Alaska’s oil projects deliver revenue and jobs we depend on

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.

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AnchorageVoter
10 hours ago

I think Rebecca Logan has been drinking again.

Joseph Geldhof
3 hours ago

Shill.

And, not a particularly effective one.