Resource Development Council

RDC Action Alert:
Urge the legislature to act now to reverse
North Slope production decline

Opportunities to testify were February 18 and 20, 2013

Alaskans will get their first opportunity in the Senate Resources Committee on Monday and Wednesday, February 18 and 20 to speak out on the importance of reversing Alaska’s plummeting oil production. Public testimony on Governor Sean Parnell’s oil production tax reform bill, SB 21, will begin at 6:00 pm on Monday and 5:15 pm Wednesday.

Throughput in TAPS is forecast to average 563,000 barrels per day in FY 2013 and is declining at a rate of 6-8 percent annually. The pipeline is Alaska’s economic lifeline since 92 percent of the State’s unrestricted general fund revenues are derived from oil production.

The decline is not because Alaska is running out of oil, it is in part due to Alaska no longer being competitive in attracting industry investment in production. High oil prices have expanded industry investment in production, but not here. Alaska has dropped behind North Dakota in production and is at risk of falling behind California.

Action Requested:
Please present brief testimony at your local Legislative Information Office urging the legislature to make policy changes this session to attract new investment and increase North Slope production. Your participation at one of the upcoming hearings is vital and it can make a difference. Express support for Governor Parnell’s efforts and his four guiding principles in oil production tax reform:

1. It must be fair to Alaskans;
2. It must encourage new production;
3. It must be simple, so that it restores balance to the system
4. It has to be durable for the long term.

For a list of Legislative Information Offices, visit:

To read the Governor’s bills (SB 21/HB 72) to reform oil production taxes, the fiscal notes and the Governor’s transmittal letter, visit:

Points to consider in your comments:
(Be brief, select only several points and it is best to personalize them)

  • The legislature must act this session to reform oil production taxes in order to attract new investment and increase production.
  • The forecast 10 years from now indicates that unless more oil comes online, Alaska’s production will be down to about 400,000 barrels per day.  Alaska projects need to be competitive with more profitable opportunities elsewhere.
  • The accelerating North Slope production decline is unacceptable and puts Alaska’s economy and jobs at risk. Production has fallen by more than 200,000 barrels a day since 2007 – a decline of 6-8 percent annually – and TAPS is operating at one-quarter of the volume it once carried.
  • Alaska is about to slip to the fourth largest oil producing state in America as California is on the verge of surpassing us. Alaska now supplies only 8 percent of domestic production, down from 25 percent in the 1980s.
  • Oil production reform legislation should adhere to the governor’s four guiding principles: it must be fair to Alaskans; it must encourage new production; it must be simple so that it restores balance to the system, and it has to be durable for the long term.
  • Alaska has the oil but policy makers hold the keys to new production. The State can keep current policy that limits investment or change it to something more compelling that attracts investments in production while securing a long-term future for Alaskans.
  • Alaskans will get the maximum benefit over the long term by increasing oil production versus short-term gains through high tax rates today.
  • With policy reforms that move the needle on major investments, Alaska would get a healthy oil and gas industry that could extend decades.
  • A healthy oil industry is a prerequisite to realizing Alaska’s goal for a gas line from the North Slope.
  • Alaska has the highest industry costs and tax rates in the nation. Corporate capital is limited, and only the most profitable projects in a company’s portfolio will get funded. Clearly, investors are taking their money where they get a greater return, and they are heavily investing in new production elsewhere. We need new policy that encourages long-term planning and investment in new production in Alaska.
  • New production will promote growth in the private sector economy, leading to more jobs and a more stable and long-term revenue stream for the State.
  • Please accomplish meaningful reform of oil production taxes to make Alaska a compelling place to invest. Doing so will prevent a steepening in the decline curve and put more oil in the pipeline, something virtually all Alaskans want.
Opportunities to testify were February 18 and 20, 2013

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