Saturday, September 24, 2011

Alaska needs less rhetoric and more innovative thinking

Deborah Brollini
Alaska Energy Dudes and Divas

Alaska needs innovative thinking, not more rhetoric promoting business as usual. Op-eds by Senator Hollis French and Representative Les Gara offered no solutions to the decline in oil production through the Trans Alaska Pipeline (TAPS). We can all agree that we must increase oil production. However, few are thinking outside the box for solutions, and others prefer spewing rhetoric.

If you live in Alaska your quality of life is dependant on North Slope oil production, and keeping TAPS safely operational. Alaskans are blessed to live in a state rich in natural resources and oil wealth, which funds our Permanent Fund Dividend (PFD). Most Alaskans will receive $1,174 on October 6, 2011. The Governor was right when he made his PFD announcement on Tuesday, where he warned Alaskans that they might see diminishing PFD amounts in future years. The lower PFD amounts would be partly due to lower oil production, resulting in less oil revenue to be deposited into the Permanent Fund. The Governor was not attempting to “scare” the public. He was only providing Alaskans with a dose of reality. So what is the reality on the North Slope?

There is increased oil exploration on the North Slope. However, increased exploration does not equal increased oil production. Therefore, without increased oil production there will be less oil revenue for the legislature to run our state government, and to deposit into the Alaska Permanent Fund to invest your PFD dollars. So, how do we increase your PFD dollars?

One of the solutions is to take the oil tax debate out of the hands of the Governor and the state legislature. Seriously, do you really want bureaucrats and politicians messing around in your PFD pie? Of course not. Last session, Senator Lesil McGuire introduced Senate Concurrent Resolution 4, which would of established an "Alaska Oil and Gas Competitiveness Review Task Force.” Resolution 4 has now been incorporated into Senate Bill (SB) 85, which puts into statute the establishment an Oil and Gas Competitiveness Review (OGCR) Board.

The purpose of the Board is to review and provide recommendations to the Legislature each December 1st, on steps to encourage on-going long-term investment in the development of the state’s oil and gas resources. The purpose of the Board is much the same as the Permanent Fund Corporation Board. The PFC Board is designed to oversee and maximize the investment of Alaska’s Permanent Fund. The OGCR Board is designed to monitor and offer recommendations to the Legislature on steps designed to maximize the investment made in Alaska’s oil and gas resources.

The OGCR Board is to be composed of selected Legislators, Commissioners and members of the public. Our neighbors in Alberta made a similar effort that resulted in restoring oil and gas investment to the Province after a substantial downturn due to their windfall profit tax on oil in 2007 (the same year Alaska raised oil taxes). Today, Alberta is experiencing an oil boom.

The purpose of the OGCR Board is to create an ongoing body whose job it is to monitor Alaska’s position in the world oil and gas industry, and provide useful and, ongoing insight to the Legislature on that subject. Senator McGuire discusses the OGCR board during a SB 85 Senate Resources hearing (3:38) after the co-chair of Resources shelved the bill on April 4, 2011.

Last session everyone was at war over HB 110, the Governor’s oil tax reform bill, and SB 85 received very little attention. As an Alaskan the oil tax debate has become more about egos and getting elected, and less about my children’s future, which I find offensive. There is no more room for business as usual, and we need all new ideas on the table, and SB 85 is a start.


SCR4: Creating and relating to the Alaska Oil and Gas Competitiveness Review Task Force

Alaska's Future: Sen. McGuire's proposed competitiveness review is important

Energizing Investment in Alberta

SB 85

SB 85: Documents (4/4/11 Competitive Review)

SB 85 Senate Resources Hearing (Audio): Mary Jackson, Staff to Senator Thomas Wagoner, and Michael Pawlowski, staff to Senator Lesil McGuire, testimony to Senate Resources on March 25, 2011.

SB 85 Senate Resources Hearing (Audio): Catherine P. Foerster, Commissioner Alaska Oil and Gas Conservation Commission, and et al and invited testimony (4:41)

SB 85 Senate Resources hearing (Audio): Invited and public testimony (3/30/11)

SB 85 Senate Resources Hearing (Audio): Michael Pawlowski, staff to Senator Lesil McGuire testimony, and Senator McGuire’s comments on the Oil and Gas Competitiveness Review (OGCR) Board. Senator McGuire asks for recommendations rather than a “no” (4/4/11)

Alaska’s Oil Investment Tax Structure, Establishing A Competitive Alaska, Commonwealth North, March 2011