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O&G fiscal system working group meets The legislative group, formed under HB 111, is charged with making recommendations to the Legislature on the state’s oil tax system Kristen Nelson Petroleum News
The legislative working group on the state’s oil and gas fiscal system, created earlier in the year by House Bill 111, held an organizational meeting Oct. 24 in Juneau and plans additional working sessions prior to next year’s session.
The group’s mandate, as set out in HB 111, is to make recommendations to the Legislature on the state’s oil and gas fiscal system.
Members of the group were announced Oct. 19, with Sen. Cathy Giessel, R-Anchorage, and Rep. Geran Tarr, D-Anchorage, co-chairs, and representation from both bodies of the Legislature and majority and minority members.
The co-chairs said membership reflected both the Resources committees - Giessel chairs the Senate Resources Committee and Tarr co-chairs the House Resources Committee - and the Finance committees.
House members are Rep. Andy Josephson, D-Anchorage (co-chair of House Resources), Rep. Dean Westlake, D-Kiana (Resources), Rep. Jason Grenn, I-Anchorage (Finance) and Rep. Dave Talerico, R-Healy (Resources).
Senate members are Sen. Bert Stedman, R-Sitka (Resources), Sen. Natasha von Imhof, R-Anchorage (Finance and Resources), Sen. Peter Micciche, R-Soldotna (Finance) and Sen. Bill Wielechowski, D-Anchorage (Resources).
HB 111 empowered the co-chairs of the working group to form an advisory group, and Tarr and Giessel said Oct. 19 that the Oil and Gas Competitiveness Review Board, created in 2013, had accepted the role of advisory group.
HB 111 Section 32 of HB 111 established the legislative working group “to analyze the state’s fiscal regime for oil and gas, review the state’s tax structure for and rates on oil and gas produced in the state,” make recommendations to the Legislature when it meets in 2018 and “develop terms for a comprehensive fiscal regime.”
Specifics in the bill’s directions include accounting for unique circumstances in the different oil and gas producing regions in the state; identifying incentives other than monetary support that the state could employ; look at competitiveness by areas of the state; look at support the state could provide such as loan guarantees or other support through the Alaska Industrial Development and Export Authority or other state entity; consider Cook Inlet’s unique market conditions and the need for energy security for Southcentral; and look at the applicability of the current tax structure to natural gas.
Review board The Oil and Gas Competitiveness Review Board was established under Senate Bill 21 and is composed of two public members, three administration department heads, one commissioner from the Alaska Oil and Gas Conservation Commission, three oil and gas subject matter experts and two industry trade group representatives.
Current members are Wyche Ford, who is the chair, representing a non-profit trade association; Vincent Beltrami, a public member; Commissioner of Revenue designee Sheldon Fisher; AOGCC Chair Hollis French; Department of Natural Resources Commissioner Andy Mack; financial analyst Tom Maloney, a public member; Kara Moriarty, representing a non-profit trade association; Bob Pawlowski, a public member; Commissioner of Environmental Conservation designee Kristin Ryan; Tom Walsh, geologist, a public member; and Bill Van Dyke, petroleum engineer, a public member.
Giessel said the review board has been working in relative obscurity. They put out a report in 2015, but she said Ford has noted that the labor section of that report is obsolete and that the board will be working to update it. She asked for requests for other sections that should be updated. Giessel said the board is in need of an official meeting place and is recommending the Anchorage Legislative Information Office where meetings would be open because they would be in a public space.
The review board got a one-year deferral on a report on Cook Inlet because of recent statutory changes, and that report is due this January, Giessel said.
Tarr said they wanted to make sure that the legislative working group wasn’t doing the same work as the review board. In a conversation earlier in the year on whether the review board should continue, Tarr said the group’s chair said members felt they wanted to continue.
Consultants Tarr recommended that members of the legislative working group who don’t have a lot of experience with the state’s oil and gas tax system reach out to the Department of Revenue for information on how the current system works, so that everyone is starting in the same place.
The legislative working group can assign the review board tasks, Giessel said, and noted that the consultants under contract to the Legislative Budget & Audit Committee are also available.
Stedman, who chairs LB&A, said the committee’s consultants have models written and those are being checked against each other and against industry. One of the challenges is to grasp the mechanical process, he said.
Consultants include Rich Ruggiero and Christina Ruggiero of In3nergy LLC and Joe Murray of Palantir Solutions. Both consultancies presented at oil fiscal policy 101, held Oct. 18. Giessel said that webinar would be available on the LB&A website.
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