The Biggest Oil Industry Giveaway without a Guarantee

Recent articles in local papers and community forums hosted by Alaska State Senators have promoted Great Bear Petroleum and their North Slope shale oil play as THE answer to stemming the decline in TAPS.

Beware. Great Bear, and the politicians who tout them as the silver bullet for declining production, are not telling the whole truth about Great Bear, their development plans and what it could cost the state of Alaska.

On February 28, 2011, Ed Duncan, President and CEO of Great Bear testified in a House Resources hearing in support of HB 110 – Governor Parnell’s bill to change ACES. Duncan repeatedly stated that in order for his shale oil play to be successful, a change in the tax structure was necessary. Duncan told legislators “Alaska has some fiscal terms that are suppressing the development of that great basin” and “Reduction of the production tax burden would improve Great Bear’s ultimate commercial outcome which would improve the probability of attracting critical capital investment to the state, to the plays and to the business.” In this same presentation, Duncan unveiled a development plan that called for 250 wells per year for 20 years, starting in 2013.

Fast forward to April 25th, 2012: Duncan came before the legislature again, this time the Senate Resources committee, to provide an update on Great Bear’s development plan. What a difference a year makes!

Duncan’s newest presentation called for UP TO 24 wells in 2013-2014 and projected UP TO 192 wells in 2015 and 2016. A far cry from the 250 wells per year for 20 years that was presented the year before.

In this presentation, Duncan also introduced a new strategy for making his project commercially viable – driving down the profits of local service companies and incentivizing people to move up from outside. Say what? The champions of local hire –Senators Paskvan, French and Wielechowski (who spent $150,000 on a study of Alaska Hiring practices on the North Slope) must have been shocked to hear such a strategy!

Apparently they weren’t listening- and continued to promote Great Bear’s development plan as the answer to declining production.

What Duncan and his supporters in the senate have failed to disclose is just how much money the state will give Great Bear for their exploration activities.

If Great Bear accomplishes what they have outlined in their development plans before the legislature- the state could pay them close to 1.2 billion dollars in tax credits. 1.2 billion dollars without a guarantee of production. 1.2 billion dollars pushed across the table with no production guarantee.

It appears that Senators like Paskvan, Wielechowski and French who advocate local hire, oppose HB 110 and demand guarantees in return for tax relief aren’t being intellectually honest.

It appears that Senators like Paskvan, Wielechowski and French are publicly opposing a “2 billion dollar giveaway with no guarantees” while quietly supporting and promoting a 1.2 billion dollar giveaway with no guarantees. A 1.2 billion dollar giveaway to a company who intends to drive down the profits of Alaskan companies and replace Alaskan workers with cheap outside labor. A 1.2 billion dollar giveaway to a company who reduces their development plan by 90% in one year.

A giveaway. No guarantee. No local hire. Beware.


Jeff Landfield was a delegate to the 2008 Alaska Republican Convention and recently ran for office for the first time, running a close race against Senator McGuire in the 2012 Republican primary. He holds a BA in history with a minor in economics from the University of Alaska.