Big Oil Sues Alaska for $50 Million

     ANCHORAGE (CN) – Big Oil companies, Trans Alaska Pipeline owners, developers and leaseholders demand refunds of more than $50 million in property taxes they paid to Alaska under protest.
     BP, ConocoPhillips, ExxonMobil, Koch Alaska Pipeline Co. and other oil and pipeline companies sued the cities of Anchorage, Valdez, Fairbanks, North Slope and the state, in three state courts.
     The oil companies seek partial refund of property taxes on the Trans Alaska Pipeline System (TAPS), which they say they paid “under protest” for 2011.
     In one complaint, the TAPS owners and co-plaintiff Alyeska Pipeline Service Co. claim they were overcharged, and overpaid, $38.6 million to Valdez, under protest.
     They claim they defendants “substantially overvalued” the Trans Alaska Pipeline System for property taxes.
     If their appeal is successful, the plaintiffs say, they want the TAPS valuation reduced and refunds issued proportionately to local taxing jurisdictions and owners.
     In a letter to the City of Valdez finance director, one of the plaintiffs’ attorneys claimed the pipeline system was overvalued by 86.16 percent, or $7.472 billion, according to lead plaintiff BP’s complaint in Anchorage Superior Court.
     Alaskans have been trying for decades to keep oil and gas profits from leaving the state.
     The oil companies claim that Alaska assessed taxes based on widely varying estimates of oil reserves and the useful life of the pipeline.
     A “pool” assessment puts the pipeline’s “end of life” between 2065 and 2068, while a “well-by-well” analysis estimates reserves would run out between 2042 and 2046, according to the complaints.
     The estimates have great implications on how the state assesses taxes on the property and who would benefit from the Trans-Alaska Pipeline: the municipalities, the federal government or developers.
     Anti-federal sentiment is prominent in Alaska.
     On May 21, just before the recent lawsuits were filed, Gov. Sean Parnell signed four bills intended to accelerate permitting, encourage exploration and development along the pipeline and cut taxes
     The day as the lawsuits were filed, Parnell said in a statement: “As the companies move forward, the state will work closely with them to help expedite engineering and permitting work required for the project. AGDC [Alaska Gasline Development Corp.] is on schedule for a fourth quarter 2014 open season. The state continues to aggressively promote Alaska LNG [liquid natural gas] to global customers and investors, and is working closely with federal regulators to expedite the permitting of a gas commercialization project. Further, through the Interior Energy Project, the state is moving aggressively to build out gas infrastructure to get gas to Alaskans.”
     Dudley Platt, with the North Slope Borough’s Mayor’s Office, formerly did production forecasts for the Alaska Department of Revenue, first as an employee in 1989, then as a contractor. Platt said pipelines do not last forever. They require replacement, and if facilities are not expanded to handle more gas and water, production declines.
     In 2007, Platt said, there were few undiscovered resources, the North Slope being the “heaviest and shallowest.”
     Point Thompson in the North Slope remains North America’s largest known field. It is being studied – and its leases were being litigated – by ExxonMobil, which wanted to be up and running by 2016.
     In a decade-long dispute, Alaska had been trying to win back control of Point Thompson. The state claimed that ExxonMobil has failed to develop the field, though the companies cited technical challenges and the absence of new pipeline.
     Alaska’s lawsuit was dropped in March 2012.
     ExxonMobil and other leaseholders, including BP, Chevron, ConocoPhillips and Leede Operating Co., claim to have the most knowledge of the area. ExxonMobil is the largest leaseholder in Point Thompson, with more than half of the shares.
     Point Thompson is thought to have 8 trillion cubic feet of natural gas and hundreds of millions of barrels of petroleum liquids, one-fourth of the known gas resources on the North Slope.
     The plaintiffs in the new complaints are represented by James Seedorf of Hughes Gorski Seedorf Odsen & Tervooren, and F. Steven Mahoney and Jeffrey Davis of Manley & Brautigam.

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