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Oil tax cut allies turn out en masse for Alaska governor's proposal

Pat Forgey
Loren Holmes photo

JUNEAU -- Industry turned out in force at a legislative hearing Tuesday in support of Gov. Sean Parnell's oil tax cut proposal, with timber, mining, and other industries rallying behind their colleagues in the oil and gas industry.

Only about 30 seconds into the hearing came the first mention of North Dakota, the first of repeated assertions that if Alaska would offer more competitive tax rates, it would see boom that North Dakota has experienced from its Bakken oil shale.

"We're nervous about our economy, watching production decline," said Scott Thorson of Anchorage's Network Business Systems. His company recently expanded to North Dakota to take advantage of the boom there, he said.

Texas is the top oil-producing state in the country with North Dakota second.  Production in both those states is increasing, while Alaska’s has been declining more than a decade.

Cruz Construction expanded to North Dakota three years ago, said Palmer's Dave Cruz. Exploration companies there can begin producing oil in a few months after beginning work -- a far cry from what happens when they try to do the same thing in Alaska, he said.

"These folks go out and do exploration wells, they're 10 years (before production) because of all the roadblocks we have," he said.

Lynden Logistics is very supportive of Parnell's oil tax bill, added company’s Vice President Jeanine St. John. More oil production is the key to a strong economy, she said. "The decline is truly attributed to our tax regime," she said.

CIRI's Ethan Schutt, senior vice president for land and energy at the Alaska Native Regional Corporation based in Anchorage, said it is investing in numerous places outside Alaska, where profits are higher.

"Private capital follows to places where it is welcomed and rewarded," he said.

A dissenting voice came from former state Sen. Joe Paskvan, D-Fairbanks, defeated last fall in his bid for re-election. He said Parnell's tax bill will harm efforts to boost investment in Alaska by taking away tax credits, and will enable the state's oil producers to go into "super-harvest mode."

"Throughput decline started in 1989 and has nothing to do with tax policy," he said.

Contact Pat Forgey at pat(at)alaskadispatch.com