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Pressure on to pass energy bill Alaska’s gas pipeline price support and language to open ANWR likely out of bill, heavy oil credit still possible Larry Persily Petroleum News Juneau Correspondent
It’s been almost three months since much of the nation saw just how dark life can be without electricity, and the president and the nation’s utilities chose Halloween week to start pushing hard on congressional Republicans to stop fighting among themselves and pass a comprehensive national energy policy bill.
The August blackout that hit the East Coast and Midwest was supposed to be the public-pressure catalyst for quick congressional action on an energy bill. But it’s been regional politics — especially tax breaks for corn-based ethanol fuel — that have stalled the bill.
Caught in the House and Senate crossfire and apparently dropped from the bill as negotiators give up demands from each side to reach a consensus is one Alaska’s most visible issues in the energy bill — federal tax credits to protect North Slope producers from low prices if they build a $20 billion Alaska natural gas pipeline. The White House and several House GOP leaders opposed the price-support provision, which also has been called the commodity risk provision. Bill includes other gas line tax incentives While acknowledging the price-support provision may be lost this year, Alaska Sen. Lisa Murkowski pointed to other gas line tax incentives likely to stay in the final bill: tax credits for the gas treatment plant at Prudhoe Bay, accelerated depreciation for the pipeline project, and a federal loan guarantee of up to 80 percent of $18 billion. The measure also will include provisions to speed up the permitting and regulatory review process for the project, the freshman Republican said.
“Whether it’s four provisions that we need to make the gas line a reality or 14 provisions, we need to figure out what we need to make this happen,” Murkowski said.
ConocoPhillips and BP Exploration (Alaska) have said they need the price-support provision before deciding to go ahead with the project.
If the provision is not forthcoming in the energy bill, Murkowski said, everyone involved needs to get together, including the state, and figure out what final piece or pieces may be needed. “I don’t want any more excuses for us not to go forward.”
Alaska’s other high-profile wish for the energy bill — congressional approval to open the Arctic National Wildlife Refuge to oil and gas drilling — also looks like it will be left on the negotiating room floor as supporters do not have enough votes to stop a threatened Senate filibuster by opponents to drilling in ANWR. Energy tax breaks the biggest battle The bill’s big battles all along have been tax credits. House and Senate Republican negotiators have been meeting in private for almost two months to carve up billions of dollars in energy industry tax breaks. Self-imposed deadlines came and went, with watchers now hoping Congress can reach a deal before its members adjourn to carve up their own Thanksgiving turkeys.
The president sent the vice president to Capitol Hill on Oct. 29 to push Republicans to settle their ethanol-tax-break feud and adopt a compromise energy bill. That came two days after 20 executives from the biggest U.S. utilities told an administration official the White House needed to step in and force House and Senate negotiators to strike a deal.
And while Republicans fight among themselves, Democrats continue to complain they are shut out of the private negotiations. “I’ve got to have a bill that can pass the Senate,” said Senate Finance Chair Charles Grassley, R-Iowa, and the chief proponent of keeping the federal tax break for corn-based ethanol. “The Democrats are ticked off that they’re not in conference.” Farm-state senators in agreement Although Democrats are not at the table, Senate Democratic Minority Leader Tom Daschle, D-S.D., is right next to his agricultural-state brethren Grassley in spirit and has said over and over that the bill must include the ethanol tax break or he would oppose the entire measure.
Other contentious issues include tradable tax credits for rural electric cooperatives and municipalities, conservation issues, Clean Air Act amendments, liability waivers for gasoline fuel additive producers, tax credits for coal and oil and gas production, nuclear power, and even a landfill gas tax credit.
Grassley’s big push for ethanol producers has been to insist on continuing the federal tax break of knocking off 5.2 cents from the 18.3-cent-per-gallon federal highway tax for fuel blended with ethanol. But instead of continuing to short the Federal Highway Trust Fund to cover the tax break, he wants to change the law to have the cost come out of general tax revenues in the treasury. Sparing the trust fund the pain of covering the tax credit would mean more federal money for highway construction nationwide.
California Republican Bill Thomas, chair of the House tax-writing Ways and Means Committee, opposes shifting the burden for the ethanol tax break. A lot of speculation,heavy oil part of it Many of the reports about what’s in or out of the work-in-progress legislation are somewhat speculative since negotiators have not released a new draft bill in more than a month.
Among the other Alaska issues waiting for final action is the state’s push to expand the federal $3-per-barrel tax credit program for heavy oil to include the North Slope. “Heavy oil is definitely still in play,” said John Katz, head of the state of Alaska’s Washington, D.C., office.
Expanding the tax incentives to include the slope could lead to a significant boost in production from the area’s massive heavy oil deposits.
“Nobody has seen new language in a long time,” Katz said. “It’s pretty clear Congress is not adjourning Nov. 7,” its theoretical pre-Thanksgiving deadline, Katz said.
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