Editor's note: Three Alaska House Democrats sent the following letter Tuesday to Joe Hegna, president of The Alaska Support Industry Alliance. The Alliance is sponsoring an advertising campaign, including on Alaska Dispatch, arguing that state oil taxes are too high and have "reduced oil industry investment and production in Alaska." The letter is titled "Alaskans Deserve Truth About Increase In Oil Jobs: Alliance Ads Misleading."

Dear Mr. Hegna:

Jobs and investment, and a fair share for our oil, are important to Alaskans. Under ACES both jobs and investment in Alaska have increased. Your current ad campaign misleads Alaskans, and we ask that you correct them by providing Alaskans with accurate information. Alaskans deserve a fair discussion of our oil and gas policy.

We are writing to ask that you make the following four corrections to your ads, so Alaskans will be offered fair discussion rather than misleading information.

Correction 1: Jobs Are Up Under ACES.

Today, under ACES, oil and gas employment has increased in Alaska by roughly 50% since 2005, when taxes were low. Prior to ACES, in 2005, oil and gas employment was at roughly 9,000 people. Since ACES, it has increased to roughly 13,000 people. Employment has increased by 2,000 just since the 2007 passage of ACES. These numbers are confirmed in the attached Alaska Department of Revenue ACES Status Report (pp. 8-9).

Correction 2: Investment Is Up Under ACES.
Capital investment in oil and gas exploration and development has increased under ACES. It has more than doubled from roughly $1 billion in 2004 to over $2 billion this past year, and has also increased since the passage of ACES in 2007, and even after oil prices fell after 2008. Status Report pp. 7-8.

Correction 3: With Lower Taxes, Oil Companies Provided Fewer Jobs and Less Alaska Investment:

Your ads are deceptive in suggesting that companies would invest more if Alaskans received a smaller share for our oil. That disregards the history of Alaska oil policy.
Prior to reform, in 2006, Alaska enforced a minimal Production Tax. It was less than 1% on 16 of their 19 North Slope fields. See attached Jan 27, 2010, Legislative Research Report, p.2. On 14 of those fields the Production Tax rate was 0%.

With nearly a 0% Production Tax on North Slope fields, between 2000 and 2006 oil and gas jobs varied between 8,000 and 10,000. Starting with the passage of ACES in 2007, employment has increased to roughly 13,000 workers. Status Report, pp. 8-9.

Correction 4: Companies Are Making Billions In Alaska Profits

Oil company profits are high in Alaska. In 2009 Conoco reported a loss on its Lower 48 oil and gas exploration and production. Its Alaska profits in 2009 were roughly $1.5 billion. Since the passage of ACES in 2007, Conoco has reported $6 billion in Alaska Profits, during a period that riskier investments have resulted in losses in many places Conoco invests, including in Venezuela, where its property was nationalized.

Finally - Conoco's profit margins in Alaska are higher than its Lower 48 and worldwide margins. In 2009, only 14% of its exploration and production costs were in Alaska, but 43% of its worldwide profits came from Alaska. Attached, 2009 Conoco Phillips E&P Net Income and Production Chart.

Exxon doesn't report its Alaska profits publicly. But in both 2007 and 2008, with ACES in place, it had its two best profit years ever. In each year it earned more profit than any company in the history of the world, $40 billion in 2007, and $45 billion in 2008. At repeated hearings Exxon has always refused to comment on its high Alaska profits.

With Best Regards,

Rep. Beth Kerttula
Rep. Les Gara
Rep. Harry Crawford