Dermot Cole, whose anti-oil position has been his journalistic super power for decades, took another stab at oil when he wrote “SB 21 was oversold as a miracle cure for Alaska oil production.”
Cole has waged a tireless but threadbare tirade against the oil tax policy known as Senate Bill 21, which gave stability to our oil tax system in Alaska.
Historically, the accuracy of some of Cole allegations have proven to have been incorrect. For example, he recently, falsely implied that we should measure SB 21’s success starting in 2013. And yet, SB 21 wasn’t even the law in 2013.
In 2013, SB 21 was still being debated. The law didn’t actually take effect until Jan. 1, 2014. Noteworthy is that Jan. 1 is in the middle of the North Slope winter work season. The tax changes would be felt later than that date.
Even then, the industry had to survive the uncertainty of a referendum. The referendum was voted on by the people of Alaska in August, 2014.
Ultimately, SB 21 was upheld, 99,855 to 89,608. Realistically, any measure of success from SB 21 should not even begin before the referendum was challenged and then safely approved by the voters.
While it is true that there has been a slight decrease in barrels through the Trans-Alaska Pipeline System from 2014 to 2018, there were increases in 2016 (517,868 barrels per day) and 2017 (527,323 barrels per day).
Before SB 21, the tax policy known as ACES — Alaska’s Clear and Equitable Share — resulted in no anticipated increases. There was no hope on the horizon for more production, only steady annual declines.
In fact, a look at the Fall 2012 Production Forecast shows where the State thought it would be in 2019. to understand how much of a difference SB 21 has made.
In the fall of 2012 (under ACES), the state predicted that by 2019, Alaskan North Slope oil production would decrease to 421,600 barrels per day.
Think about that: Only 421,600 barrels a day.
Contrast with what is actually being produced today: In 2018, the average was 509,315 barrels. According to Alyeska, as of Feb. 28, 2019 TAPS is averaging 525,826 BPD.
That’s a beefy increase over the barrels forecasted under the failing policy of ACES.
That’s good news, although some may allege otherwise.
Alaska is getting more oil than forecast. That oil is keeping TAPS throughput fairly constant. Much of the “more oil” is coming from investments made possible under SB 21 that decrease the decline rate in our mature fields.
Take Prudhoe Bay, where most of the oil comes from. Without investment, the field could decline around 12-15 percent per year.
With basic investment, the field would decline about 6-7 percent per year – and that’s what Alaska was experiencing before SB 21 took effect.
With SB 21 and its focus on new production, BP and its partners increased investment in Prudhoe, drilling new wells and funding other in-field work. They have, remarkably, held production flat (just shy of flat in 2018) from this mature field. In other words: instead of 12 or 6 percent declines, the field has held flat.
Once a field reaches its maximum rate of production – in the case of Prudhoe, around 1988 – a field starts a natural decline. From that point on, it will take more investment in more wells, more in-field work, and more tune-ups to get a barrel of oil out.
Production declines, even as the costs-per-barrel keep going up.
Industry said that a competitive regime under SB21 would increase investment that would in turn boost production – and it has. Production can increase without a commensurate increase in TAPS volumes as other older oil fields naturally decline over time (i.e. more steeply without significant new investment).
But to allege that SB 21 has failed Alaska is simply trafficking in falsehoods.
I don’t have the time right now to cite all the potential new sources that could very well be coming online in the next few years, but there is the possibility of hundreds and hundreds of thousands of barrels per day that are all directly related to SB21. It takes years for oil tax law to show its full effect due to the permitting process.
SB21 is working, even if it is “only” holding the throughput level for now. In a couple years when the numbers start climbing it will be clear.
According to various sources the following discoveries have the potential to produce lots of oil.
Pikka : 120,000 barrels per day
Willow: 100,000 barrels per day
Smith Bay: 200,000 barrels per day on hold
There are many other smaller finds that add 10,000 or more barrels per day and then there’s the 1002 area. And let’s not forget that compared to other basins, the North Slope is virtually unexplored, Wyoming has around 19,000 wells while the North Slope, an area roughly the same size has just over 500 wells.
Having a stable tax structure helps to develop these prospects, part of the reason Smith Bay is on hold is due to the constantly changing tax scheme under previous administrations. Even under the constant threat during the Walker Administration, SB21 wasn’t changed, even if there were endless adjustments to oil tax law.
“While it is true that there has been a slight decrease in barrels through the Trans-Alaska Pipeline System from 2014 to 2018, there were increases in 2016 (517,868 barrels per day) and 2017 (527,323 barrels per day).”
The more important question is would the State of Alaska made more money under ACES than SB21?
I’d like to know. Benjamins are nice and worth jumping for.
Anyone who has known Dermot Cole knows at least three things about him:
1. He HATES Republicans and conservatives with a passion reserved for the way Hitler hated Jews.
2. He is one of the biggest propaganda machines for the Democratic Party in Alaska, spewing his hate uncontrollably in the Fairbanks DNM, and later in the ADN, for over 40 years.
3. He is only 65- years old, but looks at least 20 years older.
Cole’s identical twin, Terrence, was of the same persuasion and temperment and taught history at UAF for 30 years. Cole recently wrote a hit piece in the FDNM about Senate President Cathy Giessel. Giessel is a likely bet to take out Lisa Murkowski in 2022. Cole’s grizzly and outmoded attacks on individuals from the conservative camp are filled
with rage and contempt. But what would you expect from a third-rate writer who’s viewpoint is clouded by early bouts of de-men-shee-a and early trips to the Brown Jug for hydration?
Dear Johnnie Greene,
Yikes! Brown Jug! Dementia! Even Hitler!
You know about “Reductio ad Hitlerum” right? It was coined by one of the great conservative philosophers of all time, and it would be enlightening to you I think! And a good lesson on how to argue rationally.
https://en.wikipedia.org/wiki/Reductio_ad_Hitlerum
Johnnie, I am sure you are a delightful person sometimes, but you must have eaten a bad enchialda when you wrote this. Maybe it was a two enchilada day? Get some help! Personal insults are usually a substitue for people who dont know what they are talking about, and unfortunatley that seems to be the case here with you.
I dont know you from Red Green or Mean Joe Greene, but from what you wrote here I am guessing you seem to be one of the many Alaskans who doesnt want to admit he/she is a freeloader! I think that is the single worst fault of Alaskans who claim to be conservative, but instead want to spend every last one of what Jay Hammond called our one time only oil dollars, rather than ever pay a penny for all the services they get. I want to pay for what I get, but too many folks in Alaska just want handouts.
Anyway please send me a list of your books and articles and I will be glad to give you an honest evaluation of your contribution to Alaskan literature. From what you imply I am sure it is far surpasses either mine or Dermot’s and I sure it will be educational!
Meanwhile lay off the Mexican food if you can!
Cheers, Terrence Cole
Hitler?
The Godwin principal wins again.
Johnnie, good timing. Dermot’s evil identical twin, Terrence, just wrote a guest essay in the FDNM today, 3/3/2019. Terrence, who carrys a reserve tank of rage and anger that at least equals that of his twin, did a hit piece on Dunleavy and the proposed budget reductions. But what else would you expect from a guy who spent his entire career at UAF as a so-called college professor who lambasts Republicans and conservatives while getting full tenured pay for doing it? A state-paid demagogue? A free-loader of epic proportions with a hate-filled cranium? No wonder they both look 20-years beyond their age. Hate and anger erodes a person’s physicality and mental acuity. One thing for sure that you can say about these Cole twins: Neither born or raised in Alaska, have made a handsome living as paid propagandists of the radical left. And only the radical Democrats in Alaska give them creedence because frankly, their writing is juvenile and full of plagiarism constructed off of microfilm from prior researchers. Back to the Brown Jug, Terrence and Dermot. Have an extra swig to toast all of your Democrat disciples.
Dear Marla
Well at least your didnt bring up Hitler!
I think I am a pretty funny fellow really, and you seem to be about as poor a debater as Mr. Greene. You really think Dermot and I havent been here since we were kids? Really? Well, do some research and we could talk!
The truth is all Alaskans are freeloaders, but the worst freeloaders are those who won’t admit it!
cheers,
Terrence Cole
God always wins, Cooper.
Your’s, mine, or the other teams’s?
https://en.wikipedia.org/wiki/Godwin%27s_law
You mean there’s three?
Best to cover your bets, though I was raised to believe mine was the only true one.
Lol. Well, you are the one who jumped, not me.
Dermot and Terrence are so full of vitriol and contempt. It shows in their writings and on their faces. Identical twins. It must be in their gene pool. I don’t wish them any ill will. I don’t think that their writings are very widely read. Their books are not best sellers, even within the Alaska market. I never cared for their publications. They were only promoted by Democrats and the liberal press here in the state.
Dear Judie
I am glad you dont wish me ill! And I am sure your books are better than mine! Heck Dermot’s are better than mine!
cheers,
Terrence Cole
So we are to measure the success of SB21 solely in barrels of oil produced? Sorry but I could give two you know what’s about how much oil is being produced. Call me when you’ve got some stats that show how SB21 has made a positive impact on our economy. Oh wait, it hasn’t and the state is falling apart. Things were fine under ACES and now they’re not. If more barrels of oil produced doesn’t equal more profits for the state I’d say that’s as big of a failure as is humanly possible.
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