Alaska State Legislature
News from the House Majority

Jerry Ritter, House Majority Press Secretary
State Capitol
Juneau, AK 99801
Phone: (907) 465-3804
web site: http://www.akrepublicans.org
Actuality line: 1-800-478-6540

Knowles Vetoes Jobs Legislation

Governor's Support for Cook Inlet Oil and Gas Industry In Doubt

For Immediate Release May 6, 1998 Contact: Rep. Mark Hodgins at (907) 465-2283.

Juneau – Governor Tony Knowles, whose mantra for the last three and a half years has been "jobs and families," today vetoed House Bill 380, a measure which creates jobs and helps families. HB 380 is intended to stimulate the development of old oil & gas reserves in and around Cook Inlet.

"I've read the governor's press release and his veto message and can honestly say I've never seen more egregious doubletalk in my life," said Representative Mark Hodgins (R-Kenai), the bill’s sponsor. "Here's a bill which encourages the safe development of several undeveloped oil & gas fields in Cook Inlet. It will create new infrastructure which can be used to leverage additional exploration and development in the area," Hodgins said.

The governor's own royalty adjustment bill, House Bill 207, passed three years ago. It was intended to be an incentive bill to encourage the development of marginal oil & gas fields. "The success of an incentive can be measured by the level of participation." said Rep. Mark Hodgins. "To date, no royalty reductions have been granted under Knowles royalty adjustment bill. The only company that has tried to use it threw their hands in the air and gave up in frustration after over a year of trying to work with the Division of Oil & Gas. Company representatives have indicated that they will not try use it again." Hodgins said.

House Bill 380 provides incentive for oil companies to develop old oil and gas fields as rapidly as possible, consistent with safety and environmental standards. The fields that qualify under HB 380 were all discovered more than 30 years ago and have remained undeveloped due to poor economics. The legislation says lessees would pay a reduced royalty rate of 5 percent, for a period of ten years, providing the field is brought into production before January 1, 2004.

"The Governor's excuse for vetoeing HB 380 is completely unfounded." said Hodgins. "All of these fields were discovered more than 30 years ago and during that time oil prices have been all over the map. To date these fields have been left undeveloped. That's the best economic analysis that anyone could ask for." Rep. Hodgins said.

Two years ago Governor Knowles signed a similar royalty reduction bill on all new oil & gas discoveries in Cook Inlet. Rep. Hodgins stated "The Discovery Royalty bill grants the same reduction as HB 380, 5% for ten years, and contains no upper limit on quantity or price cap. It also requires no economic analysis. It appears that Governor Knowles is only open for business if he is the sponsor of the bill."

The bill contains strong local hire and local manufacturing provisions. "This bill will provide good jobs for Alaskans," Hodgins said. Apparently, the governor thinks this is a bad idea," Hodgins said. "I'm beginning to believe this governor does not support the oil and gas industry in Cook Inlet, "Hodgins said.

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