Governor, State Senators Trade Barbs on Oil Tax Reform

March 02, 2012|By Dan Fiorucci | Channel 2 News

JUNEAU, Alaska — On Friday, Gov. Sean Parnell reaffirmed that he does indeed have a solid commitment from BP that North Slope producers will make $5 billion in investments in Alaska -- commitments that he says will get "underway" within the next three years. Parnell's statements came after members of the state Senate criticized the governor for making such claims.

In a letter to the governor Friday, Sen. Hollis French (D-Anchorage) urged Parnell to "desist" from claiming he had a $5 billion commitment over 3 years.

French issued the letter after the Senate Natural Resources Committee heard testimony Thursday night from Damon Bilbao, the financial officer for oil giant BP.

In that testimony, Bilbao stated that the commitment was to spend the money over a period of at least six years -- not three, as Parnell seemed to state.

For the senators, that's a big problem. They claim that over six years, the Parnell-backed proposal would provide the oil companies with over $10 billion in tax credits, while winning the state only $5 billion in new investments. That's a net loss of $5 billion to the State of Alaska.

Furthermore, French said that Parnell did not get ExxonMobil to agree to the investment plan.

That's important because any one of the state's big three oil producers could veto the proposal.

The Senate Natural Resources Committee passed an amended oil tax reform bill, SB 192, and sent it on to the Finance Committee Friday night. That's usually the final step before another round of amendments is added and a bill is sent to the Senate Floor for a vote.

But Parnell criticized the Senate bill, pointing out that the senators have no commitment whatsoever from the big North Slope producers.

Parnell says he has two sets of commitments -- one from BP, the other fromConocoPhillips -- and he says he's working on ExxonMobil.

It's not clear whether either the Senate or the House version of tax reform will be sent to the governor's desk before this session is set to expire in April.

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