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State board puts pipeline value at $3.017 billion

Posted: Friday, May 25, 2001

FAIRBANKS (AP) -- The State Assessment Review Board has ruled that the trans-Alaska pipeline system is worth $3.017 billion, almost $1 billion more than what its owners argued the 800-mile pipeline system is worth.

The value of the pipeline system has steadily declined, corresponding with declining North Slope oil production, since 1988. The new valuation is up from last year's $2.89 billion. The last time the value was above $3 billion was in 1999.

The assessment board's decision means about $350,000 more to the Fairbanks North Star Borough's treasury, borough officials told the Fairbanks Daily News-Miner.

The decision was released Thursday, six days after the board finished hearing arguments from the state and three local governments that collect taxes from the pipeline, and from the owner companies.

''It's a good day,'' borough assessor Lenny Reagin said.

The tax division within the Department of Revenue is charged with coming up with an annual tax value of the pipeline, accompanying buildings and equipment. This year the division tentatively assessed the value at $3.017 billion, said Dan Dickinson, director of the tax division. The number is based on estimated future income of the pipeline.

''You've got to make a lot assumptions,'' Dickinson said.

The pipeline owners -- Phillips Alaska, BP Exploration (Alaska), ExxonMobil, Williams Alaska Pipeline Co., Amerada Hess, and Unocal -- claimed the value was $2.1 billion.

The Fairbanks North Star Borough, the North Slope Borough and the city of Valdez came up with estimates that ranged from $2.9 billion to $5.9 billion, Reagin said.

The owners group and the government group used formulas that included costs to build a new pipeline at today's prices and estimated sale value, Dickinson said.

The state tax office took various arguments from the two groups' appraisals and applied them to its $3.017 billion number, Dickinson said. The state then said the pipeline system's value was $2.75 billion.

''We looked at the arguments,'' Dickinson said. ''When we considered all the assumptions, we decided to do a trim of $250 million.''

Both the owners and the governments appealed to the assessment board.

In its Thursday decision, which can be appealed to Superior Court, the board said that the state should have only considered future income of the pipeline. That put the value back over the $3 billion mark.

The board also rejected all of the owners' arguments for $2.1 billion. That would have cost the borough $1 million, nearly a third of what it collected last year.

The borough would have lost $55,000 under the state's $2.75 billion number.



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