As president of the Alaska Support Industry Alliance, I represent more than 500 businesses across the state of Alaska that provide the goods and services essential to keeping Alaska’s oil industry running. Our members are welders, truckers, caterers, engineers, and construction crews – Alaskans who make it possible to develop oil and gas safely in some of the most challenging conditions on earth.
That is why I was disappointed to see some using the Pikka Project as an example of Alaska not getting its “fair share” from Alaska’s oil and gas production tax, SB21. Those claims misrepresent both the facts and the lived experience of Alaskans who depend on this work.
First, Alaska is already benefiting. Long before oil flows, the Pikka Project has been paying property taxes and lease rentals to the State, North Slope Borough, and other local jurisdictions. This means, well before there is a chance to recoup any of the billions in costs invested in this project, millions in property tax payments are being made to the taxing jurisdictions. These revenues support schools, first responders, and basic services.
Once oil begins to flow, state royalties of 16.67% will be paid on every barrel -higher than the historic 12.5% royalty on legacy fields. And with the addition of 80,000 barrels of oil per day down TAPS, that not only adds up in royalties from Pikka, but also increases the value of every other barrel of oil leaving the North Slope by reducing the per-barrel transport costs. This means that from even before first oil, Pikka is providing a positive revenue stream to Alaska’s budget. Over the past quarter century, with the exception of the ACES years, royalties have outpaced production taxes as the state’s largest revenue stream.
Second, the project is creating jobs and opportunities today. Santos and Repsol have already invested billions in Alaska. That investment is paying off in local contracts and pay checks for Alaskans. Union halls are busy, hotels are full, and trucking companies are running at capacity. Within the span of two years, the Laborers saw their Slope workforce grow from around 100 workers to nearly 800 thanks to the development renaissance in our oil patch. The Department of Revenue itself estimates more than 2,600 construction jobs and 500 long-term positions have been created by the Pikka Project alone.
Third, the “eight years with no production tax” talking point is misleading. Large projects everywhere – Alaska, Asia, Latin America, or the North Sea – typically recover their spent development costs before paying production taxes. That doesn’t mean the state is left empty-handed. Besides property taxes that start with exploration and construction, royalties, and corporate income taxes begin with production. SB21 was specifically designed to make Alaska as competitive as other states and attract new developments, just like the Pikka Project. By balancing early risk for investors with long-term benefit for Alaska, SB21 has accomplished exactly what it set out to do – bring new players, new revenue, and an exciting North Slope renaissance to Alaska.
Finally, forecasts are not certainties. The Department of Revenue’s analysis is one scenario, based on conservative assumptions about oil prices and timing. It assumes oil prices stay in the high $60s for a decade and leaves out production expansions at Pikka and other new units operated by Santos. If prices rise even by a few dollars or development expands, state revenue projections rise dramatically.
Here’s the bigger picture: Without SB21, the Pikka Project would not be moving forward. That would mean no new jobs for our members, no added throughput for the Trans Alaska Pipeline, and no billions in future revenue for the State. Instead, Alaska would again be left watching investment go elsewhere.
Alaskans know what it takes to make a project happen here: decades of work, billions in capital, and the commitment of thousands of Alaskans and their families. The Pikka Project is proof that Alaska’s fiscal system is working. It’s delivering jobs, opportunity, and revenue—and that’s a fair share by any measure.
Rebecca Logan has served as the CEO of the Alaska Support Industry Alliance since 2010. The Alliance is a nonprofit trade organization made up of more than 500 members providing more than 35,000 Alaskan jobs related to the oil, gas and mining industries.
I think Rebecca Logan has been drinking again.
A really awful comment.
I din’t support Logan’s politics or her life’s work. And yes, she has a history.
But come on.
Come on? For what? She’s spouting propaganda. Everyone in Anchorage knows someone at Pikka who’s making bank while taking handouts. We need state revenue – not giveaways.
So post THAT criticism!
NOT the personal slur you went with.
You know better.
Likely trying to drown the shame of whoring for Big Oil.
Likely trying to drown out the shame of being a whore for Big Oil, no?
Shill.
And, not a particularly effective one.
While I appreciate the information in this article, it is a bit callous to be discussing how Alaska benefits while employees at Alyeska, Conoco, and others are literally being given notice this week.
I sat between two well employed, untaxed, oilfield workers flying to their lower 48 residences after their shifts on the north slope. Both were million miler Alaska airlines passengers. Delivering jobs for out of state residents and giving endless tax “incentives” to oil companies is not a formula for making Alaska a stronger state; it is only helping make Alaska an impoverished colony for resource extraction and corporate exploitation.
This grates me every time I board a plane. These guys commute to/from Louisiana every 2 weeks and the only income they contribute to the state is an orange mocha frappuccino from the ted stevens starbucks. We need an income tax!
Be mad at US, not THEM!
lol
“……..We need an income tax!………”
Got another unemployed, un-asseted PFD recipient in your pocket? “We” (which includes “me”) does NOT need an income tax…….and “me” doesn’t need oil patch workers in Alaska, since we can get gasoline cheaper from elsewhere…………..which is precisely where my gasoline comes from. Elsewhere. Alaskan oil goes to California, who has made it clear that they don’t want it anymore.
If more Alaskans learn a skill/trade, learn to read, show up on time and sober and quit their dope habit, they too could have a high paying slope job. Why are so many big tough Alaskans such envious little cry baby whiners? Good article Rebecca !
You are so right, ShannynMoore! Great to see some of the gang still posting here under our totally real names!
Anyone seen PaulJenkins or TomAnderson?
“………Anyone seen PaulJenkins or TomAnderson?……..”
They probably moved farther away than you did. Isn’t there enough Louisiana corruption to keep you busy down there?
“……..If more Alaskans learn a skill/trade, learn to read, show up on time and sober and quit their dope habit, they too could have a high paying slope job………”
Yet another dose of painful truth from a woman who I never thought I’d agree with on anything.
Great article Rebecca. Facts are painful for many.
Where exactly are those 500 businesses?