In 1968, after school and the Army, I was working on an oil drilling rig in California. My employer had drilled the Prudhoe Bay discovery well and offered me a job in Alaska. Just married, Susan and I came to Alaska with the chance to live the American dream -- thanks to a new state that believed in creating jobs and private companies that took the risk of investing for development. My family and I will always be profoundly grateful to the people who gave us this chance.
Those dreams can be as real today as they were in the past for the thousands of Alaskans who discovered the oil, built the pipeline, and developed the nation's largest fields. That's why I have joined the groundswell of support calling for our leaders to heed the warning signs of a much harsher, not-too-distant future and to take the necessary steps to make Alaska competitive.
Everyone agrees the immense oil and gas resources of the North Slope are within our grasp. Our job is to make sure there is access to the resource and to create the financial incentives for exploration and production.
The facts are not in dispute:
• The pipeline today is only about 30 percent full and declining at 6 percent a year.
• There is only one exploration well scheduled for 2011. Exploration has fallen to an all-time low since the first oil flowed down the pipeline in 1977 - 34 years ago.
• AOGCC data shows that it takes an average of 11 years to move a discovery to first production.
• Investment in exploration by an oil company is competitively based upon the total business environment -- including costs of exploration, development and production as well as local, state and federal taxes.
• Lower costs and lower total government take have the oil industry in Canada and the Lower 48 on fire with new exploration, drilling and production generating new jobs and booming economies. Drilling activity in the Lower 48 has tripled in the last eight years while declining in Alaska.
It shouldn't be hard to connect the dots. While we don't control the costs of operating in a remote Arctic environment, we do control the tax regime.
Some people ask, "what's the problem?" Revenues are up. Investment on the North Slope is high with lots of development wells.
They miss the point. Aging oil fields require more money to get less oil. Without exploration for new fields we are living on borrowed time. The issue is not about today's prosperity, but what we do today to ensure tomorrow's prosperity. To ignore what we know today, as we enjoy the benefits of yesterday's wisdom, is to steal from our children's future.
It cannot be a partisan political issue. This is just a straightforward business decision to create the partnership of shared commitment and responsibilities that encourages growth. We've done it before.
Faced in 1998 with $9-a-barrel oil and serious budget cuts, the Legislature and executive branch worked across party lines -- and with industry -- to create marginal-field tax incentives and new agreements on old undeveloped leases, opening new state and federal land for exploration and reducing regulations. Despite low prices we shared a spirit of optimism driven by investment, exploration and production, which created new Alaska jobs and businesses. ARCO coined the slogan "no decline after 99." And, in fact, these policies and oil companies' investment put more oil in the pipeline and reversed, for the first time in more than a decade, the declining "Prudhoe Bay curve."
How do we get back on track? Tough, fair negotiations; an attitude of mutual respect guided by "trust but verify;" commitments by Alaska to implement a tax system that provides balanced returns and fair incentives to both new and legacy fields, and by industry to substantial new investments using Alaska workers and businesses.
The pipeline is about to start running on empty. Without change, it will run dry. We need to act today to ensure tomorrow's prosperity. Let's make Alaska competitive.
Tony Knowles served as governor of Alaska from 1994 to 2002.
By TONY KNOWLES