Conoco CEO pledges increased investment if tax break passes OIL TAX BREAK: Mulva says up to $5 billion in increased spending could add 90,000 barrels a day.

The head of Conoco Phillips responded to critics of the governor's oil tax break Thursday, pledging to increase investments by up to $5 billion in existing North Slope fields if the new tax rules take effect.
Jim Mulva, Conoco Phillips' chief executive, said the investments could add about 90,000 barrels of oil a day to the 600,000-plus barrels now flowing through the trans-Alaska pipeline, a significant increase but far short of the million-barrel goal of Gov. Sean Parnell.
Mulva was in Anchorage to promote the tax cut at a breakfast session of the pro-industry Make Alaska Competitive Coalition and in a series of media interviews. The Houston-based executive said he was making his investment pledge in response to lawmakers who have balked at Parnell's proposed tax cuts.
Supporters of the cuts have been arguing that the action will encourage additional development by oil producers. But the critics say Parnell's plan, passed last week by the House, would give away billions of dollars in tax revenues without any promise from industry that it would hire more Alaskans or put more oil through the pipeline. After reading a transcript of Mulva's breakfast speech, one of those critics, Sen. Bill Wielechowski, was unimpressed.
Wielechowski, an Anchorage Democrat, is vice chairman of the Senate Resources Committee, where the tax bill has been dissected through six hearings since March 9 with more still to go. He said Conoco Phillips should be investing in existing fields anyway under the terms of its state leases, which require it to develop the resources. Tax policy should reward oil companies for exploring for new finds, not reworking old ones that already have proven highly profitable, he said.
Current Alaska tax law, a populist measure passed early in Gov. Sarah Palin's term with the backing of Parnell, her lieutenant governor, increases the tax rate on oil production as prices rise -- something like a tax on windfall profits. With oil now more than $100 a barrel, the state has been raking in surpluses while oil companies are complaining they could keep more of their profits by drilling elsewhere. Parnell said he changed his mind about the tax law, Alaska's Clear and Equitable Share, or ACES, saying taxes rose too steeply with high oil prices.
Mulva, a 64-year-old native of Green Bay, Wis., said he decided to get directly involved in the latest Alaska tax battle about a week ago while making one of his periodic visits to Anchorage to meet with employees, inspect facilities and talk to local business leaders.
He said some of those leaders talked about Parnell, who had been showing increasing frustration by his inability to get his bill passed. The governor had begun accusing the Senate of taking a "do-nothing approach" that would lead Alaska "into economic obscurity."
In their conversations, Mulva said, the business leaders talked about Parnell's recent idea of increasing production to a million barrels a day.
"Why not?" Mulva said. There are resources still in the ground, he said, but there's a problem: "It's more difficult to develop and find and exploit, it takes more investment to produce it and put it down the pipeline."
Mulva told oil industry representatives he'd return to Anchorage with specific commitments to tap that oil, and talk publicly about it. He arrived on his jet Wednesday night and left Thursday afternoon.
Conoco Phillips doesn't operate Prudhoe Bay, but it would work with operator BP to drill 50 new wells and build other facilities, Mulva said, at a cost of $1.5 to $2 billion. At Kuparuk, which it operates, the company can drill 50 to 100 new wells, plus develop satellite fields there and at its Alpine field.
"If you take Kuparuk and Alpine, we see that there may be about $2 to $3 billion of investments," Mulva said.
While he could only commit Conoco Phillips, he said he believed the two other major producers, BP and Exxon, would do likewise.
"If the governor's bill is passed, or the significant elements of his bill are passed, then we commit to going forward on these projects," he said.
As it is now, "production's going down and essentially no new investment is taking place for the future, so we're living off past investments," Mulva said. "Most of the average $4 billion that's spent by the industry on the Slope is for maintenance and safety reasons, and environmental. That's good -- that needs to be done. But if we had what the governor is proposing, we'd be investing far more than $4 billion."
Parnell issued a statement Thursday describing Mulva as endorsing his tax plan.
"Lower oil taxes will make Alaska more competitive and invite billions in new investment, creating thousands of new jobs," Parnell said. "Our economic future is at stake and with 10 days left, I urge the Senate to take this announcement to heart and act."
Sen. Bert Stedman, a Sitka Republican who co-chairs the Finance Committee, said there's virtually no likelihood that will happen. The Finance Committee hasn't even touched the tax bill yet, he said.
"You're not going to pass a bill that could cost the state a billion dollars a year in the Senate Finance Committee in a week," Stedman said. "That's crazy. We have a fiduciary duty to meet, and we're going to meet it."
Stedman described Mulva's remarks as "positive" and invited him and chief executives from the other producers to explain what they would do under the revised tax code.
Wielechowski said he didn't see anything in Mulva's pledge to suggest it was worth billions of dollars in tax reductions.
"They're trying to leverage us and get massive tax cuts," he said. Rather than blanket cuts, the state should expand its tax credit program to provide incentives for companies to develop new fields. Conoco Phillips already should be taking steps to increase production in its older fields under the current regime, he said.
Parnell's tax bill passed the House last week on a mainly partisan vote, with two Republicans from fishing communities joining Democrats in opposition, and one Democrat from the Bush siding with Republicans. One of the leading opponents, Rep. Les Gara, D-Anchorage, introduced a bill Thursday that would provide incentives to companies that develop new oil fields. It would also give credits for new oil treatment plants that would make smaller fields more competitive.
Gara said his bill would not reward Conoco Phillips for doing work in old fields that would likely be done anyway, which he described Parnell's bill as doing.