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.
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“The way to ensure a balanced budget with the least hassle is to ensure future revenues. ”
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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.
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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.
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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.
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Why consider the input requirements of Alaska’s failing lobbyist-legislator team any differently?
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The thing isn’t running right, Robert. It needs more and more power for less and less work.
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We don’t even know how much power it actually needs to do a certain amount of work.
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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?
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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.
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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.
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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.
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.
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.
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Take the oil out of Alaska, everything shuts down.
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Take Hilcorp out of the inlet and south central has no gas.
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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.
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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.
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!