John Binkley for Governor of Alaska

Protecting Alaska's Future: Getting a gasline on Alaska's Terms

Alaska is blessed with enormous amounts of natural gas that can help meet the needs of Alaska and our country. I am a strong proponent of a natural gas pipeline and am confident we can get a deal that will be fair for Alaska and actually get one built.

As I travel around our State meeting thousands of Alaskans and listening to their concerns, one thing is clear: the current gasline contract proposal, negotiated by Frank Murkowski's administration, is bad for Alaska. It gives away too much to the oil companies and does not guarantee a pipeline.

Earlier this spring I outlined several principles on which to base evaluating the gasline proposal:

Making sure Alaskans get the maximum value for our resource, as required by the state constitution.
Assuring access to gas to meet the needs of Alaskans.
Providing certainty in a deal that a gasline gets built according to a timetable set out by the state.
Making sure good paying jobs for Alaskans are included in the deal and that Alaskans who are ready to work will receive jobs building the line.

Beyond those principles, my way forward includes:

We should begin the process to build a smaller gasline "bullet line" from the North Slope to Southcentral Alaska.
- A bullet line would be quicker to build (24 inch or less high pressure line).
- Work could begin while details of larger gasline are finalized.
- Make gas available to our homes and business by running through Fairbanks, the Mat-Su Valley, Anchorage and Kenai.
- Use of liquids for petrochemical industry.
- Make LNG to export from Nikiski.
- Produce propane to ship to rural Alaska.
We must use our leverage in order to negotiate from a position of strength. We need to recognize that the oil companies are standing up for their shareholders and we need someone to do the same for Alaskans.
Stop the giveaway of Pt. Thomson and enforce the producers' duty to develop that important field.
- 300 - 500 Million barrels of oil
- Lease terms require duty to develop, produce, and market
If we can't reach a fair deal with the producers, all of the proposals should be put back on the table.
- Trans Canada and Mid American submitted proposals that were dropped by this administration.
- All Alaska line should receive fair and thorough evaluation on its economic viability.
We must negotiate a contract that guarantees access to the line for new explorers. More exploration means more gas in the pipeline and more opportunity for instate use.

I am confident that we can negotiate a good deal for Alaska and actually get a gas pipeline built. It will take new leadership that earns the trust of the people and the legislature.

I believe we can have a tax system that is fair and simple. On July 6, I introduced my plan at a press conference, joined by four respected statesmen: Speaker of the House John Harris, Senate Resources Chairman Tom Wagoner and former Speaker of the House and Mayor of Anchorage Tom Fink. They all agreed with me that the Legislature must do away with Murkowski's proposed Petroleum Production Tax (PPT) which is based on the oil companies' net profits, and implement a plan featuring a flat tax rate based on gross value.

Murkowski's fatally flawed PPT idea creates a whole new tax system that is confusing and untested, both in practice and in the courts. Alaska went through years of litigation with oil companies over our current severance tax system. It could take legions of lawyers and accountants and more years of court battles before any new PPT law could finally be settled. The uncertainty of a new system would make our State revenues more unstable, and unpredictable. PPT rewards companies for aggressively claiming deductions and forces the State to hire additional state employees to focus on lawsuits and audits.

My plan is simpler and it is more fair for Alaska because it:

Fixes what is really broken - the Economic Limit Factor (ELF) adjustment, not the entire tax structure.
Is clear, simple and uses established methodologies to calculate tax.
Creates more stable and predictable revenues for the State.

More specifically, my plan includes the following changes to the existing severance tax:

Eliminate the ELF, and charge a flat tax rate based on gross value. The ELF is a factor multiplied by the production tax rate, which decreases the percentage that the oil companies pay as production declines on a field. This was a sound concept in the early days of North Slope production, but in the current environment of high energy prices, the system is broken.
Give credit for money spent on exploration and development wells, to encourage drilling activity. Drilling more wells means more oil flowing down the pipeline. Credits should be focused on what will encourage production.
Ensure that smaller independent oil companies are encouraged to continue doing business and that current marginal fields keep producing by exempting a set number of barrels of oil per day.
Include a progressive feature; when oil and gas prices are high, the state should see a greater return.
- Specifically, once the price of a barrel of oil rises above a minimum level, the tax rate would increase by a set percentage.
- My plan is not just about increasing state revenues for more government spending; it's about providing a direct benefit to Alaskans and saving for our future.
- My plan also includes setting a portion of this increase aside into a property tax reduction account.
  - Communities that reduce property taxes on individuals will be reimbursed.
  - Communities with only a sales tax, will be able to lower the tax rate for consumers.
  - Communities with high costs of energy, but without local taxes, can receive funds to help off-set those high costs of energy.


	Paid for by Binkley for Governor P.O. Box 92326 Anchorage, AK 99509-2326	Protecting Alaska's Future: Getting a gasline on Alaska's Terms Alaska is blessed with enormous amounts of natural gas that can help meet the needs of Alaska and our country. I am a strong proponent of a natural gas pipeline and am confident we can get a deal that will be fair for Alaska and actually get one built. As I travel around our State meeting thousands of Alaskans and listening to their concerns, one thing is clear: the current gasline contract proposal, negotiated by Frank Murkowski's administration, is bad for Alaska. It gives away too much to the oil companies and does not guarantee a pipeline. Earlier this spring I outlined several principles on which to base evaluating the gasline proposal: Making sure Alaskans get the maximum value for our resource, as required by the state constitution. Assuring access to gas to meet the needs of Alaskans. Providing certainty in a deal that a gasline gets built according to a timetable set out by the state. Making sure good paying jobs for Alaskans are included in the deal and that Alaskans who are ready to work will receive jobs building the line. Beyond those principles, my way forward includes: We should begin the process to build a smaller gasline "bullet line" from the North Slope to Southcentral Alaska. A bullet line would be quicker to build (24 inch or less high pressure line). Work could begin while details of larger gasline are finalized. Make gas available to our homes and business by running through Fairbanks, the Mat-Su Valley, Anchorage and Kenai. Use of liquids for petrochemical industry. Make LNG to export from Nikiski. Produce propane to ship to rural Alaska. We must use our leverage in order to negotiate from a position of strength. We need to recognize that the oil companies are standing up for their shareholders and we need someone to do the same for Alaskans. Stop the giveaway of Pt. Thomson and enforce the producers' duty to develop that important field. 300 - 500 Million barrels of oil Lease terms require duty to develop, produce, and market If we can't reach a fair deal with the producers, all of the proposals should be put back on the table. Trans Canada and Mid American submitted proposals that were dropped by this administration. All Alaska line should receive fair and thorough evaluation on its economic viability. We must negotiate a contract that guarantees access to the line for new explorers. More exploration means more gas in the pipeline and more opportunity for instate use. I am confident that we can negotiate a good deal for Alaska and actually get a gas pipeline built. It will take new leadership that earns the trust of the people and the legislature. I believe we can have a tax system that is fair and simple. On July 6, I introduced my plan at a press conference, joined by four respected statesmen: Speaker of the House John Harris, Senate Resources Chairman Tom Wagoner and former Speaker of the House and Mayor of Anchorage Tom Fink. They all agreed with me that the Legislature must do away with Murkowski's proposed Petroleum Production Tax (PPT) which is based on the oil companies' net profits, and implement a plan featuring a flat tax rate based on gross value. Murkowski's fatally flawed PPT idea creates a whole new tax system that is confusing and untested, both in practice and in the courts. Alaska went through years of litigation with oil companies over our current severance tax system. It could take legions of lawyers and accountants and more years of court battles before any new PPT law could finally be settled. The uncertainty of a new system would make our State revenues more unstable, and unpredictable. PPT rewards companies for aggressively claiming deductions and forces the State to hire additional state employees to focus on lawsuits and audits. My plan is simpler and it is more fair for Alaska because it: Fixes what is really broken - the Economic Limit Factor (ELF) adjustment, not the entire tax structure. Is clear, simple and uses established methodologies to calculate tax. Creates more stable and predictable revenues for the State. More specifically, my plan includes the following changes to the existing severance tax: Eliminate the ELF, and charge a flat tax rate based on gross value. The ELF is a factor multiplied by the production tax rate, which decreases the percentage that the oil companies pay as production declines on a field. This was a sound concept in the early days of North Slope production, but in the current environment of high energy prices, the system is broken. Give credit for money spent on exploration and development wells, to encourage drilling activity. Drilling more wells means more oil flowing down the pipeline. Credits should be focused on what will encourage production. Ensure that smaller independent oil companies are encouraged to continue doing business and that current marginal fields keep producing by exempting a set number of barrels of oil per day. Include a progressive feature; when oil and gas prices are high, the state should see a greater return. Specifically, once the price of a barrel of oil rises above a minimum level, the tax rate would increase by a set percentage. My plan is not just about increasing state revenues for more government spending; it's about providing a direct benefit to Alaskans and saving for our future. My plan also includes setting a portion of this increase aside into a property tax reduction account. Communities that reduce property taxes on individuals will be reimbursed. Communities with only a sales tax, will be able to lower the tax rate for consumers. Communities with high costs of energy, but without local taxes, can receive funds to help off-set those high costs of energy. Fishery Principles Ethics - Restoring Trust Getting a Gasline on Alaska's Terms Government Philosophy Prosperity & Jobs Alaska's Workforce Bringing Alaska's Natural Gas to Market Budget Management Education Fish & Game Public Safety Transportation Protecting Your Rights and Freedoms Faith, Life and Family Values