Monday, December 14, 2009

Tax program for oil industry makes exploration less attractive

Letter to the ADN editor:

Tax program for oil industry makes exploration less attractive
Some say Alaska's tax program, ACES, benefits the oil industry. Industry executives say while innovative technology opens opportunities, ACES takes away "the up-side" and Alaska is no longer attractive for oil exploration. What should Alaskans believe?
Alyeska Pipeline's reality is based on one thing: pipeline throughput. Setting aside debate over policies, taxes and regulations, Alaskans should be concerned that the Trans Alaska Pipeline System now carries just one-third of peak throughput. Since 1988, throughput has declined from 2.1 million to 700,000 barrels per day and should dip below 300,000 barrels a day within 15 years.
What does future declining throughput mean for Alaskans? Fewer jobs. Lower state revenue. Reduced services. Tougher economic times for all.
Alyeska is making dramatic changes to manage decline. Our 2010 budget is 14 percent lower than 2009. We have cut 60 well-paying Alyeska and contractor positions and are spending less with local businesses. Seeking efficiencies, we will likely close some facilities and relocate jobs to Anchorage.
These difficult changes will impact individuals and communities. But every change is designed to extend the pipeline's life. While we increase efficiency, we will still invest in pipeline renewal and maintain our keen focus on safety, integrity and environment.
Pipeline throughput is a harbinger of things to come in Alaska. Alaskans must pay attention to Alyeska's reality. We are carefully changing our processes, culture and operations so TAPS can stay viable despite declining oil throughput. Alaska, its communities and its citizens would be wise to do the same.
-- Kevin Hostler
President and CEO
Alyeska Pipeline Service Company

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