Fairbanks Rotary Luncheon March 28, 2013 Kara Moriarty, Executive - - PowerPoint PPT Presentation

Fairbanks Rotary Luncheon

March 28, 2013 Kara Moriarty, Executive Director

Alaska Oil and Gas Association

Purpose

• 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

AOGA Concerns with CSSB 21 (FIN) am(efd fld)

• Base tax rate is too high
• 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