PRESS RELEASE REGARDING PETITION TO REPEAL ELF:

Ray Metcalfe
Anchorage, AK
Jan. 14, 2005.

The attached letter to the Division of Elections, along with the signatures necessary to begin a petition drive to repeal ELF will be delivered to the Division of Elections on the fifth floor of the Dimond Center in Anchorage at 3:00 PM January 14, 2005.

Prime Sponsors are Ray Metcalfe 250-5442 and Robert Buch 243-7562, both from Anchorage and James Price from Kenai 394-2054.

The original severance tax rate on most of our North Slope oil was 15%. The Economic Limit Factor, better known as ELF, was an afterthought lobbied through by oil companies. The “Economic Limit Factor” is a mathematical formula by which oil producers calculate tax breaks that get bigger and bigger every year.

After 20 years of chipping away at our tax, KUPARUK, the second largest oilfield in North America, will be taxed at 2.6% this year and over the next five years, KUPARUK’s tax rate will be eroded away to zero.

To bring into focus just how low Alaska's oil taxes are, one need look no further than the little known North Slope oil field known as the Duck Island field.

Produced by BP, Duck Island is next door to KUPARUK, and has been producing without difficulty for over 20 years. Negotiated under terms unaffected by ELF, Duck Island produces revenue to Alaska equaling a 20% of the oil of the top, in the form of royalty, plus a 79.59% of the net profits produced from the sale of the remaining 80% of the oil.

The Duck Island lease terms are identical to what is commonly referred to as OPEC terms and is a medium average oil taxation terms around the world.

By comparison, KUPARUK, which is much cheaper to produce, will soon be paying a 12.5% royalty and a severance tax of zero.

As the oil companies and some legislators often argue; “A deal is a deal.” All we want to do is return to the original deal. As any casual observer can calculate from the Duck Island lease, even after we repeal ELF, most of Alaska’s oil will still be taxed at a rate far below what BP has proven in Duck Island that they are willing to produce at.

Repealing ELF would balance Alaska’s budget without taking your readers and listeners dividends slashing their services or slapping them with a new tax. And, contrary to what oil companies have told Alaskans for years, Alaska is now and will still be the lowest taxing major oil producer in the world.

Alaska’s department of natural resources has posted Duck Island Lease terms.

When you get there, page down about twice, to "Bid received"

There you will find terms that John Shively and BP swore under oath were impossible in when the Republican Moderate Party, Inc. sued Tony Knowles and the State of Alaska for removing the "Net Profit Share" provisions from the North Star lease.

To see a detailed explanation of how ELF is eating away at our oil revenues, go here