No Senate Finance HB 111 CS yet

As Petroleum News closed out this issue the Alaska Senate Finance Committee had cancelled three meetings on House Bill 111, probably indicating that work was continuing on a committee substitute for the Senate Resources CS on which the committee has taken testimony since it was introduced April 24.

Senate Resources made substantial changes to the version of the bill, crafted by House Finance, which passed the House April 11. The House version of the bill made multiple changes in the state’s oil and gas tax system, which is based on provisions in Senate Bill 21 which was passed in 2013. Members of the majority in the Senate have indicated that they are not interested in broad-based changes to the state’s oil and gas tax system.

SB 21 fixed issues in the previous system, ACES - Alaska’s Clear and Equitable Share - which were problematic at high oil prices, with the state taking such a large share of profits that companies pulled back on investments.

SB 21, however, proved problematic at low oil prices, with the state’s share of profits falling off substantially. And credits built into the system to encourage investment in the state grew beyond what the state could afford at low oil prices.

Fixes to the credit issue began last year with HB 247, but legislators limited the focus of that bill to Cook Inlet, leaving the issue of North Slope credits unresolved.

Industry representatives told Senate Finance that the Senate Resources CS still represented a tax increase, and expressed concern that various aspects of the CS needed to be specified in statute, not left to be determined by regulations.

- KRISTEN NELSON