Alaska voters shot down a proposal to tax oil companies $1 billion a year until they build a pipeline to take the largest reserve of natural gas in the United States from the North Slope to Midwestern markets, election results showed on Wednesday.
ANCHORAGE, Alaska Alaska voters shot down a proposal to tax oil companies $1 billion a year until they build a pipeline to take the largest reserve of natural gas in the United States from the North Slope to Midwestern markets, election results showed on Wednesday.
The tax would have been levied against the leaseholders of the North Slope's 35 trillion cubic feet of natural gas reserves until the gas starts flowing to market.
Opponents of the measure say the tax would have killed the $25 billion pipeline project. Its proponents say it is the only way to force oil companies to build the pipeline.
Would-be pipeline owners and gas reserves leaseholders Exxon Mobil Corp., BP PLC and ConocoPhillips say the tax would add another 50 percent to the cost of the project. Others in the oil industry believe it would discourage further exploration.
If another company or a consortium built the pipeline, it would pay none of the tax, so there is no increase in the pipeline's cost, supporters say.
With more than 98 percent of Alaskan precincts reporting, 66 percent of voters came out against the proposal.
Democratic Rep. Eric Croft of Anchorage, the main sponsor of the initiative, interpreted the results as Alaskans wanting to give the oil companies operating in the state a chance to do good by committing to a gas pipeline.
"Everybody wants a gas line, but they want to see if we can do it without taking out a big hammer," Croft said. "That's fair enough, I trust the people. We'll give that a try. But if these people continue to hold the gas hostage, we may see it again."
The initiative would set a 3-cent tax on every 1,000 cubic feet of proven natural gas reserves in Prudhoe Bay and Point Thomson that the leaseholders -- North Slope oil and gas producers -- don't extract and ship to market.
When a pipeline is built, the tax would be repealed and a portion of the money collected from the oil companies would be refunded through credits.
Source: Associated Press