Wagoner Bill Would Make Oil Companies Pay
Bill disallows deductions for improper maintenance

JUNEAU – Sen. Tom Wagoner plans to introduce a bill on Friday that would prevent oil companies from deducting costs for repairs due to improper maintenance of property or equipment.

“Basically this bill was the aftermath of the lack of action on an amendment that was offered in the Special Committee on Natural Gas Development last year,” said Senator Tom Wagoner, R-Kenai. “I thought we should follow up and re-introduce this amendment as a bill amending the PPT legislation because the state of Alaska should not in any way pay for the maintenance of a system that is not maintained properly.”

Wagoner’s bill, which has not yet been assigned a number, allows the commissioner of the Department of Revenue, in consultation with the commissioner of the Department of Environmental Conservation and the chair of the Alaska Oil and Gas Conservation Commission, to disallow costs determined to be related to the repair or replacement of improperly maintained property or equipment.

“I think we should at least have that ability in law so they have the right to do that. I think this could wind up, if not done properly, could cost the state tens of millions of dollars, not only with the BP problem, but other similar situations that we may see in the future,” Wagoner said.

For the purpose of determining the value subject to tax, the petroleum production tax passed in August of 2006 allows producers to deduct costs associated with the production of oil and gas from the gross value at the point of production. This bill prevents oil companies from deducting expenses resulting from improper maintenance. The issue of tax credits for repairs became a concern when corrosion in a 30-inch pipeline in Prudhoe Bay caused some 200,000 gallons of oil to leak onto the tundra.

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NOTE: A Fact Sheet for the bill is attached.
http://www.aksenateminority.com/pdfs/25/sb0080.pdf

For sound actualities by Sen. Tom Wagoner, click the following links:
http://www.aksenateminority.com/media/25/wagoner2007020801a.mp3
http://www.aksenateminority.com/media/25/wagoner2007020802a.mp3