Today in the Senate Finance Committee, PFC Energy, a global energy consulting firm specializing in oil and natural gas fiscal issues, gave the first of many presentations relating to the Senate’s oil and gas tax bill, Senate Bill (SB) 192. (See my previous blog post for more detail on SB 192.)
Gerald Kepes, a senior partner with PFC Energy, presented on two key topics: the overall competitiveness of Alaska’s current oil and gas tax relative to other jurisdictions worldwide and the role of Alaska assets within the global portfolios of the three major North Slope producers, BP, ExxonMobil, and ConocoPhillips. Gerald also provided detailed analysis and modeling of key provisions of SB 192.
A key takeaway from the PFC Energy presentation was analysis showing that in Alaska, at oil prices of $100/barrel, government take of oil profits is one of the highest in the world among developed countries, second only to Norway. It should be noted that among all countries—developed and undeveloped—Alaska ranks significantly more favorably.
PFC Energy also presented analysis showing that SB 192 provisions relating to the progressivity tax and to incentivizing new oil production may not do enough to affect change in industry investment behavior.
Finally, PFC Energy presented detailed analysis of the global portfolios of each of the three major North Slope producers. PFC Energy identified that, in terms of their Alaska assets, both BP and ExxonMobil were in what’s called “harvest” mode. According to Gerald, when in harvest mode, oil companies, although typically making significant profits, tend to limit reinvestment because they see limited growth opportunity for that particular area.
PFC Energy’s 94 page presentation can be accessed online here.
I’m looking forward to hearing what the response to PFC Energy’s presentation might be when the Senate Finance Committee takes testimony from oil industry trade and support groups tomorrow morning.
Comments are closed