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AP Interview: Parnell plans to 'pursue vigorously' changes to state's oil tax regime

Posted: May 29, 2011 - 8:09pm

JUNEAU — Gov. Sean Parnell said he plans to continue to “pursue vigorously” changes to Alaska’s oil tax structure as a way to boost production in the state.

Parnell told The Associated Press he is currently working to get the votes needed in the Senate to advance the tax cut narrowly passed by the House during the regular legislative session. The bill stalled in the Senate, with leaders in the majority bloc saying they didn’t have the information needed to make a sound decision, but the bill will still be in play when the Legislature reconvenes in January.

While Parnell said he’s open to other ideas for stemming and reversing the trend of declining production, “we need to see it. At this point, what we have on the table to increase jobs, increase production and basically create a longer-term future for Alaska, that’s what I’m looking for right now.”

Parnell said he considers changes to the tax regime critical to his goal of having one million barrels of oil per day course through the trans-Alaska pipeline system within a decade. The tax element, or otherwise making Alaska more competitive for investment through royalty relief or other means, is one aspect of a broader strategy that his administration is taking to achieve the audacious goal. Others include improving the permitting process and access to resources — something that Parnell said must be done by both the state and federal governments. A more detailed plan is being finalized.

Department of Natural Resources Commissioner Dan Sullivan called this an “all hands on deck moment in Alaska.”

The trans-Alaska pipeline remains the state’s economic artery, though it’s far from operating at peak levels. At its height, in the late-1980s, the pipeline moved 2.1 million barrels of oil a day from the North Slope. Since then, oil production has been declining and throughput has recently averaged about 640,000 barrels a day.

Questions were raised during the tax debate — and conflicting data was provided — on how long the line could continue to safely and efficiently operate. Similarly, the administration’s defense of its tax-cut bill proved lackluster, at best, for a number of lawmakers, including some senators who believed aspects of the tax regime — like the progressive surcharge tripped when a company’s net profits top $30 a barrel — could be revisited. But leading senators said they didn’t have the information needed — on issues like jobs, the potential to recover revenues lost by cutting taxes, whether Alaska’s tax system is actually out of whack compared to other energy-producing regions — to immediately act.

It is widely anticipated, though, the debate will be revived next year. Industry representatives and groups, like the Alaska Oil and Gas Association, plan to maintain their call for tax changes.

In the months ahead, Parnell said he plans to work with lawmakers — including senators with whom he’s had a prickly relationship — to move beyond the contentious regular and special sessions this year and “figure out how to better work for Alaskans. That’s what we’re here for.”

“When politics gets in the way of the people’s business, or personalities get in the way, it’s time to take a step back, take a breath and figure things out together — and how we can work together better,” he said

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