New Bill Encourages Independent Oil Exploration

Dave Donaldson, APRN – Juneau

A bill introduced Wednesday morning in the state House would give independent oil exploration companies more direct access to the facilities they need to ship their oil through the TransAlaska Pipeline system.   Those facilities are covered by Unit Agreements and are controlled by the existing producers.

Sponsor David Guttenberg says the goal is to  get more companies producing more oil on the North Slope.  His bill would let those pre-shipment facilities be controlled as a utility by the Regulatory Commission of Alaska.

“RCA will determine what needs to be done to get facilities access, whether it’s taking gas out of oil or water out of oil or whether they need to expand an existing facility and who needs to pay for that,” Guttenberg said. “Is it rolled in rates or is the new developer responsible for all of it?   Is there displaced oil?  There are lots of questions.”

“To get into the finite of the minutia of it would be something I think only the governor can do of the RCA can do because they have the agencies at their beck and call. We want to tell them this is one of the ways that will get us more oil.”

Guttenberg says there are plenty of tax incentives available to those already producing oil, but those are meaningless to new producers who cannot ship their resource.   He sees the most effective solution to declining production is to have more companies at work in existing fields that are now closed to them.

Opposition to the idea is developing.   Anchorage Republican Mike Hawker – who has introduced a bill offering the oil industry lower taxes – says legislators have considered and rejected such regulation within the past few years.

“I don’t know where one can point at any proven reserve of oil that has not been produced on the account of not having access to these facilities that this bill proposed to regulate,” Hawker said. “It’s a solution looking for a problem.”

Guttenberg acknowledges that smaller companies have gained access to the Pipeline through “partnership” arrangements by offering to share profits with the larger, existing producers.  However, he says more companies have kept away from Alaska because of the absence of being able to get their product to market.

“When you realize why that doesn’t happen, you realize you need to have a regulatory process in place that allows them to have that access, and you have to give the owners of those facilities a reasonable return on their investment,” Guttenberg said. “But I think that is clearly one of the biggest obstacles I can see that’s in the way.”

Hawker points out that ancillary facilities are included in the state’s incentives for both their construction and their operations.

The bill was referred to the Labor and Commerce Committee, but it hasn’t been scheduled for hearing.

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