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NEWS BULLETIN

August 03, 2007 --- Vol. 13, No. 70August 2007

PPT special session set for Oct. 18

Alaska Gov. Sarah Palin said at a press conference late this morning that a special session of the Alaska Legislature on the state’s petroleum profits tax will begin Oct. 18.

Legislative leaders from both sides of the aisle have asked for a review of PPT, Palin said, calling such a review critical to restoring public confidence.

Revenue Commissioner Pat Galvin released a department study on the implementation of PPT. The tax has raised more money than the state would have received under the previous economic limit factor or ELF-based tax on gross production, Galvin said, but far less than was projected in the fiscal note which accompanied the bill.

“In FY 2008, based on forecasted price and production levels, the PPT is expected to generate about $250 million over that which would have been generated under the ELF system. However, this is more than $800 million less than what was predicted in the PPT fiscal note,” Revenue said in a PPT implementation status report.

Costs are higher than forecast at the time PPT was passed under the previous administration and it appears explorers may not be able to realize the value of PPT credits.

Revenue also faces significant challenges in implementing PPT. Galvin said the auditing required is more complex than expected and it has been difficult for the state to attract auditor expertise at state pay levels.

Revenue expects to have a clear proposal ready for legislators on Sept. 4, Galvin said. A bill reflecting proposed changes would be ready by Oct. 18 when the special session begins, he said.

Palin said she has asked legislative leaders to get back to her by Sept. 4 on where they would like to hold the special session.

MMS proposes February Chukchi Sale

The Minerals Management Service said today that it proposes to hold an oil and gas lease sale in the Chukchi Sea in February — the first Chukchi Sea outer continental shelf lease sale since 1991.

The proposed notice and final environmental impact statement for the sale are available on the agency’s Web site at www.mms.gov/alaska.

MMS said seven stipulations will be made part of any lease issued as a result of the sale.

Stipulation No. 4 — industry site-specific monitoring program for marine mammal subsistence resources — applies to specific blocks during specified timeframes.

Stipulation No. 5 — conflict avoidance mechanisms to protect subsistence whaling and other marine mammal subsistence-harvesting activities — applies to specific lease blocks for offshore exploration, development and production activities, but would also apply to all leases for associated activities such as vessel and aircraft traffic that transit the specific blocks or that occur nearshore in support of those leases.

See full stories in Aug. 12 issue of Petroleum News.

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