Voting Measure 1 (Prop 1) would change the current production tax system passed by Senate Bill 21 (SB21) to allow Alaskans to obtain a transparent and fair share of revenue when oil is extracted from our three largest and most profitable fields. SB21 is the largest petroleum resource in Alaskan history. If you are an Alaskan you should vote to amend SB21 to be fair by voting “yes” on Prop 1.
Big Texas-based international oil companies are spending millions to convince Alaskans to vote “no” on Prop 1, arguing that we had better take less than a fair share of our major fields. They suggest that we should just be thankful that they’re here taking our oil because they can do a lot better in Lower 48. Let’s take a closer look.
Two-thirds of the increased production revenue under Prop 1 will come from our Prudhoe Bay unit (PBU). Our SEB is one of the most profitable conventional oil fields in the world. It can easily help pay a fair share to the people of Alaska without affecting investments or jobs. For more than four decades, our SEB has produced far more than expected, while the price of oil has risen at double the rate of inflation. In 2018, for example, our SEB produced just over 106 million barrels which sold for $ 6,744.7 million. After operating costs, capital costs, royalties and transport costs; producers achieved a net income of $ 3,683.5 million, or $ 39.70 per barrel. They are killing our SEB oil! But, because of SB21, our share of production taxes of $ 3,683.5 million was only $ 230 million. This is called getting ripped off.
ConocoPhillips (CP) annual reports show that CP earns more than twice as much per bbl Alaskawide than in Lower 48. The Legislative Research Service (LRS) analyzed and compared CP Alaskawan’s income with Lower 48. LRS Report 20.119 (February 7, 2020), the LRS determined that the CP made more than twice as much per bbl in Alaskawid as in Lower 48 in each year it examined (2012-2019). In the first year after the adoption of SB21 (2014), for example, CP made $ 4.43 per barrel in Lower 48, while it earned $ 31.10 per barrel in Alaskawan, or 602% more. This is called being taken to the cleaners.
Since SB21, CP has made 68% of its global profits in Alaska, but has only invested 15% of its global capital in Alaska. CP has increased its dividends by 60% over the past two years and increased the authority to repurchase its own shares from $ 10 billion to $ 25 billion in the past three months – as we have reduced our PFD to one-third . Since SB21, CP has paid off nearly $ 12 billion in debt, while we have spent $ 18 billion in savings. This is called the CP cash cow.
Texans and North Dakotans get two to three times more oil than Alaskans. As a result, people opposed to Alaskans getting a fair share have offered misleading comparisons to justify why we get much less than other states. A recent commentator suggested that Texas was a better place to do business than Alaska. Obviously, CP’s actual performance in the Lower 48 directly contradicts his suggestion. Moreover, even a cursory examination of his misleading comparison between Alaska and Texas reveals significant errors. His comparison ignored the differences in favor of Alaska (our oil sells for more than Texas oil, for example), misinterpreted transportation benefits as costs, included non-production costs, and pulled out of nowhere are the operating costs of major Texas fields. In fact, a recent survey of 26 Texas operators as well as the Dallas Fed’s energy survey of 200 oil and gas companies put the breakeven costs of major Texas fields well above balancing costs of our SEB. His comparison is called the usual disinformation.
Prop 1 will help Alaska’s overall economy a lot. Keeping $ 1.1 billion more per year of our oil wealth in Alaska is the economic equivalent of adding 11,000 new jobs in Alaska to $ 100,000 per year – more jobs than in the oil and gas industry as a whole. in Alaska. While helping the economy as a whole, prop 1 will not hurt investments or jobs in the oil industry, as it only applies to our largest and most profitable fields that can well afford. to pay a fair share to the Alaskans. In fact, the production taxes under Prop 1 will in fact be lower than the average production taxes for the three decades preceding SB21. This is what we call them on the impact of Prop 1 on our economy and our jobs.
Prop 1 will help save PFDs, avoid cuts in K-12 education, minimize taxes on Alaskans, and save and create thousands of jobs in Alaska. Prop 1 also provides for transparency so that every Alaska knows the financial performance of our core domains. We must not allow Alaska to continue to be treated like a third world banana republic. Alaskans should vote Yes on Prop 1 and get a fair share of our core estates. This is called defending Alaska!
Robin O. Brena is a longtime Alaskan who is an original sponsor of Ballot Measure 1, chairman of the Oil and Gas Transition Committee for the Walker administration and founder of Brena, Bell & Walker, a longtime law firm. from Alaska.
• By Robin O. Brena
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