Correction: Originally, The Concerned mistakenly attributed the Alaska Pipeline Project (APP) to the Murkowski administration and Mr. van Meurs, neither of whom participated in the legislation that initiated that project, the Alaska Gasline Inducement Act (AGIA). AGIA replaced the gasline contracts negotiated with Mr. van Meurs' input under the Alaska Stranded Gas Development Act (SGDA), contracts which were rejected by the Legislature. We regret the error and have corrected the text below to reflect these facts and clarify the opinion being expressed.
To: Dr. Pedro van Meurs
Subject: Vote for Pedro
Dear Dr. van Meurs,
Well, it's oil-tax debate time in Alaska again, as we're sure you know. You've been a big part of the discussion in Alaska lately, as has become your habit.
You and your consulting company are known worldwide as one of the few preeminent consulting teams on the subject of government policy and the petroleum industry. A quick look at the brief version of your Curriculum Vitae shows you've been in the middle of scads of successful, high-level negotiations on every continent.
And you're no stranger to Alaska. You have worked with two Alaska governors and negotiated with oil companies. You were the lead consultant for Gov. Frank Murkowski's plan to replace the tax structure known as the Economic Limit Factor (ELF).
As far as we The Concerned can tell, that 2006 replacement, known as PPT, and its concomitant natural gas line plan negotiated under the Alaska Stranded Gas Development Act, have come the closest of any to actually turning dirt on the imaginary pipeline from the North Slope.
Ahh, good times.
Unfortunately (or not), the sacrifice of locking in tax rates on oil and gas for decades, among other things in the PPT/SGDA agreements, was too much for the public. Then the legislation got carried off and buried by an avalanche of anti-oil populism. When it emerged, it had been replaced, under Alaska Gov. Sarah Palin, into Alaska's Clear and Equitable Share (ACES) and the Alaska Gasline Inducement Act (AGIA), without your input, as far as we know.
Hence the ongoing hassle in Juneau. We don't blame you for how long the mess has gone on. At first, we assume you were just doing what we assume was asked of you -- to fix ELF, encourage Slope investment and overcome the fiscal obstacles to an Alaska natural gas pipeline, obstacles that since 2006 have gotten as tall as a Southcentral snowbank.
You've submitted analysis recently that ACES is broken and needs to be changed in a few ways in order to stimulate heavy oil development, but not in the ways Gov. Sean Parnell has proposed. And just recently you went on record saying flatly that a gasline isn't economic under the status quo.
You further suggested that the steps necessary to bring a gasline about -- if that's really what the state wants -- are likely to be so extreme that at the first hint of a framework, the public could burst into rage flames. Which makes total sense to The Concerned, judging how negative the reaction was to PPT and the contracts under SGDA.
But, we're not concerned about all that here. We're more concerned about two other things. First, we hope you've taken steps to begin training an apprentice to take over for you when -- hopefully a long time from now -- you're no longer able to help people and businesses navigate the complex world of petroleum.
The way things are going lately, we're worried that decades from now the debate over Alaska's oil taxes will still be raging. The tax and royalty structure still won't be entirely fair to all players, and that important, concrete, but sensitive data about the state's main industry will still elude Alaskans.
Which is why we want you to finish training your successor and become Alaska's next governor. Don't worry about the perception of an interest conflict. Apparently no one up here cares about stuff like that. The way we The Concerned figure it, you've worked for so many governments, governors and heads of state by now that it's high time you were one.
That way Alaskans can finally cut out the middlemen and go straight to the oracle, ask some questions and pick the fairest plan. The current governor and more than a few legislators seem to have taken everything industry says with complete trust and are supporting changes to ACES. While we believe trust and good faith are essential parts of any negotiation, we think the whole process must be guided by cold, hard math, some of which is unavailable until it gets released in a court decision.
As we're sure you know, errors are cumulative. Market currents and capital winds can change direction quickly, and the longer the voyage, the more carefully the chart must be plotted. As it has been, Alaska has been trying to figure out a path forward using the economic equivalent of a Traverse board and dead reckoning.
Just imagine how accurate your analysis of Alaska's next 30 oil years under three or four different scenarios could be if you could guide agencies that have subpoena power.
With you in the driver's seat, Alaska would have the economic equivalents of an inertial navigation system, GPS transceiver and Loran gear. Then maybe squeezing more from the oil patch wouldn't have to be such a pain for everyone.
And we swear this isn't some sneaky attempt to snooker you into providing a range of solutions to a big, debilitating hassle then duck out of paying your consultancy fees.
Good looking out,
The Concerned