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Three lawmakers file initiative to force gas pipeline construction

Democratic sponsors say 'either build the line or pay the fine'

Posted: Sunday, May 15, 2005

Adding one more twist to what already looks to be an explosive 2006 election season, three legislators filed a ballot initiative Friday to force oil companies to produce a North Slope gas pipeline.

The producers, who have held leases containing vast natural gas reserves for two decades, would "either build the line or pay the fine," said Rep. Eric Croft, D-Anchorage, who filed the proposal with fellow Democrats Harry Crawford and David Guttenberg.

The fine - a reserves tax - would amount to about $700 million per year beginning in 2007.

That's the annual revenue, by ExxonMobil's 1997 estimate, that Alaska would generate under an all-Alaska pipeline and liquefied natural gas project, Croft said.

If the producers - BP Exploration, ConocoPhillips and ExxonMobil - take diligent action to build the pipeline, the tax would go away and the producers would be given a reduction in their severance tax, he said.

Other legislators weren't so optimistic.

"I'm very disappointed to hear about this petition," said Rep. Vic Kohring, R-Wasilla. "It's really going to hurt this industry ... and slow down the pipeline."

Murkowski administration spokeswoman Becky Hultberg said the petition may even prompt lawsuits.

Representatives for ConocoPhillips and BP Exploration said their corporations vehemently oppose the severance tax concept.

"We're diligently working toward a gas line project. We certainly don't view this as helpful. I don't know of any projects that have been taxed into commercial viability," said Daren Beaudo, a BP spokesman.

Croft accused ExxonMobil of holding out because a pipeline would compete with its other global projects.

An ExxonMobil spokesman did not immediately return phone calls. Beaudo said Alaska's gas is one of the largest resources in his corporation's global portfolio.

The pipeline "is a very important piece of business for BP," he said.

This dispute is just one of several hot spots in 2006.

In addition to the looming governor's race, already on the primary ballot is a proposal to charge cruise ship passengers a $46 tax. The cruise industry has filed a pre-emptive lawsuit to block the tax in Alaska court.

Other ballot proposals are stacking up, including one to form a state gaming commission and another to eliminate the Economic Limit Factor, a tax structure that limits the taxation on certain oil fields.

Dan Dickinson, director of the Department of Revenue's tax division, said Gov. Frank Murkowski objects to both of the ballot petitions to extract new revenue from the oil companies.

Croft and Crawford, also an Anchorage Democrat, tried to push a bill this session that provided for a gas reserves tax. Both their bill and the initiative are based on a Kentucky tax created after coal companies based in West Virginia bought up Kentucky coal reserves to block their competition.

Croft and Crawford filed their petition in Lt. Gov. Loren Leman's office Friday morning.

"The lieutenant governor hasn't seen it yet," said Robert Pearson, a special assistant in Leman's office.

He said the petitioners must collect 31,451 valid signatures and meet state legal requirements in order to qualify for the election ballot.

• Elizabeth Bluemink can be reached at elizabeth.bluemink@juneauempire.com.



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