JUNEAU, Alaska — Governor Sean Parnell (R-Alaska) is saying tonight that even though he has the power to call a second Special Session, it's unlikely that he'll do so.
Parnell spoke with KTUU-TV Friday, one week after the special session came to an abrupt end. On Monday, the State House suddenly voted to adjourn. That, after they were unable to come up with a compromise proposal for a small-diameter natural gas pipeline from the North Slope.
The House's move came four days after the Senate suddenly voted to adjourn for an entirely different reason. A majority of Senators believed the governor had overstepped his constiutional authority when he unexpectedly withdrew his oil tax-reform bill from the session. Senators claimed the move violated the "Separation of Powers" clause of the state's constitution. They said withdrawing lesiglation from a special session amounted to a sort of preemptive veto. Senator Donald Olson (D) Nome, said on the Senate Floor that a governor could not do that.
But today Parnell disagreed with the Senate's assessment. Parnell said "Well, clearly I had the constitutional authority to remove a piece of legislation from the call.The governor is given the authority to ah, limit the call -- determine what legislators can work on. A governor can add to the call, and certainly a governor can remove from the call as well."
On the subject of Oil Tax-Reform, the first issue the special session stumbled on, Parnell insisted that big tax cuts are needed for both new and existing oil fields. He says they're necessary to stem the decline in oil production on the North Slope.
"Clearly those who think that we're doing fine with status-quo decline kind of won the day," He said. "Production is going to still decline and we have go to address that. So we're going to take what we've learned from these last two years of working through this very public process, kind of review what's happened and, and then determine a course forward."
Others disagree with the governor. Witnesses before hearings in both the Senate Finance Committee and the Senate Resources Committee contended that the North Slope is following the natural decline of aging, so-called "elephant fields" all over the world. They said such fields are largely immune to tax incentives. The latest Department of Revenue figures show the North Slope declining at a slower rate for the next eight years or so. According to D.O.R, the rate will remain at 2% to 3% for the next 8 years. It will not be as high as the Slope's historic decline of 6%.
Senators Lesil McGuire (R-Anchorage) and Bill Wielechowski (D-Anchorage) were among those expressing deep doubts about the Governor's proposed oil tax reform at an April 20th hearing."This isn't the way to do it. And we all know it's goning to end in a train wreck", McGuire told Depertment of Revenue Commissioner Bryan Butcher at that hearing.
That was moments before Butcher was closely questioned by Senator Bill Wielechowski about Butcher's premise that big tax cuts could spur added production at aging "elephant fields". Wielechowski pointed out that more than a decade ago, a big tax cut was enacted at the second greatest conventional oil field in North America. That field was Kuparuk at the North Slope. And what happened there? Alaska lost out on tax revenue and the field declined.
"So we had Kuparuk at a 1 percent tax rate, we had an 8 percent decline in Kuparak", Wielechowski pointedly told Butcher. Wielechowski and others believe that big tax breaks should be reserved for new exploration.
On other matters, the governor said there was also significant progress this legislative session. He said lawmakers passed his "Alaska Performance Scholarship" program. The governor said it would create new opportunities for college and job-training for Alaskans. He was also proud of the passage of his "Human Trafficking" Bill, which he said would make it harder for sex-traffickers to lure young girls from native villages, and into a life of sexual slavery in Alaska's larger cities.
And Parnell is proud of a new agreement reached between North Slope producers and the Trans Canada Pipeline Company with respect to Natural Gas. This week, Parnell's Department of Revenue and his Department of Natural Resources agreed, a big gas line to the Lower-48 is out. And a large diameter gas pipeline from the North Slope to tidewater is in. "We're in new territory with respect to a gas pipeline", Parnell said.
Finally, on the matter of Point Thomson, Parnell argued that Mark Myers, the former head of the U.S. Geological Survey, was wrong when he argued before the Senate one week ago that the Governor's new contract with Exxon was flawed. Myers said the contract, for the second greatest gas field on the North Slope, left Alaska vulnerable to a process called "blow-down".
That's when an oil company elects to go the cheap and fast way to get oil and natural gas out of the ground. It just lets natural gas and oil fizz out together; the way the soda fizzes out of a bottle when it's shaken.
At Point Thomson, such a blow-down method would be disastrous for the state. Gas must be recycled to keep the field pressurized. And if Exxon chooses the fast and cheap way to get gas and oil out of the ground it could leave a pool of untapped oil beneath the ground worth $6 billion at today's prices. At least that's what Myers testified. Today the Governor dismissed his concerns, saying that scientific data showed it would be unwise for Exxon to develop the field using Blow-Down methods.
But Myers insists, the contract, as it is written, leaves the state with too little power to intervene if Exxon chooses the blow-down Method.
And on the matter of the proposed Pebble Mine, Parnell agrees with the actions of his Attorney General Michael Geraghty.
Geraghty is accusing the U.S. Environmental Protection Agency in being too intrusive in the licensing process for Pebble.
"Its about the state controlling it's own destiny," Parnell said. And he supports Geraghty's efforts to restrict E.P.A's role in perhaps restricting Pebble development before the state completes its process in dealing with the application.