Timeline for Oil Tax Reform has Shifted
Lawmakers set their sights on a familiar target
JUNEAU - Nearly a month into the legislative session, lawmakers are setting their sights on a familiar target – Alaska’s oil tax structure.
After a more than 200-page decision by a Superior Court judge and hundreds of pages of previously confidential studies on the Trans-Alaska Pipeline System (TAPS), lawmakers said the timeline for tax reform has shifted.
Previously the discussion was based on an estimated TAPS low-flow limit of 300,000 barrels per-day. When the oil flow – currently at around 600,000 barrels per day – fell below that mark, pipeline owners told lawmakers the system would no longer be able to operate because of low pressure and the risk of ice building up in the line.
Several Alaska communities, including the Fairbanks North-Star Borough and the City of Valdez, felt differently.
Bill Walker, an Anchorage oil and gas attorney involved in the case, said the two communities had filed suit over the value of the pipeline. During the proceedings, two studies commissioned several years ago by oil giant BP revealed the pipeline could actually sustain operations with flow levels at 135,000 barrels per day and potentially as low as 70,000 barrels per day.
That would mean a longer and more profitable lifespan for the 800-mile-long pipeline and, according to the decision issued by Judge Sharon Gleason, was the figure reported to the Securities Exchange Commission.
But when pipeline owners joined the tax debate in Juneau last year, lawmakers said they were presented with the more urgent 300,000 barrel-per-day number.
"The source of that information was from the same source, but with inconsistent results,” said co-chairman of the Senate Resource Committee, Senator Joe Paskvan (D-Fairbanks).
Committee members said they’re now in the process of reviewing the court’s findings and the new information on pipeline throughput.
“We have no immediate concern of a shutdown or revocation of the TAPS line and infrastructure in the Arctic,” said Senator Bert Stedman.
He said it’s a revelation that has erased the sense of urgency from the oil tax discussion.
"What is time sensitive is to put to rest the fear-mongering around the state that we are in jeopardy of losing one of the richest hydrocarbons on the planet,” said Stedman.