The head of Conoco Phillips responded to critics of the governor's oil tax break Thursday, pledging to increase investments by up to $5 billion in existing North Slope fields if the new tax rules take effect.
Jim Mulva, Conoco Phillips' chief executive, said the investments could add about 90,000 barrels of oil a day to the 600,000-plus barrels now flowing through the trans-Alaska pipeline, a significant increase but far short of the million-barrel goal of Gov. Sean Parnell.
Mulva was in Anchorage to promote the tax cut at a breakfast session of the pro-industry Make Alaska Competitive Coalition and in a series of media interviews. The Houston-based executive said he was making his investment pledge in response to lawmakers who have balked at Parnell's proposed tax cuts.
Supporters of the cuts have been arguing that the action will encourage additional development by oil producers. But the critics say Parnell's plan, passed last week by the House, would give away billions of dollars in tax revenues without any promise from industry that it would hire more Alaskans or put more oil through the pipeline. After reading a transcript of Mulva's breakfast speech, one of those critics, Sen. Bill Wielechowski, was unimpressed.
Wielechowski, an Anchorage Democrat, is vice chairman of the Senate Resources Committee, where the tax bill has been dissected through six hearings since March 9 with more still to go. He said Conoco Phillips should be investing in existing fields anyway under the terms of its state leases, which require it to develop the resources. Tax policy should reward oil companies for exploring for new finds, not reworking old ones that already have proven highly profitable, he said.
Current Alaska tax law, a populist measure passed early in Gov. Sarah Palin's term with the backing of Parnell, her lieutenant governor, increases the tax rate on oil production as prices rise -- something like a tax on windfall profits. With oil now more than $100 a barrel, the state has been raking in surpluses while oil companies are complaining they could keep more of their profits by drilling elsewhere. Parnell said he changed his mind about the tax law, Alaska's Clear and Equitable Share, or ACES, saying taxes rose too steeply with high oil prices.
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