Alaska Senate passes oil tax bill

By Becky Bohrer

Associated Press

Published: Saturday, April 14 2012 12:00 a.m. MDT

Sen. Bert Stedman speaks during the floor debate on a bill intended to encourage new oil production on Saturday, April 14, 2012, in Juneau, Alaska. The Alaska Senate passed a version of HB276 Saturday. Stedman voted with the majority in support of the bill.

Becky Bohrer, Associated Press

JUNEAU, Alaska — The Alaska Senate on Saturday passed a bill intended to encourage new field oil production, just days after an overhaul of Alaska's oil tax structure stalled in the Senate's bipartisan majority caucus.

A piece of that overhaul was a tax break for oil production in new fields. On Saturday morning the Senate Finance Committee grafted a version of that from the stalled SB192 onto a House bill intended to encourage more oil and gas drilling in select basins around the state.

The bill, which passed 17-3, must go back to the House, which would have to agree to the changes or the bill would go to a conference committee. House Speaker Mike Chenault said early Saturday afternoon that it would be a large policy call to make with one vote on the floor and no hearings on the changes on the House side. He said the House majority would have to take a look at what it wanted to do.

The House also could just keep the bill in what's known as the limbo file — and let it die.

The Legislature is scheduled to end Sunday, and other issues still in play include the state budgets, additional education funding and an in-state gas pipeline bill.

Parnell said earlier this week that he would call a special session if the Senate passed an oil tax bill in the Legislature's last days to give the House time to vet the legislation. The bill passed by the Senate Saturday afternoon looks far different from SB192.

The new version of HB276 represents the Senate's best stab at oil tax changes in a session in which it delved deeply into the tax issue but wasn't able to find enough agreement within the bipartisan caucus for more sweeping changes.

Nonetheless, some senators saw the bill as significant progress; Sen. Lesil McGuire, R-Anchorage, for example, declared the bill "awesome," and said she believed it would "create a stampede" of companies coming to Alaska.

But Sen. Cathy Giessel, R-Anchorage, one of the no votes, said the new-oil provision in the bill lacked the punch needed to turn around the oil production decline in Alaska. She noted that the Department of Revenue projected no impact on state revenues until fiscal year 2018. She said in 7-10 years, the time it could take for new production to come online, oil throughout in the trans-Alaska pipeline could be half of what it is today.

All 16 members of the bipartisan majority voted for the bill, as did Senate Minority Leader John Coghill, R-North Pole, who sought unsuccessfully to amend the bill to extend the new-oil tax break to existing fields. He said he hoped the bill would lead to more production.

Joining Giessel in voting no were fellow minority members Sens. Fred Dyson, R-Eagle River, and Charlie Huggins, R-Wasilla.

An end goal of the oil tax debate is to get more oil in the pipeline. Alaska relies heavily on oil revenues to run.

Senate Finance Committee co-chair Bert Stedman, R-Sitka, has said that one of the stumbling blocks among senators has been deciding how to address oil in legacy fields, like Prudhoe Bay and Kuparuk, long the mainstays of Alaska's oil industry, where production has been declining.

A concern among some senators was giving too much money to oil companies, particularly for oil they would have produced anyway. Others felt a tax cut was needed to boost incremental production.

Before the floor debate, Sen. Bill Wielechowski, D-Anchorage, said the Senate moves represent a substantial incentive, and meaningful tax change that will "super-charge" new oil production on the North Slope and bring in more independents — companies in addition to the slope's current Big Three players.

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