Lawmaker questioned about oil tax posture

February 17, 2006

Spectrum/Larry Wood

Dear Rep. Kohring;

I am disappointed in your response to the two oil and gas tax bills coming before your committee. You indicated to me by e-mail on Feb. 4 that your position is based upon the idea &#8220that 70 percent of something is better than 100 percent of nothing,” and &#8220no new taxes.”

Why are Exxon, Conoco-Phillips and BP investing so heavily everywhere else in this world? Is it Alaska's &#8220high” taxes?

No, it is because there are absolutely no time constraints and no penalties regarding the development and marketing of Alaska's NG in their Alaska North Slope leasehold agreements. Alaska's hydrocarbon resource is just money in the bank.

Every ounce of foreign gas Alaska's NG displaces in the U.S. market are money and jobs that remain here, in the U.S. and Alaska.

The recent report by the Federal Energy Regulatory Commission further highlighted the lack of commitment on the part of the oil companies to develop and bring to market Alaska's North Slope NG resource. FERC expressed concerns over increasing project costs and that no permitting in the U.S. had been started for the Murkowski-Knowles NG pipeline.

Permitting has not even been started in Canada for the Murkowski-Knowles NG pipeline.

Why do you think that is?

Exxon is building a $14 billon LNG plant in Qatar. Why? To ship Qatar gas to the U.S.

When is this project expected to be completed? In 2008. The need for a vastly enlarged LNG tanker fleet will delay the impact upon the U.S. NG market of Qatar's 1,000 trillion cubic feet NG reserves.

Conoco-Phillips and BP are developing gas reserves everywhere but here.

Obviously, Alaska's NG does not buy guns and bombs to kill Americans, or build mosques that signal a danger to our republic.

Remember your oath and Section VIII of Alaska's Constitution: sec. 2: &#8220The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”

I will remind you that we voted and passed Proposition 3 last election creating the Alaska Gas Development Authority to build and operate a natural gas pipeline running from Prudhoe to Valdez. This proposition is law, not a fanciful wish of the people to be ignored by the Legislature or our governor.

We spoke, and you all turned a deaf ear. This institutional deafness constitutes a violation of the oath of office on the part of each and every legislator and our governor.

Now we are at a crossroads in Alaska's resource development. Do we or do we not have any say in developing our natural resources, much less in getting our natural gas to market?

The NG pipeline project represented by ANGDA is permitted and ready to build. The Alaska Gas Port Authority is a very close second.

The only bars are the Murkowski administration, the Alaska Legislature and the oil companies.

You, Sens. Lyda Green and Charlie Huggins, and Reps. Mark Neumann, Carl Gatto and Bill Stoltze should be the strongest advocates for an all-Alaska Route, because AGPA's route includes a 500mcf/day spur that terminates near Palmer. The Murkowski-Knowles pipeline does not include this option. Yet, there is nothing but deafening silence from our Valley delegation on this issue.

AGPA's litigation may force the producers to sell our NG, but how many years will that take?

Increased taxes cannot hurt as a bargaining chip. Before there has been any real discussion, you stating that your committee will not consider these two tax bills that send a clear message to the producers regarding positive development is lousy poker.

I believe that your decision regarding the tax bills has given the oil companies comfort.

Best regards, Larry Wood.

Palmer resident Larry Wood is a regular contributor to these pages.