Alaska's Pipeline and Industry are in Deep, eh, "STUFF"

Coach is Right ^ | 8/30/2011 | Carlos Calwianka

[Oldpuppymax]

Rick Rydell (born Rick Green) is the #1 Radio show host in Alaska; project manager; writer, bear hunter and arm wrestling champion.

Named Alaska´s GOP man of the year (2004) Rydell is possibly the only media figure who can not only boast that he knows Sarah Palin and has spoken with her for hours at a time as well as being able to not take her calls to his morning program on KENI when he has other topics to cover.

Rydell offered the following comments on Alaska’s current energy situation in a recent interview.

Rydell’s estimate of the recoverable oil reserves in Alaska´s North Slope, NPR-A Chukchi and Beaufort Seas is approximately 55 billion barrels. In 1988 state production peaked at 2 million barrels/day. Today Alaska is producing approximately 650,000 barrels per day. What happened?

A-“Three words: Government, Government, Government. The combined taxes on Alaskan oil are the highest marginal tax rate in the world.

When you take the royalty (12.5%), subtract the lifting and transportation costs, ACES (base rate 30% plus progressivity on every dollar, oil prices increase over $30 of .04%) State Corporate Income tax, Property tax and the Federal Corporate Income tax, the oil companies are left with very little.”

[ConservativeDude]

President Obama’s policies on oil and gas have matched that of [a] former 1/2 term governor [with] state policies to literally shut down all major oil and gas development on both Federal and State lands putting the US in the position to be more dependent on buying our nation´s oil from foreign countries”

So Palin and Obama are the same when it comes to hampering the domestic oil and gas industry?

[agere_contra]

A royalty is not a tax. Alaska gets a royalty because it owns the oil. Also: it's a low royalty (compare and contrast e.g. with the level of royalties on the Iraq fields).

[IamConservative]

The old adage: “Anything you tax you will have less of.”

[1raider1]

Y’all are trying to bring down Superwoman with mere bullets. Unless you can get your hands on some Kryptonite, you’re wasting time and bandwidth.

[Roccus]

I may be way off here, but aren't “royalties” deductible, dollar for dollar, from the tax bill?

[Roccus]

Ping to my #6

[agere_contra]

Interesting question: I couldn't say (and I haven't been able to find out with a search).

If royalties are deductible then this article would look to be agenda-driven.

[CharlesWayneCT]

THe alaska web site’s overall chart wasn’t working (the pdf was blank.

I did a search of a few month’s numbers. I wanted to debunk the notion that ACES led to the decline in oil produced.

January of 2001: 1021072
January of 2006: 857272
December of 2006: 808092 (Palin takes office)
October of 2007: 715416 (month ACES passed)
August of 2009: 572967 (Parnell takes office)
June of 2011: 570172 (last month without planned outage)

What we see is that in the 5 years before the year Palin took office, production dropped by 164,000 barrels, or about 2700 barrels a month.

In the 11 months before Palin took office, oil produced dropped by 50,000 barrels, or about 5000 barrels a month.

In the 10 months before ACES, oil produced dropped by another 90,000 barrels, or about 9000 barrels a month.

In the 22 months after ACES, oil produced dropped 140,000 barrels, or about 6400 barrels a month.

In the 2 years after Parnell took office, oil produced has not dropped.

So there doesn’t appear to be any correlation between the passage of ACES and the drop in oil produced. Clearly there is a serious problem with getting oil from Alaska, and certainly oil production loss accelerated during Palin’s term in office, but there’s no indication it had anything to do with her term in office.

You might even argue that ACES eventually stopped the decline of production, or that some other policy of Parnell might have encouraged more production, or simply that we’ve reached a good steady-state ability to pull this amount of oil out of the existing wells.

[Roccus]

IIRC, back in the early 70s the Shah wanted some new military aircraft from the US and didn’t have the money. Kissenger suggested to him to raise the royalties on his oil. The royalties would be written off dollar for dollar against the oil companies’ US tax bill, the Shah would get the money for the planes, US workers would have the jobs to produce the planes, US motorists would end up paying the higher fuel costs and US taxpayers would end up paying any tax shortfall on the whole deal.

[hosepipe]

Rydell is a flaming RINO...

[ConservativeDude]

I’m not trying to bring down anyone.

I want to see serious answers on serious policy issues.

If this radio guy is dead wrong, we need to know; if he’s not, then ever more so we need to know as energy production is in my view the most important issue in this country.

[DJ MacWoW]

What pundits should be talking about when it comes to Palin

Palin tossed out the corruption-ridden, structurally-flawed Petroleum Profits Tax of the Murkowski administration and put forth ACES (Alaska’s Clear and Equitable Share), which incentivized development while seeing to it that Alaskans — resource owners as per the Alaska Constitution — would receive “A CLEAR and EQUITABLE SHARE (ACES) of the value of their commonly-owned oil and gas.” The result? Alaska was left with a $12 billion surplus. Also, as reported at Big Government, “The number of oil companies filing with the Alaska Department of Revenue has doubled, indicating that competition has indeed increased. Alaska has the second most business friendly tax set-up — up two spots since the passage of ACES. Additionally, a report from Governor Parnell’s Department of Revenue indicated that 2009 yielded a record high in oil jobs.”

[Al B.]

ADN 8/14/11: Slope exploration season looks to be busiest in decades

"As Southcentral Alaska prepares for an increase in oil and gas exploration and development in the Cook Inlet basin, operators on the North Slope and nearshore Beaufort Sea are preparing for what promises to be one of the busiest exploration seasons since 1969, when 33 exploration wells were drilled after the discovery of the Prudhoe Bay oil field."

If all goes as planned, as many as 28 exploration wells could be drilled between October 2011 and mid-2012."

The Independents are coming in, as intended by ACES and its exploration incentives. The Big 3 don't like it because it's breaking their choke hold on the North Slope. ConocoPhillips, for instance, makes a large percentage of their worldwide profits -- 23% during the last 3 years combined according to their 10-k reports -- from their existing production in Alaska. They don't want the competition, which was one of the major goals of Palin's ACES to rectify the corruption-ridden tax system that Murkowski negotiated secretly with the Big 3.

Parnell wants to adjust the upper end of the ACES tax scale. All the legislature has asked for is hard evidence that ACES is inhibiting new exploration. They didn't get any this last session so the AK Senate didn't act. Maybe next year, but the increased exploration activity may make it harder for Parnell to make his case. If a modification to ACES can be shown to be beneficial all around, I'm sure Palin would support it.

[1raider1]

Sorry. I didn’t realize the first part of your post was a quote from the article. I jumped the gun and responded to you before I read it.

[strongbow]

"Rydell is a flaming RINO..."

I used to listen to him for years. I finally saw the light when he sold his soul out to lisa murkowski against Joe Miller. Now I can't even stand to hear his voice. He is an entertainment conservative who says what his listeners want to hear in order to keep his ratings up. The same goes for his buddy in the afternoon.

[hosepipe]

true... Moosecowski has a long broom.. showing the proclivity’s of Frank..
He was as corrupt as local democrats..

[thackney]

Keep in mind that in Alaska, Royalties are less than a third of the dollars they pay to the state for producing Alaskan Oil. In Alaska, they also pay property tax (no other industry does), corporation tax (like all industry) and a special profit tax.

After that, they get to pay the federal taxes.

[thackney]

So there doesn’t appear to be any correlation between the passage of ACES and the drop in oil produced.

Companies are not going to shut down oil wells they already drilled and produced. Nor will they shut down construction projects that are already in construction with the material and equipment bought.

But they did shut down plans for most future projects and the drilling quickly started slowing down.

I was working in an Alaskan Engineering office working on future projects when ACES was enacted. Within 2 years the staff had been cut to 1/3 the previous size as the operating companies began shutting down future projects.

[Roccus]

Thanks, but I was just questioning the validity of my memory. Are royalties a dollar for dollar write off as I stated?