JANIE LEASK: Dan and Tom, I apologize in advance because this is an incredible topic, that a lot of people are very interested in and it's very important to the state. And I wish we did have more time, but we don't. So I want to get on to just a couple of little questions before we wind this up this morning.

Can additional oil wells other than those affected by the Governor's decision fall under the ELF purview?

DAN DICKINSON: ELF will affect every well in Alaska, any oil produced in Alaska. I guess what may be worth pointing out, is we have in our regulations a system set up similar to, for example, in IRS if you're about to undertake something, you can get a letter ruling, ask for how it will be treated, we have something similar. Fundamentally all other producing properties on the North Slope are already covered by such letter rulings. We're in the process of working through for proposed developments or developments that have started already but are not in production of working through and seeing if similar advanced rulings can be made. So I think the short answer is yes, the ELF will affect all North Slope properties and I think especially after the decision issued on this January producers are very keen to get certain (tape malfunction)

MS. LEASK: Do other states have an ELF?

MR. DICKINSON: I believe, and Tom may correct me if I'm wrong, but I believe fundamentally as we've researched it no. We are -- a unique feature of Alaska system. And in fact, when you look at documents or places that compare that's one things that folks bring attention to. I think it's unique.

MS. LEASK: So if ANWR oil is found and it gives us half of the royalty of oil from State land, is one unintended consequence of ELF is to make ANWR production less attractive to Alaska if ELF were up there?

MR. DICKINSON: It will be totally dependent on the size and productivity of the fields and those that are there. If another elephant is found, another Kuparuk, if you will, that will probably have very high ELF and have a lot of production at a fairly high tax rate. The flip side if there's lots of small fields that aren't as productive there could be no production tax from that area.

TOM WILLIAMS: I would add that for any field that was found there the ELF would lower the tax rate more than it would be without an ELF.

MS. LEASK: Okay. Should ELF have a price proxy as well as a cost proxy?

MR. DICKINSON: I will answer that personally and say yes, I believe it should. I believe the economic limit factor is simply a misnomer. Price is what drives economics, maybe long-term price, but price drives economics and to ignore that simply -- well, I guess that wouldn't be the first name of a bill or something that didn't accurately reflect what was going on, but my personal opinion is it is. And I will tell you that those debates are, you know, I'm making my point known to folks in the administration.

MR. WILLIAMS: May I comment on that?

MS. LEASK: Sure.

MR. WILLIAMS: Again, this is only my personal observation. And that is the Legislature is the tax policy maker for this state. They write the laws. They have chosen a couple of short-hand simplifying assumptions to get out of a lot of potential disputes and administrative difficulties trying to figure out exactly what your operating costs are for each field. So we have a rule of thumb, you need 300 barrels a day to break even. That was created to protect Cook Inlet. They have the rule of thumb that 150,000 barrels a day is the swing size for a field to be above that you start getting significant economies of scale and below that you don't.

Those are the decisions of the Legislature. Like any decision of the Legislature it can be revisited by the Legislature but for now those are the rules.

MS. LEASK: There's a couple of more questions. I'm going to ask one more and this goes to Dan. How is the State planning to address the long-term fiscal viability of the State? This is an ongoing question. Is the plan to limit revenue generation to the primary production of oil? Is it reasonable to find more and more creative taxation systems on one industry to avoid a broader more ever even taxation system?

MR. DICKINSON: Thank you.

MS. LEASK: And we don't expect you to have all those answers.

MR. DICKINSON: With the 20 seconds remaining. And actually if you do look at slide number -- there is a slide in the package that looks at what might happen if ANWR, gas line, et cetera, et cetera, came on line. You know, the Governor has launched a number of initiatives and he is very focused on the fact that some of them will take to come to fruition. I don't think there's any question of that. It is -- you know, there is some interesting initiatives going on. Representative Hawker's is one that would take all the money from the gas line and put it in an endowment which would then pay out and gave, in fact, a stable inflation sensitive stream of revenues.

I guess what I should really say is there is debate going on within the administration and I think clearly folks recognize, everyone recognizes that the State ought not be (indiscernible) and whatnot to be driving industry, you know, just to go back to the original purpose of the ELF was that a tax shouldn't shut a well in and a level of taxation shouldn't be negatively affecting an industry. And to give industry, I think the important thing to note, is not the absolute level of taxation and royalties paid, but how competitive we are. Multi-national corporations will make decisions about where to invest based on many factors including the fiscal regime and we need to take that into account, so a good question and stay tuned for over the next two or three decades.

MS. LEASK: Well, there's certainly a lot more information and a lot more questions and we could spent a lot more time on this, but please help me in thanking both Tom and Dan for being here this morning. (Applause) And as a small token of our appreciation we do have a plaque for each one of you, and thank you so much spending your time with us this morning.

I have a couple of announcements before adjourning. Our health care study has recently been approved. It will be circulated. We would love to hear comments from the membership. It's going to be circulated statewide and we're looking at a July 8th, I think it is, cut-off date for comments to that we can finalize it, so be looking for it and please give us your comments.

We have a couple of upcoming lunches. They're actually back to back. Tuesday July 5th at the Hotel Captain Cook we will have as our guest Secretary of Transportation Norman Mineta. The following day on Wednesday July 6th we'll be hosting the Secretary of Commerce Carlos Gutierrez at 7:00 a.m. The lunch with -- well, the lunch is obviously at noon with the Secretary of Transportation at the Captain Cook. Both of them are going to be held at the Captain Cook; one at noon, and one at 7:00 a.m.

If you're a guest here today of Commonwealth North, welcome and we would appreciate you considering membership in the organization. Membership does sustain us. And you can find the information about Commonwealth North and the various studies that we have by the door. And if you are a member of Commonwealth North, thank you very much. We are a membership organization. We generate most of our revenues from our membership base and we do appreciate your participation in getting up early in the morning to come to these forums.

So in closing, we hope that you'll spend what time you have left before you have to go to work visiting with other people and other members and guests who are here. And with that stand adjourned. Thank you very much for coming.

(END OF PROCEEDINGS)