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By MARK THIESSEN
Associated Press 

Criticism of reserve tax proposal brushed by Walker

Governor says Alaska needs to act like the owner-state that it is

 

Photo courtesy State of Alaska

Gov. Bill Walker.

Gov. Bill Walker on Friday brushed aside criticism from Republican lawmakers that they were blindsided by his call to reinstate the gas reserves tax during the upcoming special session.

"I sat right at this table and talked about fiscal certainty and project certainty," Walker said during a news conference at his Anchorage office. He met with lawmakers a week ago Monday to inform them of his call for the special session, which starts Oct. 24 in Juneau.

Walker said the tax is not meant to be punitive, only to spur movement on the natural gas pipeline project, estimated to cost between $45 billion and $65 billion. However, it remains only in the preliminary design stage, and the four partners have not decided whether to build it.

Walker and others see the pipeline as a salvation for a looming budget crisis as oil production dwindles on the North Slope and oil prices plummet. The deficit this year is $3.5 billion.

"I need to create our own project certainty," Walker said Friday of the tax, which is meant to entice getting gas to market.

Walker on Thursday called lawmakers back into a special session to deal with the liquefied natural gas pipeline project. It will include asking lawmakers to buy out Canadian pipeline maker TransCanada from the project. Walker reiterated Friday that this was the best way to ensure the state has a seat at the negotiations table along with other project partners BP, Exxon Mobil and ConocoPhillips.

"Gov. Walker's administration wants the state of Alaska to take on a bigger role in the development of Alaska's natural gas resources, including the Alaska LNG Project," TransCanada spokesman Davis Sheremata said in an email to The Associated Press.

The state's contract signed in June 2014 allows the state to buy out the Canadian company.

"We have been in discussions with the Walker administration about this for some time. We are not able to comment further on these discussions," Sheremata said.

Walker also intends a provision in his legislative package to reinstate a reserves tax on North Slope resources in the ground that are not developed. His office said former Gov. Bill Egan in 1975 signed a similar bill to allow the state to collect oil revenue before the trans-Alaska pipeline was built.

The governor said he couldn't accept a scenario in which a company keeps its gas off the market, and he said this was a way to make sure companies know there are consequences if they withhold their gas.

"It's time Alaska acts like the sovereign that we are, and make sure we have some leverage and act as an owner state," Walker told the AP on Thursday.

House Speaker Mike Chenault said Walker made no mention of the tax when legislative leaders met with him Monday about the special session. But Walker said he told lawmakers that his intent for the special session would include a provision for project certainty.

BP, one of the oil company partners, said Friday the tax could complicate its intent to be an "equal participant and co-investor" in the project with the state and result in unintended negative consequences, such as delays to negotiations and 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," BP said in a statement. "The gas reserves tax makes an Alaska LNG project more difficult."

 

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