Communities, companies appeal pipeline valuation

Posted: Friday, May 18, 2001

FAIRBANKS (AP) -- Three Alaska communities and six oil industry companies are disputing the tax value of the trans-Alaska oil pipeline before the state's Assessment Review Board.

The board was expected to complete a hearing on the issue Friday. The hearing began Wednesday.

The Fairbanks North Star Borough, the North Slope Borough, the city of Valdez and the six oil company owners all disagree with the state's assessment of $2.75 billion for the pipeline and associated properties such as pump stations.

The pipeline owners -- Phillips Alaska, BP Exploration (Alaska), Exxon Mobil, Williams Alaska Pipeline Co., Amerada Hess, and Unocal -- say the pipeline properties are worth $2.1 billion. The three local governments say $2.9 billion.

Last year, the state placed the value at $2.89 billion, which no one appealed, said Richard Brewer, petroleum property assessor for the Department of Revenue.

That brought the Fairbanks North Star Borough $3.8 million in taxes, according to Mayor Rhonda Boyles. With the $2.75 billion assessment, that borough's tax receipts would drop by $55,000. Under the owners' proposed assessment of $2.1 billion, the borough's loss would be $1 million.

This year's assessment was based partly on a forecast that a daily average of 1 million barrels of oil would flow through the pipeline in 2001, said Brewer of the Revenue Department. The assessment was also based on owner income and sales, he said.

Oil production at Prudhoe Bay has gone down 8 percent a year for the last 12 years, Brewer said.

The pipeline is assessed yearly by the Department of Revenue. The law allows appeals to the five-member board, appointed by the governor. The review board has seven days to make a decision after the hearing ends, Brewer said.

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