Walker touts tax to push AK LNG

“I’m not trying to buy love. I’m trying to sell gas.”

So declared Gov. Bill Walker in a press conference Friday as he explained to the state’s political reporters why his call for a special session next month includes a controversial tax plan.

The third special session of the Alaska Legislature in 2015 will address the long-awaited Alaska LNG Project, also known as AK LNG.

To encourage the state’s three big producers — ExxonMobil, ConocoPhillips and BP — to stay with the project until its completion, Walker has proposed the state tax gas not pledged to the pipeline.

 

“When gas is not produced, we receive nothing from that,” Walker said. “We’ve got to be in a situation where we cannot be blocked by somebody else.”

Details of the proposal have not been released.

“What I have in mind may need some legal review,” the governor said, explaining that the proposed tax must be vetted by various state agencies before it is made public.

Asked when the proposal will be released, Walker replied: “When it’s done.”

Walker repeatedly said he is seeking assurance and security for the state. He doesn’t want AK LNG to be added to the state’s history of failed gas pipeline efforts, but a tax would be a secure way to collect revenue if the pipeline does fail.

“We have a gun to our own head with our fiscal situation,” he said, referring to the state’s multibillion-dollar gap between revenue and expenses.

The tax idea will face a tough slog when the Alaska Legislature convenes in Juneau on Oct. 24. In 2006, Alaska voters turned down a ballot measure that would have enacted a similar tax by a 2-1 margin.

Lawmakers said they have plenty of questions, and the oil companies themselves are generally opposed.

“Introducing a gas reserves tax undermines the efforts of all parties to progress the Alaska LNG Project and puts investment in Alaska’s future at risk,” wrote ExxonMobil

spokeswoman Kimberly Jordan in an email.

An emailed BP statement said: “BP wants to be part of a successful Alaska LNG project that includes the State of Alaska as an equal participant and co-investor. A gas reserves tax complicates this process and results in unintended negative consequences, such as: distraction and delays to negotiations, impacts to investment and Alaska jobs.

“A targeted tax at any one of the Alaska’s oil and gas producers impacts all companies and will reduce work activities on the North Slope during an already challenged time for the state. The gas reserves tax makes an Alaska LNG project more difficult.”

A ConocoPhillips spokeswoman said she had no comment until the company sees the specific legislation.

Walker, meanwhile, had an answer to questions about the companies’ concerns.

“If a producer found this objectionable, I’d have to question their motives,” he said. “It’s not a penalty at all unless they fully intend to not do a project.”

James Brooks is a reporter for the Juneau Empire.

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