A Citizen’s Guide

OIL TAXES: A big part of the Murkowski administration’s strategy on oil taxes and the gas pipeline is that the oil tax rate approved this year should be locked in for the next three decades.

It’s probably this hope of a tax freeze that led the major oil companies to make their uncharacteristic pledge to support a 20 percent tax rate two months ago.

(The companies have tried to distance themselves from that agreement somewhat, with BP going so far as to run an ad this week saying Alaskans should call legislators and oppose the 20 percent tax rate. But BP executives also testified this week that they do not oppose the 20 percent tax.) Read the rest of this entry »

JUNEAU—Gov. Frank Murkowski is banking legislators will complete their work on a new oil tax system by the May 9 end of session.

Murkowski needs the Legislature to move quickly on reforming the state’s oil production tax so the fiscal details can be inserted into a contract with Exxon, BP and ConocoPhillips to develop North Slope natural gas reserves.

The governor and administration officials announced Friday that a draft version of the gas contract would be released on May 10 to start the clock on the public comment period.

“Sometimes to move projects forward you need to create deadlines,” said Deputy Commissioner of Revenue Steve Porter, a member of the governor’s gas line negotiating team.

Murkowski has been meeting privately this week with leadership from both bodies to push for passage of oil tax legislation. The governor said Friday that Republican legislative leaders had agreed to move the bill before the end of session. Read the rest of this entry »

Sen. Gene Therriault, R-North Pole, is expected to introduce an amendment in the Senate Judiciary Committee on Friday to Senate Bill 316 that would increase the minimum amount of time for public comment on a stranded gas contract.

Therriault said he would like to see the minimum move from 30 days to 90 days to give the public and non-signatory producers adequate time to review the contract. Politics being what they are, though, he may have to drop the minimum to 60 days in order to get it passed.

Senate Bill 316 would require all judicial challenges of the contract to come only after the Legislature gives its approval of the deal. Senate Judiciary is currently considering the bill.

“If there’s going to be a change to where the public fits in, we should balance it out with an extended public comment period,” Therriault said.

ANCHORAGE—State Senate President Ben Stevens says the deferred cash and stock he receives as a board member of Semco Energy is not income, and he plans to refute any charge that he must report it to the state.

State law requires legislators to list all sources of income above $5,000 during the previous year. Stevens reported that he serves on Semco’s board and owns stock, but he did not report any income from the company.

An entry as income for Stevens showed up in the Michigan-based company’s reports to the Securities and Exchange Commission, according to the Anchorage Daily News, which first reported the story Friday.

Stevens is obligated to disclose the money, even though it’s still in Semco’s deferred-compensation plan, the Alaska Public Offices Commission said.

The Anchorage Republican says he receives $35,000 plus 7,000 shares of company stock as annual compensation for being on Semco’s board. That compensation is converted entirely into stock and is held in a deferred compensation plan until his three-year term on the board ends. Read the rest of this entry »

State Revenue Commissioner Bill Corbus on Thursday reiterated the administration’s stance that the 20/20 proposal originally introduced by the governor is the appropriate rate to encourage investment on the North Slope.

He said a higher rate—such as the 22.5 percent tax rate and 25 percent credit rate passed by the Senate—could adversely affect negotiations with the producers for a natural gas pipeline.

He said the administration also does not support the escalator in the Senate version that would increase the tax rate by 0.2 percent for every $1 the price of oil goes over $50 a barrel.

Corbus said the governor’s proposal presented the “least risk to the state and the most assistance to the industry.”

The governor is scheduled to meet with the press again today at 1:30 p.m. to make his case.

Exxon posted first-quarter profits of $8.4 billion, a 6.9 percent increase over the same period the previous year.

High oil prices caused by uncertainty over the situations in Nigeria and Iran helped push Exxon’s profits to record levels.

Reduced production and higher taxes resulted in a 15 percent drop in net income to $5.6 billion for BP.

ConocoPhillips reported a 13 percent increase in profits to $3.3 billion.

U.S. oil futures traded 27 percent higher in the first quarter than a year earlier, hitting an all-time high of $75.35 a barrel last week. The increased trading indicates investors expect prices to remain above $70 a barrel through 2009.