Knowles to seek tax breaks for proposed natural gas pipeline

Posted: Tuesday, September 11, 2001

ANCHORAGE (AP) -- Gov. Tony Knowles is headed to the nation's capital next week to propose tax breaks to aid in building a natural gas pipeline from Alaska's North Slope to the Lower 48.

''This pipeline is in Alaska's interest and the nation's interest,'' Knowles said Monday after making a speech to the Anchorage Chamber of Commerce.

The big companies looking into building the pipeline, however, say they're not interested.

''We're glad the governor is thinking about us. But as a joint team, right now, we're not seeking fiscal incentives,'' said Dave MacDowell, external affairs manager for the Anchorage-based North American Natural Gas Pipeline Group, formed by BP, Exxon Mobil and Phillips Petroleum to study development of the North Slope's vast natural gas holdings.

Instead, the companies are seeking their own federal legislation that would streamline the complex federal and Canadian permitting process.

Knowles said he talked with Exxon Mobil production company president Terry Koonce, Phillips Alaska President Kevin Meyers and BP's David Welch. All reiterated their opposition to the proposed federal legislation, Knowles said.

John Shively works for Foothills Pipelines, the company which holds permits that allow the company to build, own and operate a pipeline from the North Slope to the Lower 48. He said economic incentives may be needed.

The three big oil companies are in the midst of a $100 million study of whether a natural gas pipeline from the North Slope to the Lower 48 makes economic sense. Cost estimates range from $15 billion to $20 billion.

Knowles is proposing three financial incentives:

--Accelerated depreciation over seven years, which would allow the companies to pay less each year in taxes and recover their investment sooner.

--A 10 percent investment tax credit, which could shave $1.5 billion to $2 billion off the project.

--A tax credit when natural gas prices become low.

Knowles plans to leave for Washington, D.C., on Monday where he will lobby Congress for the new gas legislation as well as for oil exploration in the Arctic National Wildlife Refuge.

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