Resources moved tax bill, ACMP revision

Eric Feige, R-Chickaloon, co-chair of House Resources, talks about accomplishments of committee in his first session in Juneau

Steve Quinn

For Petroleum News

Rep. Eric Feige just wrapped up his first legislative session, for which he served as co-chairman for the House Resources Committee.

Feige, a Chickaloon Republican, got a bonus in his first year — a special session, which kept him busy as his committee reviewed a stack of energy projects during a set of weekend hearings with the House’s Energy Committee.

One of the signature accomplishments of the Resource Committee’s work was the passage of HB 106, a compromise designed to end the highly contentious coastal zone management debate.

Feige got help from colleagues outside of his committee, Reps. Reggie Joule and Bob Herron, en route to a 40-0 backing from the House.

The bill however, never passed, as the House and Senate could not agree on changes, leaving the Legislature until June 30 to work out differences or there will be no state or local voice for coastal issues.

Feige sat down with Petroleum News to review his first year as co-chairman and what’s next for him during the interim.

Petroleum News: You’ve had a lot on your plate as resources co-chair in your first year. What have you learned?

Feige: I’ve learned the people and people have learned about me. I got a lot better idea of the history behind various issues; and the personalities behind various issue. That’s the kind of thing you don’t get until you get down here. You can read it in the library but you’re not going to get the details unless you’re here. I think I’ve been effective in getting legislation through. We managed to get HB 110 out of the committee and out of the House. With coastal zone, we made a valiant effort to reconcile the wants and the desires of the coastal districts with the wants, needs and desires of the industry as well as the executive branch. I don’t see that the Senate has really helped us out there. We sent them a good bill and they tried to get too much. Now we’re probably not going to get anything.

Petroleum News: During the special session hearings, your committee collaborated with the Special Committee on Energy.

Feige: We looked at some of those projects because a lot of those projects hadn’t had any kind of public hearing before they were entered in the budget. I think we were able to find out a lot more about some of those projects. It wasn’t our objective to try to eliminate them from the budget, which we did not do. But it was our intention to find out a little bit more about it, find out and understand what the heck was going on there. I learned things about the projects and thought OK, why are you really doing this?

Petroleum News: What are your plans during the interim in your role as Resources co-chair?

Feige: We are going to investigate some roads-to-resources projects besides what’s out there. There’s a good case for a road from the Mat-Su Valley area to Beluga. You’ve got a number of different projects down there as well as an area that still hasn’t been explored as much as it should be for oil and gas. If you build a road down there, those projects become much more viable. This will allow for lower cost of development. It would make projects that are marginal, more economic and allow more development out that way. You’ve got a lot of companies out there in the northern and western side of Cook Inlet: Cook Inlet Energy; you’ve got Linc Energy; CIRI with their UCG program; Chuitna Coal; you’ve got any resource projects that Tyonek Native Corp. wants to get involved with on their land; you’ve got the Beluga Power Station; you’ve got projects out there that need to be maintained. So it does simplify the logistics if you have a year-round road. It would open up lands for more recreational opportunities in that area as well.

Petroleum News: Would this be a capital project or a separate legislation?

Feige: It would be a similar roads-to-resources project like the road to Umiat, except you already have a little more development already there. The benefits would already be more immediate.

Petroleum News: Are you done with tax rewrite?

Feige: We sent our bill to the Senate and they need to chew on it. So far they refused to chew on it.

Petroleum News: Do you see the discussion changing?

Feige: The arguments for or against are pretty much not going to change. The reality is there. As the production drops in the pipeline, it just becomes that more urgent that we have to find sources of new oil or find ways, through use of engineering, extend the ability of the pipeline to transmit lower quantities of oil, whether that is by insulating or dilution.

Petroleum News: Why are you confident that HB 110 can get you closer to resolving the throughput issue?

Feige: HB 110 by lowering the tax rate and making it a better investment in terms of profitability, you get that started. The risk on a new project is pretty low. You already know there’s oil down there. Part of the problem with ACES, as the price of oil goes higher, the amount of profit they make here versus someplace else gets less and less. As the market price of crude goes higher, because of progressivity, Alaska becomes less and less rosy of an investment in the eyes of the world.

Feige: What I liked about the legislation is that we were able to move all concerned parties to the table, move them to the middle and achieve a compromise. When we say it was a finely balanced compromise, it was. There was a lot of give and take. The industry was understanding; the administration gave; the coastal districts gave. In the end, when we passed it out of the House, 40-0, it was a pretty good bill. The fact that it moved out 40-0, well it was not some fluff piece of legislation. It wasn’t some resolution to open up ANWR, something like that. What it had been was a pretty contentious issue not only in 2003 when they the reshuffled the system but also last year with people getting downright pointed and ugly. We were able to work through the issue, arrive at solutions that were acceptable and get it off to the Senate.

Petroleum News: And yet it still didn’t make it to the governor’s desk. Are you disappointed that it fell short?

Feige: I’m disappointed that for all the noise about how the program was so valuable and that we shouldn’t let it die, that, in the end, the Senate wasn’t willing to compromise on the proposal.

When we started talking about another special session June 1, I saw the version of the Senate bill that was essentially to be the House bill plus five things the governor had negotiated.

The word I got was the senators would not agree to send that version to us in a special session.

The whole noise about the special session and about how a program can’t die, well there’s something there that doesn’t make sense as far as hearing people talk like that.

The votes are not there to pass the Senate version on the House side. Now it could take more votes to get people back for a special session that it does to pass the bill.

Petroleum News: After your committee moved the bill, you, Reggie Joule and Bob Herron were identified as point people on this. Why did this kind of collaboration work?

Feige: Herron was doing a lot of back and forth between the committee and the coastal districts. I was happy to let him do that. He had more history and closer ties, especially the west coast regions where a lot of the objections on coastal zone management were coming from. I’m never going to say I’m the smartest guy in the room, but I’ll always try to find the smartest guys to work with. I don’t have to be the point guy. I have to be willing, if the situation warrants it, to let somebody else who perhaps is better capable or better connected to go off and do some of those things. Rep. Joule had a long history because he represents the North Slope Borough and they had some of the major objections to the current coastal zone program. Rep. Herron represents western Alaska. One of the major issues was subsistence and being able to come up with rules and enforceable policies that account for the subsistence needs of the population. He’s much closer to that than I am. I spent five years flying up there; I know those people; I know their concerns, but he knows them a lot better. I may be able to understand them but he has day-to-day contact with those folks. He did a great job in representing his people. That legislation would be the signature legislation for me as well as for the House.

Petroleum News: It’s possible you could be back for a special session to address a prospective in-state gas line.

Feige: There are a number of different projects and a number of different proposals. I think it’s better if the state lets the market decide. We have to take market considerations into play. We are somewhat hindered by AGIA. We can commit to have a billion cubic feet, but nothing more than that under the terms of AGIA. My concern with AGIA is that it’s not doing what we expected it to do. That was the reason for HB 142: To bring it to light and bring it to a head, and try to get TransCanada to move faster. It’s still out there. It certainly got TransCanada’s attention. There are two issues on the table right now that are perhaps holding up precedent agreements occurring.

One is the outcome of the Point Thomson litigation, which needs to be resolved. The other one is the oil tax legislation so they can have some certainty on how that resource is going to be taxed.

Petroleum News: Do you see your committee having any hearings on Point Thomson next year if this isn’t resolved?

Feige: We’ll have to see where they are at. The DNR commissioner and the legal team involved on the state’s behalf are working. My sense is they will come to some sort of resolution. I’m not sure what that will entail and I don’t have any kind of timeframe. I’d like to see it sooner rather than later, but I’m not going to hold up any artificial timeframe.

Petroleum News: Recently President Obama announced an intent to ease the way for Arctic drilling and drilling at NPR-A. Are you encouraged or do you need to see more action?

Feige: Let’s see him do it. All I’ve heard at this point is talk. The President needs to back up his words with positive actions. A lot of people in this state are kind of upset. We are still waiting for a Corps of Engineer’s permit on a bridge across the Tanana. We are still waiting for a Corps of Engineers’ permit for a bridge at CD-5. This beluga whale, critical habitat, I’m not sure how much that’s going to impact development, but I’m sure it will.

Petroleum News: Your Resources Commissioner Dan Sullivan has made few trips to Washington, D.C., to tout Alaska’s resource development prospects. In light of the President’s announcements for Alaska, are these visits an appropriate follow-up?

Feige: It can’t hurt. At least he can put the word out that the Parnell administration is pro development and wants to see investment in the state. There is certainly nothing wrong with that. When Commissioner Sullivan told me about his plan to do that, I enthusiastically supported that and offered him whatever he needs from our office.