A Citizen’s Guide

JUNEAU–With time running out, a Senate committee Wednesday threw out a key component of the oil production tax rewrite approved Sunday by the House and added a provision to protect the state from costs associated with shutdowns at Prudhoe Bay and other oil fields.

The Senate Special Committee on Natural Gas Development rejected the proposal to tie a company’s tax rate to its level of investment and replaced it with a 22.5 percent rate that would increase at high oil prices.

It also approved a “floor” on the tax rate at low prices and a proposal meant to limit state subsidies for repairs to the Prudhoe Bay oil field, which BP announced Sunday it would shut down because of pipeline corrosion.

“We took a good bill and made it better,” said Sen. Gary Wilken, R-Fairbanks. Read the rest of this entry »

The Senate special committee has approved a proposal by Sen. Tom Wagoner that would stop oil companies from deducting or receiving credits on a certain amount of capital expenditures. This idea was in response to the Prudhoe Bay shutdown, which has got everyone wondering about how much the state might potentially be paying toward the repairs.

In another vote, the committee turned down proposals to remove tax credits for development of the Point Thomson unit and upstream gas infrastructure and to push back the tax’s effective date. It also turned down a proposal by Sen. Gene Therriault to stop the state from subsidizing capital and operating costs associated with improper maintenance of infrastructure.

At about 4:10 p.m., the committee passed the bill out of committee. The Senate will meet as a body at 7:30 p.m. to review the revised bill. The plan is for the bill to move out late tonight. If not, the Senate is expected to take it up early Thursday and ship it to the House. The session adjourns at midnight that day.

The Senate special committee reviewing the oil tax bill this morning removed the House mechanism that would have linked the tax rate to investment per unit of production and replaced it with a flat 22.5 percent tax rate.

In a move that acknowledged both the work in the House and the importance of creating a bill that lawmakers will vote for, committee members left unchanged the rate of progressivity passed in the House. The rate is 0.25 percent.

The committee is also considering an amendment introduced by Sen. Tom Wagoner, R-Kenai, with help from Pedro van Meurs, the governor’s lead oil and gas adviser. The amendment would block companies from deducting or receiving credits for a certain basic amount of capital investments. Read the rest of this entry »

Oil companies may be able to get a credit for repairing corroded pipelines at Prudhoe Bay under oil tax changes being considered by the Legislature, a revelation that has some members saying the bill needs clarification to eliminate the possibility of such credit.

Under current law, no construction in the Prudhoe Bay field is deductible from the state’s 15 percent tax on oil production.

The governor and Legislature are pondering a change in that policy to encourage investment in oil production facilities.

At the same time, BP Exploration Alaska has announced that it will shut down Prudhoe Bay to repair corroded pipes. A state official said Tuesday that the expense could be deducted and taken as a tax credit under both the House-passed bill and the governor’s original version, though the extent of the benefit would depend on whether the work is considered a “maintenance” or “capital” cost. Read the rest of this entry »

JUNEAU–With two days left in the summer’s second special session, lawmakers still haven’t settled on the specific structure or rates of a change to the state’s oil production tax.

After testimony from the governor’s lead adviser on oil and gas issues, the Senate may scrap a proposal approved in the House to tie the tax rate to industry investment.

“There’s a lot of concern over some of the formula mechanisms in the House bill,” said Sen. Gene Therriault, R-North Pole.

Lawmakers also are considering other changes to the tax proposal, including one that would limit the state’s contributions for repairs to Prudhoe Bay or other infrastructure, he said.

But even with the 11th-hour changes, lawmakers say they’re hopeful both bodies of the Legislature will approve an oil tax bill and go home. Read the rest of this entry »

Gov. Frank Murkowski canceled some bill signings in Anchorage today to talk with the press and check in for a few national TV appearances.

At 1 p.m., the governor weighed in CNBC’s Kudlow & Company for a debate over the Prudhoe Bay shutdown and drilling in ANWR. Yes, it’s time to open up ANWR, he said, and to suggest that doing so wouldn’t be in the national interest would be “without any foundation.” Read the rest of this entry »