Murkowski pushes incentives for oil companies

Posted: Thursday, October 24, 2002

ANCHORAGE (AP) -- Republican Frank Murkowski pledged not to raise oil company taxes if he's elected governor.

Speaking Wednesday to employees of Conoco Phillips, the 22-year U.S senator replied with an emphatic ''no'' when asked if he would raise oil company taxes.

''That will be the first thing I oppose,'' he said. ''We want to provide incentives.''

Murkowski said Gov. Tony Knowles and Lt. Gov. Fran Ulmer, Murkowski's Democrat opponent for governor, did not do enough to encourage development.

''They put out a big sign and said, 'We're open for business,' but they did not really mean it,'' Murkowski said.

Ulmer campaign spokesman Jason Moore took issue with Murkowski's characterization.

''One of the things Murkowski doesn't seem to be aware of is what's been happening in Alaska over the last seven years,'' Moore said. ''The current administration has been very friendly to the oil industry.''

One of the biggest incentives, area-wide leasing, was put in place in 1998 at the industry's request. The Department of Natural Resources used to wait until companies expressed interest in an area before opening it to bidding.

''It's been hugely successful. They've had record sales,'' Moore said, and new companies have come up to bid.

Ulmer has not ruled out new oil taxes. Her idea for closing the fiscal gap includes a ''parachute plan.'' The plan calls for new tax measures, to be determined with legislators, to kick in if the state's main savings account, the Constitutional Budget Reserve, falls below $1 billion.

All possible taxes would be considered in the discussion. However, Ulmer personally believes oil companies have carried the brunt of the tax burden and that Alaskans should not look to them for more, Moore said.

''We don't want to create a disincentive to investment,'' he said.

At the afternoon gathering Murkowski repeated his contention that the state is not approaching fiscal crisis.

There is $2.1 billion remaining in the budget reserve, the state bank account used over the last decade to bridge the difference between state spending and income. Murkowski said what remains in the budget reserve is enough to fill gaps in the next several years while the economy expands.

Knowles administration officials say the reserve could run out by 2004.

Murkowski laid out a variety of incentives, including one for exploration wells that allows for a 50-percent recovery of qualified seismic and exploration well drilling costs through credits to severance tax or royalty payments or both.

He called for oil companies to return North Slope leases after five years, rather than seven, if no seismic or drilling activity has taken place.

Among his other ideas, Murkowski recommended the state:

-- Release proprietary seismic data after 20 years rather than hold it in perpetuity;

-- Streamline permitting for wells, in part by shifting personnel from other departments, retraining them and assigning them to permitting activity;

-- Construct gravel roads in select areas on the North Slope to create staging areas for resource development;

-- Negotiate project-specific incentives for heavy oil projects if producers commit to developing them by a certain time;

-- Seek other producers to develop heavy oil sites unused by major producers;

-- Support federal legislation to streamline natural gas permitting.

He said he did not know why more than 12,000 wells were drilled in Alberta last year and just 141 were drilled in Alaska.

''We're going to find out and we're going to address this,'' he said.

He said the stars are aligning for growth in Alaska. President George Bush worked in Fairbanks and is pro-development in Alaska. The Alaska congressional delegation will remain strong with Sen. Ted Stevens and Rep. Don Young.

''The void, in my opinion,'' is in Juneau,'' he said.

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