Fairbanks Rotary Luncheon March 28, 2013 Kara Moriarty, Executive Director
Purpose Alaska Oil and Gas Association Serve as single point of contact for Alaskans on the state s oil and gas industry Provide a forum for discussion and a point of decision on issues that affect the industry Mission Long-term viability of the Alaska s Oil & Gas Industry for the benefit of all Alaskans
AOGA Member Companies
Oil & Gas Has been Good to Alaska Jobs & Revenue State of Alaska has collected $160+ billion from oil & gas since 1959 Oil & gas continue to dominate state s unrestricted revenue, accounting for 93% ($8.8 billion) in FY 2012 State estimates 90% of its revenue will continue to come from oil and gas even with falling production Industry creates jobs and provides income for many 44,800 jobs and $2.65 billion in annual payroll (does not include State jobs, or jobs related to capital budgets) 1 = 9 - Nine oil industry-related jobs created in Alaska for every primary company job
C O M M U N I T Y
How Did we Get Here? Alaska s Tax Policy Has Changed Substantially Over the Years Pre 2005: Gross System w/economic Limit Factor (ELF) Recognized challenging economics as fields declined 2006-2007: Net System: Petroleum Production Tax (PPT) Net system to create incentives for exploration/development Increased state revenue as prices rise, regardless of size of field or production More than doubled taxes 2007-Today: Net System: (ACES) Still Net System Increased progressivity rates/added complicated regulations More than doubled taxes..again.
Where Are We?
Production Decline Is Real
Competition at High Oil Prices
Alaska Headed Out of Medal Contention 4th
Alaska Contributing 8% of U.S. Oil Production
A Grim Future Without Oil & Gas Sources of FY 2012 Unrestricted Revenue Oil and Gas Royalties & Taxes ($8.8B) 93% Excise Taxes ($170.8M) 2% Corporate Income Taxes ($98.5M) 1% Licenses & Permits ($42.3M) less than 1% Mining Taxes ($40.7M) less than 1% Fisheries Taxes ($32.7M) less than 1% Source: Alaska Department of Revenue Fall 2012 Sources Book
What does Alaska look like in 10 years? Scott Goldsmith, Institute of Social and Economic Research, UAA, "Maximum Sustainable Yield: FY 2014 Update," Web Note 14, January 2013
A Grim Future Without Oil & Gas Scott Goldsmith, Institute of Social and Economic Research, UAA, "Maximum Sustainable Yield: FY 2014 Update," Web Note 14, January 2013
Governor Lays out Principles for Oil Tax Reform Anchorage Daily News, Jan. 6, 2013: Reform must: Be fair to Alaskans Encourage new oil production Be simple and restore balance Be durable and long-term in nature
Governor Lays out Principles for Oil Tax Reform Anchorage Daily News, Jan. 6, 2013: Reform must: Be fair to Alaskans Encourage new oil production Be simple and restore balance Be durable and long-term in nature AOGA Recommendation: Avoid changes that artificially creates winners & losers
AOGA Supports Components of CSSB 21 (FIN) am(efd fld) Cornerstone for significant and crucial tax reform Support the elimination of progressivity Support the concept of gross revenue exclusions Support the transferability of loss carry forward credits Support the manufacturing credit Support lower statutory interest rate
Base tax rate is too high AOGA Concerns with CSSB 21 (FIN) am(efd fld) Serious concerns with how the bill addresses tax credits (QCE elimination, no extension of small producer and exploration credits) Does not support the Competitiveness Review Board Gross Revenue Exclusions for legacy fields needs clarity and certainty. Identified other ways to improve policy (repeal minimum tax, and allow DOR to use joint-interest billings)
Work Together. Win Together. Alaska Needs a Strong Oil Tax Policy that achieves production from new & legacy fields Continue to evaluate the bill to look for ways to accomplish Gov. s Goals Stand ready to assist in achieving long-term policy for Alaska