Restoring oil flow requires huge investment, consultant says
http://www.adn.com/2012/02/13/2316100/advisor-restoring-oil-flow-a-huge.html#storylink=cpy
excerpted:
About 600,000 barrels currently flow through the pipeline. Parnell wants to reach his target within a decade.
Increased production considered vital to Alaska’s financial future. About 90 percent of the state’s unrestricted revenue comes from oil taxes.
Van Meurs, a consultant to the Legislature, said the changes he’s proposing — which he plans to lay out over two days of hearings — would lead to $7.5 billion in additional investment. Part of his plan calls for the state to define competitive, fixed fiscal terms for its oil and gas resources, such as new and existing light oil, heavy and ultra-heavy oil, natural gas and shale oil.
He also calls for offering fiscal stability for large new projects.
Van Meurs said it would be difficult to introduce the changes he’s proposing in what he called a somewhat unfavorable political climate in Alaska.
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In his calculations, van Meurs said he was not taking into consideration plans for Arctic offshore development, in particular by Shell. Under current federal law, the state doesn’t reap taxes from oil produced miles offshore in federal waters.
Van Meurs said it would be difficult to introduce the changes he’s proposing in what he called a somewhat unfavorable political climate in Alaska.
Over the opposition of oil companies, Republican Gov. Sarah Palin and Alaska’s Legislature last year approved a major increase in taxes on the oil industry — a step that has generated stunning new wealth for the state as oil prices soared
The windfall Tax took 70 cents of every dollar of profit leaving the oil companies with 30 cents of profit.
“What the tax has done is take away all the upside,” said Doug Suttles, president of BP Alaska. The U.K.-based oil company paid more than $500 million in taxes to Alaska last quarter — far more than it earned in profits from Alaskan oil, according to Suttles.
Investment dollars are flowing instead to places that have a better return, like the massive deep-water projects offshore in the U.S. Gulf of Mexico, where ConocoPhillips said the government take equals less than 50 percent of the barrel.