Gas pipeline contract not good enough for Alaska

Posted: Thursday, August 03, 2006

The proposed gas pipeline contract should be scrapped. BP, ConocoPhillips and ExxonMobil are not the best companies to build the gas pipeline, especially since Exxon has not paid for all the damages caused by the Exxon Valdez oil spill. We need better partners in such an important project. Alaska needs to consider an all-Alaska pipeline and bids by other companies that were rejected without full review.

Locking in the oil production tax rate for decades as an incentive to build the gas pipeline is a bad idea.

In these uncertain times of global warming, wars on many horizons and depleting oil and gas reserves, we would be doing our children and the young adults of today a disservice to lock them into a tax system that may not be appropriate for their future. Alaska can find other companies willing to build a gas pipeline without this type of concession.

Taxing the net profit instead of gross production is totally flawed. It’s too complicated. Net profit is difficult to measure, costly to audit and subject to manipulation or gaming by the oil company accountants.

The contract is full of concessions that would limit our state’s sovereignty and right to obtain relief in court. The provision to allow BP, ConocoPhillips and ExxonMobil off the hook in an arbitrated dispute if they can just claim “errors in judgment” is way too loose.

The contract stipulates that Alaska receive its royalty payments in gas or oil, loosing the current flexibility we have to receive royalties in cash. The provision to freeze corporate income taxes also robs Alaska of potential income.

This sweetheart contract doesn’t even require that they build the gas pipeline. Its Alaska-hire provisions are inadequate. The contract is a losing proposition for Alaska and should be discarded.

Carol Anderson


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