Consultant: Alaska needs a no-pipeline fiscal plan

Posted: Friday, June 11, 2010

FAIRBANKS - Former state oil and gas director Dan Dickinson says Alaska would have a better shot at a North Slope natural gas pipeline if it didn't view the project as an economic savior.

Speaking at a Fairbanks luncheon, the energy consultant said an over-reliance on money from natural gas might scare off companies seeking to invest. That's because the state could decide to balance future budgets by simply adjusting gas tax revenues.

Dickinson said energy producers became particularly wary after oil prices spiked in 2008. Governments, he said, found ways to increase production tax revenues, regardless of previous agreements designed to create predictable tax expenses for oil companies.

Dickinson said the state would build a better case for a pipeline if it isn't a vital part of Alaska's economic future.

"The conventional wisdom is that we need a fiscal plan until we can get a gas pipeline, and we'll all be in a bed of roses," he said. "What we really need is a fiscal plan in case there is no pipeline."

Creating an environment where natural gas revenues aren't critical to Alaska could be a challenge.

Oil, the backbone of Alaska's economy for the past 35 years, has been in decline since production peaked at about 2 million barrels in 1988. Though current production is down by two-thirds from that level, oil has never been more valuable to Alaska.

Because of high prices, the state collected more in tax revenues in 2008 than at any time in its history.

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