Oil Patch Insider

Heinze predicts January ‘07 for Alaska gas pipeline contract vote; Canada elects new prime minister

What will the next Alaska Legislature be doing in January 2007?

If Harold Heinze is right, they’ll be voting on a gas pipeline contract.

Heinze, chief executive officer of the Alaska Natural Gas Development Authority, told his board at a Jan. 23 meeting that he now believes it could be 2007 before the Legislature votes a gas pipeline contract up or down.

Earlier this January the Murkowski administration announced it would be introducing legislation to change the state’s oil production tax system (see story in Jan. 22 issue of Petroleum News).

Heinze’s timeline includes introduction of that legislation in February. In March a contractor for the Legislature would analyze the revenue impacts. His estimate is that House and Senate committee would hold hearings on the proposed oil tax changes in April and a new production tax bill would be passed in May.

Consultant Pedro van Meurs told legislators that passage of a revised oil production tax would have to happen before a gas pipeline fiscal contract is presented to the Legislature.

Heinze estimates that the governor will reach agreement with the producers and a contract and best interest finding will be finished in June and released in July, with public review and legislative hearings in August and September, followed by revisions to the contract based on public input in October.

The revised contract and related legislation would be sent to the Legislature in November.

Nov. 7 is Election Day — for both the Legislature and the governor.

Heinze told the board that after the issue of the oil production tax was added to the mix it seemed to him the process would probably take longer. If it gets to be fall and there hasn’t been a vote, he said he thinks the vote likely won’t take place until January.

There’s a lot of risk in this decision, Heinze said, and he doesn’t think legislators will want to be exposed to risk over a very short time before an election.

If he’s right, the Legislature would organize in December and the vote wouldn’t come up until the new Legislature convenes in January.

Deputy Revenue Commissioner Steve Porter told the board the state’s negotiators have long since given up predicting timing. But, he said, it is the governor’s intention that this Legislature and this governor make this decision this session.

Porter said Revenue has been working on the production tax issue for a couple of years, and both the Legislature and the administration have spent a lot of time working on the present system and the economic limit factor.

The question, he said, is how fast the Legislature will act on a tax change.

—Kristen Nelson

Canada elects new prime minister

Here’s the basics from PN’s Yanks: New Conservative Party Prime Minister-elect Steven Harper defeated Paul Martin, unseating Martin’s Liberal Party after 13 years in power.

Still, according to the New York Times, without a majority in the House of Commons “Harper may lead a weak, unstable government opposed by three left-of-center parties represented in Parliament.”

The Times also says Harper will “almost certainly bring, at the least, a warming of relations” with Washington and the Bush administration.

Harper, 46, an economist and social conservative who is writing a book on the history of ice hockey, is from Alberta where the energy industry is the prime economic driver, so it’s no surprise he opposes the Kyoto Treaty. Since Canada isn’t anywhere near reaching its Kyoto targets will Harper consider joining the Asian Pacific Partnership forged by Bush last year? Or, as some suggest, drop Canada’s opposition to ANWR drilling?

We’ll leave the answers to Mr. Park…..

—Kay Cashman