Oil, gas bills signed

Posted: Thursday, June 12, 2003

Gov. Frank Murkowski signed into law four oil and gas bills at Wednesday's Kenai Chamber of Commerce luncheon and applauded the efforts of Kenai Peninsula state legislators Sen. Tom Wagoner, R-Kenai, and Rep. Mike Chenault, R-Nikiski, who helped steer the natural resource development bills into being.

Each of the bills was designed to encourage oil and gas companies to continue to explore in the state, he said.

"Alaska is no longer competitive," Murkowski said. "We don't see the capital being invested here because other oil regions are offering better incentives. If we're not going to be competitive, (oil companies) are not going to come."

Bill 185, sponsored by Wagoner, contains severance tax credit provisions to encourage new exploration drilling for oil and gas. The bill offers a 20-percent tax break for exploration at least three miles from an existing well, and another 20 percent for exploration at least 25 miles from a unit under a development plan. The measure also offers a royalty reduction provision for older Cook Inlet fields.

"It continues the continuity of the economy of this area," Murkowski said.

"Continued production from these declining offshore reserves means continued jobs for the Kenai Peninsula and continued revenue to the state of Alaska."

The Chenault-sponsored House Bill 57, was developed with Agrium in mind, Murkowski said. It gives the state Department of Natural Resources authority to use the contract price as the value of the state's royalty share of gas sold to an agricultural chemical manufacturer.

"Well, you know who that's geared to," he said. "Right here in Kenai. While it still has challenges in terms of deliverability of gas, this is going to provide an opportunity to deliver gas to keep that plant going, and in turn, keep the jobs going."

Senate Bill 151, by Wagoner, impacts the Kenai Kachemak Pipeline, as well as future pipeline companies, Murkowski said.

The bill allows North Slope natural gas pipelines to differentiate rates between firm transportation and interruptible transportation, making them available to any natural pipeline carrier operating in the state. Firm transportation is guaranteed by a reservation charge, while interruptible costs are based on shipments actually made.

"You might think these are a little change, but they allow greater flexibility for the Kenai Kachemak Pipeline," the governor said.

Chenault's House Bill 61 is designed to stimulate gas exploration south of the North Slope by providing oil companies a 10-percent credit against state corporate income taxes.

"Again, it helps us maintain competitiveness," Murkowski said.

He named future resource development growth initiatives he was working toward, including additional oil lease sales from Marathon Oil, timber growth in the Chugach Mountain range, mining development in Delta and federal monies to support commercial fishing processing and marketing. The governor also remained hopeful about progress in opening the Arctic National Wildlife Reserve.

Lt. Gov. Loren Leman also was on the peninsula this week, explaining the administration's recent budget decisions and hopes for the future.

One aspect of Leman's job is to perform "other duties as assigned by the governor," he told a packed meeting of the Soldotna Chamber of Commerce on Tuesday. "That's why I'm here today. To talk to you about the budget and why some of the actions the governor has taken are necessary."

Leman outlined the administration's three primary priorities in the state's budget.

"Just last Friday, I was in a Cabinet meeting in Juneau and (Murkowski) reiterated his priorities: education, public safety and transportation," Leman said, explaining the definitions of each.

"Education is central to everything we stand for," he said. "Public safety is the ability for all of us to work, live and play safely. It extends beyond troopers to things like emergency services and Homeland Security ... to make sure not only our state, but our country is secure.

"Transportation is the ability to travel safely to visit loved ones and to conduct commerce."

Leman spent a brief time highlighting recent actions in each of these areas, such as last week's signing of Senate Bill 202, which increased education funding statewide.

He also discussed resource development and the administration's attempts to streamline permitting processes in an effort to save money and encourage more business. That, he said after the chamber meeting, is the one action the administration has taken that likely will affect the peninsula the most.

"We want to reduce costs and delays and still protect the environment," he said.

As for other cuts that have been made across the state, Leman said he believes changes to the budget were necessary to plan for the future.

"It's necessary to discuss spending today, so we will still be able to work tomorrow," Leman said. "As we work to meet the needs of the state, our success is less dependent on (Washington) D.C., or Juneau, or even oil prices, but on each of us taking responsibility."

Murkowski on Wednesday echoed the statement as he talked about the need to tighten the state's fiscal budget, referring to the shift of responsibility Monday's cut to municipality revenue sharing and safe communities grants created.

"It's everybody's chore to make adjustments," he said. "This was a recognition that we're giving a year's notice that it is over, unless we can develop more resources."

He pointed out his disappointment with proposals he moved forward that did not pass legislation, saying those were tools he devised to generate state revenue. Primary among those shortfalls were proposals for a higher tax on charitable gaming, a cruise ship head tax and a 20-cent increase to state gasoline tax.

"We have the lowest gasoline tax of every state in the union," he said of the 8-cent tax. "I wanted to raise it to 20, which would've generated $40 million."

After the chamber luncheon he defended his stand on creating taxes, however, suggesting there were misconceptions that his original stance on the matter changed after his election.

"When I was campaigning I said I opposed a state income tax and I said I was going to protect the (Alaska) Permanent Fund," he said. "I proposed a seasonal tax and I proposed a head tax, but I remain opposed to a state income tax."

Murkowski estimated the budget cuts his vetoes created as of Wednesday were about $192 million. He said he had set a goal of $250 million and would try to reach that goal to minimize the impact to the state's reserve fund, although he was pleased with his progress.

"Clearly in my mind, we have gotten control of the growth of state government," Murkowski said. "I think we're taking positive steps."

The governor said to expect further scrutiny of governmental spending and infrastructure, and particularly identified school district consolidations as an avenue for trimming the budget.

"We're going to go down every department and ask what can be cut," Murkowski said. "Consolidation of school districts will be primary.

"This is a reflection of my commitment to reduce the rate of growth of government. I think Alaskans have been calling for these cuts for a long time."

Clarion reporter Jenni Dillon contributed to this report.

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