By JOE SCHIERHORN AND JIM JANSEN
Alaskans have good cause for celebration. The recently approved Willow project can reverse the last 10 years of population decline and outmigration, provide hundreds of jobs, dramatically increase Alaska’s oil production, fund state services for the next 40 years, provide permanence to the PFD and the Permanent Fund and revitalize Alaska’s economy. At peak production, this major oil project on the North Slope will increase oil production in Alaska by up to 180,000 barrels per day.
Last fall, Santos sanctioned over $2.6 billion to start phase one of the Pikka project, which will produce up to 80,000 barrels per day, giving us another reason to celebrate. This, combined with the Willow project, could mean up to 50% more oil flowing through the pipeline.
Alaskans can be proud today. We have consistently voted to maintain tax stability over the last 10 years which ensured the investment climate to allow Willow and Pikka to be funded. The Alaska voter said no to the repeal of SB 21 in 2014, and no again in 2020 to a poorly designed initiative that would have raised taxes on our legacy fields by as much as 300%.
Stable tax policies have allowed North Slope producers to halt production decline from fields that are approaching the half century mark. And explorers continue to make world-class discoveries despite highly volatile oil prices. We have a bright future if we can keep Alaska competitive and continue to attract investment to our resources industries.
Despite these encouraging and hopeful facts, the Senate Rules Committee recently introduced SB 114 which would make significant changes to SB 21, increasing taxes on new fields and existing North Slope oil production.
Among other changes, it adds instability and complexity to the tax system by dramatically changing the deductibility rules for capital costs of new projects like Willow and Pikka, which negatively impacts project economics and cash flow. Not only is this short-sighted view blatantly unfair to an industry that made investment decisions based upon our current oil tax structure, but it is also a major risk to the future viability of our state should these changes derail these projects.
Alaska’s leaders must be diligent today. It’s time to keep our eye on the future, maintain our competitiveness and investment stability and enjoy the long-term prosperity we are offered with Willow and Pikka.
Changing our tax structure at this late date on those projects’ developments could spoil the greatest opportunity of this generation.
Joe Schierhorn is Chairman and CEO of Northrim Bank and co-chair of KEEP Alaska Competitive. Jim Jansen is the Chairman of Lynden and co-chair of KEEP Alaska Competitive. Photo: North Slope work, by Rob Bussell.
The state is hungry and must be fed.
Alaska state government: too much (taxes) is never enough!
Do you remember the old Clinton tax form?
Q: how much did you make?
A: send it all in.
Churchill said Socialism works just fine until you run out of other people’s money. Seems our legislators are trying to prove his hypothesis.
I believe that was Margaret Thatcher. He/She had it right
They have not gotten there 10%. The legislatures are foaming at the mouth for more money. They will push for taxes and more PFD.
We don’t have any leaders, we have leaches, thousands of friggin leaches and the worst of them are in Juneau making policy decisions with ZERO idea of how to run a business. I wouldn’t hold my breath hoping that the state government doesn’t submarine our oil production companies.
SB 114 is aimed primarily at one very large producer that pays no state taxes due to a loophole in the tax code that should have been foreseen years ago. That loophole needs to be closed so that all the producers are on the same page. I don’t blame anyone for exploiting the stupidity that allowed the S Corporation exemption, but it needs to finally stop.
Oh, and if we are really nice to them, they will suck the oil dry and not give us anything in return and still gladly bend us all over onenergyl prices. Big Oil is not our friends .
Excellent post. The high PFD crowd need to leave Oil taxes alone and deep six a State Sales Tax and or income tax. Let more oil flow down the pipeline and reset our State Budget before asking for a high PFD.
Is one of the guest contributors the same Jim Jansen that owns Alaska Marine Lines? The same Jim Jansen that promised the State of Alaska that he wouldn’t raise shipping rates in Southeast if they allowed him to buy his only competitor’s company (Northland) but immediately raised our shipping rates after the deal was inked? I don’t disagree with his position statement on this subject but wanted to make sure that everyone reading this understands that he is a cutthroat capitalist who doesn’t care a bit for the common person as far as I can see.
I’d be a lot more impressed if these two Top 20%’ers were arguing for a comprehensive Income Tax.
Further more, the Feds own the oil in Willow. The States not getting revenue from the oil, only from the services provided to get the oil.
Paraphrasing the late Milton Friedman…”If you let the Alaska State Legislature be in charge of the SAHARA DESERT, in 5 years there would be a shortage of SAND!
We saw what happened to production and the number of Oil Companies operating in the State after the implementation of Palin’s “Fair Share” tax increases. I thought maybe we learned our lesson. Apparently I was wrong.
There is no such thing as “fair share”. We need to tax at a level that will encourage development and exploration.
Come on Alaska, figure this out!
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