An official with B-P Alaska today told the Senate Resources Committee that meaningful tax change will turn the current downward oil production trend on the North Slope.
The company’s Chief Financial Officer Claire Fitzpatrick pointed to several projects that have been in the works for several years – saying a better fiscal environment would allow for more resources to be directed to technical or engineering work.
However, she pointed to other elements that have contributed to production downturns.
Anchorage Democrat Hollis French asked Fitzpatrick – historically – whether Alaska’s tax regime had been attractive before it was changed by Governor Murkowski, and then Governor Palin.
FITZPATRICK: If your question is, Were they more attractive and right at the top of the pack. The honest answer is I can’t say. But there was probably a time when you were more attractive than you needed to be. And I think now we’ve gone the other way.
FRENCH: And During those years, what was the decline curve of, say, the Prudhoe Bay production area.
FITZPATRICK: It will have been different in different years – depending on when you look at it. Depending on various points of when these fields came in. And it was also impacted by when well-work and drilling would have been done. So the overall decline would have varied between three and six percent. But I would have to go back and check the facts.
Anchorage’s Bill Wielechowski said the numbers the company presented showed that B-P was “harvesting” Alaska by taking profits from its production here and investing it in other oil producing areas of the world. He pointed to a record of declining taxes, rising oil market prices and, yet, lower production. He asked Fitzpatrick what return the state can expect if it lowers taxes even more. Fitzpatrick said the state saw a lot of investment over those years. And now, petroleum technology has changed.
We’re actually viewing Alaska more now the way we’d have done at the beginning. There’s a huge opportunity here. Why would we not want to get after it? If at a point in time before 2004 we didn’t see that resource base, our view and our strategy is totally different. But I understand your sentiment.
The committee is now planning to begin considering amendments to its version of the tax plan on Friday.