Energy issues on floor of House, Senate; committee tables oil tax


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Some of the Legislature’s major energy issues of 2013 moved to the House and Senate floors Thursday. The House is giving final consideration today to a plan for the state to finance a small North Slope liquefied natural gas, or LNG, plant and trucking operation to move the gas to Fairbanks.

Senate Bill 23 would have the state’s Alaska Industrial Development and Export Authority find a developer for the plant and finance both the plant and a gas distribution system for Fairbanks.

AIDEA says the plan could reduce Fairbanks space heating costs by 50 percent compared with the cost of heating with fuel oil.

In the Senate, a bill making changes to statutes governing an in-state gas pipeline project will be voted on. House Bill 4 makes technical changes in laws governing the Alaska Gasline Development Corp., the state corporation formed to pursue an in-state pipeline.

The bill would also give AGDC access to funds set aside for it earlier by the Legislature to do more engineering on the project.

HB 4 has faced some opposition but is expected to be approved by lawmakers. The city of Valdez has conducted a vigorous lobbying and advertising campaign against the bill. Bill Walker, Valdez city attorney, told legislative committees the city feels AGDC’s in-state pipeline, which would move 500 million cubic feet of gas per day, is too small to be economically viable. The city is urging legislators to support a larger pipeline that would ship more gas and be more efficient.

On one of the Legislature’s major issues, the plan to modify the state oil and gas production tax, the House Finance Committee tabled its proposed changes Thursday morning to a bill passed to the committee earlier from the House Resources Committee.

The new version raises the base rate of the tax on oil from 33 percent in the Resources Committee version to 35 percent of net per-barrel revenues, the same tax rate that was in Senate Bill 21 when it was passed by the Senate.

The proposed new Finance Committee bill also makes several adjustments to tax credit provisions compared with earlier bills, some changes aimed at helping independent companies now developing projects based on the investment tax credit system in the current state oil tax law.

Finally, the Legislature has given final approval to a new state royalty oil contract for Flint Hills Resources’ refinery near Fairbanks.

The contract was approved by the state House Wednesday after being approved earlier by the Senate. It was sent Thursday by the Legislature to Gov. Sean Parnell for signature.

“Under the new contract we will receive between 18,000 and 30,000 barrels of royalty oil. The pricing terms are similar to our previous state royalty oil contracts,” Flint Hills spokesman Jeff Cook said.

State of Alaska royalty oil is Flint Hills’ only source of crude oil for the refinery, which is at North Pole, east of Fairbanks. Crude oil is taken from the Trans Alaska Pipeline System, which passes through Interior Alaska and near the refinery.

The company produces gasoline and heating oil for local markets, as well as jet fuel sold to air carriers serving airports at Fairbanks and Anchorage.

The company has scaled back operations at the refinery in recent years from three to one crude oil producing towers after losing market share in jet fuel sales at Anchora

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