Committees take up gas pipeline incentives

WASHINGTON - Members of the U.S. House and Senate have begun negotiations on a bill containing tax incentives for a natural gas pipeline from the North Slope.

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The tax incentives are in the Senate version of a corporate tax bill originally designed to solve a trade dispute with Europe. The House version lacks the gas incentives.

Negotiations began Wednesday afternoon.

Gov. Frank Murkowski said last week the fate of the incentives was uncertain. The matter depends on whether Rep. Bill Thomas, the GOP chairman of the House tax-writing committee, will accept the package of energy-related tax provisions in the Senate bill, Murkowski told the Fairbanks Daily News-Miner. The Alaska natural gas provisions are part of that package.

Murkowski also wondered whether Democrats would let the package pass or would stage something like the walkout in the Senate Energy and Natural Resources Committee earlier this month, which blocked progress on a bill sponsored by his daughter, Sen. Lisa Murkowski.

"Politics are running pretty heavy," the governor said.

Democrats said they walked out because Sen. Murkowski had not cooperated in addressing their concerns about the bill, which authorized a land trade in Southeast Alaska. The senator said she made several changes and it was Democrats who stopped talking to her staff about the measures.

John Katz, director of the governor's Washington office, said he did not have a good feel for how the House-Senate conference committee might treat the energy tax provisions. The governor's office has inquired about Thomas' views.

"We just don't have any definitive feedback yet," Katz said.

If House conferees accept the overall energy tax package, at least two of the Alaska provisions have a good chance of being part of it, Katz said - accelerated depreciation for the pipeline and a tax credit for a North Slope processing plant.

"There has been no controversy attached to those provisions," Katz said.

A third provision would offer gas owners a limited tax credit on sales of gas from northern Alaska if the wellhead value of the gas falls below $1.35 per thousand cubic feet. Katz said the credit's political viability is "questionable." The Bush administration opposes it.