Paul Jenkins: Ask ACES defenders what they plan to do when the oil slows to a trickle

October 27, 2012 

Add to the fiery debate about Alaska's oil taxes and some state senators' recklessness this tidbit that tickles the Left: A proposed tariff settlement between the state and oil industry indicates the trans-Alaska oil pipeline will be operating until at least 2044.

Gov. Sean Parnell said the line's declining throughput could shut it down in eight or 10 years. His remedy? Amend Alaska's Clear and Equitable Share oil tax to cut the levy and stimulate production and investment. More oil means a longer pipeline life, he said.

Detractors disagree. See, they say, we told you. The pipeline will be in use for decades. Everybody is lying - but us. Those dirty, stinkin' oil companies want a giveway. There's no problem. Keep ACES the way it is. No increased production; no fair tax.

The question? Why waste time arguing about when the pipeline will shut down? It is, after all, not a question of how long the pipeline stays in use; it is how much is in the pipeline. 2044? 2014? 2026? 2075? Pick a year. Who really cares? A line operating in 2075 moving 212 barrels a day, after all, is useless.

If the ninnies who want things to stay as-is get their way, at some point long before the line is kaput it will have serious problems. Waxy deposits. Ice crystals. Corrosion. Frost heaves. Hydraulics, chemistry, the laws of physics. All are in play every day -- even in Alaska.

Oil once gushed through the 800-mile line from Prudhoe Bay to Valdez in three or four days, arriving at a toasty 100 degrees. It now dribbles there in something like two weeks, much of it in cold, above-ground pipeline sections, arriving sometimes at a chilly 40 degrees. Shipping expenses are increasing because it costs more to move less. Nonetheless, that throughput -- about 11 percent of the nation's oil - underwrites 90 percent of the state's spending, and North Slope oil accounts, directly or indirectly, for more than half the state's economy.

You would think Alaskans would do anything to keep the line awash in oil, but no. Throughput averaged about 613,000 barrels daily last year, down from a peak of 2.1 million barrels in 1988. Nowadays, it is dropping like Obama's approval ratings. Every year, 6 percent less. Grab a pencil, start with 613,000 to represent last year's average and reduce that by 6 percent, and then reduce the answer, and so on. It will not take long to reach the 350,000-barrel number that some say is where real problems begin.

The solution is obvious: More oil. ACES is the problem.

It steals $2 billion a year from the industry's shareholders and shifts it to government, where it produces no wealth, no long-lasting, self-supporting jobs, no security for Alaskans. Instead, it pays for more government, more spending, more fat, $3 billion capital budgets, more union contracts, more savings for even more spending.

Because of ACES, North Slope production is down. Exploration for new oil by major companies is down. Jobs and investment are going elsewhere. Sure, with luck, Shell Oil will produce a treasure trove of oil in the Chukchi and Beaufort seas in the next 15 to 20 years. That could mean 1 million or more barrels a day for the pipeline. But Alaska would get chump change, with the feds pocketing the lion's share.

The Senate bipartisan coalition knows all that, too. It has decided to get what it can while the getting is good; the future be hanged.

Have you asked a member of the coalition or a union leader what they plan for Alaska when finally there is just not enough oil? What then?

The Nov. 6 election is pivotal. You have ample time. Do not take it from me or anybody supporting ACES reform. Ask somebody who wants it untouched. Ask them how, without more oil, they will pay for state government. Income tax? Sales tax? Spending cuts? (I know. I could not resist.) What about the economy? Ask why they refuse to cut ACES to spur production when they know it simply could be raised again if production does not increase. Ask them.

There are perhaps another 10 billion barrels of harder-to-recover oil beneath the North Slope. This state's dream could live a long time. It would be a shame if myopic greed and outright stupidity ended it on our watch.

A shame, indeed.

 

 


Paul Jenkins is editor of the AnchorageDailyPlanet.com.

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service