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Alaska Legislators Again Consider Tax on Undeveloped Gas Reserves

Former Alaska Gov. Walter Hickel has once again urged state legislators to impose a tax on undeveloped natural gas reserves to encourage North Slope producers to agree to begin building the long-proposed North Slope gas pipeline.

Hickel, speaking before the Alaska House Ways and Means Committee last week, said, "Life has consequences. If you run a red light, you get a ticket. If you steal someone's property, you go to jail. And if you keep what may be over $1 trillion worth of someone else's resources off the market for the benefit of yourself and your stockholders, you must pay a price."

Privately, a team of state negotiators led by Gov. Frank Murkowski has been working for months with the three major North Slope producers -- BP plc, ConocoPhillips and ExxonMobil Corp. -- on a workable deal to build a gasline to the Lower 48. However, predictions of the outcome remain unclear; Murkowski had hoped for a contract before the end of 2005, but it was not to be (see NGI, Dec. 26, 2005). The governor's office on Thursday said talks were continuing.

However, after the negotiations between state leaders and the producers ended late last year, the Alaska Gasline Port Authority (AGPA), of which Hickel is a member, filed a federal antitrust lawsuit against two of the producers, ExxonMobil and BP, charging them with conspiring to refuse to sell gas from the resources they control on the North Slope.

Last week, Hickel was called to testify for a bill proposed by State Reps. Eric Croft and Harry Crawford. Similar to a bill the two proposed last year, the legislation would impose nearly $1 billion in combined annual gas reserve taxes on ConocoPhillips, ExxonMobil and BP until they commit to a pipeline project.

Croft, who is running for governor, said he and Crawford will try to put a similar measure on the 2006 statewide ballot in November if the legislature fails to act. More than 46,700 initiative petition signatures from across the state have been collected so far, he said.

"They've had a version of this before them for the past four years, and I'm not going to rely on the legislative process to get this done," Croft told the Anchorage Daily News. More public testimony is scheduled for Wednesday (Jan. 18).

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