Alaska Digest

Posted: Wednesday, March 08, 2006

Oil industry turns out to blast reserves tax

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JUNEAU - Alaska can't tax a natural gas pipeline into existence, industry representatives told a legislative committee Tuesday night.

Executives from BP PLC and ConocoPhillips, along with the head of the Alaska Oil and Gas Association, expressed their displeasure over a plan to tax Alaska's natural gas reserves to members of the House Special Committee on Oil and Gas.

The $1 billion-per-year tax would be enforced on the companies who hold leases to the 35 trillion cubic feet of North Slope gas reserves until a gas pipeline is built. When that happens, the taxes they paid would be returned as tax credits.

The tax plan was certified as a ballot initiative on Monday and will be included in November's election if the Legislature does not pass substantially similar legislation. That legislation, House Bill 223, was being heard by the committee Tuesday night.

"House Bill 223 would create, in terms of monetary impact, one of the most massive new taxes in the United States, and certainly the most massive punitive tax that has ever been imposed in the world," said Judy Brady, executive director of the Alaska Oil and Gas Association.

Gov. Frank Murkowski and BP, ConocoPhillips and Exxon Mobil Corp. have agreed in principle to a fiscal deal that could move the $25 billion North Slope pipeline closer to reality. The details of the contract, which were negotiated in secret, have not been released.

Ken Konrad, a BP senior vice president and the company's gas business unit leader for Alaska, said the state and the producers are aligned behind the gas pipeline project.

Rep. David Guttenberg, D-Fairbanks, said the only intention of the tax proposal is to get the gas to market. Guttenberg is one of the three Democratic legislators who is sponsoring the initiative.

Prudhoe workers clean up oil spill

JUNEAU - Workers have recovered more than 56,000 gallons, or 1,335 barrels, of crude oil and snowmelt after a leak was discovered on a transit line on Prudhoe Bay, officials said Tuesday.

It's still not known how much total oil spilled from the 34-inch diameter transit line onto the North Slope's frozen tundra, but one oil company official said it will likely be largely crude once water is separated out.

"We expect that the majority of the material recovered is going to be oil," BP Exploration (Alaska) Inc. spokesman Daren Beaudo said.

The latest figure of crude oil recovered was provided Monday, and was only based on collection efforts in the first 36 hours after the discovery of the leak early Thursday morning. Officials said about 501 barrels - or more than 21,000 gallons - of crude had been separated from the melted snow.

State and company officials said work calculating a figure of the amount of crude spilled started Monday, but no figures would likely be released until Thursday.

"I can only say we've got 1,335 barrels of liquid, and I can't tell you how is much is oil and water," said Linda Giguere with the state Department of Environmental Conservation.

It appears internal corrosion is the cause, although an investigation is underway, Beaudo said.

Stevens votes for earmark changes

FAIRBANKS - Alaska Sen. Ted Stevens voted in favor of a bill that would make it harder for him to do something he does well - attaching billions of dollars of earmarks to federal spending bills.

From 1995 to 2005, Stevens, along with his Alaska colleagues in Congress, added more than half a billion dollars of Alaska earmarks to federal spending bills that were in conference committees. However, on Feb. 28 Stevens himself voted to make such earmarks much easier to kill.

The reform measure that Stevens voted for may come to the Senate floor this week.

Stevens' vote last week came during a morning meeting of the Senate Rules and Administration Committee. The Alaska senator is the second-ranking Republican on the committee, behind the chairman, Sen. Trent Lott, R-Miss.

Stevens attended the beginning of the meeting but left before the actual vote. He gave his proxy to Lott who used it to secure unanimous, bipartisan approval of his reform proposal from committee members.

Stevens said he cast his vote for the proposal, even though it could make it more difficult to bring home money to correct what he sees as decades of federal neglect of Alaska.

"With the climate around here, I want some certainty," Stevens said. "Uncertainty is worse than certainty. No matter what the rule is, if I know what it is, I can live with it."



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