JUNEAU -- The effort to cut Alaska's oil-production tax is gaining speed in the state House, with a vote possible as soon as this week, even as the debate rages over whether it's a good bet to lower taxes by billions of dollars to encourage more drilling.
House Speaker Mike Chenault said the plan is for the bill to reach the floor on Wednesday for debate over amendments and a vote as soon as possible.
House approval of the bill would set up a showdown with the Senate. Leaders of the Senate have consistently said they are not interested in rolling back the state's oil taxes before the Legislature adjourns for the year on April 17.
At stake is an oil tax system that's brought billions of dollars to the state treasury since it passed in 2007. It stands among the biggest legacies of Sarah Palin's time as governor. Palin's former lieutenant governor, Gov. Sean Parnell, is leading the attempt to roll it back, saying he's become convinced it hurts investment.
It's not clear that Parnell has enough support for his plan to pass in the House. He'll need to lobby lawmakers in the coming days to ensure he does have the votes. The House Finance Committee erupted into debate on the proposal Monday, with Democrats saying Parnell failed to make the case.
Anchorage Democratic Rep. Mike Doogan said no one's offered any evidence that giving up a billion dollars or more each year in taxes would lead to anywhere near enough new drilling to balance it out.
"Do you have some information that's going to tell us that if we spend $5 billion or $10 billion that in five years we're going to get the equivalent amount of oil in the pipeline?" Doogan asked Parnell's revenue commissioner on Monday.
Commissioner Bryan Butcher responded that he can't read the future. "I feel like we know our production is declining, we know we're not getting the exploration other areas are getting and this is the governor's attempt to change that," he said.
Doogan said he doesn't see how the Legislature can give up that much money to the companies without any concrete evidence of the benefits in return.
"Basically you're asking us to just throw the money up in the air and hope that some of it lands where we want it to," he said.
Anchorage Republican Rep. Mike Hawker said oil companies have made clear they need tax relief to make Alaska more globally competitive for investment and to look at moving forward on work.
More oil will lead to tax money, Hawker said, and talk of a billion and a half dollars less in state revenue every year doesn't factor in additional oil flowing through the pipeline.
Anchorage Democratic Rep. Les Gara said none of the big three oil companies operating in Alaska have promised more oil production in their testimony to the Legislature and, he asserted, they seem little interested in exploration.
Exxon Mobil's Dale Pittman told the Finance Committee last week that he believes his company has drilled no exploration wells on the North Slope since 1992, other than at the legally disputed Point Thomson. Pittman said he could not promise the tax cut would lead to more exploration but it would lead to more investment.
Gara also pointed to the testimony of BP's Claire Fitzpatrick, who indicated her company didn't plan on drilling what are considered exploration wells if the bill passed. Fitzpatrick said she would focus on "developing wells and recompleting wells and on well work" under the lower taxes.
Hawker responded that BP, Exxon Mobil and Conoco Phillips are all heavily invested in the big existing oil fields that are forecast to provide most of the state's production in the coming years. BP's history in Alaska is buying and developing oil assets that other companies discover, he said.
"Likewise, Exxon and Conoco Phillips have been at the table here with their conversations about the projects they want to go forward to add to development of those legacy fields," Hawker said.
The House Finance Committee on Monday unveiled a new version of the oil tax proposal, House Bill 110.
The new version includes a seven-year time limit on how long a company can be taxed at a lower rate for new oil production, but opponents of the bill said it doesn't represent much of an improvement.
Both sides of the debate are seizing on arguments that support their views. Supporters of the tax cut point to statements by Native corporations, contractors and others that it is needed to create jobs in the state and put more oil in the pipeline. Opponents of the bill bring up the testimony of Rick Harper, a former Arco Gas president and oil consultant, who told lawmakers last week that the oil companies haven't made the case.