Jack-up rig property taxes, based on assessed value as determined by Alaska Department of Revenue are, (drumroll): The Buccaneer Endeavour, which can leave Homer but cannot drill, has a taxable value of $40,241,590. That could bring the city of Homer $180,000 in taxes for 2013, subject to the appeal process. The borough gets a similar sum, while the South Peninsula Hospital Service Area receives $90,000. This is disappointing for local government, which expected four times as much.
The Alaska Industrial Development and Export Authority partnered in buying the rig out of storage for $68 million -- and spent a gazillion more trying to rebuild it. So, most people thought it would be worth much more. Some even thought that it might actually be able to do the work we subsidized it for: drilling for oil and gas.
Neither the city, nor the hospital, gets anything from the other, much-smaller jack-up rig being worked on this winter at Port Graham. The Spartan 151 is valued at $17,629,460 -- like last year. In 2012, that rig paid the South Peninsula Road Service Area $6,500 and a total of $21,000, according to the borough. Spartan spent the 2012 season drilling in the Kitchen Lights Unit, up Cook Inlet, so its tax payments were shared between service areas.
True market value of these rigs is not much of a factor, because of the extensive state incentive programs. Onshore or off, we pay the majority of exploration costs; up to 100 percent in some cases. In addition, the state will pay $60 million in bonuses for the first three wells that get to depth. Spartan failed at do it in 2012. It seems a little odd that Alaska state Sen. Peter Micciche, at his town meeting in Homer earlier this month, asked why oil is treated so unfairly compared to other industries. He was talking about questions touching on whether -- as a ConocoPhillips executive -- he was being paid while campaigning.
That's a touchy question, because it is actually forbidden for corporations to contribute anything of value, including paying the salary of a candidate during a campaign. This includes local offices, such as running for Soldotna mayor, as well as for state Senate.
Although no such contribution was disclosed in official public offices commission reports, it could become an issue after the legislative session. Legislative immunity means APOC cannot investigate during this time. It would seem odd that ConocoPhillips didn't support a candidate and senator who advocates for the state to build a gasline that would cost billions, from the vast North Slope holdings of his employer, ConocoPhillips, to ConocoPhillips' gas export plant on Cook Inlet. Conoco's Nikiski plant has been exporting our gas for 45 years, and is one obvious cause of the present shortage of natural gas for light and power in southcentral Alaska.
Now that VECO's Corrupt Bastards Club is gone, we are seeing a somewhat more honest approach to politics: the direct election of company executives. The intention is the same: maximizing their profits at the expense of ours. Come to think of it, those same initials, CBC, can now stand for Conoco Boys Club.
Larry Smith is a longtime Homer resident who finds himself "constantly amazed by the Alaska oil industry for 50 years." The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.
This commentary first appeared in the Homer Tribune.