In this week’s Petroleum News, Alan Bailey reports on the presentation on the Norway oil model last week before the Alaska World Affairs Council. These pages previously have provided a copy of the slide deck accompanying the presentation. Now, read Alan’s take on the discussion on the pages of the Petroleum News or here.
From the article:
Bradford Keithley, partner in the oil and gas practice of Perkins Coie LLP, attributed the decline in Alaska oil production to a parallel decline in Alaska oil investment.
“We’re shorting investment by roughly half of what we need to do in terms of getting production up,” he said.
Keithley said that, from his perspective, one of the biggest factors in encouraging oil industry investment in Norway is the Norwegian government’s own investment in the country’s oil and gas fields. Petoro, a company wholly owned by the Norwegian government, invests along with private industry as a working interest owner in every Norwegian field, with the government providing its share of development capital and subsequently earning its share of field profits. The extent of government financial participation in different fields varies, depending on the risks involved, but averages about 20 percent, Keithley said.
In Alaska, the government tries to drive the oil industry from the back seat through regulation, trying to push oil companies into doing what appears to be in the state’s interests, while sometimes pushing for actions that industry does not see as good investments, Keithley said. Under the Norwegian system, however, government and industry interests tend to be aligned, he said. …
The result [in Norway] is to generate more investment, both on the government side and on the side of private industry, Keithley said.
“It grows the pie, rather than what we do in Alaska, which is fight about what share everyone gets of the existing pie,” he said.
Separately, there also will be presentations this coming week on the same subject before two legislative committees in Juneau. House Economic Development, Trade & Tourism is holding a hearing Thursday at 10:15 am on HCR 19, “Acknowledging the lessons learned from the 2011 Norway Policy Tour and encouraging investment in the state’s oil and gas industry,” followed by a “Lunch & Learn” before House Resources at noon, Thursday, on “Lessons Learned from Norway.”