Murkowski won't raise oil-company taxes

Posted: Thursday, October 24, 2002

ANCHORAGE - Republican Frank Murkowski pledged not to raise oil-company taxes if he's elected governor.

For more Juneau Empire coverage of the November 5 general election, please visit the Juneau Empire Elections Guide.

"That will be the first thing I oppose," he told employees of Conoco Phillips on Wednesday. "We want to provide incentives."

Murkowski said Gov. Tony Knowles as well as Lt. Gov. Fran Ulmer, the Democratic candidate for governor, did not do enough to encourage development.

"They put out a big sign and said, 'We're open for business,' but they did not really mean it," Murkowski said.

Ulmer campaign spokesman Jason Moore took issue with Murkowski's characterization.

"One of the things Murkowski doesn't seem to be aware of is what's been happening in Alaska over the last seven years," Moore said. "The current administration has been very friendly to the oil industry."

One of the biggest incentives, areawide leasing, was put in place in 1998 at the industry's request. The Department of Natural Resources used to wait until companies expressed interest in an area before opening it to bidding.

"It's been hugely successful. They've had record sales," Moore said.

Ulmer has not ruled out new oil taxes. Her idea for closing the fiscal gap includes a "parachute plan" that calls for new tax measures, to be determined with legislators, to kick in if the state's Constitutional Budget Reserve fund falls below $1 billion. However, Ulmer personally believes oil companies have carried the brunt of the tax burden and Alaskans should not look to them for more, Moore said.

"We don't want to create a disincentive to investment," Moore said.

In Wednesday's address, Murkowski laid out a variety of incentives, including one for exploration wells that allows for a 50-percent recovery of qualified seismic and exploration well drilling costs through credits to severance tax or royalty payments or both.

He called for oil companies to return North Slope leases after five years, rather than seven, if no seismic or drilling activity has taken place.

Among his other ideas, Murkowski recommended the state:

• Release proprietary seismic data after 20 years rather than hold it in perpetuity.

• Streamline permitting for wells, in part by shifting personnel from other departments, retraining them and assigning them to permitting activity.

• Construct gravel roads in select areas on the North Slope to create staging areas for resource development.

• Negotiate project-specific incentives for heavy oil projects if producers commit to developing them by a certain time.

• Seek other producers to develop heavy oil sites unused by major producers.

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