Alaska Gov. Sean Parnell answers a reporter’s question during his first news conference of the new legislative session on Thursday, Jan. 17, 2013, in Juneau, Alaska. Topics covered during the news conference included oil taxes, a gas pipeline project, education and state spending. (AP Photo/Becky Bohrer)
JUNEAU, Alaska (AP) — Gov. Sean Parnell said Thursday that his new benchmarks for progress on a major gas pipeline must be met before the state talks with companies about gas tax rates.
In his first news conference of this legislative session, Parnell also rejected critics’ characterizations of his oil tax overhaul as a repackaged version of his tax-cut plans that stalled in the Legislature the past two years and a giveaway to oil companies.
A day after delivering his fourth State of the State address, Parnell told reporters he is taking the long-term view with a plan that he says restores balance to the oil tax system, not just looking at the short-term impact that his oil tax bill would have on revenue.
“We know that the path they support guarantees production decline,” he said, with at least two Democratic critics of his plan, Sen. Bill Wielechowski and Rep. [auth] Les Gara, in attendance. “I think the way to go is the new proposal I’ve made,” he added later.
In Wednesday’s State of the State speech, Parnell laid out a series of new benchmarks for progress on a major gas line. The first of those calls for the North Slope’s major players and TransCanada Corp. to settle on a project concept by Feb. 15. He said he believes that’s not only achievable but also “responsible for Alaskans to require that of these companies. ‘Tell us what you’re planning. Tell us what you’re going to build.'”
Parnell also expects for the companies to finalize an agreement by spring to move into a stage that would include preliminary engineering and a financing plan. He also wants a full summer of field work to begin this year.
Parnell told the companies last year that if they met the targets he set, the state could look at gas taxes this year. The producers, BP PLC, ConocoPhillips and Exxon Mobil Corp., have pushed for greater certainty on oil and gas taxes in order to move ahead.
He said gas tax rates can still be evaluated — but only after his new targets are met.
“That’s kind of the order of things,” he said. “Alaskans deserve to know … what the plan is before we’re asked to give up anything on the gas tax side of things.”
Parnell said he set new targets because the companies “upped their game and responded” to benchmarks he set last year to jumpstart the seemingly stalled project. He said he spoke with company representatives before announcing his new goals and said there wasn’t unhappiness on any side.
TransCanada, BP, Exxon Mobil and ConocoPhillips have agreed to pursue a liquefied natural gas project capable of overseas exports. They have said the project could cost more than $65 billion but they haven’t announced specifics and haven’t committed to build.
The companies said in October, after meeting Parnell’s first round of goals, that “significant environmental, regulatory, engineering and commercial work remains to reach upcoming decisions to bring North Slope gas to market,” a point reiterated by a TransCanada spokesman Thursday.
“We are working to complete concept selection as soon as possible,” spokesman Shawn Howard said by email, when asked if the Feb. 15 target was achievable. “We understand the importance of this work to the state and are working diligently to complete it.”
Parnell’s sharpest words during the news conference were in response to criticism of his oil tax plan. He said the current tax structure isn’t fair to Alaskans, because it doesn’t protect the state as well as it could when oil prices are lower. He said it also isn’t fair to Alaskans “to be sliding in production and doing nothing about it.”
Production has been on a downward trend since the late 1980s but has fallen to a point more recently where there are greater concerns about the impact on the state’s budget since Alaska relies heavily on oil to run. Republicans and Democrats agree with the goal of increasing production but disagree on how best to achieve that.
Wielechowski, D-Anchorage, said it’s “crazy” to say he and other critics support status quo decline because they don’t like Parnell’s bill. He said very low taxes in the past didn’t reverse the trend and there are other things the state should look at, like requiring development plans as a condition to leasing, enforcing leases and having the state partner with companies to make uneconomic projects economically feasible.