Alaska Governor Palin Unveils Energy Plan

Alaska Report:

Conservation and long-term solutions remain key focus - From a State of Alaska press release: Governor Sarah Palin today unveiled a short-term energy plan to address the skyrocketing costs of energy in Alaska. The package includes two parts – returning surplus funds through a grant to all electric utilities to reduce ratepayer bills and an Energy Debit Card for the next 12 months.

“Alaskans are feeling the pinch of high energy costs,” Governor Palin said. “The state treasury is swelling, while family checkbooks are evaporating. The right thing to do is to return surplus monies to the resource owners through energy relief. Instead of going to Washington , D.C. for relief, Alaskans should be independent enough to take care of this energy problem ourselves.”

Read the full story

Vetoes with an olive branch

Fort Mill Times:

Gov. Sarah Palin signed a hotly disputed state supplemental budget bill Thursday, using her line item veto pen to strike more than 80 percent of $70 million in capital projects that were inserted by lawmakers.

But it’s not all bad news for them. She’s recommending that most of those vetoed projects be funded in the 2009 capital budget instead, using this year’s surplus revenues from high oil prices. That’s a promise legislators are banking on.

Read the whole story here.

State checkbook goes online

Want to know how much the Department of Transportation spent on guardrails from AAA Fence Co. last year? How much the Department of Revenue paid Gaffney, Cline and Associates for help with oil and gas issues? Or how much your local lawmaker billed the state for travel expenses? Now you can. Easily. Gov. Sarah Palin announced Tuesday she was putting all the state’s expenses online. She said about a dozen other states are already doing it and added that she got hooked on the idea after talking with other governors at the National Governors Association annual meeting. “Alaskans deserve open, transparent government,” she said at a news conference.

All of the information posted online is public information. The goal of posting it online is to make the information much more accessible to the general public. Sen. Bill Wielechowski, D-Anchorage, is sponsoring a bill that would require the state to post its expenses. His office said Tuesday he would keep pushing the bill, SB 201, to make sure the online service continued beyond Palin’s time in office.

Read the full story here: Fairbanks Daily News-Miner

Earmarks Seen Likely to Continue

The New York Times:

President Bush is unlikely to defy Congress on spending billions of dollars earmarked for pet projects, but he will probably insist that lawmakers provide more justification for such earmarks in the future, administration officials said Monday.

Fiscal conservatives in Congress and budget watchdogs have been urging Mr. Bush to issue an executive order instructing agencies to disregard the many earmarks listed just in committee reports, not in the text of legislation. Read more

BP plans to pull investment from Alaska after a $1.5bn tax increase

The latest broadside against the oil industry will eat into the value of the UK giant’s huge operation in the Arctic state

Carl Mortished, World Business Editor

BP is preparing to slash its spending on future oil developments in Alaska in response to a $1.5 billion (£760 million) tax increase imposed by the US state on oil companies.

The fiscal reform, which was signed into law last week by Sarah Palin, the Governor of Alaska, will eat into the value of BP’s huge Alaskan operation and could mean the cancellation or deferral of projects in one of America’s leading hydrocarbon provinces.

“The effect of [the tax increase] is likely to be reduced investment,” said Steve Rinehart, a spokesman for BP in Alaska. BP is currently revising its 2008 budget for Alaska. The company spent more than $2 billion in the state last year, including $1.2 billion in capital expenditure.

ConocoPhillips this month retreated from pledges to spend $1 billion in the state and scrapped plans to invest $300 million in a small refinery to produce clean diesel for use by vehicles in the Prudhoe Bay area.

Alaska’s move is a further blow to international oil companies, which have seen their assets come under threat in Bolivia, Kazakhstan, Russia and Venezuela. The fiscal broadside in the heartland of the US oil industry represents a home-grown political backlash against big oil after several years of mounting concern about bribery, corruption and operational negligence.

Two Alaskan legislators were recently convicted on corruption charges relating to efforts by the industry to stem the impact of tax reforms. Peter Kott and Vic Kohring, both Alaskan Republicans, were convicted of accepting thousands of dollars in bribes after an FBI investigation involving executives of Veco, an oilfield services company.

Meanwhile, sentiment towards the oil producers was damaged by a major oil spill in August 2006 caused by poor maintenance of BP’s pipelines. The spill became an issue in the political debate over oil taxes when it emerged that the British company would seek to take advantage of tax deductions from the cost of replacing old pipelines.

The reforms will raise Alaska’s tax burden on oil and gas producers by almost 10 per cent, according to Wood Mackenzie, the oil consultancy. On modest oil price assumptions, that would slice $2.7 billion from the present value of existing oil production on the Alaskan North Slope, but on a current oil price of about $90 per barrel, the loss of value to the oil companies would be more than $11 billion, representing 16 per cent of the present value of the known resource.

“After three tax increases in three years, would-be players may now question the frigidity of Alaska’s investment climate, rather than that of its Arctic tundra, before making the decision to move north,” said Wood Mackenzie.

BP said it had not yet decided which projects would suffer from the changing tax regime. “The projects that are the most challenging are going to be the ones that are affected,” Mr Rinehart said. “The easy oil is out. There is a lot left but it costs more.”

Alaska’s big resource of heavy oil could be a casualty of the tax increase. Extraction of the viscous fluid, similar to tar, would add extra technical difficulties in the already challenging environment of the Arctic and an additional cost burden from higher taxation could reduce returns to unacceptable levels.

Doubts are also being expressed about the viability of the state’s ambition to pipe the Prudhoe Bay gas reserves south to markets in the lower 48 states.

Prudhoe Bay contains some 35 trillion cubic feet, 13 per cent of America’s known gas reserves, and the Alaskan Government has been at loggerheads with the three oil majors, BP, Conoco and ExxonMobil, which control the Prudhoe Bay oil and gas resource, over a $30 billion project to pipe the gas to Chicago, via Canada.

The three majors failed to submit bids in a recent tender organised by the Government under the Alaska Gas Line Inducement Act.

BP said the fiscal regime offered by the Alaskan Government was still too uncertain for such a vast project over such distances.

“A ten-year limit on tax increases was not enough to mitigate the risk in a $30 billion project,” Mr Rinehart said.

Source: Times Online

Next Page »