October 17, 2002 --- Vol. 8, No. 106October 2002

State moves to ensure tax credit for its ANS royalty gas; energy bill conference committee on hold until after elections

As joint House-Senate energy bill conference committee members close up shop until after the November elections, state of Alaska officials in Washington, D.C., continue to work on gasline and other issues with conference members who have not left the capital city.

One such issue deals with the gasline incentive package BP put together at the request of the Bush administration.

John Katz, director of state-federal relations and special counsel to the governor in Washington, D.C., told PNA Oct. 17 that state officials want to be sure that the proposed incentive package authored by BP for inclusion in the U.S. House-Senate energy bill extends production tax credits to buyers of state royalty gas.

The state strongly supports the overall BP proposal, Katz said, but it wants to clarify the tax incentive language to ensure the incentive applies to state royalty gas whether sold in value or in kind.

He said application of the tax credit is tricky when state gas is sold in value because the state is not a federal taxpayer. The state wants to shift the tax incentive to buyers of its gas.

Language in the Senate version of the energy bill proposed by Phillips Petroleum Co., now ConocoPhillips, is not viable, Katz said, so the BP alternative is now under consideration by the joint House-Senate energy bill conference committee. The state sent a memorandum about its tax credit concerns to committee staff working on gas pipeline issues.

In addition to production tax credits, the BP proposal includes a U.S. government loan guarantee, accelerated depreciation and oil recovery tax credits for an Alaska pipeline gas treatment plant.

Murkowski comments on energy bill discussions

After several meetings with House and Senate conferees in Washington, D.C., Sen. Frank Murkowski, R-Alaska, said the joint House-Senate energy bill conference committee would take up energy issues when it reconvenes in mid-November for a short session.

He said Energy Conference Chairman Billy Tauzin had “assured me that the gas pipeline provisions to reduce the regulatory and fiscal risks are still very much a part of the package and a critical component of increasing domestic energy production.”

“The Chairman further indicated that he was pleased with the progress in the tax portion of the bill, which includes Alaska gas pipeline provisions,” Murkowski said.

“Yesterday and today we advanced the negotiations with both the Senate Finance Committee and Chairman Bill Thomas of the House Ways and Means Committee. I’m very pleased with the progress thus far. I believe we can hold the pipeline provision in the conference and resolve the specifics when we return.”

An alternative proposal “regarding ANWR has yet to be acted upon by the Democrats,” he said, noting that the Republicans had proposed to “provide a 100 foot right of way through the 1.5 million acre 1002 area from the 92,160 acres of privately held Native land to existing infrastructure and pipelines.”

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