG/Brooks Range Petroleum claimed oil taxes should be reduced to attract new partners.
“We made the decision 10 years ago [to come to Alaska],” said Bart Armfield, Vice President of Operations for Brooks Range Petroleum. “Would we make the same decision today? Me, personally, I would say it would be a long, hard decision process and, quite honestly, it would probably be to the negative.”
But when addressing British Petroleum Alaska, one state lawmaker questioned: What does the state get in return for such a relationship?
“There's the consistent and continued concern that the industry isn't making any commitments to us. They are asking for things without commitments,” said Rep. Mike Hawker (R-Anchorage).
In response, BP representatives said it couldn’t make any promises right now.
“Even if we found something big, and I have my fingers crossed like everyone else,” said, Claire Fitzpatrick, CFO for BP Alaska, “if one of the smaller guys find something, it's going to be five or seven years before that's hitting the pipe.”
BP claims Alaska is not competitive in its current state and as a result is not getting the level of investment it could.
And back in Anchorage, one local pro-development group agrees.
“The only time that you are able to get a promise from a business is when you are asking a business to come to a state and you provide…you provide tax incentive, tax reductions,” said Joe Beedle, immediate past president for Commonwealth North, Co-Chair of Study Group and President of Northrim Bank.
Commonwealth North released a 50-page report examining the current oil and gas tax structure, known as Alaska's Clear and Equitable Share or ACES.
The report claims the state is taking too much from producers, especially when crude prices spike.
“It's a trade off. Long-term revenues, long-term employment as opposed to this short-term tax. The short-term tax has already shown results that are not positive,” said Beedle.
While some state lawmakers worry that the state could lose up to $2 billion a year if the changes go through, the Commonwealth North study indicates the risk sits with oil companies.
“All of the risk is the oil company’s risk—it's not the state,” Beedle said.
The House Finance Committee is offering a chance for the public to weigh in on Alaska Governor Sean Parnell’s proposal to reduce oil taxes. The public opinion period will take place at legislative information offices statewide on Thursday, March 24, from 5 p.m. to 8 p.m.