Board sets TAPS' value at $4.6B, owners appeal to Superior Court
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The Alaska Assessment Review Board disappointed both oil companies and several local governments by announcing the trans-Alaska pipeline system, at least for tax purposes, is worth $4.6 billion.
Municipalities said they would likely accept the decision, but oil industry officials said they have already appealed the decision to Alaska Superior Court.
Several municipalities that tax the line — including the North Slope and Fairbanks North Star boroughs and the city of Valdez — argued the line should be valued at $7.4 billion. The oil companies that own the line, including subsidiaries of BP PLC, ConocoPhillips and ExxonMobil, say it is worth about $800 million.
The board’s assessment, announced May 31, amounts to a 7 percent increase in its value from last year and upholds the annual assessment, assigned in March by the State of Alaska.
The state two years ago changed the way it values the pipeline, abandoning the approach of basing the estimate on income from tariffs charged for transporting unrefined oil. Oil companies that own the pipeline have argued the state should return to the tariff-income method because it works to estimate the pipeline’s market value.
Last year’s assessment still being appealed “As with last year’s decision, the state appraisal review board has placed no weight on a basic appraisal methodology that considers the income of this business,” BP spokesman Daren Beaudo said of oil pipeline-ownership and operation. “Any willing buyer for the TAPS pipeline would base their purchase on how much income they expected to make.”
While this year’s review board stuck close to the state’s original assessment, past appeals have turned out differently. Last May, an appeal led the board to boost the 2006 assessment from $3.6 billion to $4.3 billion, a move that sent the Fairbanks North Star Borough more than $900,000 in unexpected tax revenue.
That decision, however, was also appealed by the oil companies to state court, where Beaudo said it remains unresolved.
The oil companies had hired expert appraisers to support their arguments this spring, but board members said in their decision those experts lacked information available to the state of Alaska’s specialists, who had relied on a “more sophisticated” assessment method than the companies’ experts.
—The Associated Press
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