Morning Headlamp—Walker needs to check his numbers on oil and gas taxes and one step at a time for AKLNG

February 22, 2016 | Posted in : News

Focusing on the task(s) at hand. Last Wednesday, representatives of the Alaska LNG Project partners — the state of Alaska, BP, ExxonMobil, and ConocoPhillips — said at an Anchorage press conference that despite market uncertainty, AKLNG will move steadily into pre-FEED. In a public meeting Saturday at the Kenai Visitor Center, Alaska LNG Community Stakeholder Advisor Josselyn O’Connor said these possible changes were not prompting hesitation with the project’s work. “Our marching orders are to get through and complete pre-FEED,” O’Connor said, using the project’s acronym for pre-Front End Engineering and Design — the preparatory work needed to decide whether to invest in building the 806-mile pipeline to carry natural gas from the North Slope. In the coming months, Alaska LNG will have to submit 13 reports of the project’s estimated effect on the local environment and culture to the Federal Energy Regulatory Commission, a national licensing authority. Alaskans are confused about the status of this project; as AKLNG employees continue work, Governor Walker removes $7 million in funding for AKLNG support positions in DNR and holds a press conference to announce change…but no detail.  Headlamp has said it before:  Uncertainty is the enemy of investment. 

House members question whether Walker’s administration has done enough analysis of proposed oil and gas tax changes – as well as other tax increases Walker has proposed. Speaker of the House Mike Chenault says it’s important for legislators to study economic models showing how the changes will affect the state’s economy. The state didn’t conduct statistical modeling before Walker proposed the tax changes. “They were told basically they have no modeling – or that they were working on modeling” Chenault said. “Well, it’s hard to put together a tax bill if you don’t have modeling.” Economic modeling is the backbone of any fiscal reform—it’s frankly irresponsible not to model potential changes before voting on them. Headlamp agrees with concerned House members, the Walker administration must be well-informed before they propose such sweeping changes.

Oil exploration closer to home. In an effort to encourage oil and gas drilling in a large chunk of Southcentral Alaska, a preliminary determination document was signed on February 2, 2016 by Corri Feige, director of the state Division of Oil and Gas. The document is part of a plan to declare about 50 million acres of state land open for oil and gas exploration. The proposed area north and east of Anchorage extends to the Canadian border, with boundaries encompassing some state waters — such as Prince William Sound — and communities that include Talkeetna, Tok and Cordova. Jonathan Shick, pre-exploration team lead for the state said that the program is “geared toward smaller-scale investors and exploring unknown areas.” Headlamp is always happy to hear when responsible resource development is proposed for Alaskans. Hopefully the exploratory licenses will evolve into drilling licenses and Alaskan’s can prosper through small-scale drilling operations.

Global LNG developments. A liquefied natural gas (LNG) tanker docked on Sunday at the Sabine Pass terminal in Louisiana, with only days to go before the United States ships its first export cargo of seaborne gas from the lower 48 states. Set to load the first shale gas to export markets, the Asia Vision LNG tanker docked at Cheniere Energy’s Sabine Pass LNG terminal on Sunday, Reuter’s ship tracking data showed. Once operational, Sabine Pass will be the first LNG export terminal outside of Alaska. The United States has been exporting LNG mostly to Japan from Alaska since 1969.

 

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First Reads

AK LNG project pace holds steady
Peninsula Clarion, Ben Boettger, February 21, 2016

House Speaker questions administration’s analysis of oil, gas tax changes
Alaska Public Radio News, Andrew Kitchenman, February 19, 2016

What’s it like to work at an oil field on the North Slope?
Alaska Dispatch News, Annie Zak, February 19, 2016

First U.S. shale gas exports imminent as tanker docks at Sabine Pass
Reuters, Jacob Gronholt-Pederson, February 22, 2016

State encourages small-scale efforts to hunt for oil and gas in Southcentral
Alaska Dispatch News, Alex DeMarban, February 19, 2016

House wants details on impacts of oil, gas tax changes
KTOO, Andrew Kitchenman, February 19, 2016

An inevitable delay for natural gas: Price slump, supply glut a one-two punch to Alaska LNG timeline
Fairbanks Daily News Miner, February 19, 2016

 

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Morning Headlamp— Budget talks and Dermot Cole weighs in on AKLNG’s future

February 19, 2016 | Posted in : News

As budget talks continue, lawmakers and Governor Bill Walker are struggling to find middle ground on where cuts to the budget can be found. Walker is now proposing $135.5 million less in spending this year. He amended his budget for the next fiscal year, which starts in June, to include reductions in some areas but additions in others. The governor eliminated his Pension Obligation Bond proposal for funding the state pension program, from this year’s budget, which cuts spending back $220 million. But he added money back in to keep a state trooper in Kodiak, a state attorney’s office in Dillingham and restored $2 million in funding for Pre-kindergarten grants. House Finance co-chair Rep. Steve Thompson says his committee is looking at $4.5 billion to $4.7 billion in funding – $50 million to $250 million less than the governor’s $4.75 billion budget. Thompson says the house hopes to have a budget by March 9th.

The people of Alaska aren’t gonna stand for their pockets being picked to the level that he has proposed. Earnings reserve, dividends, sales tax, tobacco tax, sin tax, income tax, fuel tax, kitchen sink tax… I don’t think they’re gonna support that. So rather than lose that battle, I’d rather not fight it.” said Sen Pete Kelly when asked about the possibility of higher taxes. Headlamp agrees with Sen. Kelly. The state is absolutely facing tough decisions, but kicking the can by adding tax after tax is a simplistic and shortsighted attempt to balance the budget.

According to a Peninsula Clarion editorial, while times are certainly tough for the oil and gas industry, progress is essential. The piece stresses the important fact that, “the reality is that slower progress is preferable to no progress. It’s far better to adjust expectations now, than to find Alaska with nothing to show for its efforts a year down the road.”

In his Alaska Dispatch News column, Dermot Cole examined the future of the AKLNG megaproject. According to Cole, “companies must find markets for the gas or risk losing the value of the resource.” While Mr. Cole is certainly right, finding a market for LNG will ultimately lead to the overall success of the project, AKLNG has a market abroad. Looking internationally, LNG could satisfy the energy needs of some of the fastest growing economies in Asia.

 

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First Reads

Alaska lawmakers, governor still undecided on ‘right size’ of government
KTVA, Liz Raines, February 18, 2016

Is this the end of the gas line dream — again?
Alaska Dispatch News, Dermot Cole, February 18, 2016

A reality check on LNG progress
Peninsula Clarion, February 18, 2016

For Alaska’s Cable Company, Excessive State Spending is a Bottom-Line Issue
Town Hall, Brian McNicoll, February 19, 2016

 

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Morning Headlamp—Walker LNG Presser Provides More Questions than Answers

February 18, 2016 | Posted in : News

So…where’s the news? In yesterday’s press conference, Gov. Bill Walker said the state and industry partners are looking at different options for moving forward amid low oil prices. But he insisted that the project is still moving forward, and preliminary engineering and design work should be completed this fall. Walker said the state will explore options to see what can be done to provide certainty to taxes and royalties without an amendment. “The elephant in the room has been for some time — what do we do in the challenging times of low oil prices and how does that impact the project?” Walker said. All three industry partners acknowledge the task at hand but also reaffirmed their commitment to the megaproject. Rebecca Logan, general manager of the Alaska Support Industry Alliance trade group, commented that the financial pressure of a low-oil price environment should not be compounded by higher industry taxes.

It appears that more information on the “options” the Governor hinted it should become public “sometime in early March.”

In this era of low oil prices, the state must adopt policies that incentivize private sector investment regardless of price climate. Prices have, and will always fluctuate—how Alaska responds policy wise to the market is what matters.  Regardless, the success of the project will depend on a healthy Alaskan oil economy. Changing Alaska’s oil tax structure amid low prices, such as the Governor is proposing, is not a path forward to attract new investment.

ConocoPhillips Alaska Inc. is planning a two-well exploration program this year at the western end of its Greater Mooses Tooth unit in the National Petroleum Reserve-Alaska. ConocoPhillips recently sanctioned a $900 million GMT-1 development at the eastern end of the unit, at lease AA 81798. The project includes construction of a drilling pad, a 7.7-mile road and associated facilities and pipelines and an initial nine-well drilling program with the capacity for 33 wells. The timeline calls for production by late 2018. Toward the end of 2015, ConocoPhillips CEO Ryan Lance said, “Over the past couple of years, we’ve been able to change the profile of our Alaska business. We’ve transformed the declining production base into one that can deliver stable production for a decade.”

According to an Alaska Journal of Commerce editorial, Gov. Walker’s press conference was, “the Seinfeld of press conferences.” According to Jensen, Alaska is facing a “desperate need to hold this project together through a brutal price cycle nobody saw coming, Walker must rethink his proposals to hike taxes on our project partners.”

Headlamp could not agree more with this piece by Mr. Jensen. Gov. Walker’s proposal to significantly raise taxes on our AKLNG partners, who are bleeding dry by low oil prices, is a terrible policy decision and breaks his campaign promise not to alter the state’s oil tax regime under SB 21. Alaska will never see a gasline project if we sabotage the oil industry.

The Bureau of Land Management has already spent more than $100 million cleaning up abandoned wells in Alaska’s National Petroleum Reserve and is currently pushing to finish the job. Sen. Lisa Murkowski secured an additional $50 million for the BLM through the Helium Stewardship Act of 2013 to use towards cleanup efforts of the legacy wells. “The Helium Act funding will allow us to clean up a significant number of the legacy wells to protect the public and the environment,” said BLM Alaska State Director Bud Cribley. “Remediation of the remaining wells will require tremendous additional resources over the coming years, but we are committed to doing our part to finish the job. The BLM is continuing to work with the Alaska Oil and Gas Conservation Commission and other stakeholders to prioritize which wells to clean up first, based on risks to human health and the environment. By the end of this summer, the BLM is expected to have spent $150 million on the legacy well project. Headlamp is encouraged to see the BLM being held accountable for their legacy well mess. It’s astonishing how long this process has taken. There would be lawsuits, protests, clamoring for people to be fired or likely jailed if the State, or private sector, had ever done anything remotely close to what the BLM has done. Everyone, especially our federal government must be held accountable to the same standards and be required to comply with the same laws. No one, or no agency is above the rule of law.

 

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First Reads

Alaska gas project partners to consider options
Associated Press, Becky Bohrer, February 17, 2016

AJOC EDITORIAL: No news is bad news for AK LNG Project
Alaska Journal of Commerce, Andrew Jensen, February 17, 2016

Gazprom: Arctic offshore oil more than doubled at Russia’s Prirazlomnaya
Alaska Dispatch News, Trude Pettersen, February 17, 2016

Producers, Walker admit AK LNG stall
Alaska Journal of Commerce, Elwood Brehmer, February 17, 2016

Alaska gas line setback is all but certain, Walker administration officials say
Alaska Dispatch News, Nathaniel Herz, February 17, 2016

Conoco plans NPR-A exploration program from Greater Mooses Tooth unit
Alaska Dispatch News, Eric Lidji, February 16, 2016

BLM announces major cleanup of ‘legacy wells’
KTVA, Shannon Ballard, February 17, 2016

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Return on Investment (ROI) – What value do memberships in associations bring to the state?

February 17, 2016 | Posted in : News

ROI:  A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost. 

In a 7 month period, from July 1, 2015-January 31, 2016, the State of Alaska spent $1.5 million dollars on membership dues to 120+ groups.

From the Council of State Archivists ($2,500) to the Multistate Tax Commission ($122,000) – and everything in-between.

If everything is truly on the table, these memberships need to be reviewed for what benefit they are providing to the state. Are the benefits that come with membership worth the price of membership?     That question should be asked by the state and the information should be shared with Alaskans.

Many people will say that $1.5 million is too small a number to care about.   Don’t fall into the trap.   If we are going to bring our budget in line with our revenue – we have to look at everything the state is spending money on.   Many things are “nice to have” but not “need to have.”

Click here to see the list.
 

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Morning Headlamp—Walker press conference on AKLNG & Saudis and Russians to slow oil production

February 17, 2016 | Posted in : News

Walker press conference on AKLNG today. Yesterday, State Revenue Commissioner Randall Hoffbeck said it doesn’t appear that gas line contracts will be in place in time for the legislature to be able to review them and get a constitutional amendment on the ballot this fall. Gov. Bill Walker has scheduled a press conference this morning about the gas line project. Stick with Headlamp as we cover any developments the Governor has on AKLNG.

Saudi Arabia and Russia look to stabilize oil prices. According to Bloomberg, large actors in the global energy market are actively addressing the internal fall in oil prices. Saudi Arabia and Russia agreed to freeze oil output at near-record levels, the first coordinated move by the world’s two largest producers to counter a slump that has pummeled economies, markets and companies. The deal to fix production at January levels, which includes Qatar and Venezuela, is the “beginning of a process” that could require “other steps to stabilize and improve the market,” Saudi Oil Minister Ali Al-Naimi said in Doha Tuesday after the talks with Russian Energy Minster Alexander Novak. Qatar and Venezuela also agreed to participate, he said. Strategies like these from oil-producing countries represent an encouraging sign that oil prices may rebound sooner than expected. That being said, it’s far too early to speculate that oil will rebound to anywhere near levels we saw from 2011 to 2013. Therefore, instead of praying that oil rebounds to $100 per barrel (the level needed to balance the budget) Alaska must take control of its own destiny this year by cutting spending and wisely using its savings to cover the fiscal deficit.

Mark Myers, commissioner of the Alaska Department of Natural Resources, announced his retirement Tuesday, which he said was for personal reasons. A spokeswoman said Myers wasn’t available for an interview Tuesday. But he did phone into a meeting of municipal officials and told them his retirement was for personal reasons that include aging parents and “a wife who actually wants to see me on the weekends.” In a prepared statement, Gov. Bill Walker added: “I hate to lose Mark from the team. He had told me back in October that he wanted to retire, but I wanted to give him time to reconsider. I’m grateful the administration and the state were able to benefit from his experience, knowledge and expertise for as long as we’ve been able.” Deputy Commissioner Marty Rutherford will head the department on an acting basis. Senate Resources Committee chair Sen. Cathy Giessel said “it’s nerve racking to have this change happen. You know, we’re in the middle of, of course, discussing taxes, but we’re also nearing the end of a pre-feed project on AKLNG, the largest project in the North American continent.” Headlamp wishes Myers well and thanks him for his service to the state but is also slightly concerned with the timing of Myers’ departure.

 

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First Reads

Hoffbeck: Gas line amendment may not make this year’s ballot
Associated Press, Becky Bohrer, February 16, 2016

Saudi Arabia, Russia to Freeze Oil Output Near Record Levels
Bloomberg, Mohammed Sergie, February 16, 2016

Low oil prices hit Alaska like an earthquake
CNBC, Gov. Bill Walker, February 16, 2016

Walker administration officials say gas line setback is all but certain
Alaska Dispatch News, Nathaniel Herz, February 16, 2016

Energy Department grants 2-year extension for Conoco’s Nikiski LNG exports
Alaska Dispatch News, Alan Bailey, February 16, 2016

 

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Morning Headlamp—Moniz’s support for AKLNG & Persily weighs in on budget talks

February 16, 2016 | Posted in : News

Moniz for AKLNG. U.S. Energy Secretary Ernest Moniz, on his second trip to Alaska in his current post and his fifth overall, talked about natural gas, renewable energy resources and his agency’s work in Alaska in a brief interview yesterday during Sen. Murkowski’s field hearing. Some Alaskans told Moniz that they don’t want to see new directives from Washington, D.C., to resolve the problem of high energy costs here. They say the answers need to come from Alaska. Others asked about the ongoing AKLNG megaproject, specifically, did Alaska “miss the window?” Moniz said, “There is market risk in any project.” “When you are talking about $50 to $60 billion, you have to expect a very healthy return for that risk.” Natural gas prices likely will go back up, he said. “I think the LNG market is going to be very strong,” he said.

Headlamp is thrilled to hear Secretary Moniz vocalize the central tenet for making AKLNG successful: ensuring that there’s a strong return for all partners involved in the project. We hope that state legislators and the administration understand that a healthy oil industry in Alaska is critical to AKLNG moving forward. If Alaska implements smart policies that support the billions already invested and foster private sector involvement, the sheer scope of the project will inevitably bring huge returns to the state—despite the current economic climate.

In an Alaska Dispatch commentary, former deputy commissioner at the Alaska Department of Revenue Larry Persily weighed in on Alaska’s ongoing budget debate. At the core of Persily’s commentary, is his contempt for “the misleading and inflammatory rhetoric that for years has plagued talk of a fiscal plan.” He proposes a ban of the following language: “It’s a raid on the Permanent Fund,” “stealing your PFD,” “waste,” “corruption,” “bloated,” “Jay Hammond,” and “the public wants to see more budget cuts.” Persily believes that the phrases above only further complicate and polarize any legislative discourse.

Knapp hits YouTube. Gunnar Knapp, director of the University of Alaska Anchorage’s Institute of Social and Economic Research, has weighed into the budget debate again—this time with a video.  Knapp’s first attempt to influence the debate came in the form of a game that forced people to choose between cuts and revenue to balance the budget. The game itself was flawed as it portrayed expenses like Education and Health and Human services as stagnant – when in reality they are growing so quickly that by 2020 the Departments could consume all of the state’s unrestricted general fund revenue. The video isn’t much better as Knapp casually states that if Alaskans paid income taxes like other states – we could raise $700 million. WHOA! The governor’s current proposal estimates $200 million from income taxes; by imposing a tax of 6% on a worker’s federal tax liability. Is Knapp suggesting that working Alaskans pay 15-20% of what they already owe to the feds, to the state? The final irony – Knapp’s challenge to Alaskans to contact their legislators and let them know what they think. “It’s not enough to say what you don’t like…” he chides, suggesting that people need to be specific in providing ideas about how to solve the budget gap. Perhaps he should follow his own advice? ISER receives one third of its funding from legislative appropriations made to the university.

BP donates big to UAF. BP has donated $1 million toward completion of the new engineering building at the University of Alaska Fairbanks, the university announced in a Monday news release. The donation was first announced Saturday night at the annual UAF Chancellor’s Gala. The money will be used for a specific element of the new building: the fourth floor, which will house the UAF Alaska Center for Energy and Power. The BP donation follows a January UAF announcement that ConocoPhillips had earlier last year donated $500,000 toward the project. BP’s donation reduces the amount needed to complete the fourth floor to about $5.5 million. UAF still needs nearly $50 million to complete the five-floor, 120,000-square-foot building. These generous donations come at a time when the industry is struggling with low oil prices and layoffs.

 

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First Reads

Energy secretary Moniz talks about renewables, Alaska LNG
Alaska Dispatch News, Lisa Demer, February 15, 2016

Myths and mistrust distort Alaska budget debate, but we need to heed call of reality
Alaska Dispatch News, Larry Persily, February 15, 2016

A professor’s quest to help Alaskans understand the size, and severity, of the fiscal crisis (with video)
Alaska Dispatch News, Charles Wohlforth, February 15, 2016

BP donates $1 million to UAF’s unfinished engineering building
Fairbanks Daily News Miner, February 15, 2016

UA president talks consolidating programs
Fairbanks Daily News Miner, Matt Buxton, February 16, 2016

 

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Can You Trust Polling Results: Representative Sampling

February 15, 2016 | Posted in : News

Headlamp returns to polling best practices with our second installment: representative sampling. An accurate sample is essential to a successful poll, and conversely, a sample that inaccurately represents a population can skew the data and subsequent conclusions. Based on the Association for Public Opinion Research’s (AAPOR) 2012 presentation, “A Journalist’s Guide to Survey Research on Election Polls”, Headlamp offers some insight on how to wade through survey sampling—the good and the bad.

Let’s begin with types of samples. A good sample is a probability sample. As seen in the slide below, probability samples employ a scientific method and involve a randomly selected sample. Polling people who you pass on the street may seem random, but you would just be polling the clientele of whatever coffee shop you happen to be in front of—not the real and entire population you’re looking for.

polls

In addition, a sample has to encompass enough of the right people to be considered an accurate survey of a population. For example, this article in today’s Alaska Dispatch, points out the folly of a poll that over-sampled one segment of Alaska’s population. As that article makes clear; demographics are extremely important when it comes to determining the accuracy of a poll. For a poll to be considered a representative sample it must duly reflect the different demographic variances of a population. For example, a poll could not claim to be representative of a state’s population if its sample was 75 percent young, female Hispanics, while in reality young, female Hispanics only made up 5 percent of that state’s overall population.

Getting the sample right is absolutely vital to ensuring that a poll’s results can be trusted. Getting the question right is just as important. Up next: Who supports the governor’s plan to fill the budget gap?   What are the results when that same question is asked differently in several polls?

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Morning Headlamp—Secretary Moniz in Alaska and Repsol explores North Slope

February 15, 2016 | Posted in : News

Since Teck Alaska, which operates Red Dog Mine in the Northwest Arctic Borough, sued the borough in superior court in January, stakeholders across the region have been voicing concerns about the ramifications of the potential outcomes of negotiations. Teck took the matter, and the borough, to court, claiming the tax is illegal. The borough, as a home rule government, believes it is fully within its rights to enact a severance tax. The borough maintains it needs the additional funds for schools, public safety and other municipal efforts. Teck has stated that if the tax remains in place, it could jeopardize the mine’s ability to continue operations. How will increased taxes impact investment, jobs and the economy?  Red Dog Mine and the local borough disagree on the answer.  Last year, the mine employed 603 shareholders, some of whom have come forward expressing concerns about the sustainability of the mine, should the tax go forward. “The concerns that I have heard have been related to jobs at the mine site, potential impacts to dividends, but also potential impacts to future responsible resource development projects, even the ability to evaluate them, or to see if it’s something that we can pursue,” said Liz Cravalho, senior director of community and government affairs with NANA Regional Corp. “This industry needs a stable regulatory regime and this severance tax destabilizes that — financial projections of potential future resource development projects. Those are the things I’m hearing from shareholders.” Alliance member NANA is working with both parties to achieve a compromise.  Headlamp is eager to see what that might look like, as this represents what is being discussed on a statewide level – how do increased taxes impact activity? 

The House Resources Committee has been pushing back strongly against a proposal by Gov. Bill Walker that would reform oil and gas tax credits and also raise additional production tax revenue. HB 247 represents a $500 million portion of a fiscal plan that would reduce the Fiscal Year 2017 gap to $440 million from about $3.8 billion. HB 247 would exclude producers with annual gross revenues of $10 billion or more from cash repurchases. Vice Chair Mike Hawker weighed in on the governor’s proposal calling the move, “purely a money grab.” As Headlamp said last week, thousands of Alaska voted for the current tax structure, a structure Governor Walker promised never to touch during his campaign.

Energy secretary Moniz to visit AK. Sen. Lisa Murkowski won’t be alone as she continues to pursue sustainable energy solutions for the US and Alaska. Sen. Murkowski is holding a field hearing of the U.S. Senate’s Committee on Energy and Natural Resources, which she chairs. The hearing will focus on alternative energy projects throughout Alaska – as well as the continuing challenge of high rural energy costs. U.S. Energy Secretary Ernest Moniz will join a host of state and federal officials in Bethel on Monday to talk rural energy needs. The hearing will begin at 3:30 p.m. at Bethel’s Yupiit Piciryarait Cultural Center. Headlamp is glad to hear that Alaska will host the energy secretary. Hopefully his visit and continued work with Sen. Murkowski will enlighten him to Alaskan energy issues.

The U.S. Army Corps of Engineers announced last week it will prepare an environmental impact statement associated with the Nanushuk project on the North Slope, near the village of Nuiqsut, that Spanish oil company Repsol estimates could yield 120,000 barrels per day. Kuukpik Corp. owns land in the area and could benefit economically from development. Repsol calls for 76 production wells and injection wells that pump gas and water underground to help maintain reservoir pressure to support oil production. Headlamp is glad to hear that not only is Repsol developing Alaskan natural resources despite market conditions, but they are examining the impact their presence would have on the local environment. Sustainable and smart plans will be key to Alaska’s long term success.

 

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 First Reads

Members of public voice concerns in Red Dog Mine tax dispute
Alaska Dispatch News, Shady Grove Oliver, February 14, 2016

Legislators Push Back Against Gov. Walker’s Oil Tax Credit Reform Proposal
Alaska Commons, Craig Tuten, February 14, 2016

Army Corps launches review of large North Slope oil project
Alaska Dispatch News, Alex DeMarban, February 14, 2016

 

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“Purely A Money Grab…”

February 12, 2016 | Posted in : News

On Wednesday, February 10th and Friday, February 12th, the House Resources Committee took up HB 247, the Governor’s Oil and Gas Tax Credit Reform Bill.

Tax Division Director Ken Alper walked the committee through the proposed legislation and answered questions from committee members.

Prior to Wednesday’s meeting, the administration indicated ISER was conducting a study that would provide an analysis of the bill. Unfortunately, they had to retract that commitment on Wednesday and admit the administration had not conducted any analysis to determine the impact of the legislation on the economy, i.e., jobs, production, government take, etc.

In an email, Gunnar Knapp, ISER’s Director stated “ISER has not studied HB 247’s impact to Alaska by deferring and/or eliminating oil & gas tax credits and I do not have any special expertise on this topic.”

In addition, when asked, the administration conceded that the legislation before the committee and the policy of the state of Alaska was to increase taxes on an industry that is currently cash flow negative.

Friday’s hearing wasn’t any better for the state.

As Director Alper walked the committee through the sectional analysis of the bill, the prevailing questions were “is this a tax increase?” “what is the impact?” and “how does this impact the state’s competitiveness?”  As the administration was only able to answer the first question, with a solid “yes”, committee members expressed their frustration.

Upon review of section 17 – a dramatic change to the minimum tax – Representative Mike Hawker exclaimed “this is purely a money grab.”

“Everyone must participate” in filling the budget gap is the mantra of the administration.  Headlamp would like to see the list of “everyone” and how much they are “participating.”

Headlamp would also like to remind the administration that 89,000 Alaskans voted for the current tax structure they are drastically trying to change and that Governor Walker promised he wouldn’t change while he campaigned.

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Friday’s Fast Five

February 12, 2016 | Posted in : News

Headlamp wants our followers to always be up to date with the developments in Alaska’s economy, politics, and industry. Check out this week’s rundown of the stories effecting you.

Top Story of the Week

In an “unprecedented” move this week, the Alaska House suspended action on all bills not related to the State budget. Lawmaker told media outlets that they wanted to “take some things off their plate” so they can pour their attention into the looming budget discussion.

Top Reads of the Week

AK LNG talks ‘unlikely’ to meet deadlines
Alaska Journal of Commerce, Elwood Brehmer, February 10, 2016
A lack of progress in negotiations between the state’s producer partners on major Alaska LNG Project agreements is likely to throw the project off schedule, according to a key member of the Walker administration.

U.S. approves ConocoPhillips LNG exports from Alaska
Reuters, Scott DiSavino, February 10, 2016
The U.S. Department of Energy approved ConocoPhillips’ application to export about 40 billion cubic feet of natural gas from its Kenai liquefied natural gas export terminal in Alaska over the next two years starting Feb. 19.

At current prices, neither the oil industry nor Alaska can take more
Alaska Dispatch News, Roger Marks, February 8, 2016
While it recognizes that in the current oil price environment there is simply no money for Alaska to pay out certain oil tax credits, it does not recognize there is also no money for the producers to pay a minimum tax.

Quote of the Week

“Any noise is bad in this situation. We’re hoping the legislature will reach a resolution with the landlord.”— Randy Hoffbeck, commissioner of the Alaska Department of Revenue.

 

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