Oil & Gas Competitiveness Review Board Alaska State Senator - - PowerPoint PPT Presentation

Oil & Gas Competitiveness Review Board

Focusing on Alaska’s Economic Future

Alaska State Senator Lesil McGuire

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

http://www.alaskadispatch.com/article/20130819/alaska- asks-oil-companies-help-write-rules-oil-tax-cut

Oil and Gas Competitiveness Review Board

• Established 2013
• Creates a Board

modeled after Alberta

http://www.downstreamtoday.com/news/article.aspx?a_id=21965

Sec 30. AS 43.56.160

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

Why We Created the Review Board

Three possible future scenarios: Each outcome is due to different levels of investment

Source: 2006, http://www.akrepublicans.org/houres/24/pdfs/houres_hb488_12.pdf

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

http://www.alaskadispatch.com/article/npr-lease-sale- federal-flop

• Alaska MUST remain

competitive in the Global Market

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
• ur future fiscal regime

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

Why We Created the Review Board

Meanwhile, AK North Slope Production has continued to decline

http://gov.alaska.gov/parnell/priorities/resources/fill-the-pipeline/fill-the-pipeline-background.html

Why We Created the Review Board

In the Spring of 2013 Alaska fell to 4th among the US oil producing states - falling behind Texas, North Dakota, and California.

• Alaska’s decline

is not because we are running

• ut of oil
• It is because we

began to fall behind the competition for new investment

Why We Created the Review Board

2013 Source: AK DNR & AK DOR

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

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

http://www.downstreamtoday.com/news/article.aspx?a_id=38624

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

http://www.pennenergy.com/index.html

Oil and Gas Competitiveness Review Board

Composition of the Board

http://dnr.alaska.gov/commis/pco/taps.htm

• Designed to be inclusive
• Consists of 11 members
• Will meet 1 time per year

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

• 3 members of the Public appointed by the

Governor

– A petroleum engineer – A Geologist – A financial Analyst

https://www.downstreamtoday.com/projects/project.aspx?project_id=119

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)

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

Oil and Gas Competitiveness Review Board Composition of the Board

Oil and Gas Competitiveness Review Board

The Duties of the Board

http://breakingenergy.com/2012/02/29/alaskas-oil-windfall/

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

• Review historical, current and potential levels
• f 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

Photo: Bob Kirst/Corbis

http://www.americasquarterly.org/po wer-shift-energy-western-hemisphere

Oil and Gas Competitiveness Review Board Duties

• Compare this to the competitive

position in other jurisdictions

• Make written findings to the

Alaska State Legislature

Oil and Gas Competitiveness Review Board Duties

• Review the competitive position of the state

to attract and maintain investment in oil and gas sector

• 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

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

http://news.nationalgeographic.com/ne ws/energy/2013/04/130409-alaska-oil- industry-taxes/

Oil and Gas Competitiveness Review Board Conclusion

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

http://www.energyandca pital.com/articles/oil- shales-real-enemy/2791

• 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

• pportunity for all Alaskans

http://www.aiche.org/about

Oil and Gas Competitiveness Review Board Conclusion

Oil & Gas Competitiveness Review Board

Focusing on Alaska’s Economic Future

Alaska State Senator Lesil McGuire ● 907.465.2995 ● sen.lesil.mcguire@akleg.gov

Questions?

Picture: http://sockeyebusinesssolutions.com/index.php/industries/oil-gas