Wednesday, October 6, 2010

It's all about tax policy

From Platts (LINK):

An ExxonMobil executive said Tuesday the producer is optimistic that an Arctic natural gas pipeline will get built despite competition from shale, but said a major sticking point remains Alaska's tax and royalty policy.

"We take a long-term view on Alaska," said Steve Kirchhoff, ExxonMobil Gas and Power Marketing's vice president for the Americas. "The shale definitely does enter into that equation but a real fundamental issue at this point is we need to be able to sit down with the state and work through appropriate fiscal regimes that are going to make this work against a range of price forecasts."

ExxonMobil partnered with TransCanada on one of two proposals for a massive 48-inch-diameter pipeline from Prudhoe Bay to Alberta.

We're more or less back where we started 3 or 4 years ago. It's always been about tax rates vs. market rates.


Dave Harbour said...

Great link and observation today! I passed it on here this morning:

Brett Chandler said...

Let's face it, this has always been the problem. I'm kind of curious about what deal Frank Murkowski reached with the producers before he got turfed out.

I think Sarah Palin is a first class wingnut, but AGIA was either monumental luck or a stroke of genius. It freed up the logjam. There was no deal on "fiscal certainty" because there was no pipeline and it was academic anyway. But, there was no pipeline because there was no guarantee that certainty would be found.

The brilliance of the AGIA is that it jumpstarted some actual work, which forced all of the participants back to the table.