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Parnell sets new benchmarks for gas pipeline

Posted: January 17, 2013 - 1:17am
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Gov. Sean Parnell speaks to the Alaska State Legislature during his annual State of the State address as Senate President Charlie Huggins, R- Wasilla, left, and House Speaker Mike Chenault, R- Nikiski, listen from the front of the House Chambers on Wednesday.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Gov. Sean Parnell speaks to the Alaska State Legislature during his annual State of the State address as Senate President Charlie Huggins, R- Wasilla, left, and House Speaker Mike Chenault, R- Nikiski, listen from the front of the House Chambers on Wednesday.

JUNEAU — Gov. Sean Parnell on Wednesday set new benchmarks for progress on a major natural gas pipeline project in Alaska and urged lawmakers to act this year on legislation to change the state’s oil tax structure.

In his fourth State of the State address, Parnell told a joint session of the Legislature that he wants the companies involved in advancing a long-hoped-for gas line project to settle on a concept by Feb. 15. That is, he wants details, like the project’s size, the location of the gas treatment plant, the size and scope of a liquefaction plant, and the number of off-take points where gas can be diverted for use in-state.

By spring, he said he wants the companies to finalize an agreement to move into a stage that would include preliminary engineering and a financing plan. He also wants a full summer of field work to begin this year.

It was in Parnell’s State of the State speech last year that he set benchmarks for progress that helped jumpstart the seemingly stalled project. The North Slope’s three major players and TransCanada Corp. agreed to pursue a liquefied natural gas project capable of overseas exports that they have said could cost more than $65 billion. But they haven’t announced specifics and haven’t committed to build. They said last fall that “significant environmental, regulatory, engineering and commercial work remains to reach upcoming decisions to bring North Slope gas to market.”

The oil companies have sought greater long-term certainty on Alaska oil and gas taxes, and have made clear that’s a key element as they move ahead with any project. Parnell last year said that if companies met his benchmarks, the state could look at gas taxes this year.

Parnell is proposing an overhaul of the state’s oil tax structure, which he has said is simpler than the current system and is aimed at encouraging new production and making Alaska more competitive. Oil production is declining, and while there is a shared goal at the Capitol to reverse that trend, there is disagreement over how best to do that. Some Democrats have already blasted Parnell’s proposal as a repackaged version of his prior tax-cut bills, and as a giveaway to oil companies.

Senate Minority Leader Johnny Ellis, D-Anchorage, said if Alaska stops getting its “fair share for our oil resource, it will bust our budget and that means politicians will look to sales and income taxes and a potential raid on your PFD,” he said in a Democratic response to the speech. PFD stands for Permanent Fund Dividend. Most Alaskans receive the dividend, their yearly share of the state’s oil wealth.

“That’s not scare tactics, that’s what’s coming, if this bill passes,” he said.

Parnell urged lawmakers to act on making changes to the tax system.

“While Alaskans — and many of us in this room — haven’t always seen eye to eye on these issues, we can all see the obvious, that unless we restore balance to our tax system, our oil fields will become obsolete,” he said. “We must make reforms and we must make them now. Waiting, it only makes this problem worse.”

Parnell said the question at hand was how to keep the state of Alaska strong.

“Make no mistake: Our present prosperity does not guarantee our future security. The choices we make during this short session will have long-lasting consequences. So let us choose wisely. Let us choose well,” he said.

The 90-day legislative session opened Tuesday.

The governor also touched on other priorities, including public safety and building on past efforts aimed at curbing domestic violence and sexual assaults. He also said he would like to see Alaska’s high school graduation rate hit 90 percent by 2020 — it’s currently around 69 percent — and he called for a commitment to childhood literacy.

He also urged lawmakers to act on legislation to help speed progress on a natural gas pipeline to meet the state’s demand for the fuel. And he called for lawmakers to come together and work with him to set a spending limit.

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Banditrider
633
Points
Banditrider 01/17/13 - 08:12 am
2
5

Good for him

Nice to see a governor working. A lot of Alaskans will have to realize that there is a lot of competition now in oil sales. Cash strapped states and new drilling technologies have brought a lot of new crude into the market. Texas and Alaska used to be the big players but we've slipped. Good to see work being done with LNG, this is a long needed clean energy source that doesn't compete with our food supply. Now if we could just get more refineries on line...

snagger
8276
Points
snagger 01/17/13 - 08:24 am
1
2

Five Years...

Too Late!

Latitude58
14427
Points
Latitude58 01/17/13 - 09:00 am
5
4

Interesting

The roles seem to have reversed. Now it's the dems who are the party of fiscal responsibility and the repubs are the profligate ones.

When the income tax goes into effect, I hope they name it the Sean Parnell Memorial Income Tax to honor our governor's stellar fiscal leadership.

JNUKara
8612
Points
JNUKara 01/17/13 - 09:02 am
7
3

Oh really

"our oil fields will become obsolete"???

No they won't. The oil is there, it's not going anywhere. And it's a finite resource - one that the world needs. We don't need to bend over backwards so the oil companies can make ginormous profits. If they don't want to do business with us, others will.

wavemkr
3761
Points
wavemkr 01/17/13 - 09:37 am
3
3

Good plan,Governor.

Get er done.

fmast50
2087
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fmast50 01/17/13 - 09:39 am
4
3

Give it a rest Lat

Really. Same thing every time.

wmolson
4382
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wmolson 01/17/13 - 02:50 pm
0
3

Maybe I'm reading the wrong document.

I have been reading the Alaska State Constitution and in Article VIII, Sec. 2, it says that it is the duty of legislatures to "provide for the utilization, development, and conservation of all natural resources.... for the maximum benefit of its people."
I have been searching through the section on natural resources to find something that says our legislature has a duty to sell the resources we have for the maximum benefit of international corporations. I can't seem to find that in our Constitution.

What I do know is that our legislators, and apparently the Governor, have an obligation to get the maximum benefit they can for the people of Alaska. They will have to negotiate with the oil industry and international corporations to determine what price, what conditions under which they will sell our product. Elected Alaskan representatives must also consider what is best for future generations of Alaskans. They must weigh the obligations they have to provide education, security, support and other factors for the people they represent.

The international oil corporations too have their fiduciary obligation to obtain the best price they can to benefit their corporation and international shareholders. This is not an unusual situation in business or between two parties with their own responsibilities and fiduciary responsibilities.

When two groups, with different fiduciary responsibilities come together in negotiations, there is bound to be conflict - both will want what is best for their constituency. If there is to be a resolution or agreement, it will have to be some kind of compromise.

I personally do not think that legislators can morally agree to reduce our income from oil and simply hope that in so doing, the oil companies will benefit Alaska. There has to be signed agreements between both parties; not just vague suggestions.

Oil production may decrease over the next decades and generations. It is a limited, non-renewable resource. We can hope to find more of this resource, but we cannot create it, nor will it return year after year as do the salmon and other renewable resources. Whatever is decided and agreed upon must be based on the realistic fact that this is a one-time sale; we are not going to be creating new oil in the future. We may find new ways to find and extract oil, and that may be more expensive that current production, and so we may have to lower our price. But what we are selling is a non-renewable resource that belongs to all Alaskan, including the young infants, children and future generations. Our price, the price our legislators decide is fair, has to be fair for all current and future Alaskans.
That's my opinion and I know others may disagree.

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