Tag Archives: natural gas taxes alaska

Up next: Natural gas taxes?

Natural gasLate last week at lunchtime, members of the Alaska state Senate leadership team were seen going into a private dining room at the Glacier BrewHouse in Anchorage. They were there for a meeting with Department of Natural Resources Acting Commissioner Joe Balash and Department of Revenue staffer Mike Pawlowski, also known as “Fish.”

The Senate Rules Committee Chair Lesil McGuire was noticeably absent. Was she busy with official legislative duties? Was she campaigning for her bid for lieutenant governor? Or was she simply not invited? Why do people call Pawlowski “Fish”? What was the group discussing? They weren’t likely discussing an oil tax overhaul. That, after all, is so last year. Natural gas taxes? Probably.

On Monday, ExxonMobil, BP, ConocoPhillips and TransCanada announced that the terminus to the mythical natural gas “big line” would be in Nikiski. Say what you will about the project bypassing Valdez, the fact that the three producers who don’t often agree on anything, agreed on this is kind of a big deal.

Embedded in the announcement was a message to the state: “A competitive, predictable and durable oil and gas fiscal environment will be required for a project of this unprecedented scale, complexity and cost to compete in global energy markets.” Translation: They also all agreed that they need a tax break on gas to build the line.

Currently, natural gas is taxed at an effective rate of 35 percent prior to credits, roughly the same rate as oil. But it’s much less valuable and the producers aren’t going to invest up to $65 billion on a project that won’t result in a hefty profit.

However, even if all the evidence points to the fact that the producers actually do need a tax break to move forward, it’s unclear if legislators have the stomach for more talk of tax breaks for the producers.

A repeal of last legislative session’s oil tax break is still in the works and won’t be voted on until the primary election in August 2014. Taking this one on next legislative session might invigorate those who would repeal that tax.

Besides, creating the kind of “competitive, predictable and durable” tax regime takes tons of political capital from the governor’s office. And it’s unclear, in an election year, if Gov. Sean Parnell will have that much to spare.

Contact Amanda Coyne at amandamcoyne@yahoo.com


Bye bye oil taxes. Hello gas taxes.

Most of us have been enjoying the glorious summer and trying to forget the last two oily legislative sessions. Trying to forget the endless committee hearings, the excruciating testimony from oil executives. Progressivity. Hyperbolic curves. Internal rates of return. Capital expenditures. New producer areas, etc …

While we have been catching fish and amnesia, ExxonMobil is rumored to be hard at work trying to convince Gov. Sean Parnell to call a special session this fall to create a statutory framework to establish and provide authorization to negotiate issues related to gas commercialization.

In other words, just when you thought it was all over, now gas taxes are going to again rear their gaseous heads.

Currently, gas is taxed at an effective rate of 35 percent prior to credits, roughly the same rate as oil. But it’s much less valuable.

According to sources, Parnell isn’t going for the special session idea. He’s upset, they say, that Exxon hasn’t committed enough resources this summer to advance the fabled, up to $65 billion large diameter natural gas pipeline.

In a press release sent last month, Parnell said that although there was progress being made, the companies aren’t “moving as quickly as Alaskans expect.”

Still, Exxon, the North Slope’s biggest gas lease holder, continues to push, and is trying to convince the other major producers — BP and Conoco Phillips – – to push with them.

The Department of Natural Resources has engaged a contractor to model various tax regimes. Acting Commissioner Joe Balash and Department of Revenue’s Mike Pawlowski are said to be working with the contractors and meeting with the producers.

It’s unclear if Exxon’s push has to do with the large diameter line, the one that has been dreamed about for more than 30 years. Or if the push is about the bullet line that’s supposed to bring natural gas to Alaskans if the big line doesn’t.

Or if has to do with the 200 million barrels of liquid condensates at Point Thomson. By 2016, Exxon expects to be producing 10,000 barrels of condensates per day at the Point Thomson site. Condensates are kind of a liquid gas. As it stands, when they are produces they will be treated like gas for royalty purposes but will be taxed like oil.

Perhaps it’s all of the above. One thing’s for sure: if it there isn’t a special session to deal with gas taxes they will be dealt with in the next session. And the committee hearings again will be endless and excruciating.

Contact Amanda Coyne at amandamcoyne@yahoo.com