Gov pulls reserves tax from special session

Gov. Bill Walker at a press conference in the Capitol, Oct. 23, 2015. He announced that he was dropping a proposed natural gas reserves tax from the special session agenda. (Photo by Jeremy Hsieh/KTOO)
Gov. Bill Walker at a press conference in the Capitol, Oct. 23, 2015. He announced that he was dropping a proposed natural gas reserves tax from the special session agenda. (Photo by Jeremy Hsieh/KTOO)

Governor Bill Walker has pulled a controversial gas reserves tax from consideration during the legislature’s special session. In a press conference Friday afternoon, Walker said he was taking the step after receiving assurances from the state’s partners in the proposed Alaska LNG project that should any one company pull out, it would not withhold its gas from the project.

The state is working with ExxonMobil, BP, ConocoPhillips and the pipeline builder TransCanada on the proposed pipeline, which would bring natural gas from the North Slope to the Kenai Peninsula for export.

The governor had been seeking a “withdrawal agreement,” in case one partner steps back. He proposed the reserves tax when the parties could not reach agreement earlier this fall. The proposal would have levied a property tax on natural gas left undeveloped.

“What it gives is the assurance that we’ll have gas for our gasline,” Walker said. “The purpose of the reserves tax wasn’t about being punitive at all…It was intended to be a commitment to put gas into a project.”

The governor’s office released letters from ConocoPhillips and BP on Friday, Oct. 23, committing to negotiate such a withdrawal agreement by Dec. 4. At the press conference, he said he also had verbal assurances from ExxonMobil and was expecting a written commitment shortly.

The governor had proposed the reserves tax at the last minute when he called the special session, surprising and irritating the Republican leadership in the Alaska House and Senate.

In a statement, House leadership expressed relief at the governor’s announcement. “Instead of making hurdles for the producers to jump over, we’re working with them to get the best deal for Alaska,” House Speaker Mike Chenault, R-Nikiski, wrote in a statement. “This is definitely a step in the right direction.”

The special session will convene at 11 a.m. on Saturday, Oct. 24. The focus now will be whether the state should buy out TransCanada’s share of the Alaska LNG project.