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Gas line negotiations under way again House Speaker John Harris says it’s his ‘gut feeling’ the Murkowski administration will ‘go a different route’ if can’t reach a contractual agreement with Alaska North Slope producers by early to mid February; ELF will go away, says governor Kristen Nelson Petroleum News
Alaska Gov. Frank Murkowski said in his Jan. 10 state of the state address to the Legislature that negotiations for a fiscal contract for a gas pipeline from the North Slope between the administration and the North Slope producers have resumed after a holiday break. The governor said negotiations resumed in Juneau Jan. 9 and will continue in Juneau until completed.
The governor said it was taking so long to negotiate an agreement because he is fighting to achieve the six principles he has set out for the contract: fair share of revenues from the project for Alaskans; access to gas for Alaskans; access to the gas pipeline for future explorers; an expandable gas pipeline; an equity share of the gas pipeline for the state, with 20 percent ownership proposed; and jobs and training for Alaskans.
The state is also negotiating for fiscal certainty on oil, Murkowski said, and will include the oil tax system in the gas line contract. The state’s oil production tax system needs to be reformed, the governor said, and a new oil tax system will ensure that at high oil prices Alaska gets a reasonable share, a share “comparable to what these companies are paying in similar areas around the world.”
The governor said a net profits tax would do that, is the industry standard and would allow Alaska to share risks and rewards from anticipated higher oil prices.
The economic limit factor (ELF) oil tax regime is flawed, he said, and within 15 years only one barrel out of five would be taxed. He also said the state’s current production tax system is flawed because oil and gas companies reinvesting in Alaska pay the same tax as companies taking their profits out of the state. Legislature could see contract in April At a House Republican press conference Jan. 9, Speaker John Harris, R-Valdez, said that his understanding from a meeting with Jim Clark was that the Legislature shouldn’t expect to see a gas line proposal until at least the first of April. Harris noted that a contract first has to go through a 60-day public review period and he said the administration anticipates having an agreement by the end of January “then you have a 60-day review period and then it’s sometime around the first part of April” before it comes to the Legislature.
Harris also said that it is his “gut feeling” that if the administration cannot reach contract agreement with the producers by the first or second week in February, “they may go a different route, they may try to go a different way.”
But, he said, he doesn’t know that for a fact, although he thinks it is a possibility. Binding future Legislatures an issue Rep. Lesil McGuire, R-Anchorage, said in response to a question on whether a future Legislature could be bound by the action of this Legislature that she doesn’t think so. “That’s my basic fundamental belief, that one Legislature cannot bind another.” McGuire said it’s “the fundamental aspect of democracy, that the public gets an opportunity every election cycle — in the House more often than in the Senate — to weigh in on who they want making decisions for them for the future.”
The decisions we make, she said, “may not be the decisions that the public would like to have made in subsequent years.”
McGuire said she think it’s “a big issue and a big part of this gas line debate and makes it very difficult, not just with the gas line but with other long-term decisions that we make as a Legislature.”
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