While I was growing up in Seward, my father was in the tug and barge business. Before Cook Inlet, in the late '50s, we moved a Richfield oil rig and supplies from Seward to Cape Yagataga on the Gulf of Alaska and from there to Wide Bay on the Alaska Peninsula. These exploration activities never resulted in finds, but they were the predecessor to what is now Conoco Phillips. After graduating college, I built my life around trucking in Alaska.
Our company, Carlile Transportation Systems, and our 600 employees have built our business on the Alaska economy and the North Slope. Since 2009 our volumes have decreased, and we primarily transport goods in support of maintenance for existing infrastructure on the North Slope. We are positioning people and equipment to take advantage of opportunities outside Alaska to fill our in-state void.
Oil companies are making a profit in Alaska on existing business, and credits have encouraged at least one new development. However, to encourage enhancement projects and future exploration we need to make changes to ACES. The extreme progressivity of ACES makes it difficult to attract investment even with oil prices high. Risks are tremendous, lead times are long, permitting is arduous and worldwide competition for investment dollars is stringent.
Recently, former Gov. Knowles and Conoco Phillips president Jim Mulva gave us both a history of what can happen when we as Alaskans work as partners with industry and a preview of the projects that would be likely to happen if we make the tax climate fair and economical. If we do nothing, in five years we could be down to 450,000 barrels a day through TAPS. Five years after that, significantly less.
Will the pipeline keep flowing? We need to think 10 years out. Today we have a surplus, but what will my children, grandchildren and great-grandchildren have if we do not act now?
We had ELF, which was unfair to Alaska; we got ACES, which is unfair to oil companies and partners. Let's compromise and go to work.
Harry McDonald is CEO of Carlile Transportation Systems.
By HARRY McDONALD