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NEWS BULLETIN

May 31, 2013 --- Vol. 19, No. 38May 2013

Value of trans-Alaska pipeline put at $11.9 billion

The State Assessment Review Board has put the value of the trans-Alaska pipeline system at $11,874,014,300, a big upward adjustment from the state Department of Revenue’s valuation.

The SARB, appointed by the governor, hears oil and gas property tax appeals.

The trans-Alaska pipeline carries crude oil 800 miles from the North Slope oil fields to the tanker terminal at Valdez. It has operated since 1977. The major owners are BP, ConocoPhillips and ExxonMobil.

Department of Revenue officials annually assess the value of the pipeline system. In recent years, these assessments have led to court battles.

The pipeline’s value, as set by the department, the SARB and the courts, has fluctuated widely over the years. Valuations have ranged from $6.1 billion in 1977, to under $3 billion in 2000, jumping to a high of almost $10 billion in 2006.

For 2013, the Department of Revenue assessed the pipeline system at about $7.2 billion.

The pipeline owners appealed to the board, and argued the system was worth no more than $2.25 billion. Municipalities through which the pipeline passes, and that share in property tax collections, also appealed, asserting a system worth of at least $13 billion.

In a 35-page decision dated May 29 and signed by chair Don Martin McGee, the SARB found that the Department of Revenue’s assessment was “improper” in a number of ways.

Department officials made mistakes regarding studies on what it would cost to replace the pipeline, the SARB held. They also made a “fundamental error” in underestimating, by billions of barrels, the proven reserves of oil remaining on the North Slope, the board said.

The SARB decision can be appealed to the Alaska Superior Court.

—Wesley Loy

See story in June 9 issue, available online at 11 a.m., Friday, June 3 at www.PetroleumNews.com

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