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http://www.omniture.com --> Sections Home Page Local News AP News Archives Business Classifieds Event Calendar Forums Life Opinion Obituaries Photo Gallery Since We Asked Sports Tempo Weather Special Coverage 2006 Britt Festivals --> Shop Our Valley AutoFinder HomeFinder JobFinder Search Our Valley Special Sections Homelife Magazine Joy Magazine Readers Choice 2006 Oregon Golf Info Oregon Wine Info Our Valley Other Publications Local Links Ashland News eSouthernOregon Newspapers In Education Personals Moving Here Movie Listings TV Listings Volunteer Customer Service Advertise With Us Media Kit Place Classified Ad Contact Us FAQ's Home Delivery Site Map --> Email Story to a Friend August 12, 2006 Alaska takes step toward gas pipeline The Associated Press ANCHORAGE, Alaska — Alaska took an important step forward in bringing a huge supply of natural gas to the nation this week. After months of wrangling with pipeline backer Gov. Frank Murkowski, Alaska lawmakers late Thursday finally passed what amounts to the biggest tax law rewrite in decades. It's only putting one piece of the puzzle in place to get a proposed $25 billion natural gas pipeline built, intended to take an estimated 35 trillion cubic feet of natural gas — the largest reserve of natural gas in the United States — from Alaska's North Slope to Midwestern markets. But Murkowski has said the tax rewrite was essential by providing the state's largest three oil companies — BP PLC, ConocoPhillips and Exxon Mobil — incentives to build. Murkowski Chief of Staff Jim Clark said Friday that the state needs more time to evaluate public comment before making changes in the contract and bringing it back to the legislature before the Nov. 7 election. Advertisement Murkowski is running for re-election, and there is no guarantee he'll be his party's nominee in the Aug. 22 primary. All other candidates have pledged to renegotiate or change the deal completely if they win. The tax bill, which is retroactive to last April once the governor signs it, would set a base tax rate of 22.5 percent of companies' profits from their Alaska operations. But they will be allowed to claim credits and deductions in the tax bill to partially pay for the gas pipeline project's upstream treatment and processing facilities. The oil companies didn't get what they wanted from lawmakers. The governor in secret negotiations with the three companies had agreed to a 20 percent tax and 20 percent credit rate on net profits. Lawmakers settled on the 22.5 percent tax rate that would rise by a quarter percent for every $1 rise in the price of oil above $55 a barrel. Oil is trading around $75 a barrel. "Exxon Mobil is disappointed the legislature passed a bill that results in oil taxes higher than the governor's 20-20 plan," said Exxon Mobil spokeswoman Susan Reeves in Houston. "The bill represents a huge increase on taxation, roughly $2 billion a year increase in taxes paid by the industry to the state at current prices," said David MacDowell, a spokesman for BP Exploration (Alaska) Inc.'s gas group. Brian Wenzel, vice president of finance and administration for ConocoPhillips in Alaska, said the 22.5 percent places Alaska at the highest tax rate in the U.S. and Canada, and amounted to an additional $1.2 billion in taxes over the proposed 20 percent rate. The new rate, he said, was concerning because it "represents such a deviation from government tax takes in the Lower 48 and Canada." None would say, however, that the new tax rate would be a deal breaker to build the pipeline. Alaska and the oil companies are looking to gas because the oil reserves on the North Slope are being drawn down. More than 10 billion barrels of oil has been extracted since startup of Prudhoe Bay since 1977. The expectation is that there are about 3 billion more barrels of recoverable oil. Natural gas could extend the life of the field by decades. Getting a gas pipeline built is vital if the country expects to meet the growing need for natural gas in the next 10 or 20 years, said analyst Phil Flynn with Alaron Trading Corp. in Chicago. The proposed pipeline would go from the North Slope to Canada to the Midwest. "The demand for natural gas is growing faster than our ability to feed it," Flynn said. "We could get into a situation where we actually could see shortages of natural gas in this country." However, Judy Brady, executive director with the Alaska Oil and Gas Association, said the 22.5 percent rate could hurt Alaska when it comes to competing for energy projects. "Regardless of what people are saying, the point is how much tax do companies normally pay and how much tax are we charging in Alaska," she said. Brady said, with the higher rate, the total government tax take in Alaska will be over 60 percent of what the oil companies make, a higher percentage than other states. But that percentage is in line with, or even lower than, oil-producing countries that also use a net-profits tax system. Doug Reynolds, energy economist at the University of Alaska Fairbanks, said the rate won't discourage production or investment. "There is still potential in the North Slope," he said. "This is the right kind of tax for the state. When prices of oil go down, the rate goes down, too, so the state shares in some of the risk." Some environmentalists, pointing to the Prudhoe Bay shutdown this week, said the gas pipeline should not be built at all. "It is just a dirty, dirty, dirty industry," said Melanie Duchin, Greenpeace's energy specialist in Anchorage. "What it does is that it continues our addiction to fossil fuels. What we need to do instead is take that $20 billion dollars and invest it in renewable forms of energy like solar and wind," Duchin said. -------- Associated Press writer Steve Quinn in Dallas contributed to this report. Advertisement Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback online casinos news Home Security Systems California Casinos Men's Clothing Southern Oregon Loans --> GMAT Prep Fundraisers Send Flowers Entertainment Guide --> Casinos Canada Trunks, Footlocker Online Casino Reviews