Good wells get drilled; bad wells get subsidies

Kay Cashman

At a Jan. 15 House Finance Committee meeting in Juneau Rep. Brian Davies asked Division of Oil and Gas Director Mark Myers if there were adequate incentives in place to encourage new oil and gas companies — “the Anadarkos of this world” — to come to Alaska.

Myers told him the best incentive was Alaska’s tremendous geologic potential: “Good oil and gas fields bring in companies.”

The exploration success that Phillips Alaska Inc. is having, as well as the fact that 3-D seismic and better drilling technology are producing fewer dry holes “gets noticed,” Myers said.

Second to lots of oil is affordable access to North Slope facilities and pipelines. Affordable access is more important than tax incentives, he said.

“The incentive programs fall at the second tier level and quite honestly some of those — like discovery royalty on the North Slope — haven’t been terribly successful,” Myers said.

“Good wells get drilled and bad wells get subsidies,” he said.

“We need to be very careful and very judicious about how we set up incentive programs; that they’re not icing on the cake but essential to the process,” Myers said.