The first session of the 28th Alaska legislature made significant progress in affecting positive change for Alaska’s natural resource- dependent economy. RDC members engaged in a proactive way by testifying, writing, calling and visiting their elected leaders on important issues.
To all who responded to our repeated action alerts, thank you! Be proud that you are a champion for Alaska’s future.
If you didn’t get to step up, there’s more work to do and there will be many opportunities to make your voice heard.
Responding to the overwhelming mandate at the November polls, the legislature crafted significant changes to our oil and gas production tax; made progress in crafting a more efficient and rationale science-based regulatory regime; and set the stage for addressing the energy challenges facing our state.
While the operating and capital budgets continue to be at non-sustainable levels, the trend is in the right direction with a reduction in general fund spending from FY13 levels.
For years, RDC has been advocating for the reform of ACES, an oil and gas production tax put in place in 2007 that has been responsible for an accelerated North Slope production decline. This decline was in an era when unprecedented high oil prices have increased production in almost every other jurisdiction. SB21, the governor’s bill as amended by the legislature, puts Alaska in the middle of the pack compared with other oil and gas provinces that compete for investment capital. Total government take under the new law will be in the 61% to 65% range, down from 75% or higher, at high prices under ACES.
We had hoped for a more aggressive change to put Alaska ahead of the competition, however, the new tax policy is a significant improvement over ACES.
While the effective date of the tax change is January 2014 (the 2007 tax increase under ACES was retroactive), ConocoPhillips Alaska has already announced its plans to increase investment in legacy and satellite fields on the North Slope. Such an early response is encouraging.
Although critics decry the short-term impact on the State’s treasury, slowing the production decline is expected to offset short-term revenue reductions. Alaskans need to give the bill time to work and filter out the noise of those unwilling to look further ahead than the next election cycle.
With the passage of HB80, the cruise ship industry gained some needed relief from what were punitive discharge standards resulting from the 2006 ballot initiative. Under HB80, cruise ships will continue to meet very high discharge standards.
The bill was based on the findings of the Alaska Cruise Ship Wastewater Advisory Panel, which met 15 times since 2009, examining best available technology for cruise ships and the environmental impacts of their discharges. With HB80, the effluent from the cruise ships is cleaner than the discharges from our municipalities, State ferries, and commercial and recreational vessels.
The best case scenario for monetizing North Slope gas, which to date has been “stranded” lacking a pipeline to markets, is a large capacity (3.5 – 4 Bcf/day) line to tidewater for export, with off take points to meet the energy needs of Alaskans. HB4 enables the Alaska Gasline Development Corporation (AGDC) to continue on a smaller, yet substantial 0.5 Bcf/day project as a backstop in the event the larger line is not sanctioned.
Under HB4, the viability of the AGDC line will be tested at open season in 2014, when firm shipping commitments are solicited to underwrite the line. RDC supports this market driven approach as an alternative, should the more ambitious project fail to move forward.
A host of resolutions passed this session focused on federal land and resource management. Included are resolutions insisting the BLM clean up its mess of abandoned legacy oil exploration wells in the National Petroleum Reserve-Alaska; endorsing oil and gas leasing in ANWR; supporting the emerging rare earth element industry; and limited federal intervention in general.
A resolution seeking an exemption from the Obama administration’s National Ocean Policy passed the House, but did not reach the Senate floor due to time constraints in the 90-day session. These resolutions illustrate the growing frustration Alaskans have in the top-down misguided federal overreach coming from our nation’s capital.
The legislature passed SB27 providing a framework for evaluating State assumption of primacy over the federal 404 permitting program for jurisdictional wetlands. RDC looks forward to providing input as the administration evaluates the pros and cons of assuming responsibility for this federal wetland permitting program with its broad reach in Alaska.
For the 2014 session, much work remains. We look forward to continuing work on: HB77, a bill designed to improve our regulatory programs within DNR; HB79/SB28 establishing a Susitna State Forest; HB47 and other means of increasing accountability to the appeals and litigation processes for community and resource development projects, and continuing to work with the legislature and the administration on a sustainable fiscal strategy, including bringing our State spending to sustainable levels.
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