HomeMy WebLinkAboutRESOLUTION 2003-08Suggested by: City Council
CITY OF KENAI
RESOLUTION 2003-08
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA,
SUPPORTING HB57, "AN ACT AMENDING THE MANNER OF DETERMINING
THE ROYALTY RECEIVED BY THE STATE ON GAS PRODUCTION AS IT
RELATES TO THE MANUFACTURE OF CERTAIN VALUE ADDED PRODUCTS."
WHEREAS, Agrium Kenai Nitrogen Operations is exceptional for its
combination of high pay levels, amount and concentration of expenditures in
Alaska; and,
WHEREAS, Agrium Kenai Nitrogen Operations is one of the few industries
adding value to Alaska's natural resources using Cook Inlet natural gas to
create anhydrous ammonia and two forms of urea; and,
WHEREAS, Agrium Kenai Nitrogen Operations purchases natural gas from
producers in Cook Inlet; and,
WHEREAS, Agrium Kenai Nitrogen Operations markets its products around the
world competing against major world competition which is primarily baSed
upon the monetization of trapped gas resources; and,
WHEREAS, Agrium Kenai Nitrogen Operations is the Kenai Peninsula's third
largest private employer and accounts for an additional 700 jobs in Alaska and
the Kenai Peninsula; and,
WHEREAS, Agrium Kenai Nitrogen Operations expenditures in Alaska are
spread to over 250 businesses statewide with 118 companies located on the
Kenai Peninsula; and,
WHEREAS, House Bill 57 has been introduced which will provide for the State
of Alaska to enter into agreements with non-affiliated natural gas producers to
accept as the price for the State's royalty share the price established in an
arm's length contract negotiated between the natural gas producer and a
manufacturer of value added producers, like Agrium Kenai Nitrogen Operations.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
KENAI, ALASKA, the following:
Section 1' The Kenai City Council urges the 23rd Alaska State Legislature to
enact HB 57, "An Act Amending the Manner of Determining the Royalty
Received by the State on Gas Production as it Relates to the Manufacture of
Certain Value Added Products."
Resolution No. 2003-08
Page 2 of 2
Section 2' Copies of this resolution shall be sent to all members of the 23rd
Alaska State Legislature.
Section 3'
This resolution takes effect immediately upon its enactment.
ATTEST:
Carol L. Freas, City Clerk
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 19th day of
February, 2003.
S, MAYOR
Page 1 of 1
Carol Freas
From' G. Scott Pfoff [gspfoff@aurorapower.com]
Sent: Tuesday, February 11,2003 8:14 AM
To: Carol Freas
Subject' Resolution in Support of HB57
To whom it may concern,
Aurora Gas, LLC is aggressively pursuing the development of natural gas producing
properties, primarily on the West side of Cook Inlet. Oil and Gas exploration and
development is a high cost, high risk endeavor. As a producer looking to market our
natural gas, there is great hesitation to enter into a gas sales agreement with a
purchaser such as Agrium because it adds yet another layer of risk to the producer. A
producer selling gas to Agrium runs the risk, in fact the probability, that several years
after selling its gas to Agrium, the State will assert a claim that royalty needs to be paid
on a value higher than the arms length negotiated contract price. This additional
royalty, plus interest accrued at a higher-than-market rate, would have to be born by
the producer and/or by the purchaser.
It is for this reason that Aurora Gas, LLC and its natural gas marketing affiliate, Aurora
Power Resources, Inc. strongly endorse HB57 and the concept that royalty should be
paid on the basis of arms length negotiated contract prices. Accordingly, we salute and
support the draft resolution in support of HB57 and urge the Kenai City Council to adopt
same.
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2/11/2003