Alaska’s Future: It’s Under Our Feet March 27, 2012 Kara Moriarty, Executive Director
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Transcript of Alaska’s Future: It’s Under Our Feet March 27, 2012 Kara Moriarty, Executive Director
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Alaska’s Future: It’s Under Our Feet
March 27, 2012Kara Moriarty, Executive Director
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Production Decline Is RealSerious Consequences
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Accelerated Decline Since 2007
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“Your state has about the worst energy tax policy in the world. The only worse I could find is North Korea.”
-Economist Steve Forbes at the Anchorage Economic Development Corporation’s economic forecast luncheon on January 25, 2012.
Alaska’s Tax Structure: How Bad is it?
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Uncompetitive Tax Rates
30%
40%
50%
60%
70%
80%
90%
Effec
tive
Tax
Rate
Effective Tax Rate at $115/bbl Market Price(all taxes & royalties)
Source: Roger Marks, 2/8/12 Presentation
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A Grim Future Without Oil & Gas
Sources of FY 2011 Unrestricted Revenue
Oil and Gas Royalties & Taxes ($7B)92%
Excise Taxes ($165M) 2%
Corporate Income Taxes ($157M) 2%
Mining Taxes ($49M) .6%
Licenses & Permits ($43M) .6%
Fisheries Taxes ($23M) .2%Source: Alaska Department of Revenue – Fall 2011 Sources Book
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What needs to happen?
Alaska’s Oil Tax Structure Must Change
• Real, meaningful changes are needed to jumpstart production
•Legislation that does not provide for these changes will not earn industry support
•Spirit of cooperation must rule the day
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Where are we?
Senate Bill 192* will not change investment
• Progressivity changes are negligible
• Current decoupling language would raise taxes
• Information system causes concern
• New minimum tax raises concern
• Production allowance doesn’t work *As of March 20, 2012
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Effective Production Tax Rates: Effective Production Tax Rates: ACES, CS SB 192, CS HB 110 (FIN)ACES, CS SB 192, CS HB 110 (FIN)
Impact of 10% gross taxImpact of 10% gross tax
11Alaska Department of Revenue
Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl.Assumes that 80% of production is impacted by 10% gross minimum tax with no credits allowed against gross tax.
0%
10%
20%
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$35 $45 $55 $65 $75 $85 $95ANS West Coast ($/bbl)
Effective Production Tax Rate (Post-Credits)
ACES
CSSB 192
CS HB110 (FIN) Unitized Fields
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Share of Profit under ACES
Profit defined as total gross value of all oil produced, less transportation costs and lease expenditures.Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl.
36% 38%33%
28% 25% 24% 23% 21% 20% 19%
44% 42% 49% 56% 61% 63% 65% 67% 69% 71%
20% 20% 18% 15% 14% 13% 12% 12% 11% 10%
0%
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$40 $65 $90 $115 $140 $165 $190 $215 $240 $265
ANS West Coast ($/bbl)
Share of Profit under ACES
Producer State Federal
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Share of Profit under CSSB 192
Profit defined as total gross value of all oil produced, less transportation costs and lease expenditures.Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl.Assumes that 80% of production is impacted by 10% gross minimum tax with no credits allowed against gross tax.
19%
38% 34% 30% 26% 24% 23% 22% 21% 21%
70%42% 48% 54% 60% 62% 64% 66% 68% 68%
10%20% 18% 16% 14% 13% 12% 12% 11% 11%
0%
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$40 $65 $90 $115 $140 $165 $190 $215 $240 $265
ANS West Coast ($/bbl)
Share of Profit under CSSB 192
Producer State Federal