To the surprise of some, and maybe the amusement of others, Gov. Sean Parnell announced on Tuesday that he’s not planning to introduce natural gas tax legislation to be considered in the upcoming legislative session. Currently, natural gas is taxed at roughly the same rate as is oil, but it’s only worth a fraction of what oil is.
Parnell says he’s not doing so because the companies that have the lease rights to the natural gas, and who would build the line that would carry the gas from the North Slope to tidewater, haven’t met all of the benchmarks he set out for them in his 2013 state of the state address.
Apparently, Parnell’s refusal to introduce gas taxes signals some sort of punishment. What kind of punishment, however, is unclear. What is clear is that the world is awash in natural gas, and other projects — potentially more profitable projects — await the companies.
Another thing that’s clear: Parnell’s announcement signals another delay in the decades-long dream of getting a large diameter natural gas pipeline.
Bill Walker, who is running as an independent candidate for governor, had a visceral reaction to Parnell’s statement. He said that Parnell is just playing into the hands of the producers. “It’s perfect for them,” Walker said. He has been an advocate for an LNG project for more than a quarter of a century, and has long advocated that the state get tough on the companies by either building the line itself or negotiating with the companies that are willing to do it.
“Parnell is trying to get tough. He’s trying to be a negotiator. But they’re just laughing at us,” Walker said. “They’re just on the floor rolling.” He said that the producers want the delay so that they can work on other projects and wait out Alaska as oil production declines, as the state’s coffers shrink, and as the state becomes increasingly desperate and increasingly willing to negotiate.
Walker ran for governor in 2010. He came in second place in the Republican primary, winning more than 33 percent of the vote on a campaign primarily advocating the construction of a gas pipeline project.
Since the 1970s, Alaska has tried to entice, and at various times demand, that the lease holders of the vast reserves of natural gas on the North Slope build a pipeline to get the gas to market.
The market for natural gas is a fickle one, however, say nothing of Alaska’s political climate. And throughout the years, every time it looked like it might actually begin to materialize, the market either crashes, or the political winds change, or a governor tries to flex his or her muscles and punish the companies, which happen to be the among the largest, most powerful, private companies in the world.
“It’s maddening,” Walker said, expressing a sentiment shared by many who have followed the long, illusive gas line story.
Contact Amanda Coyne at amandamcoyne@yahoo.com
“Parnell says he’s not doing so because the companies that have the lease rights to the natural gas, and who would build the line that would carry the gas from the North Slope to tidewater, haven’t met all of the benchmarks he set out for them in his 2013 state of the state address.”
Yes, only big oil can build the line. There is an alternative. Beg Japan or China to build it for us. Why don’t we Alaskans establish a public Bank of Alaska and create the credit and build it ourselves. He who controls the money controls everything.
This flippant decision comes from a Governor who argues that a stable tax structure is critical for natural resource development. Apparently his ego is more important than state interests, unless his true motive is to delay the project under any pretense. How can a serious discussion about natural gas taxes have anything to do with the AGIA project technical specifications such as pipe size, and take-off points which the Governor demanded?
AGIA is now dead. Since our legislators and Governor won’t sue to end the AGIA contract Alaskans can only speculate where the rest of the 500 million we owe Trans-Canada could have been spent for the benefit of Alaska. Also, since now not even a serious discussion of tax rates will be allowed how is Dan Fauske’s AGDA/ASAP (Bullet Line) project going to find anchor tenants to justify that project? Would any potential consumer of Alaska’s gas now consider doing business with this bunch?
I bet Fairbanks is thrilled to face another winter with no permanent relief in sight. All they have going for them at this time is that goofy trucking scheme. We are in a somewhat better shape in South-Central. While probable and possible gas reserves may exist in Cook Inlet , proven reserves of Cook Inlet Gas have resulted in contracts through 2018. You cannot bet the farm on reserves that are not proven to exist and that is why contracts are only written when reserves are proven to exist. Therefore after 2018 standby to import LNG into Alaska. What a shame…….