By ROBERT SEITZ
In my commentary of Dec 22, 2024 in Must Read Alaska I stated, “Now is the time to remove the impediments to progress in oil and gas development in Alaska so our Cook Inlet natural gas production will become popular again, and increased production of oil from the North Slope can once again be a major focus for our efforts.
That is where our economy will be built and which will ensure our ability to put forth balanced budgets in the future, while still providing full Permanent Fund dividends to our citizens.”
On Nov 24, 2024 my commentary included “Instead of only considering raiding the dividend, why not consider long-term finances for the State of Alaska? I think a priority for this legislative session is to work on encouraging, incentivizing and enabling legislation to ensure active interest in any lease sales which might be arranged in the near future.
One of the most important objectives for Alaska to work on at this time is to get increased oil flow in the Trans Alaska Pipeline, with a goal of a million barrels a day or more so that we can have assured revenue sufficient to fund the necessary items of the annual budget well into the future. The way to ensure a balanced budget with the least hassle is to ensure future revenues. Oil and gas are the best revenue sources we have.”
If we can get some short timeline projects in the works that can get some additional crude oil into the Trans Alaska Pipeline while the longer term projects are being developed, would help Alaska fiscally. “North to the Future” won’t work if there are not some positive actions towards economic development through our extractive industries.
SB 92 or the “Yundt Tax” offered by Wasilla freshman Sen. Rob. Yundt is definitely an action that will hinder desire for oil producers to invest in increased oil production for Alaska. The uncertain tax on oil and gas producers is much of what drove the major oil companies away. Now is time to encourage oil and gas production as well as mining and timber.
We need elected officials who find ways to reinvigorate our industries which have been sabotaged by unnecessary environmental constraints that have halted oil production projects which could have kept the coffer full. Alaska is not warming two to three times faster than the rest of world, as I have pointed out a number of times.
Then for another boost for Alaska, do whatever it takes to get more gas wells drilled in Cook Inlet. There is enough gas to last maybe another 200 years. The lowest cost way forward for energy in the immediate future is to poke holes into the Kitchen Light Unit. And then at least get the gas pipeline from the North Slope to Fairbanks so we can reduce the wood burning in the interior and maybe build a natural gas fueled power plant in Fairbanks to feed the Railbelt Electric System from the Northern end. We need energy, high density energy, which can be there year round.
Robert Seitz, is a professional electrical engineer and longtime Alaskan.
Rather than all the smoke and mirrors, maybe the author of this article should get with Robert YUNDT for the rest of the story.
Oil production at the well head is not the problem. The production problem has to do with not enough oil refineries in Alaska. The notion that we ship Alaskan oil to the L48 for refining and then return ship refined product to Alaska is insane. Likewise in California, Oklahoma, Texas and other oil production states.
I believe oil is a naturally occurring resource—not the so-called ‘fossil fuel’ touted by the early Rockefellers. And Alaska needs to get off her duff and develop our rich natural resources and quit cowtowing to every environmental group with their interminable ‘studies’!
It’s the old mindset of prosperity through taxation. “Tax the rich” resonates with Democrats and makes the environmentalists feel they aren’t going to die in two years from climate change.
Yundt doesn’t understand anything about getting our production back to 100%, we need to be drilling every place that shows potential. The legislators have failed the people for some time. The PFD is all they focus on and making more regulations.
Well hell. Yundt just stabbed the oil industry and support industry in the back. Nice job.
Here’s the issues I see
I think the production is going up on TAPS in the next forty months . These are future production numbers from developments that are current projected . I think Willow numbers are low . In the last ten years , seen info of 350,000 barrels per day initially when running stock up . The lower numbers used ConocoPhillips does this for tax strategy will state .
Be great if a gravel road was built out to PtThomson as lot of wildcat activity ( exploratory wells with great results ) this would speed new production as year around access . And clean up a current oil spill . Dumbfounded why no permanent road out to PtThomson . Still trying to figure out how that slipped through the cracks with state ? Exxon spent $4B developing it and a year around road should have been part of development . Keeps everything real expensive for winter drilling activities is all . Impossible to clean up oil spill . Total waste building ice roads over and over again . Been a real hinderance at Willow , lack of gravel roads . They were approved at one time . Several wells drilled out East with great results in last 14 months and drilling right now to see how big the deposits are .
Kuparek in late eighties went from discovery to production in 48 months . First winter drilling , used ice roads , the summer permanent gravel roads were built . Just a note that Pikka will be over 20 years from discovery to Production . That’s a shame , even LawFare going on to slow development because of lack of access roads . That’s a state issue that should have highest priority to fix . Lawfare dragging through courts , mess .
Here’s what’s expected from press releases below .
320,000 barrels a day from Pikka .
100,000 barrels per day from Willow
100,000 barrels per day L88 Energy south Prudhoe . Huge shallow discovery west of Franklin Bluffs .
Good information, Robert. Respectfully disagree on one part.
.
“The way to ensure a balanced budget with the least hassle is to ensure future revenues. ”
.
That’s the real problem, “ensur(ing) a balanced budget with the least hassle.”. Don’t hassle the Ruling Class, give them what they want for a balanced budget and be thankful they don’t take more.
.
Look at this way: a professional electrical engineer can figure out when a machine starts to use too much power for the work it does. He’ll fix the machine or replace it.
.
He damn sure won’t double the input power or the size of the wiring to run a failing machine and risk burning down the building.
.
Why consider the input requirements of Alaska’s failing lobbyist-legislator team any differently?
.
The thing isn’t running right, Robert. It needs more and more power for less and less work.
.
We don’t even know how much power it actually needs to do a certain amount of work.
.
Maybe we don’t want to know because DOGEing down to the nuts and bolts of this dinosaur might uncover something we don’t want to see. So we just double, triple, the input power and hope the damned thing doesn’t blow up on our watch?
.
Drill Baby Drill is good, but doing it with a view to helping balance the state budget, which is known to increase exponentially at the mere thought of more money coming in, seems terribly unrealistic.
.
Bottom line: Alaska’s Ruling Class resemble other third-world rulers allowed to remain in power so long as they provide their oil company sponsors reasonable, long-term economic stability.
.
So it seems reasonable to expect the lobbyist half of Alaska’s lobbyist-legislator team shared this point with Peoples’ Imperial State Senator Yundt, which is why the Yundt tax proposal, though annoying, is hardly a show-stopper.
Yundt.
Another RINO.
I admit – I was fooled by him.
Of all the things he could do – the very first thing he does is try to raise taxes on the biggest business in Alaska.
Never again.
Here’s an honest question. Why do none of these authors, including this one, actually publish how much per barrel profit is being made on Alaskan oil? How does that compare to profits elsewhere in the world? The reason for all the smoke and mirrors and complex formulas is to hide the truth that Alaska is practically giving away the oil. Meanwhile, we argue over the scraps to bloat the budget and rob the PFD. The politicians who go along with this need Nazi Nancy to give them retirement housing at the DOC.
I find it great when oil companies make big profits because it allows them to build big projects when can greatly enhance production of oil and gas in our state. this is where our revenues come from.
Yes, by all means, let’s use some Alaska common sense, or in this case, common millions, and close Jeffrey Hildebrand’s personal/corporate tax loophole. His company can easily afford it. He gives millions away to politicians.
Why does Yundt’s bill only target one S corporation. There are at least 12 S corporations in Alaska – if we are claiming that we want to close the loophole on S corporations please include all of the S corporations.
The author didn’t get the memo. SB-21 was supposed to get us more jobs, and one million barrels per day. Those were lies. After giving away our oil for the lowest severance tax in the world, we ended up damaging the Alaska economy. A family of four has now lost $60,000 due to dividends not being paid at the statutory formula, because we have lost billions in revenue.
We need to be reminded that Prudhoe Bay is the largest oil field in North America, The development costs were paid long ago with state subsidies. Giving our oil away with the lowest severance tax, and royalties that are half of what other states get is not just bad for our economy, its unconstitutional. Even worse, we pay $1.4 billion per year in another bit of corporate welfare- the $8 dollar per barrel credit. Even worse, Alaska is paying to develop other fields. Any rational investor would take an ownership interest for the money invested, but not the morons running Alaska. We give away billions, and get no ownership interest.
Same crap happened in the Cook Inlet. One billion in corporate welfare was paid out- our money- and a bit more than ten years later we have another manufactured “crisis”. Not another cent should be wasted in corporate welfare. Alaskans have already been badly hurt. We’ve lost substantial dividend revenue, our population has been declining for 11 years, and we don’t have reasonable capital budgets to pay for infrastructure.
The state is run by ignorant fools who are not working for the interests of Alaskans. Its Texas corporations who they really work for. One wonders how big the bribes are, this time.
SB 21 did precisely what it was supposed to do – keep oil flowing thru TAPS and hopefully increase the throughput. It worked.
The thing that trashed your PFD were Bill Walker and elected democrats. Congratulations. You guys got what you voted for. You must be very proud. Cheers –
agimarc,
Did you miss the little fact that Prudhoe Bay is the biggest oil field- the biggest- in North America? We don’t need to give away the oil to keep the oil flowing from the biggest, and most valuable oil field anywhere in N. America.
Finally, it takes billions of dollars to fully fund dividends. Since we started giving our oil away for a song, we’ve not had those billions to hand out.
Please show us where you’d fund the budget differently. Use data to make your point.
M,
Once again, do you have an actual source for your claim that Alaska is “giving away our oil for the lowest severance tax in the world”? Just to be clear, using an anti-oil lawyer who confuses royalties and taxes in a years old rant against something he obviously struggles to understand is not an actual source.
Steve, you mean Robin Brena, who represents many oil companies, and is a world expert? An expert who wins cases for oil companies on a routine basis? The same guy who wins when he argues cases before the Alaska Supreme Court?
Since SB-21 has been the law for more than ten years now, the fundamentals have not changed. Therefore, no new research is needed. We continue to give away our oil, unconstitutionally. Read Article VIII some time.
Because Alaska does not have a gross profits system, but a net profits system, getting specific information is illegal. We can only see the big numbers. The system is further complicated by credits. So one can only look at the gross numbers to understand how badly we are being fleeced. From this, we can compare this to the average take, globally.
Assume TAPS throughput of 500,000 barrels per day, and an average price of oil of $75 dollars. This oil would have a gross value of $13.6 billion dollars, annually- worth $19,553.00 per Alaskan). Alaskans, the owners of the oil, and the ones that have paid billions of dollars to develop oil field infrastructure, gets a small slice of this gross value. We actually get more revenue from earnings from the Permanent Fund. The credits we pay (welfare) to Conoco, Hilcorp, etc. further complicates this calculation. This is also largely confidential. The owners (Alaskans) are not allowed to know the details. The legislature has made this illegal.
Finally, I want you to give me several hundred million dollars for an oil field I want to develop. When it starts producing, I will not give you any ownership interest. I’ll keep all the welfare money you provided. You will get zero. Your equity return will be zero.
This is what Alaska has done, over and over again. We’ve given away billions to Big Oil, and not bothered to ask for an ownership stake.
Norway, not run by corrupt fools, now has over $1.8 trillion dollars in its sovereign wealth fund- a fund started 20 years after the Alaska Permanent Fund. Norway has done so well in the Arctic because it takes an ownership interest. Our Permanent Fund only has around $80 billion.
Thank you for confirming my previous comment.
SB 21 was doing what it was intended to do. We have had a problem with interference with development of oil and gas projects which would have been on line and flowing by now.
Increasing oil production has zero to do with receiving a fair share of revenue from resource extraction
Frank,
Do you think raising taxes and disincentivizing production will result in government getting a “fair share of revenue”? Follow up question, what do you believe a “fair share” is, should it be a set amount more than oil companies make or just an arbitrary amount that is more than?
The oil companies will not reinvest into an unstable area. The time it takes to deliver first oil is too long to hope that the next government administration either federal or state will not change the rules midstream.
.
Take the oil out of Alaska, everything shuts down.
.
Take Hilcorp out of the inlet and south central has no gas.
.
The tax and spend idiots act as if there is no risk in the oil business. In any business, risk = rewards. Currently, the proposed addition of taxes will only serve to make things worse for the common Alaskan with higher energy costs.
.
To these tax and spend idiots, develop a working solution BEFORE you attempt to tax critical infrastructure out of existence.
Mr. Seitz, since you’re a EE, would you please head over to the Light Bulb story and confirm for the Luddites that LED lights are cheaper to operate than the old incandescents? No one there wants to believe it, and even after I do all of the calculations and show them, they double down on their denial. Maybe they will believe you since you’re not a liberal person like I am.
I know that denial of pure fact is in style, but that doesn’t make it right.
Thank you.
They may be cheaper to operate but cost a lot. If you are referring to the return of the Incandescent lamp it has great value. I have used them at a heat source which an LED cannot be. They are cheap lamps that will turn on in the cold. LED work in the cold but cost a lot more.
SB 92, or the ‘Yundt Tax,’ is like putting a cover charge on a bar that’s already struggling to get customers—except in this case, the customers are oil producers, and they can just take their business to Texas or North Dakota instead. If Alaska wants more oil investment, maybe scaring off the people who actually drill isn’t the best strategy. Let’s roll out the welcome mat, not the red tape!
Maybe next, we can tax the sun for shining and call it an ‘energy diversification fee.’ That’ll fix everything!
Steve, our opinion doesn’t matter. The Alaska Constitution requires that we get “maximum benefit” from the sale of our finite resources.
When we read the annual reports of Conoco, we see they do better in Alaska than anywhere else in the world. That’s a pretty big clue we are getting fleeced.
Full disclosure. I own Conoco Phillips stock. I don’t hate Conoco. But I’m an Alaskan first.
As we previously covered on another article, the Alaska Constitution actually says “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.” I understand why you choose to only quote two words from this section, hopefully you are aware of why you choose to do so as well.
Well, thanks for becoming familiar with Art. VIII Steve. The sentence taken as a whole means exactly what I’ve pointed out- the resource owner (Alaskans) are to derive maximum benefit.
Maybe you missed the history lesson, but Alaska got 105 million acres at statehood (which included Prudhoe Bay) so that we could pay our own way and not be the Alaska welfare colony. Getting maximum benefit not only ensures we follow the Alaska Constitution, but also ensures we can pay our bills- which we are not now doing. It is the Alaska Permanent Fund which is providing more revenue than we get from oil because of the bankrupting SB-21.
Alaskans have now lost over $10 billion just in lower dividends thanks to SB-21. Congrats are being a cheerleader for hurting Alaskans. Your Texas friends thank you.
M,
So you don’t understand what article 8 says or why you only chose to quote two words from that section, thanks for once again confirming my previous statement. SB-21 does exactly what article 8 calls for, you just happen to disagree with what the legislature and the majority of Alaskans understand. But that’s ok, at least you admitted that your opinion on a subject that has been settled for a decade does not matter, and thankfully so since apparently your opinion isn’t based on anything other than a single quote by an anti-oil lawyer.
You have failed to show how Alaskans lost money due to SB-21, you have failed to show how SB-21 does not align with article 8, you have failed to show that Alaska has the lowest severance tax in the world, you have failed to support your claims in any way.
You are familiar with where the money in the Permanent Fund came from, right? Well probably not given your past statements, the Permanent Fund comes from royalties collected by the state the majority of which come from oil. There has also been a number of deposits over the years directly from the state budget and the vast majority of those funds also came from oil. Along with the majority of the money in the Permanent Fund there has been money deposited from revenue based upon the investments made with the money that came from oil.
By the way, and not that it matters, but I don’t have any friends in Texas.
Steve, as one who has different oil company stock- to include Alaska- based ConocoPhillips, I know more about the total take (globally) than most people.
I simply refer you to the COP annual, and quarterly reports that clearly illustrate how Alaska is not obtaining a reasonable share of the resource we own.
You clearly have no idea what Article VIII is alll about. I can’t fix your obtuseness. But having spent time with those who wrote the Alaska Constitution I can tell you that they knew SB-21 was unconstitutional. This was why Vic Fischer was against SB-21 and wanted it repealed. Sadly, Vic is gone now or he’d tell you hoimself.
As far as Alaska losing money due to SB-21- what planet are you on? Just the reduced dividends have cost Alaskans over $10 billion dollars- just that one reduction. Jeezus. And the $8 dollar per barrel welfare credit is another $1.4 annual cost to Alaskla. And we haven’t even touched the severance… You drink a lot of Koolaid?
M,
Other than your insisting upon insult anyone you disagree with your post frequently carry misinformation. While you could possibly do a better job at conveying your thoughts you will need to bring facts instead of sharing your beliefs that show a bias based upon little if anything.
Conoco Philips isn’t based in Alaska.
People who wrote the AK Constitution disagreed with eachother, some even disagreed with whole sections of the Constitution. It’s cool that you knew someone, that lends zero credibility to your beliefs.
Despite your belief and insistence that the reductions of Permanent Fund Dividends was written into law when the legislature passed SB-21, this is not the case. That honor belongs to your lawyer buddy’s partner Bill Walker, he was the one who firt cut the dividend. You probably remember what he did with the money he cut, well given the revisionist history you have been trying to push maybe not.
I don’t recall you implicitly stating exactly what you want you want the tax structure to be, but if you want to go back to aces I’m sure that you’ve taken the time to see what the projections would be at the given price points and the projected lower production rates. I know the last time I ran the numbers it shows that the state has made more with more production and lower prices under the current system than they would have if aces were still in place. If you however run a simple mathematical equation that does not factor in real world number and simply say that when prices were high and the tax rate at higher price points resulted in more money then you are missing the entire discussion because you just want more money or less oil.
I’m still waiting for you to bring the severance information, this isn’t the first time we’ve discussed where your information comes from and if it is even actual information.
Steve, COP is headquartered in Houston, Texas. But it is based here in Alaska- among other places.
ACES was quantifiably better for Alaska. Under ACES we placed $20 billion into savings. We paid full dividends, and the Alaska population was growing. We also were able to spend roughly $2 billion per year on our capital budgets year after year.
Under SB-21 we’ve lost population. We spent all the savings in the SBR and CBR. We’ve slashed dividends, the Marine Highway, and our university. Our capital budgets can barely meet the federal match. Dunleavy and others have talked about imposing a sales tax so the poorest Alaskans can subsidize the theft of our oil. Great job!
The severance you ask about is close to, or below zero after credits are paid. All that’s left is our royalty- which is half of what other jurisdictions get for their oil.
I’ve answered your questions, but you ignore mine.
And you ignore the opinion of some of those who wrote our Constitution… Your bias is apparent.
M,
You’ve asked me two questions here that show you aren’t a serious person, and there’s no reason to answer idiotic questions from a person who isn’t serious.
When someone says a company is based somewhere it means where they are headquartered, not where they have facilities.
As you very well know, or very well should know, oil was at record prices under aces. Taxes were also at record prices under aces and production levels were plummeting, SB-21 stopped that precipitous drop because that’s how economics work, basic math tells us what would happen.
The elephant in the room that you ignore is state spending. State spending during and directly after aces ballooned from 3.4 Billion dollars to 10.4 Billion dollars, more than tripling during that time. The legislature has continued to spend as if they have the money, which they don’t. Once again the issue you have is spending, you want more money to spend. As you admit “We spent all the savings in the SBR and CBR” that’s the problem, spending. If aces were still in place revenue would be much, much lower than it has been and continues to be under SB-21. Instead of continuing to rehash what is already known you should take some time and inform yourself of what oil prices have done since the record years when aces was in place and what would have happened to production levels, they would have continued to plummet right along with oil revenue.
Since the only source you can provide for your claim about Alaska severance tax being the lowest in the world is the partner of the the guy who stole the PFD, I can only assume that you are once again admitting that you are not a serious person.
I didn’t ignore the opinion a guy you knew, he was just as entitled to his opinion as you are to repeat his as if it were your own.
Steve, its hard to take you seriously. I am trying to cut state spending. You don’t want to cut spending.
Ending the $1.4 billion per year corporate welfare is a budget cut.
But you want to keep the welfare going.
I’m a fiscal conservative. You are not.
More gaslighting from the left…
Comments are closed.