[dropcap]T[/dropcap]oday BP is in a joint venture with a Chinese company. Together, they are producing 3 million barrels per day from Iraq’s Rumaila field. The two companies share a payment of $4.2 million per day for their services. Today BP, ConocoPhillips, and Exxon are providing the same service for Alaska with one big difference. In Alaska, they are being paid over $12 million per day to produce a little under one-sixth that amount. Alaska pays its producers 17 times as much per barrel as the competitive bid process has clearly gotten our big three producers in other parts of the world.
Below is a link that will take you to a copy of BP’s contract with Iraq. The index of their contract provides you quick access to how owners and producers do things in the rest of the world. Click on the link and then click on the page that appears on our “Citizens For Ethical Government Web Site.” Your second click will take you to the actual contract. ( http://citizens4ethics.com/site/bp-iraq-contract/ ). On page 9 of the contract you will find ( “1.75 “Remuneration Fee Bid” or “RFB” means USD two ($2.00) per Barrel of Crude Oil as bid and as utilized in Article 19.5.“)
Ed King, Alaska’s oil economist who is advising Alaska’s legislature remarked that I could not use the BP Iraq contract as an example because, according to Ed king, BP “Simply walked into a producing field and took over under a technical services contract.” — Not true Ed King. BP Explored for, found, and developed Iraq’s Rumaila field. Between discovery in 1953 and 1961, BP took profits from the field as they owned it. In 1961 Iraq reasserted ownership and began taking the lion’s share of the profits, and in 1975 Iraq gave BP and their production services the boot.
In 2009 BP regained access in a competitive bid cost plus contract, agreeing to increase Rumaila’s production from 900,000 Barrels per day (BPD) to 3,000,000 BPD. It took about eight years to get to three million BPD. BP assumed full “at cost” responsibility for continuing the production of the 900,000 BPD, agreeing to be paid a reimbursement of costs incurred plus $2 per barrel on the increased production only. It took eight years to add 2.1 million BPD, which now pays BP and their Chinese partner $4.2 million net profit per day.
By BP’s own admission, there is no difference between their technical service contract with Iraq and their supplying engineers and their hiring of subs on Alaska’s North Slope. However, there is one really big difference. In Alaska, according to ConocoPhillips 2018 second-quarter report, they are taking home over $25.00 per barrel in Alaska, and in Iraq, BP is taking home $1.40 per barrel. Exxon and ConocoPhillips have similar contracts to produce other Iraqi fields. And the way things work on Alaska’s north slope, if ConocoPhillips is taking home $25 per barrel after taxes, BP and Exxon’s profits are similar.
The highest second quarter 2018 net profit ConocoPhillips reported from places other than Alaska was $11 per barrel. At current production rates, if we raised our tax by an additional $12 per barrel it would increase our tax revenue by $2.17 billion and leave $13 per barrel for the big three; still more than the big three net anywhere in the world. if we did, we could fund government and dividends with zero cuts and save a little for next year.
Your legislators that want to wreck our schools, close our ferry system, and take your dividend are fully aware of this. The “Corrupt Bastard’s Club” is alive and well. They control the State Senate and the Governor’s office. Every year they are giving another three billion dollars that rightfully belongs in Alaska’s public treasury, to their friends in the oil companies that pay for their campaigns. Their loyalties are to the oil companies, not you. Oil companies don’t make anywhere near $25 per barrel anywhere else in the world. and it doesn’t do Alaska any good to find more Alaska oil if Alaskans don’t get paid for it. Copy this letter and send it to your legislator. Go to the hearings and call them on it.
Ray Metcalfe, Anchorage AK 907-250-5442 RayinAK@aol.com