Gas pipeline tax wrangle consumes legislators
A lot was agreed on by both the House and Senate, however. This included a spur pipeline to connect the large-diameter Alaska LNG pipe to Fairbanks in the Interior. The route of the proposed 42-inch pipe- line is west of the city. Glenfarne, the state’s partner in Alaska LNG, also agreed to provide gas to Alaska utilities at a guaranteed price. Rep. Calvin Schrage, I-Anchor- age, and Sen. Bert Stedman, R-Sit- ka, played key roles in guiding the bills through the state House and Senate. The legislation attempts to de- fuse a serious economic problem facing Alaska LNG. Gov. Mike Dun- leavy and Glenfarne say the state’s current 20-mill property tax on oil and gas properties threatens the economic viability of the gas proj- ect. What Glenfarne and the gov- ernor have proposed is an alterna- tive tax based on the volume of gas shipped rather than a conventional property tax based on appraisals of property value. There can be disputes over prop- erty value appraisals, which have affected taxes on the Trans-Alas - ka oil pipeline for years. The cur- rent tax structure injects uncer- tainty into taxes on a gas pipeline and impairs its economic viability. However, a tax based on volumes of gas shipped is more predictable and will help secure financing for Alas - ka LNG, which is economically mar- ginal. Most legislators had little issue over the change in the tax structure but there has been intense debate over the amount of the overall tax reduction and the length of the tax abatement period. The alternative tax would lower the property tax burden in current law from 20 mills, or 2% yearly of total value, to the equivalent of 2 mills under the Al- ternative Volumetric Tax (ATV). Contrasting tax levels were de- bated in legislative committees but agreements came in both the House and Senate with tax rates of about
However, those were still below what the state would tax under the current law. The conference com- mittee will try to negotiate these differences into a final bill accept - able to the governor and Glenfarne.
10 cents per thousand cubic feet, or mcf, of gas shipped through the system. There were differences in the pe - riods of tax abatement, however, with the House proposing 30 years and the Senate proposing a shorter period but with graduated tax rates.
— Tim Bradner
Multiple red flags arise including try at oil tax changes Wrangling over a tax reduction to help the monumental Alaska LNG Project consumed the last half of the Legislature’s 2026 legislative session and continued into June in multiple special sessions after
Current plans, future energy
As natural gas production from the Cook Inlet basin continues to decline, utilities, energy companies and policymakers are evaluating options to ensure a reliable fuel supply for Southcentral Alaska. Several projects are moving for- ward with plans to import liquefied natural gas (LNG), creating poten- tial pathways to supplement local production and help meet regional demand during the coming years.
import infrastructure at Nikiski, in- cluding a marine unloading facility and storage capacity designed to receive LNG shipments from out- side Alaska. The project is intended to provide a dependable source of supplemental gas for ENSTAR cus- tomers and potentially other utilities and industrial users. By establish- ing dedicated import and storage facilities, the partners aim to create additional flexibility in the region’s energy supply system as local gas production declines. Cook Inlet LNG LLC: Offshore Import Solution Cook Inlet LNG LLC is proposing an offshore approach that would utilize existing oil and gas infra- structure in Cook Inlet. The com- pany plans to convert the Osprey oil production platform on the west side of the inlet into an LNG receiv- ing facility. The concept would employ a Floating Storage and Regasification Unit (FSRU), a specialized vessel that stores LNG and converts it back into natural gas. LNG carriers would deliver fuel to the FSRU, which would then send regasified natural gas ashore through pipeline connections. Supporters say the ap- proach could potentially reduce the amount of new onshore infrastruc- ture required while providing anoth- er option for meeting Southcentral Alaska’s future energy needs.
agreements could not be reached when the regular session ended May 20. The main points of con- tention in HB 381, the bill before legislators, were over the amount of the tax reduction and the num- ber of years it would be in place. There were multi- ple side is- sues, includ- ing efforts to change oil and gas taxes as a part of the natural gas
Harvest Alaska: Repurposing Existing Infrastructure
Harvest Alaska is pursuing a plan to convert the former LNG export facility at Nikiski into an LNG import terminal. The facility, which for decades exported Alaska natural gas to overseas markets, already possesses much of the infrastruc- ture needed for LNG handling and storage. Under the proposal, imported LNG would be received at the ter- minal, stored and then regasified for delivery into Southcentral Alaska’s existing natural gas distribution sys- tem. Harvest is currently advancing engineering work and seeking the necessary regulatory approvals to prepare the facility for its new role. ENSTAR Natural Gas Co. and Glenfarne: Building Import and Storage Capacity Utility provider ENSTAR and Glenfarne are partnering on a project that would construct LNG
Rep. Calvin Schrage, I-Anchorage (above) and Sen. Bert Stedman, R-Sitka, played key roles in guiding the bills through the state House and Senate.
MOVING ALASKA FORWARD. ROOTED IN RESPECT.
pipeline legislation. The oil tax changes included a last-minute move by the Senate to impose a corporate income tax on S corporations, which do not now pay a state income tax, continued in de- bate during the special session.
43
42
THE LINK: The Official Magazine of the Alaska Support Industry Alliance | SUMMER 2026
www.AlaskaAlliance.com
Made with FlippingBook - professional solution for displaying marketing and sales documents online