A Citizen’s Guide

JUNEAU—Gov. Frank Murkowski and executives from the state’s largest producers struck the same chord in their message to state lawmakers Thursday—tax at your own risk.

They say too high a net-profits tax will mean less investment in the North Slope fields, which will hasten declining production and shorten the time until the taps are turned off for good. Beyond that, a big tax increase threatens the future of a $25 billion North Slope natural-gas pipeline.

“Oil production in Alaska is falling, it’s serious,” Murkowski said. “Higher oil prices are not necessarily a panacea because what goes up must often come down.”

Murkowski held a press conference Thursday to repeat that warning to lawmakers. Executives from BP PLC, ConocoPhillips and Exxon Mobil Corp. testified at the same time before the House Finance Committee, which is considering the net-profits tax bill. Read the rest of this entry »

JUNEAU—Members of the Senate Judiciary Committee on Wednesday reached a tentative agreement on legislation that would postpone judicial review of a natural gas contract until after the deal is finalized.

The bill’s sponsor, Sen. Ralph Seekins, R-Fairbanks, said the measure seeks to keep a court challenge from delaying legislative approval of an agreement with a trio of major producers on a $25 billion gas pipeline project.

Senate Bill 316 is the first in a dozen or more amendments to the Alaska Stranded Gas Development Act that Gov. Frank Murkowski says are necessary to authorize a pipeline deal.

The bill would prohibit a judge from ordering a delay in the legislative review of a contract while allowing challenges on statutory and constitutional issues to proceed. It would also set a 120-day deadline from the date the contract is approved for filing a legal challenge. Read the rest of this entry »

JUNEAU—Oil companies, the public and the state’s petroleum consultants will all get one more chance to weigh in on an oil tax bill before it goes to the House floor for a vote.

The bill, which would replace the state’s current production tax with one based on the profits of energy companies’ production in Alaska, will be held in the House Finance Committee until Tuesday, said Co-Chairman Mike Chenault, R-Nikiski.

The three largest oil producers—BP PLC, ConocoPhillips and Exxon Mobil Corp.—will testify on Thursday, followed by smaller producers and explorers on Friday, then consultants and the public on Saturday, Chenault said.

The committee likely won’t produce its version of the bill until Tuesday, he said. The bill would then go to the House floor for a vote. If it passes, the Senate would have to concur with the House’s changes. Read the rest of this entry »

House Finance Committee Co-Chairman Mike Chenault, R-Nikiski, plans to take his time reviewing the Senate version of the petroleum profits tax.

House Majority Leader John Coghill, R-North Pole, said on Wednesday that he thought the caucus had agreed to move the bill quickly to the floor. But Chenault obviously didn’t get the memo.

Chenault plans to take testimony from the industry, legislative consultants and the public before putting together a committee substitute.

Public testimony is scheduled for Saturday. Read the rest of this entry »

Dan Dickinson, a former state Tax Division director and now a Murkowski oil and gas consultant, met with House Democrats on Tuesday to answer lingering concerns about the governor’s oil tax reform.

On the issue of what qualifies for a deduction for tax purposes, Dickinson said the producers could deduct the actual cost of transporting the oil and gas.

“If you have someone sitting in a warehouse in Los Angeles whose only job is to unload tankers and turn them around, then yes, that could be deductible,” he said. Read the rest of this entry »

House Majority Leader John Coghill, R-North Pole, expects a healthy discussion on the petroleum profits tax when it reaches the floor sometime next week.

The House has a reputation for spending hours deliberating a topic, especially one as important as PPT.

If the floor debate gets messy, though, the bill could be sent back to committee.

“If the pieces don’t fit at the end of the day, we may have to go back to committee,” he said.

The bill, which passed the Senate on Tuesday, is being taken up in House Finance today. That committee is expected to have a substitute bill ready within a week.