Homer Alaska - Business

Story last updated at 8:05 PM on Wednesday, March 30, 2011

Oil, gas issues simmer during town hall meeting in Soldotna

By Karen Garcia
Morris News Service - Alaska

Kenai Peninsula residents seized the opportunity to address their state representatives during Saturday's town hall meeting, and unsurprisingly many of their concerns focused on the oil and gas industries.

House Speaker Mike Chenault, R-Nikiski, and Rep. Kurt Olson, R-Soldotna, gathered with about 40 people in the Kenai Peninsula Borough Assembly Chambers to take questions and hear comments on the current goings-on in the 27th Alaska Legislature. One divisive topic was that of House Bill 110 and Senate Bill 49, two very similar bills that propose lowering taxes on oil companies to encourage companies to invest here.

"It's difficult for oil companies to continue to invest in Alaska when their rates of return in Canada, the Lower 48, the Gulf, Australia, and Central America are much higher," explained Olson, who said the current tax structure has diminished profits so badly that it is no longer a smart business move for oil companies to invest here.

"What we're attempting to do," he said, "is drop the tax structure to where we can encourage people to come back."

Chenault echoed Olson, warning that Alaska is losing employment and output through the trans-Alaska pipeline due to the too-high taxes.

"That's the lifeblood of Alaska," Chenault said of the 800-mile long pipeline system. "If throughput continues to decline, eventually they'll shut that pipeline off and when they shut it off, Alaska will have no income stream to speak of."

George Pierce, a Kasilof resident, disagreed with Chenault, Olson, and the bills they are trying to push through.

"These guys pay no taxes already. That's plenty incentive," Pierce said when he took his turn at the microphone. "They make millions if not billions of dollars up here."

Pierce, however, seemed to be in the minority, as when Niki Pereira of Sterling spoke in support of the bills, she received a rousing round of applause.

"We really do need gas and we really do need oil production in this state," she said emphatically, "and I hope you guys will do whatever you can to incentivize the oil companies in any way you have to to get the market to do its job up here. Get the feds out of our hair and get the oil flowing."

The other main issue on the table during the town hall meeting was the proposed construction of an in-state gas "bullet line" to run from Prudhoe Bay to the Cook Inlet.

"This state needs an in-state gas line and it needs it now," said Tom Stepnosky of Kenai. "Build the damn pipeline. Get it done."

Chenault, who is sponsoring several bills related to the in-state pipeline, said that if such a project were to come to fruition, it would supply gas to Alaskans for more than 100 years. The downside, he admitted, is that it might be quite expensive, depending on how much money — if any — the state decides to pitch in.

In all, 16 people gave testimony on Saturday. Oil and gas were not the only subjects up for debate, though — the proposed Kasilof Special Use area, road construction, the Kenai Peninsula Food Bank, public education and the Alaska Commission on Judicial Conduct were just some of the other topics on which concerned citizens offered their complaints, praises, and questions.

Chenault and Olson said they plan to hold another meeting about a month after the legislative session ends, assuming they are not in Juneau for a special session at that time.

Karen Garcia is a reporter for the Alaska Journal of Commerce.