Oil and Gas UpdateAlaska Municipal League Fly-in
February 21, 2018
2AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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• Employed 5,033 workers in Alaska• 4,275 AK residents earning $749 million in wages
• Spent $4.6 billion with ~1,000 Alaska vendors• $1 million in spending for each Primary Company job
• Generated multiplier effect resulting in 41,300 jobs and $2.4 billion in wages
Total: 45,575 jobs & $3.1 billion in wages
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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• State agency operations: 19,500 jobs
• State programs: 19,600 jobs
• Capital spending: 10,400 jobs
• PFD Distribution: 4,200 jobs
• Local govt. operations & projects: 4,600 jobs
Total: 58,300 jobs & $2.9 billion in wages
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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• 103,875 total jobs
• 32% of all jobs in Alaska
• $6.0 billion in wages
• 35% of all Alaska wages
• Compared to…
• Seafood: 60,000 jobs/$2.1 billion in wages
• Visitor Industry: 40,000 jobs/$1.4 billion in wages
• Mining: 9,000 jobs/$700 million in wages
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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• Oil production is ~540,000 barrels/day – increase came from several fields
• Oil remains the largest taxpayer in Alaska, with four different sources of oil revenue comprising 65-75% of the state’s general fund, i.e. spending money
• Companies need tax credits paid sooner rather than later
• Opportunity of federal alignment
• The fish habitat permit (“salmon”) initiative is a major threat to Alaska’s local communities and economy
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
7AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Source: DNR Presentation 10/25/17
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
9AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
Caelus’ Nuna ProjectEst. ~15,000 barrels per day at peak
Glacier Oil & GasFuture plans at Badami
Hilcorp’s Liberty ProjectEst. ~60,000 barrels per day at peak
10AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
Pikka Project by Armstrong, Repsol, & Oil Search
Est. ~120,000 barrels per day at peak
eniFour exploration wells approved
for 2017-2019
(First well spud on Christmas night!)
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Source: Fall 2012 & 2017 Revenue Sources Books, Dept. of Revenue
442,900bpd
546,360bpd
Fore
cast
ed
bp
d in
FY
18
Forecasted FY18 North Slope Oil ProductionFall 2012 vs Fall 2017
Fall 2012Forecast
Fall 2017Forecast
Difference in Production
103,460 bpdAdditional barrels per day
(bpd) projected in FY18 North Slope production than in FY12
Difference in Revenue
~$300 millionAccording to the Fall 2012 production forecast, FY18 State projected revenue
is about $300 million less than projections in the Fall 2017 forecast
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Note: Figures reflect unrestricted general fund (UGF) dollars
Increased FY18 revenues resulting from improved North Slope production will provide funding for important government services
DEC, F&G, DNR, DOR, and Law
COMBINED
$318 million
Public Safety
$159 million
Corrections
$267 million
Court System
$105 million
UA System
$317 million ~$300 million state revenue
could fund
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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$1,561.175%
$497.324%
$23.21%
FY18 Unrestricted General Fund (UGF) Revenues
Petroleum Non-Petroleum Investment
$442.9 million
FY17 local property taxes
~$2.4 billionPredicted total State & local communities total in FY18
$393 million
FY18 restricted revenue
Source: Fall 2017 Revenue Sources Book, Department of Revenue
values in millions
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Source: USGS
RESOURCE POTENTIAL
STATE LAND FEDERAL LAND
Cook Inlet
599 mbo and 19 tcf gas
Onshore North Slope
Conventional5 bbo and 35 tcf gas
Heavy/Viscous24-33 bbo
Unconventional2 bbo and 12 tcf gas
Offshore Arctic
27 bbo and 132 tcf gas
NPR-A
8.8 bbo and 39.2 tcf gas
ANWR
10 bbo and 3.5 tcf gas
mbo - million barrels of oil bbo - billion barrels of oil tcf - trillion cubic feet
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
15AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
December 20, 2017
16AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
• Today, Alaska is only capturing 1.7% of total US investment, or ~$1.9 billion in capital
• Based on recent history, at least $3.6 billion of Alaska capital investment is needed to grow production.
• How does Alaska compete for the investment capital necessary to grow production beyond 2018?
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Dates Tax Policy ChangeIncrease/ Decrease?
AOGA Position
Feb. 2005 - March 2006
Aggregated ELF - Administrative decision altering gross production tax
Tax Increase Opposed
April 2006 - July 2007
Petroleum Production Tax (PPT) Tax IncreaseOpposed Final
Version
July 2007 - 2013Alaska's Clear and Equitable Share (ACES)
Tax Increase Opposed
2010 Cook Inlet Recovery ActIncentives for
IndustrySupported
2014 SB 21 BothSupported, with
concerns
2016HB 247 - Gov. Walker's oil tax reform
Tax Increase Opposed
2017 HB 111 Tax Increase Opposed
2018 Proposed HB 288 Tax Increase Opposed
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Does HB 288 help achieve
this goal?
Question
Source: Alaska Department of Commerce. Northern Opportunity: Alaska’s Economic Development Strategy, Pg 17. 2018.
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Paid for by Stand for Alaska, 200 West 34th Avenue, PMB 1219, Anchorage, AK 99503. Marleanna Hall, chair, Aaron Schutt and Joey Merrick, co-chairs, approved this message. Top contributors are ConocoPhillips, Hecla Mining Company, and Kinross Fort Knox.
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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• Cannot understate the consequences of this initiative
• Virtually impossible to permit large projects:o Parks, Seward, or Denali Highwayso Prudhoe Bay o Chena River Flood Control Project o Trans-Alaska Pipeline System o Red Dog Mine o Potential LNG Pipeline
• Projects that interfere with anadromous fish habitat cannot be permitted – including state & local government projects
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
21AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
- AGDC President Keith Meyer
The Alaska LNG project “would be virtually impossible to permit.”
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State of Alaska
• Anadromous Fish Act• Water Use Act• Special Area Permitting Program
Federal Government
• Clean Water Act Section 404 • Clean Water Act Section 401 (as implemented by ADEC)• Clean Water Act Section 402 (as implemented by ADEC)• Magnuson-Sevens Fishery Conservation & Management Act• Rivers and Harbors Act• National Environmental Policy Act
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
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Paid for by Stand for Alaska, 200 West 34th Avenue, PMB 1219, Anchorage, AK 99503. Marleanna Hall, chair, Aaron Schutt and Joey Merrick, co-chairs, approved this message. Top contributors are ConocoPhillips, Hecla Mining Company, and Kinross Fort Knox.
Air LiquideAlaska Drilling and CompletionsAlaska Enterprise Solutions, Inc.Alaska Marine LinesAlaska Forest AssociationAlaska Miners AssociationAlaska Oil and Gas AssociationAlaska Supply Chain InternationalAlaska Support Industry AllianceAlaska Truckers AssociationAlaska West ExpressAlaska WinsAmak TowingAmericans for Prosperity- AlaskaANCSA Regional AssociationArctic ControlsAspen Suites Hotels AnchorageAspen Suites Hotels JuneauAspen Hotels KenaiAspen Hotels SitkaAspen Hotels SoldotnaBeacon Occupational HealthBeadventuresBering Marine CorporationBlueCrestBlueprint Alaska
BP AlaskaBrilliant Media StrategiesBrooks CampBrooks Range SupplyCaelus Energy AlaskaCIRICLIA AlaskaCoastal HelicoptersCoeur Alaska - Kensington Gold MineColvilleCONAMConocoPhillips AlaskaConsumer Energy Alliance AlaskaCouncil of Alaska ProducersCruise Line Agencies of AlaskaCruz CompaniesDeadhorse Aviation Center, LLCDenali AsphaltDenali DrillingDenali Industrial SupplyDittman ResearchDonlin GoldDoyon Ltd.ENSTARExxonMobilFairbanks Economic Develop. Corp.
Fairweather, LLCFirst Things First Alaska FoundationFlavin PhotographyFlowline AlaskaFrontier Supply CompanyGBR Oilfield ServicesGlacier Oil and Gas Corp.Global Diving and SalvageGreater Fairbanks Chamber of CommerceHecla Greens Creek Mining Co.HilcorpJudy Patrick PhotographyJuneau 1, LLCKinross Fort KnoxKnik ConstructionKoncor Forest ProductsLaborers' Local 341Laborers' Local 942LyndenLynden Air CargoLynden InternationalLynden LogisticsLynden TransportMAP ConsultingMark K. Johnson, Attorney at LawMatSu Business AllianceMSI Communications
MSI CommunicationsNorth Pacific MaritimeNorthern Industrial TrainingNorthstar HelicoptersNorthstar Stevedoring EquipmentNorth Slope BoroughPebble PartnershipPRL LogisticsResource Development CouncilSecurity AviationSoutheast StevedoringSRKStoel RivesStrands SalonSumitomo Metal Mining Pogo, LLCSurvey Point HoldingsTeamsters Local 959TeckTemsco HelicoptersThe Associated General Contractors of AlaskaThe Cannery LodgeThe Carter CompanyThompson & CompanyTransportation InstituteUsibelli Coal MineWestward Fishing Company
AOGA Oil & Gas UpdateAlaska Municipal LeagueFebruary 21, 2018
Become a part of the coalition at:
www.standforak.com