Corporate income tax credits to protect the wellhead value of Alaska North Slope natural gas from low prices will not be part of a federal energy bill, says Senate Energy and Natural Resources Committee Chairman Pete Domenici.
Domenici, R-N.M., a member of the House-Senate conference committee on the energy bill, said three other financial incentives for the Alaska natural gas project remain in the latest draft of the bill: a federal loan guarantee for the project’s construction financing, accelerated depreciation for investors, and tax credits to lower the cost of constructing a gas processing plant on the North Slope.
However, the loss of the wellhead-based tax credits to protect producers against low prices for their gas could kill the project for the immediate future. Opposition from the White House, Lower 48 gas producers and members of Congress apparently knocked the price-support provision out of the bill.
“That in essence kills the pipeline. Our CEO has said that we cannot pursue this without some kind of risk provision,” said ConocoPhillips spokesman Don Duncan in Washington, D.C.
A BP official said it was too early to speculate on the issue until seeing the actual language of the legislation, and an ExxonMobil spokesman from Houston restated the company’s long-held opposition to federal price supports for the project.
House and Senate negotiations met today and will meet again Thursday in an urgent attempt to resolve the several disputes blocking adoption of an energy bill this year. In addition to the Alaska gas pipeline tax credits, minority Democrats and majority Republicans — and Republicans vs. Republicans — are still arguing over solutions to the nation’s electrical distribution problems, tax credits for several different energy programs, and federal support for corn-based ethanol.
“At this point in negotiations, you hear all sorts of things,” said Chuck Kleeschulte, spokesman for Sen. Lisa Murkowski, R-Alaska. “It’s too early for any pronouncements.”