AGIA and the $10 billion challenge

Andrew The first comment inferred that the $10 billion in savings came from maintaining the ELF tax. This is wrong. Gov Murkowski negotiated a deal with the producers that traded a tax increase for tax stability and a gas line. The previous year (Jan 2005 state of the union) Gov Murkowski suddenly raised taxes significantly by removing the ELF exemption on Prudhoe Bay satellite fields immediately and without prior notice. As a result the producers were concerned about tax stability during the 2005-2006 gas line discussions. My understanding is that the gasline deal involved a tax increase (PPT) in exchange for stability and a gasline. Well, the legislature took on Gov Murkowski 20% recommendation, approved a 22% PPT and refused to consider stability or a gasline. A year later, after the VECO scandal, Gov Palin introduces ACES as a 25% tax. The legislature turned that around in a record 30 day session and passed a 50-70% ACES tax to replace the 22% PPT. No stability or gasline deals for the producers. Sidebar: ELF was a great deal for the state during low oil prices, as the state got the 12.5% royalty and the 15% ELF regardless of what profits or lack thereof the producers were making. Remember 1999 and $10/bbl oil? No profits for the producers, but the state got the 15% ELF production tax where it was applied. Sidebar: There is no cap on the ACES tax. It was over 70% at $140/bbl. What would happen if oil prices kept rising and the legislature was not in session? The tax could exceed 100%! Would Prudhoe Bay get shut down? Brilliant!

As I understand the proposed SGDA deal, it would have locked in ELF rates for over 40 years. Under ELF, Kuparik would be paying ZERO taxes today. Prudhoe would not be paying much more. You are right in that the "deal" was to make all things equal but to have agreed to keep things at the ELF level would have been nothing short of highway robbery. So, AH, is it your opinion and position that the SGDA would have been a good deal for us?? I say heck no it would have been the worst deal in US petroleum history! Let's remove the spin, peel back the rhtoric and analyse details.

..I've never said the prior gas line proposal is what we should have taken, quite the contrary. While I believe this  administration is using it unfairly to try and make AGIA look like a sweet deal, it's unfair to simply use one side of the ledger without looking at the entire give and take. I've long such said that while the prior deal gave too much in various areas, AGIA gives too little. The solution is always in the middle.

this $10 billion dollar question has been answered over and over and over and over. the fact you don't know the answer says more about you than it does about the gas line team. so the question is: could you be less relevant? your ongoing attempts to become part of the conversation are pretty sad. go rent someone an impala.

There you are, I was getting worried about you...thought you might be hiding from a supoena or something.

How about explaining it one more time, just for me and the 80,000 hits a day on this blog?

And while you're at it, how about laying out just how much TransCanada will pull down in benefits as the middle man...say as compared to the $10 billion in concessions.

We'll wait right here.

AH

Maybe the bomb throwers like Eddie Burke should read this.

Alaska Gas Interference Act This is true Andrew. The ten billion is a distortion. Again, no one holds the Palinistas accountable to tell the truth. If they say it, it must be true. What about the lost revenue associated with delay of a gas pipeline? AGIA will cost us tens of $billions in delay. In the end TransCanada will extract billions by capturing gas into their Alberta system - a true monopoly - much more than what may have been paid for fiscal certainty with producers. fiscalfrank