Hilcorp gets grilled in Senate Finance


Senate Bill 114, which would expand oil and gas tax to S Corporations like Hilcorp, was the topic of a Senate Finance Committee hearing on Friday, during which Hilcorp Alaska Senior Vice President Luke Saugier gently explained to the committee that the company has made billions of dollars in investments both in Cook Inlet and in Prudhoe Bay since entering the state in 2012.

Saugier said that the company now has 1,300 Alaska employees and that Alaska makes up nearly 60% of the business.

Hilcorp came to Alaska in 2012, just as larger companies were exiting Cook Inlet’s natural gas fields and the Railbelt was preparing for natural gas shortages and brownouts.

Since then, the company has invested over $1 billion in Cook Inlet natural gas, and has increased the supply, drilling 90 new wells and completing 400 well repair projects.

“Hilcorp is proud of the role we’ve played in keeping the heat and lights on for Alaskans and we look forward to continuing to play an important role in fueling Alaskans’ homes and businesses,” he said.

In 2014, Hilcorp entered the North Slope, and took over at the operator in 2015. The company has invested over $1 billion and drilled more than 100 new wells, with another 20 wells planned for this year. It’s grown from 18,400 barrels per day in 2014 to over 41,000 barrels per day today, and Saugier expects it to grow to 60,000 barrels per day in the next four or five years.

But Sen. Lyman Hoffman was not impressed. He wanted to know why there isn’t one million barrels per day going through the Trans Alaska Pipeline System. He said that Hilcorp was making a veiled threat of shutting down gas production in Cook Inlet if SB 114 passes.

Hoffman said that SB 114 is “baby steps” in rewriting Alaska’s oil and tax tax laws, which were last changed in 2012 with SB 21. “And I find it hard to believe the industry doesn’t come to that same conclusion.”

Hoffman appears ready to not only go after Hilcorp as an S corporation that doesn’t pay the same rate as publicly traded corporations, but to come back later with legislation to ratchet up the government’s take on other companies by moving the dials on existing tax laws.

“We need to reevaluate where we are and are we getting our fair share,” Hoffman said.

It was a remarkably hostile approach to a company and an industry that has poured billions of dollars in investment into Alaska’s aging oil and gas fields in recent years.

Sen. Donny Olson also raised the point that when Hilcorp took over the assets from BP, it was not subject to the same tax structure as BP, something that clearly also bothers him.

Saugier took the hostility in stride, reiterating that the company has made not only significant investment, but has helped the energy sector stem the pipeline and natural gas decline from the trajectory it was on before Hilcorp arrived.

Photo: Luke Saugier, Vice President of Hilcorp, testifies in Senate Finance.


  1. Politicians have an insatiable hunger for other people’s money. Let’s be perfectly clear, senators Hoffman and Olson what more tax revenue from Hilcorp so they can give it to their supporters. There is nothing ecumenical in the senator’s hearts or motive. What the senators want is wealth redistribution. Good to remember that if they can do it with Hilcorp it is only a short time when they will do it directly to us.

    • We don’t get politicians anymore, we get money grubbing, self promoting, self aggrandizing, simple minded, leaches that have no more clue of how an economy works than a 4 year old. There is candy everywhere, I want candy, I am just grabbing all the candy. That is what is in Juneau. And, if you close your eyes and listen to Hoffman, if you can STAND it, he sounds just like the clueless, petulant, spoiled child he has always been when he goes to Juneau. The idiot blows through more cash than anyone should be able to have access to control when they have zero knowledge of how to project the end result of the expenditures on future budgets.

    • If the oil industry doesn’t start paying a reasonable return on our oil we will be the ones paying taxes. You can kiss your PFD goodbye, get higher taxes on what is already taxed, and then add an income tax to the bill.

      Or, we could stand up and support Alaska over outside interests (whom, btw, are more than capable of making profit while also paying a more reasonable price for the oil that belongs to us).

      Your choice

  2. Go get em Hoffman! Be like a bull in a china shop and go in there and kick some ass and take names later! We dont need those sorry assed oil companies stealing our hard earned natural resources just floating around out there. Im sure all you political geniuses can just go and do it all for us so we will all be rich and you will have so much money to spend for us. Its so simple just do it and send me a postcard in Costa Rica letting me know when all the banks are overflowing with all the money you made for us. Too bad you werent around in the 60’s when all this got discovered. Downtown Anchorage would look like Dubai instead of API headquarters.

  3. Why doesn’t the State of Alaska just nationalize its oil and gas industry and get it over with? That way, they can have all of the income! And when it does, we’ll all be watching for that million-barrel mark.

    Politicians have no effin idea of what it takes to make oil and gas production happen. Geez.

    • Idk bout politicians but I sure know that SB21 isn’t what it takes (after all that was the key to getting million barrel mark, and what happened? Oh right they immediately made massive profit, the state lost billions, and jobs and production were cut – BEFORE the economic slide which made SB21 even more lucrative to them and painful for us)

  4. As soon as anyone says “fair share”, they prove they aren’t to be taken seriously.

    • I like Professor Thomas Sowell’s question: “Just how much is your fair share of what another man produces?”


      • I love and almost revere Dr. Thomas Sowell but you’re being a moron with your false equivalency. Hilcorp isn’t producing THEIR oil from THEIR land, they are producing OUR oil from OUR land and you know these are two entirely different things. We absolutely need to not kill the golden goose of our oil production by taxing it too hard but if we don’t tax it enough, there’s no reason we should let it be produced. We can leave it in the ground if we’re not going to make money off of it.

  5. It would be more honest to just put a gun to his (Saugier) head and demand a vig. Or else.

    Alaska is determined to commit suicide by as many means possible. Economic, cultural, social.

    • Amen: Letting our most valuable resource leave the state at such an undercut price is economic suicide. Letting our extremist leadership and their bigotry run us into the ground is economic, social, and cultural suicide.

      Finally someone who sees it

  6. It’s a very impressive feat of accomplishment that Hilcorp has successfully taken expired oilfields in both Cook Inlet and the North Slope, implemented cutting edge technologies and invested billions of dollars, to stem the decrease of production and extend the life of these fields, providing excellent jobs and commerce opportunities for local Alaskans and Alaska. I would venture to say that they might also be just as successful, and/or more successful, at running the State Government!
    Multiple decades of poor leadership at the State Legislature has proven to be a complete disaster and utter failure, a very costly abrogation of fiduciary responsibility. Alaskans deserve a helluva lot better! AND, the current forecasted trajectory for the State is fastly approaching cataclysmic – apocalyptic CRASH!
    Buckle up and enjoy the ride. We’ll surely pass the savings onto future generations!

  7. If they continue to screw with Jeff Hildebrand and they will find out what decisive individual looks like in real life. These idiot politicians, especially Lyman on his knees Hofman and Benny Olson, know NOTHING about earning a dollar or running a for profit company. They could get oil out of the ground if they had put it there themselves. To infer there exists a “fair share” of someone else’ work product is a purely evil principal. Alaska gets plenty of oil money to run this state. The problem is we have politicians that have zero idea how to control their absolutely maniacal spending habits that do absolutely ZERO to perpetuate the future of the state. There is no future plan, there is only spend every dime we can get today and try to get more money out of somebody so we can spend more, It is insane.

    • Its not a fair share of someone’s work. Its a fair share of Alaska’s oil. We are letting them walk it out of state at severely undercut pricing. The oil industry is our customer (would be nice if they were more partner like but they won’t ever come to the table to be equals)

      And you are absolutely right, our governor, legislature, and supporters of the sweetheart deals giving away our most precious resource have no plan for the future, just cut income, spend more, and promise big PFDs to get your votes and then blame someone else when they can’t follow through because the real world doesn’t allow fake money to be printed out of nowhere to cover their lies and empty promises.

  8. Maybe the state should drill their own wells and take the same chances that are required for oil production. Reminds me of the landlord who saw the success of a small business who was leasing his space and decided to jack up the rent and drive the guy out. He now has vacant space. We should never try to profit on the backs of the risk takers. Many times they are not successful but deserve success when they earn it. Good for them.

  9. A lot of hyperbole on Senator Hoffman’s part. Senate Bill 21 never promised filling up TAPS (2M BPD). No, it was a rebate for PRODUCED oil and that investment did stem TAPS decline. Just the facts.

  10. Lets start telling the truth about SB-114. This is a spending reduction bill. It cuts the corporate welfare Alaska pays by about $500 million per year, and it treats all the producers on the slope more fairly. It will not matter if they are C corps, (Conoco) or S corps- Hilcorp- they’d all pay the same rate.

    How many billions of dollars have Alaskans paid Hilcorp in corporate welfare? Not counting the lavish credits paid to Cook Inlet operators, the per barrel credit would have paid Hilcorp hundreds of millions per year. That corporate welfare is not needed, and its bankrupting Alaska. We’ve paid over $7.2 billion in corporate welfare over the last ten years. This is the approximate amount Alaskans have lost to smaller dividend checks. That damage is now over $10,651 per Alaskan- a loss of over $40,000 for a family of four.

    We can stop the welfare payments, or we can continue to cut dividends. Most Alaskans would like a full dividend, and do not want a sales tax as Dunleavy is proposing.

    • You realize this state has subsided on oil company taxes and royalities from those same companies for the state budget for the last 40 years; we have a $80B fund and get a dividend every year. Now they want more…

      “Let’s start by telling the truth about SB-114”. It’s another taxing scheme so the Senate doesnt have to be responsible and actually balance a budget on the spending side.

      You want “more” from the oil companies? How’d that work with half term governor Palin tried it? It ended up driving BP, Shell, Exxon, and Unocal/Chevron out of our state.

      As far as “welfare”, when you tax them $10 and give them back $1 and bi^&h about the $1, you’re not being intellectual honest.

      Face it – you want them to pay for more of your stuff…

      and yes, I use my name, not an “initial”, M.

      • Well, Dan, you might not understand a few things. So here’s some facts for you:

        1. The Permanent fund has dropped to about $76 billion. It is not at $80 billion as you state.
        2. Please show us where SB-114 changes production tax rates. (Hint, it doesn’t.)
        3. You, if you are an Alaskan, are one of the owners of the oil. When we sell it, we are required by the Alaska Constitution to get “maximum benefit” for the owners- with you being one of them.
        4. Under SB-21, until 2020, we paid more in corporate welfare than we received in production taxes. No jurisdiction in the world is that stupid.
        5. I own various oil company stock. “Them”, as you describe it, is “me”. And I want Alaska to have enough money to pay its bills. We’ve reduced the capital budgets so significantly that our roads and infrastructure is failing. Before SB-21 we spent about $2 billion per year on infrastructure. After SB-21, that spending fell to a few hundred million per year. We are too big a state with too small a population to pay for all this unless we get a fair return when we sell our oil.

        Finally, Dan, we don’t tax them at $10, and give them one dollar back. Again, we gave the industry more welfare money than we got in production taxes until 2020. Now we get about 4% in production taxes. Our royalty rate is half of North Dakota, and Texas, and most private land owners get more. If you want to give up your dividend, and pay sales taxes as Dunleavy wants, please let us know. I suggest we stop giving away our valuable oil. But perhaps you like smaller dividends, and taxes to subsidize the giveaway?

  11. Senator Lyman Hoffman is correct in asking why the North Slope is not producing one million barrels per day in 2023 . While it not Hilcorps fault , it is I believe the big problem . When Parnell pushed for million barrels of production in ten years , the oil was found and tested . Now the question in my mind is why are we not producing a million barrels per day ? One I believe is that with out a road network on the Slope , makes its very expensive to access the production sites . Ice roads are very expensive to build and disappear with the seasons . Total waste of time and money once the oil has been found .Permanent gravel roads need to be built . I’d rather the state of Alaska build these roads for public access . ConocoPhillips has prevented OilSearch/Santos access to the Pikka . Caused lots of problems for development. It’s beyond me how the Badami field could have been built and a 30 mile pipeline constructed with no gravel access road . The trans Alaska pipeline has access roads built to all but 7 miles of the entire 800 mile line . In fact access roads that are 12 to 15 miles long in some places . A road is also needed to PtThomson as no gravel road , no possible way to clean up an oil spill . There should be a permanent road built out there and this with spur some more investment in drilling as a very undeveloped area and lots of oil . PtThomson has one of the largest single production wells in North America . 2nd issue is financing for development of the oil once it’s found . The wheels turn very slow , small company’s do not have access to capital right now . Big banks have shut the capital spigots off in Alaska while freely loaning money to company’s to drill all over the world . I believe we are at that rainy day when Alaskans need to reinvest the profits of the permanent fund in producing and development on the North Slope and the state government needs to get away from picking the winners and losers on the North Slope . Too cozy of a relationship with the big producers and state Govt . Willow should have been in production several years ago and oil production out of the huge field should be progressing year around . It would literally take 2 to 3 years if gravel roads were built to where the oil has been found to bring it to production of a million barrels a day of TAPS through put . ConocoPhillips was given the green light several years ago to build permanent gravel roads out to the Willow and elected not to , ask yourself why ?

    • Why Alaska doesn’t produce 1 million BPD? It’s simple … unstable political climate. It takes money to produce oil and very few banks or oil companies will take the risk of changing tax rates, tax credits being pulled out from under them (Caelus), never ending new regulatory burdens as a result of irrational climate alarmism, ESG and frivolous lawsuits. BP was smart to leave this 3rd world mess.

      • Spot on Josh. I have a friend that was high up in UNOCAL and Cheveron in Alaska. They’re working in Africa now….because Africa is more politically stable than Alaska, who love to grow the “fair share” if they can’t make ends meet. That’s a business killer.

        Government never makes “ends meet”.

  12. Stupid politicians will never learn. We just keep changing the tax climate like it was a fast order grill. Let’s just tax anything that has value and moves. There could be two Alaska residents and the legislature we cry we need more money. Let’s make being a politician a poor job and tax them 90% of their wealth to be elected into a job they have no idea how it works. The sooner we are broke the sooner we are a third world state. Drive jobs away a wonder where the jobs went.

  13. Just like GOP ( Grifters Opportunists and Pimps ) . Except the folks on left do the same in name of equity while lining their pockets . Just look at homeless problem ! The bigger the city govt , bigger the homeless issue ! All those funds going where ! Govt pension plans and govt salaries . Cali has spent $10B on homeless issue in ten years and homeless problem has double in size ??

  14. These politicians simply want more money…the coming loss of jobs and death of the proverbial goose be darned. This tax strategy and similar burdens on productivity will force Alaska back into being a fiefdom of either DC or Seattle

  15. I lived in a “ fair share “ era in a small town north of Flint Mi.
    Those with too much time on their hands, google earth and street view a few minutes this area. 50% of nothing is still nothing. All this money that Alaska is reportedly giving to industry, where does this money in fact come from?
    If the Federal Government takes a hundred dollars less from my weekly salary. Are they “giving “ me money?

  16. Hoffman and Olson are Bush Marxists. They and their constituents produce nothing, yet expect those that those that invest and produce to turn their profits over to the Bush welfare collective. BP was smart to leave this 3rd world cesspool. Alaska is lucky that Hilcorp came here. Or else we would be heating by wood and lighting our homes by candles. With clueless Bush Marxists, that is always a strong possibility.

  17. The absolutely correct that the state of Alaska did not pay Caelus the monies owed for drilling . They screwed them
    Out of $100M they were supposed to be reimbursed after discovery and screwed up all their financing . The state was picking winners and losers . 2Billion barrels of recoverable oil sits in ground at SmithBay because the State defaulted on payments promised . It could easily produce 200,000 barrels per day !

  18. Oil and Tax experts opine that Alaska tax revenue is between 1/2 and 2/3rds of the tax revenue other oil and gas States receive. Anyway you slice it, we are getting screwed. All of those lower 48 commuters on Hilcorps payroll contribute about zero to anything named Alaska, except for the Airline company

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