Rosemarie Alexander, KTOO – Juneau
Governor Sean Parnell’s bill to give oil companies bigger tax credits is on the move, but the controversial legislation has a long way to go and major opposition.
After five lengthy hearings, the House Resources Committee Monday night moved the bill onto House Finance. No word yet as to when that committee will schedule it.
Resource Committee members heard from the oil industry and state revenue officials, who agree it’s expensive to do business in Alaska. Industry representatives gave the Resources Committee no commitments that their companies would invest more in Alaska in exchange for lower production taxes.
Committee co-chairman Paul Seaton wasn’t convinced that greater exploration would result from tax breaks.
He produced an Alaska Oil and Gas Conservation Commission graph that shows declining production long before the legislature changed the production tax in 2007.
Seaton tried but failed to amend the bill to leave the current production tax structure intact. In the end, he voted to move the bill out of committee.
Parnell’s bill would reduce the base rate tax on new fields from 25 percent to 15 percent. Estimates indicate the state would lose about $2 billion a year in oil tax revenue through 2017, when revenue officials hope new exploration would kick in.
Revenue Commissioner-designee Bryan Butcher says the reduction would encourage oil companies to find ways to produce more from the Prudhoe and Kuparuk fields and also explore new fields.
Both ConocoPhillips and BP have said their capital investment on the North Slope will be flat this year.
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