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Alaska’s Future: It’s Under Our Feet March 27, 2012 Kara Moriarty, Executive Director

Alaska’s Future: It’s Under Our Feet March 27, 2012 Kara Moriarty, Executive Director. AOGA Member Companies. Production Decline Is Real Serious Consequences. Accelerated Decline Since 2007. Alaska’s Tax Structure: How Bad is it?.

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Alaska’s Future: It’s Under Our Feet March 27, 2012 Kara Moriarty, Executive Director

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  1. Alaska’s Future: It’s Under Our FeetMarch 27, 2012Kara Moriarty, Executive Director

  2. AOGA Member Companies

  3. Production Decline Is Real Serious Consequences

  4. Accelerated Decline Since 2007

  5. Alaska’s Tax Structure: How Bad is it? “Your state has about the worst energy tax policy in the world. The only worse I could find is North Korea.” -Economist Steve Forbes at the Anchorage Economic Development Corporation’s economic forecast luncheon on January 25, 2012.

  6. Uncompetitive Tax Rates Source: Roger Marks, 2/8/12 Presentation

  7. A Grim Future Without Oil & Gas Sources of FY 2011 Unrestricted Revenue Oil and Gas Royalties & Taxes ($7B) 92% Excise Taxes ($165M) 2% Corporate Income Taxes ($157M) 2% Mining Taxes ($49M) .6% Licenses & Permits ($43M) .6% Fisheries Taxes ($23M) .2% Source: Alaska Department of Revenue – Fall 2011 Sources Book

  8. What needs to happen? • Alaska’s Oil Tax Structure Must Change • Real, meaningful changes are needed to jumpstart production • Legislation that does not provide for these changes will not earn industry support • Spirit of cooperation must rule the day

  9. Where are we? • Senate Bill 192* will not change investment • Progressivity changes are negligible • Current decoupling language would raise taxes • Information system causes concern • New minimum tax raises concern • Production allowance doesn’t work *As of March 20, 2012

  10. Effective Production Tax Rates: ACES, CS SB 192, CS HB 110 (FIN)Impact of 10% gross tax Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl. Assumes that 80% of production is impacted by 10% gross minimum tax with no credits allowed against gross tax. Alaska Department of Revenue

  11. Share of Profit under ACES Profit defined as total gross value of all oil produced, less transportation costs and lease expenditures. Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl.

  12. Share of Profit under CSSB 192 Profit defined as total gross value of all oil produced, less transportation costs and lease expenditures. Assumes FY 2012 Transport costs of $8.72/ bbl, Opex of $14.03 per taxable barrel, and Capex of $10.25 per taxable bbl. Assumes that 80% of production is impacted by 10% gross minimum tax with no credits allowed against gross tax.

  13. Alaska’s Future is Under Our Feet

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