Thursday, March 08, 2007

Corporate Predator Exxon Whines About Alaska's "Fiscal Instability"

Now that their "boy" Frank Murkowski is no longer the governor of the state of Alaska and he's been replaced by Sarah Palin, who will insist upon the state being adequately compensating for its natural gas, the oil companies are beginning to ratchet up the rhetoric and use strongarm tactics to intimidate us into selling our natural gas for a song. They don't know that the "pretty lady" in Juneau comes equipped with a set of "iron teeth".

In particular, the most egregious offender is Exxon. The state of Alaska is once again the target of remarks made by the president of this corporate predator. Original report from KTUU Channel 2.


During a recent news teleconference with reporters, ExxonMobil Chairman and President Rex Tillerson (pictured at left courtesy of CNN), who obviously learned his public relations skills in Pyongyang, said Alaska is unstable when it comes to taxing oil companies and that could jeopardize prospects for building a gas pipeline. "The state of Alaska does not have a good track record on fiscal stability. Not trying to single them out or be critical, but they've changed fiscal terms on us 13 times over the last couple of decades," he said.

Tillerson's remarks aren't sitting well with the Palin Administration. Revenue Commissioner Pat Galvin says the state's tax system has changed only once in the past 20 years. "When you look at it in the context of the international markets that Exxon works within, you really don't understand where that comment is coming from when you've got the political stability associated with the U.S. and Alaska," said Galvin. "In Alaska we don't have terrorists we don't have compounds people have to work within."

Perhaps Tillerson should have a chat with former Wasilla Police Chief Irl Stambaugh to find out what happens to people who cross Sarah Palin.

Commentary: Alone among the "Big Three" producers (Exxon, BP, Conoco), Exxon has consistently displayed nothing but arrogance and contempt for Alaska, treating our state like a conquered province. Their public realtions strategy could have been conceived by Machiavelli himself. Here's how Exxon has rewarded Alaska's generosity:

1). Awarded retiring CEO Lee Raymond an utterly obscene $167.7 million golden parachute in 2005.

2). Sat on a natural gas lease at Point Thomson for 30 years whithout making any attempt to develop it, in violation or the original intent of those type of leases. Just before leaving office, former Governor Frank Murkowski revoked the Point Thomson lease.

2). Attempting to outlast (in the actuarial sense) victims of the 1989 Exxon Valdez oil spill through endless appeals and delaying tactics. An estimated 10% of claimants have now died since that time.

3). When the Ninth Circuit Court of Appeals lowered the civil judgement against Exxon from $5.0 billion to $2.5 billion, Exxon's response was not to propose and counter-offer out of a genuine desire to meet the claimants part-way, but to launch yet another appeal. Their windfall profits give them almost unlimited funds to spend on these appeals.

Contrast this to British Petroleum. BP has been careless and negligent at times, but has shown more fundamental respect for Alaska. When part of their North Slope pipeline starting leaking last August, they took responsibility, shut the pipeline down for a short period to effect repairs, and restored service earlier than the targeted November date. And when it came time to compensate their CEO, Lord John Browne, they didn't give him a gigantic golden parachute. BP cut outgoing chief executive John Browne's bonus almost in half last year as oil spills and safety lapses in the United States overshadowed record profits for the oil company. Browne's annual performance bonus for 2006 was cut to 900,000 pounds, or $1.74 million, from 1.75 million pounds the year before, according to BP's annual report. While his basic salary rose to 1.53 million pounds, or $2.95 million, from 1.45 million pounds, Browne's total compensation -- including salary, bonus, noncash benefits and annual long-term remuneration paid last month -- fell 28 percent to 4.57 million pounds, or $8.81 million, from 6.36 million pounds. It was the second year running that Browne took a pay cut.

ConocoPhillips has been almost a model of social responsibility. There have been few problems associated with their North Slope operations, and one of their vice-presidents, Joe Maruschak, has waged an aggressive and constructive public relations campaign to engage Alaskans on the natural gas pipeline debate. He participated in KTUU's Natural Gas Pipeline Roundtable, broadcast by KTUU last summer in a 15-part series (unfortunately KTUU dumped their archives but I posted the first seven of those discussions on this website).

Last week, Governor Sarah Palin unveiled her Alaska Gasline Inducement Act, in which competition will be thrown open to all prospects willing to meet a series of baseline conditions designed to ensure an Alaskan workforce, assure a steady supply of gas to Alaskans, and to create production expansion incentives in the even of subsequent additional discoveries. She's offering a $500 million jump-start incentive to the producer who earns the contract. Governor Palin may look like Cindy Crawford, but she obviously thinks like Margaret Thatcher.

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