• By Ted Boettner, Charleston WV Gazette Mail, August 19, 2019

West Virginians have something to learn from Alaskans. Several years ago, Jay Hammond, the Republican governor of Alaska from 1974-1982, wrote a memoir called “Diapering the Devil,” about how Alaska turned its rich oil assets into an everlasting source of wealth by creating the Alaska Permanent Fund.

During the 1970s, when Hammond was asked how much he should tax oil in Alaska, he said, “for every cent we can possibly get … after all, just as it is the obligation of oil company CEOs to maximize benefits for their stockholders, so is it the obligation of the state’s CEO to do the same for his.” Moreover, Hammond argued that, instead of beginning with moderate rates of taxation and then later increasing the rates, Alaska should have started out with a “99 percent severance tax and worked our way slowly down until we started to get vibrations.”

Today, Alaska’s Permanent Fund, valued at $66.3 billion dollars, is run by a state-owned corporation. In 2017, it paid a $1,100 dividend to every state resident, for a total of $696 million, money that went right back into the local economy when many Alaskans went shopping. A 2016 study found that the dividend reduced poverty by 20 percent in Alaska.

Two of Hammond’s biggest regrets were abolishing the state income tax and not raising their severance tax higher. In 2012, Alaska’s effective severance tax rate was 23 percent. Over the past several years lawmakers in Alaska have significantly reduced the effective state severance tax rate, which, coupled with its lack of other revenue sources, has led to significant budget cuts.

While Alaska has failed to diversify its revenue sources, West Virginia wisely ensured it had an income, sales and property tax to help stabilize its revenue. However, unlike Alaska, West Virginia has failed to “diaper the devil,” because it has not adequately taxed its extractive industries or put the revenue in a permanent fund to ensure that future generations will benefit the state’s natural wealth.

With nothing in its “Future Fund” and severance taxes that are too low, West Virginia has very little to show for the hundreds of billions of dollars in coal, oil and natural gas that have been extracted from our state. As historian Ron Eller pointed out in his book, “Miners, Millhands, and Mountaineers,” West Virginia resembles a Third World nation, with growth but no development.

The good news is we can reverse our state’s “resource curse” by adequately taxing natural gas and using it to rebuild our economy so more people benefit from growth. The severance tax falls mostly on out-of-state producers who sell almost all of the natural gas out of state. This means drilling companies can’t pass much of the tax increase onto to us. They aren’t building several pipelines to keep the gas in West Virginia.

A higher severance tax keeps more money in West Virginia, money that can grow our economy and be invested in our communities. Today, producers pay a 5 percent severance tax on the well-head price. To put this in perspective, from 2010 to 2018, the price of natural gas declined by over 80 percent while production grew by nearly 600 percent. Raising the severance tax another 20 percent isn’t going to have much of an impact on production. If it did, producers could wait for the price to rise.

Research shows that a higher severance tax might move the drilling date forward, but it doesn’t necessary lead to less drilling. If severance taxes were all that mattered, then our drillers would all be moving to Ohio, where the severance tax is much lower than ours. They aren’t. Drilling depends less on taxes and more on proven reserves, quality of the resource, prices, infrastructure (e.g., pipelines) and transportation costs.

We can raise the natural gas severance tax by a lot, and out-of-state gas and oil producers will stay put. Just like they did in Alaska. If we invest that money wisely — putting some into the Future Fund, higher education, early childhood development, industrial energy efficiency, renewable energy for public schools, etc., it will create jobs now while more than paying for itself over the long run by creating stronger economic growth.

A recent Penn State University study found that, for every $100 million in severance taxes collected on oil and natural gas companies in Pennsylvania, the state would see a net gain of 1,100 jobs. This is largely because natural gas jobs are very capital intensive, whereas jobs in schools and health care are very labor intensive.

West Virginia policymakers would be smart to raise the severance tax now and use it to diversify our state’s economy before it’s too late and the gas companies inevitably file bankruptcy and reshuffle their assets like coal companies are doing now. The question is whether policymakers will be good CEOs for our state in the meantime, maximizing the benefits for our residents, or continuing to let the devil control our economy.

>>> Ted Boettner is the executive director of the West Virginia Center on Budget & Policy.

URL:

https://www.wvgazettemail.com/opinion/op_ed_commentaries/ted-boettner-time-to-raise-gas-severance-tax-opinion/article_eead8889-259c-5301-8e31-0f45f6ffe865.html

Home / Shipping News / International Shipping News / MOL co-own world 6 largest Liquified Ethane Carrier with Reliance -As Japanese ship owner, it is first ever to own VLEC

Mitsui O.S.K. Lines Ltd, with Head office located at Minato-ku, Tokyo, Japan and Reliance Ethane Holding Pte. Ltd. (“REHPL”) a 100% subsidiary of Reliance Industries Ltd(“RIL”) (*1) and based in Singapore agreed to co-owning of Six (6)Very Large Ethane Carriers (VLECs) (*2) which are currently fully owned by REHPL. (*3)

The six VLECs were delivered in 2016-2017 and have been engaged for transportation of Liquefied Ethane from Houston (US Gulf coast) to Reliance facilities at Dahej in West coast of India. MOL has been involved right from the ship building supervision stage at Samsung Heavy Industries yard in Korea and in the operation of the VLECs thereafter. (*4) Prior to this transaction, MOL and RIL have cooperated in the transportation of crude oil on VLCC’s.

After two and a half years of efficient and safe operation of VLEC’s as well, MOL, through this strategic investment, shall now to be a stakeholder in terms of co-owning of the 6VLECs.

It is pertinent to record that MOL is the only Japanese shipping company and the largest VLEC operator in the world. This development is in line with MOL’s philosophy of aiming for Higher Competitiveness in the field in terms of safety and reliable ocean-going transportation and meaningful contribution to the emerging energy transportation scenario.

[ VLECs ]
Name of Ship Ethane Crystal Ethane Emerald Ethane Opal Ethane Pearl Ethane Sapphire Ethane Topaz
Delivery 2016 2016 2017 2017 2017 2017
Flag Marshall Island
Capacity Around 87,000CBM
LOA 227.8m
Beam 36.5m

Very Large Ethane Carrier the ETHANE CRYSTAL

(*1) Reliance Industries Limited (RIL)
RIL is India’s largest private sector company, with a consolidated turnover of INR 622,809 crore (US$90.1 billion) and net profit of INR 39,588 crore (US$ 5.7 billion) for the year ended March 31, 2019. RIL’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.
RIL is the first private sector company from India to feature in Fortune’s Global 500 list of ‘World’s Largest Corporations’

(*2) Very Large Ethane Carrier(VLECs)
VLEC is designed for transportation of liquified ethane which has over 80,000m3 of tank capacity. The vessels which transport liquified ethane at – 92 degrees have GTT Mark III membrane system and reliquefaction system. VLEC is between LNG carrier which transports liquified natural gas at 162 degrees and LPG carrier which transports liquified propane gas at – 42 degrees.

(*3) The deal will swiftly be proceeded subject to approval by the relevant competition law authorities.

(*4) For details, please refer to following press releases.
The 25 December,2014 press release:
MOL Seals Long Term Shipping Deal with Reliance
The 18 March,2016 press release:
MOL Group Company Earns World’s 1st SIGTTO Certification of Seafarer Training for Very Large Ethane Carriers – Training High-caliber Seafarers to Ensure the Safe Transport of More Diverse Gas Cargoes –
The 10 November,2016 press release:
The World’s First Very Large Ethane Carrier “ETHANE CRYSTAL” Delivered for Reliance Industries Limited
Source: Mitsui O.S.K. Lines Ltd.

https://www.hellenicshippingnews.com/mol-co-own-world-6-largest-liquified-ethan-carrier-with-reliance-as-japanese-ship-owner-it-is-first-ever-to-own-vlec/