A ConocoPhillips executive says Alaska is still a great place for the oil and gas industry, but future development on the North Slope hinges on maintaining the new oil tax structure approved by the legislature in 2013.
Scott Jepsen, vice president of external affairs for ConocoPhillips Alaska, told the Juneau Chamber of Commerce on Thursday that there’s an old saying in the oil industry.
“If you want to find oil, look where you already found it,” Jepsen said.
Jepsen says ConocoPhillips will spend $1.7 billion on capital projects in the state this year. That includes preliminary work to bring three new drill sites into production by late 2017, as well as exploration for new oil.
“This represents about $600 million more than we spent last year,” Jepsen said. “We’ve hired about 1,750 new jobs to the North Slope to support this scope of work.”
ConocoPhillips is working with BP, Exxon, TransCanada and the State of Alaska to develop a natural gas pipeline. State lawmakers are considering legislation that would advance the nearly $65 billion project.
Jepsen says the key to making Alaska’s gas competitive worldwide is a healthy oil industry, because producers can leverage existing infrastructure and operations. He says the oil tax cut approved by lawmakers last year improved the business climate in the state.
“If it goes the other direction, we will go back and we will look at all the projects we’ve got, all the investments we’re thinking about making,” Jepsen said. “I can’t tell you today which ones we would or would not do, which ones we’d curtail, which ones the scope might be cut back a little bit on, because we’ve got other places that make more sense to invest than Alaska.”
Former state Senator Vic Fischer is a spokesman for the bipartisan group Vote Yes − Repeal the Giveaway, which hopes to overturn the tax cut, known as Senate Bill 21. The group collected enough signatures to put a repeal initiative on this August’s primary ballot.
“We do want oil production in the future. At the same time we feel that Alaska and Alaskans should get a proper share of the benefits deriving from oil production,” Fischer said. “Senate Bill 21 has greatly decreased the amount of revenue the State of Alaska receives and will receive in the future.”
Fischer points to a state revenue forecast released this week, which shows continued steady declines in oil tax income and North Slope production. Oil taxes fund about 90 percent of the state budget.
“The oil companies are sitting on big pools of oil,” said Fischer. “They know what’s there and they’re going to pump it no matter the tax regime.”
Fischer also was territorial legislator and a delegate to the state constitutional convention.