Alaska Senate passes revised oil tax bill {Alaska}

AP via Fiarbanks Daily News-Miner ^ | Apr 14, 2012 | Becky Bohrer

[thackney]

The Alaska Senate on Saturday passed a bill intended to encourage new field oil production, just days after an overhaul of Alaska's oil tax structure stalled in the Senate's bipartisan majority caucus.

A piece of that overhaul was a tax break for oil production in new fields. On Saturday morning the Senate Finance Committee grafted a version of that from the stalled SB192 onto a House bill intended to encourage more oil and gas drilling in select basins around the state.

The bill, which passed 17-3, must go back to the House, which would have to agree to the changes or the bill would go to a conference committee. House Speaker Mike Chenault said early Saturday afternoon that it would be a large policy call to make with one vote on the floor and no hearings on the changes on the House side. He said the House majority would have to take a look at what it wanted to do.

[thackney]

Short excerpt due to AP content

Gov Parnell has already called a special session to work on this and two other issues.

[thackney]

Governor calls special session on three issues
http://newsminer.com/view/full_story/18249864/article-Governor-calls-special-session-on-three-issues?instance=home_news_window_left_top_3

Gov. Sean Parnell is calling lawmakers back for a special session this week to deal with unresolved issues from the just-ended legislative session, including oil taxes.

Parnell issued a special session call shortly after the House and Senate adjourned their regular session early Monday. Also on the call are HB9, a bill meant to further advance an in-state natural gas pipeline project, and HB359, Parnell’s bill to strengthen penalties for people convicted of sex trafficking.

The special session is scheduled to start Wednesday.

Read more: Fairbanks Daily News-Miner - Governor calls special session on three issues

excerpted...

[Eska]

I noticed the article in paper yesterday. From what I took of it all, this isn't what the oil industry wanted at all. The bill would give a tax reduction of 1/3 on new field development where the future is down the road; am I correct on this? They got Dem support though, and I really don't believe many ALaskans would support much more. They have been watching the tax reduction games for 25 years and have seen so many of our Republican Politicians sent off to the big house in oil industry corruption cases. People are sick of it to the point they don't want to give anything to the oil industry anymore.

Snow is finally starting to melt out our way, luv our summers.

[Recon Dad]

An analysis by PFC Energy, a consulting firm that's been working with the Senate on the oil tax issue this session, found that total government take would be around 64-66 percent for new field production at various cost-to-produce scenarios at $120-a-barrel oil. Under the current tax structure, government take at the same price point and scenarios would be 77-78 percent.

The state take, meanwhile, would be 49 percent under the three scenarios at $120-oil under the new-field provision. Under the current tax structure, it would be 65-68 percent.

In the first paragraph I am assuming when they say “government” they are referring to both State and Federal? Why do they use $120 bbl? Also I will assume the percentages discussed are net numbers (after expenses)and they're are talking about splitting the profits. It's cheaper to do business in most foreign countries then to do business in AK.

[thackney]

I don’t have a clear understanding of what passed the Senate. But since it doesn’t match the House Bill, it really doesn’t have much meaning yet.

I got some emails from folks I would expect to know yesterday talking about it and they had conflicting information as well.

Part of the ability to have corruption in the system is the convoluted way these taxes are done. It should be straight forward, simple percentage of the gross; that reduces the games that can be played. I see convoluted and differing rates and credits as something that should be eliminated.

[thackney]

In the first paragraph I am assuming when they say “government” they are referring to both State and Federal?

Yes, both State and Federal. They cannot change the Federal but they are trying to gain public understanding of what the total take is by the governments.

Why do they use $120 bbl?

Because Alaskan crude sold on the West Coast of the lower 48 is getting that price today.

http://www.adn.com/2012/04/13/2421576/fridays-oil-gas-gold-and-zinc.html

http://online.wsj.com/mdc/public/page/2_3023-cashprices.html?mod=topnav_2_3000

[thackney]

Also I will assume the percentages discussed are net numbers (after expenses)and they're are talking about splitting the profits.

No, this is the percentage applied to the gross revenue. The expenses have to come out of what is left before any profit is seen.

ACES is a profit based tax. But the comparison of total taxes taken by the state and federal is being compared to the total revenue.

[thackney]

Do you have a link for the PFC Energy report?

[thackney]

Sorry not enough coffee yet...

You were referring to the article I linked.

[strongbow]

I don’t expect much from this legislature. I thought my home state of Louisiana was dysfunctional. 12 years of living here convinces me LA has nothing on Alaska when it comes to corruption and ineptitude in the state governance.