Compass: Repeal the oil tax cuts, because ACES was working

Senate Bill 21 is a giveaway because reduction in the oil and gas production tax is not dependent on increased production. It is a bad deal because the former tax, ACES, was working well.

ACES rewarded new production. And discoveries made while ACES was the law were actually increasing oil production.

Between 2007 when it was passed and the end of 2013 when it was repealed ACES produced $8.5 billion more in revenue compared to what Alaska would have received if SB 21 had been in effect.

Gov. Sean Parnell and the Legislature knew that active exploration for new oil production was occurring under ACES. Karen Rehfeld, director of Parnell's Office of Management and Budget said on January 19, 2011, "the good news is we are seeing a lot of increase in oil exploration."

But "the devil's been busy in your back yard." BP, Exxon and Conoco-Phillips (the Big 3) have paid $6.5 million to fund a massive campaign to keep ACES repealed. The media blitz performed by Porcaro Communications on behalf of big oil says we need new discoveries to increase oil production.

Well, under ACES (2007 through 2013) there were several new oil discoveries. Three of those new oil discoveries are particularly good examples.

Now let's be clear about one thing right off. BP's sale to Hilcorp, a Texas independent, of its interest in four North Slope fields demonstrates that Alaska can not count on the Big 3 to actively search for new oil. None of the new discoveries that have added 10s of thousands of barrels to North Slope oil production under ACES were made by BP, Exxon or Conoco. Instead the three new discoveries under ACES have been made by new independent oil companies drilling on the North Slope.

First was Pioneer Natural Resources, another Texas independent. It came to Alaska in 2002. It explored on the Slope and in Cook Inlet. That did not succeed. However, in late 2007, the year ACES became law, Pioneer focused on developing the Oooguruk field. Pioneer knew oil was there but could not be produced. To develop Oooguruk into a producing field required construction of a gravel island, acquisition of new leases, much additional drilling and finding new oil. Pioneer did all that. It brought Oooguruk on line in June of 2008, one year after ACES became law. By 2012 it was producing 7,000 barrels of oil a day.

The second new discovery is by Eni which is spending $1.5 billion to $2 billion on the development of the Nikaitchuq field. According to Alaska Business Monthly, the field averaged production of 11,926 barrels a day in May 2013, with total production of 7 million barrels up to that point.

The third company is Repsol, the 15th largest oil company in the world. Repsol acquired leases on Alaska's North Slope in 2007, the year ACES was enacted. It drilled two wells in 2012, when ACES was in effect. In the 2012 drilling season Respol employed more than 500 people and contractors under ACES.

Repsol, under ACES, acquired more tracts at the fall 2012 oil and gas lease sale than any other company. On April 9, 2013 Repsol, before ACES was repealed, announced it "proposed spending billions of dollars in Alaska as part of a long-term drilling program."

But the Big 3/Porcaro blitz has not said any thing about any of these 3 discoveries all of which took place under ACES. Maybe they think individual Alaskans do not need to know. Or as the Traveling Wilburys say:

Sometimes you think you're crazy

But you know you're only mad

Sometimes you're better off not knowing

How much you've been had

Alaskans are learning just how much they are being had by Senate Bill 21. That is why we should Vote Yes, Repeal the Giveaway and protect Alaska's future.

Chancy Croft is a former state senator and candidate for governor of Alaska.