Fairbanks  News Miner/AP.  Gov. Sean Parnell (NGP Photo) on Sean Parnell, Governor, Alaska, State of the State, Speech, Oil Taxes, Gas Pipeline, deadline, Photo by Dave HarbourWednesday set new benchmarks for progress on a major natural gas pipeline project in Alaska and urged lawmakers to act this year on legislation to change the state’s oil tax structure.  In his fourth State of the State address, Parnell told a joint session of the Legislature that he wants the companies involved in advancing a long-hoped-for gas line project to settle on a concept by Feb. 15.  (See text: Governor’s State-of-the-State speech.)  …  Max Buxton story.  When it came to energy relief and natural gas pipelines, the Interior’s Republican senators had good things to say about Gov. Sean Parnell’s State of the State address.

U.S. News and World Report by Meg Handley.  Surging domestic production of shale gas and oil means the United States could be virtually energy self-sufficient by 2030 according to a report released Wednesday by British Petroleum.  … "The outlook shows the degree to which once-accepted wisdom has been turned on its head," Bob Dudley, BP Group Chief Executive, said in a press release. "The U.S. will not be increasingly dependent on energy imports, with energy set to reinvigorate its economy. And China and India are expected to need a lot more imports to keep growing."

Part IV Of The Alliance Report 

by

Dave Harbour

It’s both hard to imagine and a credit to the Alliance staff that so many outstanding speakers and messages were provided in only one day — and that doesn’t count the trade show supported by dozens of vendors and scores of employees and business development representatives.  The Dianne Blumer, Commissioner, Labor, Alaska, Alliance, Workforce Development, Photo by Dave HarbourPete Stokes, PRA, Petrotechnical Resources Alaska, Alliance, oil taxes, oil and gas exploration and development, consultant, legislature, Photo by Dave HarboutAlaska Support Industry Alliance has indeed become one of Alaska’s most important business oasis locations over it’s forty-year life.  

Today, we will wind up our report with brief summaries now that the Alliance has posted the speaker presentations here.

Continuing now from yesterday’s report, we saw Petrotechnical Resources Alaska  principal Pete Stokes (NGP Photo-L) introducing Dianne Blumer (NGP Photo), a life-long Alaskan now serving as Alaska’s Commissioner of Labor and Workforce Development.

Blumer’s theme largely focused on developing Alaska’s workforce/human resource potential, Joe Mathis, founding president, Alaska Support Industry Alliance, Photo by Dave Harbourresulting in more opportunitiesBruce Tangemon, revenue department, alaska, oil taxes, tax reform, production, severance, Photo by Dave Harbour for citizens and diminishes the need to hire non-residents.

The Alliance’s founding president, Joe Mathis (NGP Photo-L) of Nana Development Corporation introduced Bruce Tangeman (NGP Photo), Deputy Commissioner of the Department of Revenue.  

Tangeman outlined Governor Parnell’s principals for oil tax reform, including the fairness of tax reform; encouraging new production, simple to understand and administer, and sustainable over time.

Making reference to the way in which other states are now outstripping Alaska in energy production, Tangeman said, "When ACES (i.e. the oil severance tax) passed, Alaska lost a great opportunity as Dave Harbour, Alliance, Canadian Institute, Alaska Oil and Gas Congress, Meet Alaska, Oil Taxes, Photo by Dave Harbourour competitors moved ahead.  Alaska should not settle for ‘honorable mention’," he said.

Following Tangeman, your author (i.e. NGP Photo-L, a member of the Alliance’s board of directors) introduced the subject of Alaska state taxing and spending policies, with oil and gas attorney Brad Keithley (NGP Photo, L, and his blog) and Jonathan King (NGP Photo), an economist with Northern Economics.

Keithley briefed audience members on the fiscal message which the University of Alaska’s Institute of Social and Economic Research (ISER) fused into its latest economic study of the state.  That Brad Keithley, alaska oil and gas attorney, fiscal plan, blog, Photo by Dave Harbourstudy demonstrated that Alaska Johnathan King, Alliance, Northern Economics, ISER, Economist, Alaska, Photo by Dave Harbourwould need to reduce its spending level, initially, by about $1 billion/year in order to have a sustainable economic future.  (Here is the ISER study.   *   *   *    Here is Keithley’s presentation.    *   *   *   We have editorialized on this subject many times over the last few years.)

King was also concerned about the state’s economic sustainability, pointing out that movement toward spending control will represent sacrifice.  "Where do we start slaughtering sacred cows", he asked rhetorically.   He inventoried ways to economize, pointing out the pain and political pushback that would occur with thinning the capital budget, cutting entitlements, providing fewer tax credits.  "No cuts are painless," he said,  "It’s pain now or crash later," noting that the good news is in the ISER study.  By adopting ISER’s recommended approach the state can, with minimal pain, develop a long term, sustainable fiscal plan.

Craig Wilson, K&L Gates, oil and gas attorney, harrisburg, shale oil and gas, regulations, statutes, alaska, Photo by Dave HarbourK&L Gates’ Louann Cutler introduced Craig Wilson (NGP Photo), a partner in the firm’s Harrisburg office who concentrates on energy, environment and natural resources.  His presentation dealt with the dramatic growth of shale oil and gas along with the community relations, political and regulatory growing pains faced by the industry.  

Alaska has an enormous but undeveloped shale potential.  While Lower 48 shale activity seems far removed, Wilson cautioned listeners that, "If there is to be shale in Alaska, the current shale debate is relevant."  He made reference to the importance of updating oil and gas regulations to accoLouann Cutler, Alaska attorney, Alliance, K&L Gates, Photo by Dave Harbourmodate the new shale technologies, and we are pleased to note that several weeks ago the Alaska Oil and Gas Conservation Commission did, indeed, begin the process of promulgating new shale regulations.

Filling out the program at day’s end, Larissa Phillips (NGP Photo-below) introduced the Fraser Institute’s Senior Fellow, Senior Economist, Gerald Angevine (NGP Photo).   Angevine provided the Institute’s 2012 Global Investment Climate Survey, whose findings continue to be an embarrassment for Alaska and her leaders.  

While state officialsGerald Angevine, Heritage, fellow, senior economist, oil and gas, investment climate. Photo by Dave Harbour speak of the strength of theLarissa Phillips, Photo by Dave Harbour, Alliance economy, all of the trends are moving in a dangerous direction: throughput in the oil pipeline is down; taxes are up; expenses continue to rise; the relatively high price of oil benefits the taxing authority that takes no risk and returns relatively little to the risk taker.  Meanwhile, with the advent of shale technology worldwide, particularly in North America, Alaska is just not as needed as it once was.  The essence of Angevine’s report is that Alaska is in the middle percentile in some aspects and in lower percentiles in other areas.  Those who would disparage the results of the study should note that the Institute asked oil and gas companies around the world to grade the various exploration and production provinces in the world.  If the news is bad for Alaska, it should be good from the standpoint of waking up those who for too long have thought Alaska taxes and spending levels are appropriate.

Note: We remind our gentle readers that we strive for accuracy.  Therefore, when readers wish to inform us of an addition or correction that should be made in the interest of accuracy, we are overjoyed!  Here’s how you would contact us.  -dh