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State value of oil pipeline disputed Pipeline’s value likely to be set by review board; state, local governments and oil companies at odds for second year in row The Associated Press
A disagreement is brewing between oil companies and three local governments over the assessed value of the trans-Alaska oil pipeline system.
The problem likely will result in a formal review board looking at the pipeline’s value for the second year in a row.
The State of Alaska has valued the 800-mile pipeline system at $3.64 billion. The consortium of oil companies that own the pipeline says it is worth $1 billion. The municipalities that collect property tax from the system — the Fairbanks North Star and North Slope boroughs and the city of Valdez — say the assessed value should be closer to $5.6 billion.
The difference could lead the oil companies to ask a review board to take a closer look at the state’s 2006 pipeline assessment. Representatives for ConocoPhillips and BP, two of the companies with subsidiaries in the Alyeska Pipeline Service Co., which operates the pipeline, said they will decide by the end of April whether to appeal.
Municipalities want review Municipalities say they are certain to ask for the review.
Fairbanks Mayor Jim Whitaker said local governments want to ensure the State of Alaska gets a fair assessment on the pipeline, an annual assessment that takes into account the pipeline, the right of way below it and other pipeline-related infrastructure.
He said that property assessments inside the borough — not counting oil and gas properties and infrastructure — have increased by 83 percent in the past decade.
Meanwhile, the pipeline’s assessed value has decreased over that time.
“There is no logical basis for that,” Whitaker said. “I’ve worked very hard to reverse that trend. Alyeska has to be treated as any other citizen is.”
Pipeline big source of taxes The state collected close to $30 million last year in property taxes on the pipeline.
The Fairbanks North Star Borough received more than $3.6 million — 5 percent of all the property taxes it collected — from the oil companies.
The three municipalities are challenging the state’s estimates from a number of angles. They have considered asking the state to estimate how much money a firm would pay to buy the system, and, according to state documents, argued the state should take into consideration the market value of the oil companies’ stocks, bonds and other securities.
This is not the first time the municipalities, the state and the oil companies have disagreed over the value of the 800-mile pipeline system. In 2001, a disagreement led the state to agree to hold the assessed value at just more than $3 billion until last year, when challenges arose again.
The state’s assessments of the pipeline system began during its construction in 1975. The assessed value peaked in 1979, when the state assessed the system’s worth at $8.4 billion.
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