Anchorage Daily News

Three Democratic state lawmakers have revived a measure to tax Alaska natural gas reserves.

Reps. Harry Crawford of Anchorage, David Guttenberg of Fairbanks and Beth Kerttula of Juneau recently filed paperwork for a proposed ballot initiative to levy a 3-cent tax on every thousand cubic feet of known gas reserves in large fields in Alaska.

The measure, called the Alaska Gasline Now! Act, could appear on ballots in 2010.

The measure is nearly identical to one filed several years ago by Crawford, Guttenberg and then-Rep. Eric Croft, D-Anchorage.

Following a lengthy and expensive public relations effort by oil companies and vigorous debate on both sides of the issue, voters opposed the measure by a nearly 2-1 margin two years ago.

The intent of the new measure is to prompt the oil companies holding North Slope leases to develop their natural gas reserves. The companies are using gas to power the oil fields and coax more oil from the ground. But they are not shipping it out to markets outside the state for lack of a gas pipeline from the Slope.

The debate over the 2006 measure came as negotiations between the state and the producers on developing a gas pipeline stalled, leaving the multibillion-dollar project in limbo.

Since the previous measure failed at the ballot box, two proposals for building a gas pipeline have made significant strides.

A state-sponsored effort by the Canadian pipeline company TransCanada and a BP-Conoco Phillips joint venture called Denali both started pre-construction work this year. And both are a couple of years away from holding an "open season," where gas producers would commit to shipping through the pipeline. That step is needed before a decision to actually build a pipeline is made.

But potential builders have been talking about moving toward an open season "for the last decade or so," Crawford said.

"Show me, don't tell me," Crawford said.

The progress made on the project over the past two years, though, adds a twist to the gas reserves tax debate. Now, the intent of the measure is not simply to spur pipeline construction, but also to get the producers to commit to shipping their gas down a pipeline as envisioned by Gov. Sarah Palin and a majority of the Alaska Legislature.

Crawford said he would cancel the new reserves tax measure should the North Slope leasees eventually commit gas to a pipeline, regardless of the sponsor, that meets a set of 20 requirements, or "must haves," set out under the Alaska Gasline Inducement Act.

As the sole licensee under that state law, TransCanada is required to meet those 20 must-haves as it moves to certificate and build a pipeline. The Denali project, as currently proposed, meets many, but not all of those requirements.

The proposed measure would apply to conventional reserves in state units created since 2002 and known to contain at least 1 trillion cubic feet of known natural gas reserves.

Under that definition, the measure would certainly cover the gas reserves in the Prudhoe Bay and Kuparuk River units, which hold nearly 25 trillion cubic feet in estimated reserves.

But Crawford believes the proposal would not apply to the estimated 8 trillion cubic feet of gas reserves in the Point Thomson unit because of a state decision to terminate the unit.

Exxon Mobil, the unit operator at Point Thomson, is challenging that decision in court.

The new measure would let leaseholders reclaim the entire tax through annual credits. The previous measure included a similar provision, but stopped reimbursing companies after 2030. The newly proposed measure contains no such deadline.

The previous measure would have brought the state around $1 billion per year.

BP, Conoco and Exxon would be the primary companies paying a reserves tax. TransCanada, an independent pipeline company without North Slope reserves, would not be directly affected by the tax.

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