unless you include Alaska Native Claims Settlement Act (ANCSA) corporations as private landowners and even they have no subsurface rights. The provinces at issue are those on State lands and perhaps some on ANCSA Corporation lands which would also be subject to State and political subdivision taxation, e.g., the North Slope Borough. It is extraordinarily unlikely that there will be any development on federal lands or waters until that glorious day when Republicans have 60 Senators that will actually vote like Republicans, a House majority, and the WH.

The real issue is the fact that the more promising provinces on State land are quite far from the Prudhoe Bay/TAPS complex and thus entail very high development costs. Expensive provinces require high prices to be profitable and the “progressive” aspects of ACES tax the oil at a much higher rate at higher prices thus removing the incentive to develop more expensive fields. It should also be noted that the State’s efforts to force the producers to develop the Pt. Thompson province have been unsuccessful thus far as the Superior Court rejected the State’s attempts to take the leases back. The decision is here: http://www.courts.alaska.gov/specproj/3an-06-13751ci.pdf

Taking these leases back was also a centerpiece of the AGIA Gasline initiative. I assume that the State will appeal to the AKSC, but there goes another year without Pt. Thompson oil or gas being developed. Exxon is the major producer on this unit and it has been clear for over twenty years that they do not believe this province is economically viable because of the lack of transportation to the TAPS system. Consequently, either prices and profits must be high enough from this field to justify building a pipeline to connect to the TAPS or Exxon could be hardballing the State in an effort to get the State to finance the necessary pipeline.

Ulimately, a State equity position of some sort is likely to be necessary. Alaska has about a decade window before it HAS to have NS gas for its own domestic needs. Pt. Thomson has significant gas and that gas can be developed without reducing the already declining Prodhoe Bay production which is maintained largely by gas re-injection or by increasing Prudhoe Bay production costs by substituting water injection for the gas. So, the game here will be to get somebody to pony up for a pipeline to connect Pt. Thompson to the already developed provinces. Maybe tax incentives will do it or maybe the producers will sit and force the State’s hand as Southcentral Alaska begins to run out of Cook Inlet gas and the TAPS teeters inexorably toward the lower limit of its economic viability due to increasing costs of the now almost forty year old field and the steadily declining production.

can propose taking permanent fund revenue for any purpose other than a dividend or tapping the corpus of the Fund. Simply can’t be done politically; all Alaskans are entitled to either a new flat screen or a ticket to Hawaii or Mexico every October paid for by the Permanent Fund Dividend.

They’re not going to go to federal land because the feds won’t let them and they know it. Even if the feds put something up for lease, it isn’t a good faith offer, because they know the Greenies will lock it up in litigation for a decade or more. The only potential for development is on State land and, a little, in State waters. And there the issue is taxation. Under ACES, the tax is too low for State operations at low production and low prices and too high for increased development at high prices. Plus, a profits tax is simply guaranteed never-ending litigation about where the profits were made and whether the expenses were deductible.

We adults had this discussion back in the ’70s when She Who Was Once Governor was in grade school. Alaska sells oil and the way we collect most of our revenue from it is by measuring how much we sell. How much profit the producers make is largely beyond our control. That’s why we chose production based taxes as the primary revenue source back when the North Slope was first being developed. We do have a corporate income tax that the large producers have to pay but it basically relies on what they tell the Fed and we say, “me too.”

The producers haven’t covered themselves with glory in the way they’ve maintained the Prudhoe Bay field, with a due allowance for the fact that is a large and very harsh place. There’s a stink somewhere in how the State regulated the maintenance, especially during the Knowles Administration, but the only thing I can say with certainty about whose fault it is is that the first liar doesn’t have a chance.

The only real beef with the Murkowski era PPT was just where the rate would be set, 20%, 22%, or some other number. Nobody, including the producers and the Democrats really disputed the methodology. The Democrats wanted a higher percentage, the producers a lower one. The end result was somewhere in the middle. The government never proved that any of the votes were a quid pro quo, and frankly, those legislators would have voted with the industry no matter what; it didn’t take a hundred bucks changing hands in Room 604 of The Baranof to make them vote that way.

The FBI managed to criminalize politics. You could have sent most anybody who held elected or appointed office to jail just by charging them with holding office in those days. When Palin introduced ACES, nobody would dare vote for anything the industry wanted for fear of having the FBI at their door. Ralph Samuels is the only R who voted against it and he’ll probably be the next govenor for his efforts.