Please pass the PPT net profits oil tax now.
Whether it's a 20% rate or a little higher doesn't matter to me.
What is important is that the new tax should have a test drive period into at least 2007. At the end of the "test drive" the tax should be reviewed to see if any changes need to be made.
The test drive needs to start now so that we can start gaining valuable experience.
The net profit tax system makes sense because it is a self calibrating system. It dials in precisely to the actual expense and trouble of trying to get the heavy oil out of the ground. It is a fair system and will encourage exploration and development.
The old Economic Limit Factors were only estimates at exploration and drilling costs, and tended to get out of calibration with time.
Getting a good tax system in place is a necessary step toward getting a gas line contract.
We cannot afford to dilly dally while the window of opportunity for a gas line project closes. At some point, low cost LNG imports on the Gulf of Mexico and on the East coast will satisfy the needs of the American Midwest market. Alaska needs to move quickly and get some of those long term contracts. The Alaska North Slope's proven 35 trillion cubic feet of natural gas reserves are less than 1% of the world's 6,044 trillion cubic feet of proven gas reserves.
Yes, we should make sure that everything is right in the gas line contract. It doesn't look like the gas line contract will be voted on until 2007.
But even if the gas line contract was voted on in the latter part of 2006, I would not want the new oil tax to be locked in until it has finished its test drive.
I do agree that the participants in the gas line need to have financial certainty, but we need to have a test period for the new net profits tax system.
Sincerely, Randy Griffin
PO Box 73653
Fairbanks, Alaska, 99707