Get production back up

Oil company executives aren’t the only people who have been weighing in on Alaska’s oil tax debate. The oilfield service firms that provide Alaskans with a chunk of the state’s highest paying jobs have also been communicating with state legislators, cautioning them against another oil production tax hike.

James Gilbert, president of Alaska-based Udelhoven Oilfield Systems Service, summed up the concerns of many of the contractors in a Nov. 14 Anchorage Daily News guest editorial.

“We should not be considering raising taxes. We should be considering what it will take to get (oil) production back up to 2 million barrels per day,” Gilbert wrote, noting his company provides 538 jobs in Alaska.

If the Legislature passes Gov. Sarah Palin’s production tax plan in the special legislative session that ends the day after Petroleum News goes to press Nov. 15, “it proves that Alaska is an unstable place to operate and invest,” Gilbert said, noting that it has only been “14 months since the last tax increase was imposed.”

Before oil prices shot to new highs in recent years, Alaska had been a tough place for oil companies to make a profit, he said.

“Maybe that’s why, after 30 years of North Slope production, only one independent — Pioneer Natural Resources Co. — has developed a new field. Now we want to punish Pioneer by raising its taxes too.”

Now that Alaska oil producers “are finally getting some payback for all those years of investments, we seem to hear nothing but complaints, accusations and whining,” Gilbert said.

“No other industry — not fishing, not tourism, not mining, and certainly not the public sector — contributes what our employees, our clients or our clients’ employees do,” he said. “My clients (the oil companies) pay their ‘fair share,’ and they’ve been paying it for 30-plus years. Consider the Permanent Fund: a $40 billion nest egg built on the foundation of oil revenues. Consider more than $70 billion paid to the state in taxes and royalties.

“We need to be looking at how we can get the pipeline back to its operating capacity, not trying to tax the final 600,000 barrels per day into ultimate submission,” Gilbert said.

—Kay Cashman