New Slope Exploration Renews Oil Tax Debate

- New Slope Exploration Renews Oil Tax Debate

Tuesday, August 16, 2011
Knight Ridder/Tribune Business News
by Sean Cockerham, Anchorage Daily News, Alaska

Gov. Sean Parnell is getting ready to renew his push to roll back Alaska's oil tax while supporters of the tax are pointing to news of increased exploration and jobs on the North Slope. The latest report getting attention from lawmakers came from Petroleum News. It reported in an Aug. 14 article that "operators on the North Slope and nearshore Beaufort Sea are preparing for what promises to be one of the busiest exploration seasons since 1969, when 33 exploration wells were drilled following the discovery of the Prudhoe Bay oil field."

Legislators opposed to Parnell's attempt to lower oil taxes forwarded the article by email with comments like "amazing news" and "great article." But advocates of lowering the tax say exploration does not necessarily mean production, and that the tax dissuades companies from investing in the development of Alaska fields instead of elsewhere in the world.

Parnell spokeswoman Sharon Leighow said Monday the governor will continue to push for lower oil taxes when the next session of the Alaska Legislature begins in Juneau in January.

Fairbanks Democratic Sen. Joe Paskvan sent a statement to the press soon after the Petroleum News article first appeared. Paskvan is among the skeptics in the state Senate who blocked Parnell's tax cut.

"It appears that Alaska's tax credits under its production tax system are working to promote capital expenditures, including new exploration wells. Good news for the industry and the state, which relies upon the industry for revenues to its treasury. Exploration should mean increased oil production and increased throughput down the pipeline," he said.

Paskvan went on to say he didn't want to be overly optimistic and wanted to learn more from the companies, but that "this is strong evidence that the independents in the oil industry are both looking at Alaska as a place to do business and that they are actually coming to Alaska to develop our abundant oil resources."

The Petroleum News reported that, if all goes as planned, as many as 28 exploration wells could be drilled between October 2011 and mid-2012. The trade industry publication cited exploration by Brooks Range Petroleum Corp., UltraStar Exploration, Repsol, Linc Energy and Great Bear Petroleum.

Leighow, the Parnell spokeswoman, on Monday sent a statement from the governor saying that such exploration is "great news" but that Alaska also needs to get a big financial investment in the currently producing fields just to maintain the existing level of flow in the trans-Alaska oil pipeline.

The flow of oil through the pipeline has been declining since 1988 and is now at about 600,000 barrels per day. Parnell has said he would like to see production up to a million barrels a day within a decade, which he figured would require a $4 billion annual investment from the companies instead of $2.5 billion now.

"If we don't see renewed investment in the legacy fields to keep production on a slow decline, any new discoveries are going to be entering a pipeline with substantially reduced throughput and, therefore, higher tariffs. We need more than new exploration to keep the pipeline full (enough) and functioning well," Parnell said.

Parnell's bill, which the Department of Revenue estimated could result in more than $8 billion in lost production tax revenue to the state over the next five years, passed the Alaska House of Representatives this spring. But state senators resisted and the bill didn't make it very far in the Senate.

Parnell's plan still has little support in the Senate. Some senators cite Alaska Department of Labor employment figures that show oil industry employment up around record levels.

The Senate Finance Committee has paid for a review of what is happening with oil employment in Alaska, including data showing nearly half the North Slope jobs go to nonresidents. The review, by the McDowell Group of Juneau, is supposed to be turned in to the Legislature in December.

Advocates for lowering Alaska's tax attribute the increased jobs to maintenance, rather than production, and say Alaska is missing out on the kind of drilling boom enjoyed by North Dakota.

Anchorage Sen. Lesil McGuire said Monday she's seeking an effective way to get some certainty that the companies would reinvest any Alaska tax reductions in the state.

McGuire said she's heard from oil companies that Alaska has a good tax structure when it comes to exploration, but that at high oil prices the state takes too big a bite from production in comparison to other places they could develop.

Senate President Gary Stevens said he's interested to see if there might be "compromise between what the governor might be thinking and what we're thinking" in the Senate.

Copyright (c) 2011, Anchorage Daily News, Alaska

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Iraq Parliament Starts Debate on Reviving National Oil Company

- Iraq Parliament Starts Debate on Reviving National Oil Company

Monday, July 04, 2011
Dow Jones Newswires
by Hassan Hafidh

The Iraqi parliament has held its first hearing session to pave the way for the debate on a controversial draft law to reestablish the Iraqi National Oil Company, which the former Iraqi leader Saddam Hussein's regime invalidated in the 1980s, officials said Monday.

The session was attended by the country's Oil Minister Abdul Kareem Luaibi, two former oil ministers Ibrahim Bahr al-Uloom and Thamer al-Ghadhban as well as the head and members of the parliament's oil and energy committee and several Iraqi oil experts.

Absent from the parliamentary hearing was deputy prime minister for energy affairs Hussein al-Shahristani, a key ally of prime minister Nouri al-Maliki.

A draft law of the long-awaited new national oil company, which would revive a company originally established in the 1960s and merged into the Iraqi oil ministry in 1987, was passed by the then cabinet in July 2009 but has been stalled in the parliament since.

Oil minister Luaibi told the hearing that creation of a new Iraqi National Oil Company is not essential and "it would add nothing to the Iraqi oil sector."

While speaker of the parliament Osama al-Nujaifi, head of the parliament oil and energy committee Adnan al-Janabi and Ghadhban who is also the current top energy advisor to Prime Minister al-Maliik, voiced their support for reviving the company.

The INOC, if restored, would act as the parent of the existing South Oil Co., Iraq's largest petroleum company, North Oil Co., Missan Oil Co. and Midland Oil Co.

According to its draft law, the INOC would spearhead national and local strategy. It would carry out all sorts of oil operations from exploration down to marketing. The firm would also partner with or even compete against foreign companies to develop Iraqi fields.

The INOC will be a cabinet-level organization led by a president with ministerial rank. The company's board will include officials from the ministries of oil, finance and planning and the Central Bank of Iraq.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Debate on Gas Drillers' Impact Fee Put Off

- Debate on Gas Drillers' Impact Fee Put Off

Wednesday, June 29, 2011
The Morning Call, Allentown, Pennsylvania
by John L. Micek, The Morning Call, Allentown, Pa.

Hours after a threatened veto, Republicans who control the state House pulled the plug Tuesday on a planned debate over a local impact fee for natural gas drillers, saying they'll take up the issue this fall.

The 180-degree turn came as lawmakers worked to put the final pieces of a $27.15 billion budget into place so they could send it to Gov. Tom Corbett before the new fiscal year starts on Friday.

At a news conference, the GOP governor said he wants lawmakers to wait to debate any impact fee bill until after a Marcellus Shale commission submits its report next month on the effects of drilling.

"I have sent this message back: If something gets to my desk, it will be vetoed," Corbett said.

The budget cleared a major hurdle as the Senate voted 30-20 along straight party lines to approve it, positioning it for a vote by the House as soon as Wednesday.

Also on Tuesday, House and Senate Democrats withdrew their opposition to funding bills for Penn State, Temple and Lincoln universities and the University of Pittsburgh, and the veterinary school at the University of Pennsylvania, mustering the two-thirds majority needed for approval.

Democrats in the two chambers withheld their votes for the schools Monday, complaining they hadn't had time to review the details of the sprawling main budget bill. Once that happened overnight and into Tuesday, the Democrats said they were prepared to withdraw their opposition. In short order, the House and Senate separately voted to approve the appropriations.

A key budget bill governing how the state regulates public education and a bill known as the fiscal code, which implements the spending in the main budget, were also moved into place. The House advanced the fiscal code bill, positioning it for a vote Wednesday. The school code bill cleared the Senate on a 33-17 vote and went to the House for approval.

During lengthy debate in the Senate, Democrats repeated arguments that the budget, which trims overall state spending by about 3 percent largely through more than $1.1 billion in cuts to public schools and 18 universities, would result in reduced services for the needy and the aged, tuition hikes for college students and local property tax increases for homeowners.

They also reiterated longstanding complaints that Republicans and the administration had refused to tap a year-end stimulus of as much as $700 million to restore some of the deepest cuts. The spending plan includes more than $100 million in surplus funds.

"This budget recognizes that there are tough, tough choices, I understand that," said Sen. Lisa Boscola, D-Northampton. "But it also includes some bad choices on how to reinvest $27.15 billion for as many Pennsylvania families as we can."

Republicans have said they're not comfortable with all the reductions in the spending plan. But they stressed that the plan "reflects the circumstances of the times," while ducking any major tax increases.

"The document reflects the need for the commonwealth to be fiscally responsible at a time of difficult financial challenges," said Majority Whip Pat Browne, R-Lehigh.

Negotiations continued on two of Corbett's key legislative priorities: authorization of public school vouchers and legislation closing most of the loopholes in a law requiring voter referendums for any school tax hike that outpaces inflation. The governor wants both measures passed before lawmakers start their summer break.

"The House and the Senate have worked with us to reach a final budget," Corbett said. "Because we planned carefully, estimated conservatively, we have a framework to put our budget together."

Corbett has pressed hard to close the loopholes in the "back-end referendum" law, raising the issue in nearly every negotiating session with legislative leaders. Implementing language sponsored by Rep. Seth Grove, R-York, has been attached to a Senate bill currently scheduled for a House vote Wednesday. The governor appeared ready to play hardball with lawmakers, saying "until there is a budget, until I sign one, there is no budget."

Talks on the school-choice bill are continuing, with House leaders saying it's up to the Senate to make the first move. "The Senate has always been in the lead," said House Majority Leader Mike Turzai, R-Allegheny.

Senate President Joe Scarnati, R-Jefferson, said the chamber is "continuing to work with the House to see if there's support" for a school-choice bill and to "see what we can get done before we leave."

House Republicans denied that Corbett's veto threat had anything to do with their decision to put off a vote on an impact fee until the fall. They were complying with his long-stated position that lawmakers delay voting until the Marcellus Shale commission presents its report.

"We'll try to design a legislative package that addresses the full impact of drilling," House GOP spokesman Steve Miskin said.

Scarnati, who spearheaded the push for a drilling fee, said Corbett's veto threat had "changed the dynamic. ... Obviously, it's not going to get done by June 30 if the governor has put his marker down," he said.


Copyright (c) 2011, The Morning Call, Allentown, Pa.

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