A Citizen’s Guide

Three proposals currently before lawmakers appear to do something significantly different from what they were described as doing.

A bill of changes to the Stranded Gas Development Act that the administration described as incomplete could in fact grant blanket authority to the administration to include anything it wants in the proposed contract.

An amendment to the Senate version of that bill is described as granting an oil tax freeze for 14 years and a discretionary freeze after that if the companies haven’t been able to recover enough of their investment. But that “discretionary” phase could apparently be locked in now.

And another amendment, introduced Friday, was presented as allowing the people of Alaska to vote on the proposed contract instead of the Legislature, but it has some lawmakers questioning whether the amendment itself authorizes the contract.

The last two proposals were introduced by Sen. President Ben Stevens.

The first is important because at least some lawmakers are relying on the stranded gas act as a tool to set boundaries to this or any other contract to develop North Slope gas.

The administration negotiated a contract that it admits does things the law doesn’t allow, including agreeing not to change oil taxes. That’s why the amendments are necessary.

But because the governor has not said whether he would sign a contract without legislative approval—an act that might be within his power—it’s important that lawmakers not allow things in the stranded gas act that they wouldn’t want to see in a contract, says Sen. Kim Elton.

The amendments bill before the House changes the stated purpose of the act, which, combined with another section of the law that already exists, could grant blanket authority to put almost anything in the contract, according to a consultant hired by the Legislature.

The version now before the Senate makes a slightly different change to the purpose and also changes the section that empowers the purpose.

It’s unclear how much authority either version grants. But if the changes do grant blanket authority, then whatever painstaking work lawmakers do on other amendments could be a fool’s exercise.

The second unknown is less unknown. As introduced during the last special session, the Stevens’ amendment could allow the revenue commissioner to lock in oil taxes now for a period pitched as discretionary.

The idea was that if the companies didn’t get enough return on their investment, and if taxes were increased, then the commissioner could make the companies whole.

“That was how Ben described his intent,” said Sen. Ralph Seekins, the Fairbanks Republican who is chairman of the special Senate committee taking up oil and gas issues.

But some problems were found in the language, namely that the amendment could allow the lock-in to happen now, according to Seekins, who said he voted for it anyway because he knew the bill didn’t have time to get through the House.

When the proposal was adopted Friday by Seekins’ committee as part of a working draft, the language appeared to be the same.

The difference might not matter much because the proposal would give 14 years of lock-in starting at project sanction, which is expected to be about five years after contract signing, and be extendable to 25 years from the contract’s effective date. That discretionary period could be only about five years.

The difference between the stated intention and potential effect of the third proposal is huge. Instead of letting the people decide about the contract, Stevens’ amendment could simply authorize the contract.

That’s according to Sen. Gene Therriault, who noted that one section that would go into effect immediately and did not rely on a popular vote “approved and ratified” the contract provisions. Therriault, Republican of North Pole, is one of the Legislature’s key oil and gas figures.

Stevens denied Friday that was his intent or the bill’s effect.

“It’s the provisions,” he said. “It doesn’t say the whole thing.”

Therriault said later had this response: “I would need to know what the difference is.”