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U.S. Senate passes amendment to protect builders if gas price drops
Steve Sutherlin PNA Managing Editor
A tax incentive amendment added by unanimous consent to the Senate energy bill April 23 is designed to protect the builders of a North Slope gas pipeline from dips in gas prices that might make the project uneconomic.
The amendment, sponsored by Sen. Frank Murkowski and Sen. Ted Stevens, provides a federal income tax credit to builders of a southern route gas pipeline if the price of natural gas drops below $3.25 per thousand cubic feet. Gas producers would be required to repay the credits in full when the cost of gas rises above $4.85 per mcf. Cost to taxpayers zero The amendment should have no net cost to taxpayers because payback provisions require that during periods of high natural gas prices, companies must repay any tax relief granted, Murkowski said in a statement. The credit would stay in place for 15 years after gas line completion, while the payback provision won’t expire until all of the credits are paid back.
Murkowski said the amendment provides a financial safety net that should allow for financing and construction of the pipeline.
“Alaskans are ready to do their part to protect America’s energy security,” Murkowski said. “Without these safeguards, Alaska natural gas could stay in the ground for a very long time.”
“This tax provision is the final critical piece of the comprehensive package needed to finance and construct the gas pipeline,” Stevens said. “The adoption of this tax credit is good news for Alaska and America. It means more revenue for the state’s budget, more jobs for Alaskans and access to gas resources for in-state use.”
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