No oil companies oppose bonds for tax credits, commissioner says

Alaska Commissioner of Revenue Sheldon Fisher testifies before the House Finance Committee, April 23, 2018. The committee was taking comments on House Bill 331, introduced at the request of Gov. Bill Walker. If passed, the bill would allow the state to sell bonds in order to pay tax credits to oil companies. (Photo by Skip Gray/360 North)

A bill that would use bonds to pay off the state’s debt to oil and gas companies for tax credits has raised a question from lawmakers: are the companies interested?

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Revenue Commissioner Sheldon Fisher provided the House Finance Committee an answer Monday, saying most of the companies are on board with the idea.

“So far, no one has informed us that they do not intend to participate,” Fisher said. “They’ve either informed us that they want to participate – which is far and away the majority – (or) there’s a handful of companies that have said they’re still thinking about it and want to get back to us.”

The state owes the companies more than $800 million in tax credits.

House Bill 331 would allow it to pay them off quickly.

The state would receive a discount of roughly 10 cents on the dollar, to cover the cost of issuing the bonds.

State payments for the credits slowed as oil prices fell. But companies have said the delayed payments have hurt development.

One company that is especially interested is Caelus Energy. It has $180 million in tax credits owed it.

Caelus Vice President Pat Foley said it would be a win for the state and investors if the bill passes.

“We do have loans against a substantial portion of that,” Foley said of the credits. “We’d be in a position to pay off those loans and most importantly we’d be in a position to attract additional investment … to allow us to go ahead with full speed at Nuna and hopefully we’d be in position to drill an additional appraisal well out in Smith Bay.”

Lawyers for the state have different opinions about whether the bill would withstand a legal challenge.

The Department of Law said the bill is constitutional. But an attorney who advises the Legislature has questioned its constitutionality, because the constitution limits how the state can issue bonds.

The House Finance Committee will hear public testimony on the bill Tuesday.