ConocoPhillips reports $2.3B in earnings in Alaska

(AP) — A legislator critical of Gov. Sean Parnell's plan to overhaul Alaska's oil tax structure says 2012 profits by ConocoPhillips shows the system is working.

Sen. Bill Wielechowski, D-Anchorage, said Thursday that it's "gratifying to see Alaska's major oil producers reaping substantial profits under our existing oil tax structure at the same time as Alaskans enjoy their fair share of oil revenue. It demonstrates that our tax system is fair to everyone — the companies that produce our oil as well as Alaskans, who own the oil."

But Bob Heinrich, vice president of finance for ConocoPhillips Alaska, said in a release that the company's fourth-quarter earnings "continue the general trend where we pay twice as much in taxes as we keep. We are hopeful that the Governor and legislature will be successful in creating a better business climate on the North Slope."

ConocoPhillips reported making $570 million in the fourth quarter of 2012 and $2.3 billion in earnings in Alaska for the year. Those earning came after paying $3.7 billion in taxes and royalties to the state in 2012, the company said.

Last year's earnings compare to about $2 billion in 2011. ConocoPhillips Alaska spokeswoman Natalie Lowman said the increase in 2012 was due primarily to factors like higher realized crude prices and sales from inventory. The company in 2011 also had a write-off due to an abandoned natural gas pipeline project.

ConocoPhillips and the North Slope's other major players — BP and ExxonMobil Corp. — have said Alaska's current tax structure eats too deeply into profits when oil prices are high, discouraging new investment. They have called for a tax cut but have not yet testified on Parnell's latest plan. Industry is scheduled to testify before a special Senate committee next week.

Wielechowski said in a news release that ConocoPhillips reported profits of nearly $28 a barrel in Alaska, compared to less than $11 per barrel equivalent in the Lower 48, "and yet we hear time and time again that our tax rate is too high. That just doesn't make sense, even when you consider that they are producing more gas down south."

Lowman called that comparison inaccurate, saying 75 percent of the company's production in the Lower 48 is comprised of lower-value natural gas and natural gas liquids, while 96 percent of production in Alaska is high value crude oil.

Wielechowski has said he is open to tweaks to the current tax structure. He and other minority Senate Democrats are expected to propose their own plan aimed at increasing oil production.

02/01/2013 - 6:02am