• Forecast
  • News Tip
  • Categories
Temperature Precipitation
Estimated read time
3m 14s

Small oil company delays loan repayment after Walker cut tax credits

By Liz Raines Photojournalist: Rachel McPherron - 8:22 PM December 1, 2016

Last summer, Gov. Bill Walker postponed hundreds of millions of dollars in oil tax credit payments for the second year in a row.

“We just didn’t have the cash flow to fund those at this point,” Walker explained after announcing the budget veto in July.

Now, companies that were counting on those credits say they’re feeling the ripple effect — companies like BlueCrest Energy. It planned to use the tax credit money to pay off a loan it received from the state’s public financing corporation, Alaska Industrial Development and Export Authority (AIDEA).

BlueCrest now estimates a $60 million setback in its finances because of Walker’s cut, and is asking to delay repayment on its $30 million AIDEA loan.

“What we’ve asked for is a little bit of reprieve,” said John Martineck, chief operating officer of BlueCrest Energy. “It’s just like your balancing your household finances, if somebody took $60 million  out of your household finances, you’d have to change the way you do your business.”

BlueCrest isn’t the only one renegotiating. The Alaska Oil and Gas Association (AOGA) says several of its smaller members have had to do something similar.

But while BlueCrest may be borrowing from a public corporation, delaying the loan repayment won’t come out of the state budget.

“We are entirely self sustaining, that is the key point to understand,” explained Karsten Rodvik, external affairs officer for AIDEA. “We’re making this investment because it’s a good business decision, we expect to make a return on it.”

When there is a return on the loan, some of that money will help pay for troopers, schools and other public services. Oil tax credits, public financing and the state budget are all intertwined, much like a series of dominos carefully placed to keep the ripple effect from causing a crash.

In a statement Thursday, Walker said:

“Although the State has fully met its credit reimbursement obligations under the law, we understand the difficult financial position many companies are currently facing and have encouraged state agencies to be flexible whenever possible in working with companies to get through these trying times.”

Ken Alper, director of the state’s tax division, estimates the state will owe around $650 million in tax credits to oil companies by June 2017.

AIDEA board members voted unanimously to approve BlueCrest’s request. The company will make interest-only payments on the loan for the next year.

Several Alaskans spoke against the resolution at AIDEA’s board meeting Thursday, citing concerns about the company’s plans to use fracking techniques to extract oil from the Kenai Peninsula.

“At this point, we’re grasping at straws to try and prevent this frack,” said Homer resident Amy Christiansen. “I’m not going to quit. I’m going to go after them as long as I can because I don’t want to see the Kenai Peninsula become oil, and industry and trucks on the road all the time.”

But AOGA says fracking in Cook Inlet isn’t new.

“It’s the same fracturing process, it’s not a new process, it’s been happening in Alaska. It’s not new,” said AOGA CEO Kara Moriarty. “It’s been happening in Cook Inlet and on the North Slope. In fact, you would not have the production you have today if you were not able to use hydraulic fracturing.”

Cook InletKeeper, a nonprofit organization, has requested change in state fracking regulations. The Alaska Oil and Gas Conservation Commission will take public comment on the topic at a meeting on Dec. 15.

KTVA 11’s Liz Raines can be reached via email or on Facebook and Twitter.

Correction: An earlier version of this story misspelled Karsten Rodvik and Amy Christiansen’s names. This has been amended.

Latest Stories

  • Statue stands in honor of Iditarod founder

    by Dave Leval on Jun 24, 22:21

    He already has a school named after him, now, there’s another way to honor the man known as the “father of the Iditarod.” It took Palmer artist Pat Garley took roughly 18 months to complete the “Joe Redington, Senior on the Trail” statue that sits outside Redington Junior-Senior High School. The part of Redington weighs […]

  • Rookie musher first to sign up for 2018 Iditarod

    by Dave Leval on Jun 24, 22:19

    Shaynee Traska has what she needs as she prepares for the biggest challenge of her athletic career. The Yukon Qyuest 300 veteran from Two Rivers wants to play with the big dogs. Traska is the first person to sign up for next year’s Iditarod. “Very surprised, being a big Iditarod sign up day, I thought […]

  • News

    Pride Fest celebrates 40 years in Anchorage

    by Heather Hintze on Jun 24, 18:04

    Hundreds of people turned out in downtown Anchorage for the 40th annual Pride Fest. Mo Haddock and Callene Monasmith set their lawn chairs up early to get a front for the parade. “It’s a lot of fun. We like to people watch anyway but today is very fulfilling. Very heartwarming to see so many people […]

  • News

    Here’s what is pushing up U.S. home prices

    by CBS News on Jun 24, 14:53

    When it comes to buying a home in the U.S., the tide is turning in favor of sellers. The typical residential property that’s up for sale currently stays on the market for 77 days, according to Zillow — that’s the shortest listing time since the real estate service started tracking the data. While demand for […]

  • Mom left 2 children who died in hot car as punishment, police say

    by CBS News on Jun 24, 14:35

    A Texas woman told investigators that she left her 2-year-old daughter and 16-month-old son in a hot car last month to teach the girl a lesson, police said. The children died after spending several hours in the car. Cynthia Marie Randolph, 24, was being held Saturday on two counts of causing serious bodily injury to […]

  • Six inmates who saved guard’s life rewarded with shorter sentences

    by CBS News on Jun 24, 14:32

    Officer down. It’s one of the scariest calls a sheriff can receive. But when Polk County Sheriff Johnny Moats got that call on June 12, it didn’t turn into the nightmare scenario he might have expected. On the contrary, that hair-raising call was the start of something heartwarming. Its unexpected source? A group of selfless […]

  • Lifestyle

    How would the Senate health care bill actually affect Medicaid?

    by CBS News on Jun 24, 14:26

    Democrats and left-leaning think tanks say Senate Republicans’ health care bill would be disastrous for individuals and families on Medicaid, the federal program that provides health coverage to low-income Americans. But White House press secretary Sean Spicer on Friday said President Trump is “committed to making sure that no one who currently is in the […]

  • News

    How the U.S. Army counters North Korea threats

    by CBS News on Jun 24, 14:23

    SEOUL, South Korea — While “CBS This Morning” co-host Norah O’Donnell and her team were in South Korea, the U.S. Army took CBS News on an aerial tour to give us a first-hand look at what they are doing to counter threats from North Korea. We hitched a ride from Yongsan Army Garrison on a […]