Alaska pipeline contract would freeze oil, gas taxes

By OGJ editors
HOUSTON, May 12 -- Alaska would implement no tax changes for the three North Slope oil producers for up to 45 years under a draft contract outlining terms for a proposed $20 billion pipeline to carry natural gas to the Lower 48.

Gov. Frank Murkowski told reporters in Juneau that ExxonMobil, BP PLC, and ConocoPhillips sought assurances of a freeze in oil and gas tax rates for decades to help mitigate financial risks for the oil companies.

"I recognize the constitutional question; I recognize the legal question," Murkowski said, calling the inclusion of the tax provisions "just the hard fact associated with the negotiation in this project."

Alaskan House Minority Leader Ethan Berkowitz, a Democrat running for governor, said, "For us to even talk about locking down (taxes) for 45 years is absurd." Berkowitz called a news conference in response to Murkowski's comments.

The proposed contract, which Murkowski made public May 10, also stipulates that the state share the risks.

Draft terms call for the state to take a 20% stake in the project and to take its royalty gas and production tax in-kind, assuming its own shipping and marketing risk, Murkowski said.

"Through this structure, the state maximizes revenues while ensuring that the project moves forward. In nominal dollars, the state would realize a low of $26.5 billion (at a gas price of $2.50/Mcf) and a high of $129 billion (at $8.50/Mcf) in state revenue over the life of the project," Murkowski said on May 10 as the Alaska legislature convened a special session (OGJ Online, May 11, 2006).

Federal involvement
Murkowski reminded state lawmakers that the US Congress passed legislation in 2004 designed to facilitate permitting and construction of a gas pipeline. There also are provisions for a federal loan guarantee and tax credits, he said.

Congress also called for the secretary of energy to study "alternative approaches to the construction and operation" of an Alaska natural gas transportation project unless a pipeline construction application was filed with the US Federal Energy Regulatory Commission within 18 months of the provision's enactment.

The DOE began an early phase of such a study on Apr. 13, Murkowski said.

"I don't think any of us, including the [George W.] Bush administration, wants to see federal ownership of the pipeline," he said. "However, this is a possibility that we may all need to contend with if a contract is not consummated soon."

FERC also is paying close attention to the state's contractual negotiations, Murkowski said. FERC submitted an initial status report to Congress on the pipeline negotiations and plans to continue doing so regularly.

"All of this activity in Congress and the federal agencies leads to the inescapable conclusion that if the state and producers do not soon agree on the terms for commercializing North Slope gas and constructing the pipeline, these issues may be taken away from us," Murkowski said. "At that point, we will lose control of our own destiny."

Related Articles

ConocoPhillips slashes 2015 capital budget

12/08/2014 ConocoPhillips has elected to reduce its 2015 capital budget to $13.5 billion, down 20% compared with this year’s budget. The news comes on the hee...

BLM issues final SEIS for Greater Mooses Tooth project in NPR-A

10/30/2014 The US Bureau of Land Management released its final supplemental environmental impact statement for the proposed Greater Mooses Tooth (GMT1) oil an...

Western gulf lease sale attracts $110 million in high bids

08/20/2014 Gulf of Mexico western planning area Lease Sale 238 drew 93 bids from 14 companies over 81 blocks covering 433,823 acres, totaling $109,951,644 in ...

ConocoPhillips, Enap sign deal to study unconventional oil, gas in Chile

08/06/2014 ConocoPhillips and Chile’s state oil company Empresa Nacional del Petroleo (Enap) have signed a technical agreement to jointly conduct geological, ...

Oando completes purchase of Nigeria assets from ConocoPhillips

07/30/2014 Oando Energy Resources (OER), a Calgary-based subsidiary of Oando PLC, has completed its acquisition of the Nigeria upstream business of ConocoPhil...

ConocoPhillips, Suncor join Shell in deepwater exploration off Nova Scotia

06/11/2014

ConocoPhillips and Suncor Energy Inc. are joining Shell Canada as partners in exploring the deepwater Shelburne basin off Nova Scotia.

ConocoPhillips raises estimates on Eagle Ford recoverable resources, production

04/11/2014 ConocoPhillips has increased its estimated resource base in the Eagle Ford play to 2.5 billion bbl of oil in place from 1.8 billion bbl, as well as...

ConocoPhillips reports higher 2013 earnings

02/10/2014 ConocoPhillips reported full-year earnings of $9.2 billion in 2013, an increase from the $8.4 billion totaled in 2012, which included $1.2 billion ...

ConocoPhillips reports higher 2013 earnings, expects higher production in 2014

01/31/2014 ConocoPhillips reported full-year earnings of $9.2 billion in 2013, an increase from the $8.4 billion totaled in 2012, which included $1.2 billion ...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected