Oil & Gas Competitiveness Review Board

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1 Focusing on Alaska s Economic Future Oil & Gas Competitiveness Review Board Alaska State Senator Lesil McGuire

2 Oil and Gas Competitiveness Review Board Why we created the Review Board Composition of Review Board Duties of Review Board Whaley, Frank H. photo. AMRC. Wien Collection

3 Oil and Gas Competitiveness Review Board Sec 30. AS Established 2013 Creates a Board modeled after Alberta

4 Why We Created the Review Board Alaska Relies on Revenue from Oil and Gas Alaska Must turn the decline of Oil production around Other jurisdictions have stepped up efforts to attract investment Oil and Gas production is dependent on capital investment

5 Why We Created the Review Board Three possible future scenarios: Each outcome is due to different levels of investment Source: 2006,

6 Why We Created the Review Board Alaska s oil and gas economy does not exist in a vacuum Oil and gas companies have many options when deciding where to invest capital and resources Alaska MUST remain competitive in the Global Market

7 Why We Created the Review Board Oil and gas investments made today will have lasting impacts on AK s standard of living Alaska s ability to attract investment will determine our future fiscal regime

8 Why We Created the Review Board Alberta saw a similar decline in oil and gas production They established a Council to execute a holistic study of oil and gas investment competitiveness They successfully turned around the decline of production Alaska must also adapt to changing market conditions

9 Why We Created the Review Board Meanwhile, AK North Slope Production has continued to decline

10 Why We Created the Review Board In the Spring of 2013 Alaska fell to 4 th among the US oil producing states - falling behind Texas, North Dakota, and California. Alaska s decline is not because we are running out of oil It is because we began to fall behind the competition for new investment

11 Why We Created the Review Board 2013 Source: AK DNR & AK DOR

12 Why We Created the Review Board Other basins have turned decline around This is how Alaska did During an all time price spike in WTI price While other jurisdictions improved production during record prices, Alaska s production continued to decline Source: AK DNR and AK DOR

13 Why We Created the Review Board Alaska needs a comprehensive mechanism to assess our global competitiveness A competitive oil and gas industry creates jobs across sectors. It means a vibrant economy In 2010 oil and gas accounted for 44,800 jobs (direct and indirect) $2.65 Billion in payroll

14 Why We Created the Review Board Objective Comprehensive review of Alaska s competitiveness Better informed Agencies Better informed Legislature Stability for industry Long-term stability for Alaska

15 Oil and Gas Competitiveness Review Board Composition of the Board Designed to be inclusive Consists of 11 members Will meet 1 time per year

16 Oil and Gas Competitiveness Review Board Composition of the Board 2 members nominated by two leading nonprofit trade associations that represent the Oil and Gas Industry Appointed by Governor 1 member- the Chair of the Alaska Oil and Gas Conservation Commission or chair s designee

17 Oil and Gas Competitiveness Review Board Composition of the Board 3 members of the Public appointed by the Governor A petroleum engineer A Geologist A financial Analyst

18 Oil and Gas Competitiveness Review Board Composition of the Board 1- the Commissioner of Environmental Conservation (or Commissioner s designee) 1- The Commissioner of Natural Resources (or Commissioner s designee) 1- Commissioner of Revenue (or Commissioner s designee)

19 Oil and Gas Competitiveness Review Board Composition of the Board 2 members of the public who do not represent the oil and gas industry Appointed by the Governor Every 2 years the Governor shall designate one member as chair Members shall serve for 4 years

20 Oil and Gas Competitiveness Review Board The Duties of the Board

21 Oil and Gas Competitiveness Review Board Duties Establish and Maintain a collection of information related to oil and gas: Exploration Development production Related to: Tax structure, rates and credits In the State of Alaska In OTHER jurisdictions

22 Oil and Gas Competitiveness Review Board Duties Review historical, current and potential levels of investment in the State s oil and gas sector Identify factors that affect investment in oil and gas industry, including: Tax structure, rates, credits Royalty requirements Infrastructure, workforce availability Regulatory regime wer-shift-energy-western-hemisphere Photo: Bob Kirst/Corbis

23 Oil and Gas Competitiveness Review Board Duties Review the competitive position of the state to attract and maintain investment in oil and gas sector Compare this to the competitive position in other jurisdictions Make written findings to the Alaska State Legislature

24 Oil and Gas Competitiveness Review Board Conclusion Fiscal systems are not the only criteria Industry uses to make investment decisions Operating costs Economic and political stability Regulatory regime Alaska s position in the Global market will not remain static Alaska needed a mechanism to assess it s global competitiveness in order to attract investment

25 Oil and Gas Competitiveness Review Board Conclusion Maximizing Alaska s energy resource potential requires the articulation of a log-term vision for development It must be: Forward focused Stable Globally competitive Responsive to technological change ws/energy/2013/04/ alaska-oilindustry-taxes/

26 Oil and Gas Competitiveness Review Board Conclusion Alaska has abundant unconventional oil and gas resources Alaska must be positioned to develop these resources or face continued erosion of the overall market share pital.com/articles/oilshales-real-enemy/2791

27 Oil and Gas Competitiveness Review Board Conclusion By making written recommendations to the Alaska State Legislature the Board Modernizes the way Alaskans look at the oil and gas industry Positions the state to maximize oil and gas opportunity for all Alaskans

28 Focusing on Alaska s Economic Future Oil & Gas Competitiveness Review Board Questions? Alaska State Senator Lesil McGuire sen.lesil.mcguire@akleg.gov Picture:

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