Commentary: Don’t let a tax tailored for oil kill Alaska LNG

By MIKE CHENAULT, JOHN COGHILL, JR., AND JAY RAMRAS

June 14, 2026 – During a recent hearing before the Senate Finance Committee, testimony confirmed what many of us who worked in the legislature recognized for decades: the property tax framework we apply to resource development in this state was written in 1973. For oil. When the trans-Alaska pipeline was four years away and the modern natural gas industry was more than four decades into the future.

Fifty years later, some legislators act surprised that the numbers don’t work for Alaska LNG – or any other North Slope natural gas project we’ve tried in the past.

Let us be direct: this is not a debate about concessions. When critics frame updated tax treatment for Alaska LNG as “giving something away,” they misstate what the legislature is doing. The legislation under conisderation recognizes, finally, that natural gas development is a fundamentally different enterprise than oil production — in its capital structure, its infrastructure timeline, its market dynamics, and its risk profile — and to succeed it deserves a framework designed specifically for what it is.

Oil and gas are not the same industry wearing different clothes.

Oil flows through a pipeline and lands on a global spot market. Its value is realized relatively quickly after production begins. The capital recovery curve, while substantial, is one that investors and lenders have understood and financed for generations. The original 1973 property tax structure was calibrated for that world.

The economics and timeline of natural gas are fundamentally different. Upfront capital requirements are staggering. The period between investment and revenue can stretch out much longer than oil. To apply a property tax structure designed around oil’s economics to that kind of project is not good policy — it is a sledgehammer on the scale against development.

Look at what our competitors have done.

Texas and Louisiana are not states known for surrendering revenue. They are not naive about resource development, and they are not in the habit of leaving money on the table. And yet both states have designed property tax environments specifically – and successfully – to attract the natural gas and LNG industries. Critically, even when those abatements expire and the full property tax kicks in, the effective rate is significantly lower than what Alaska currently imposes.

They did not do this by accident, and they did not do it out of generosity. They understood that a lower tax rate applied to a thriving industry generates more revenue, more jobs, and more long-term economic activity than a higher rate applied to a project that never gets built.

What’s more, 100% of the energy from projects in Texas and Louisiana goes to export markets. Alaska LNG is different. That 800-mile pipeline? That will deliver natural gas to Alaskans up and down the state map. A tax on this project is a tax on Alaskans. Bigger tax bills mean bigger energy bills for our families, our schools, our small businesses, and our military bases.

Does Alaska want low-cost energy and new tax revenue or more of nothing? That is the calculation Alaska must now be willing to make.

The status quo is not neutral — it is a choice.

Every year we decline to design a competitive tax framework for natural gas is a year we are, in effect, saying no to development. The industry will not wait indefinitely. Capital is mobile. The LNG market is competitive. Other jurisdictions are not standing still.

We won’t silently watch Alaska miss one more transformational natural gas economic opportunity.  Seventy-five percent of Alaskans support this project. Protecting dusty statutes and protecting the public interest are not the same thing.

Discussions in the legislature have already yielded important progress, particularly around the commitment to develop a spur line to Fairbanks and added consumer protections from cost overruns.

What the legislature should be asking now is not “how much are we giving up?” but rather “what do we need to build to make this long-awaited project viable?”

That is the right question. The answer, we believe, points clearly toward a purpose-built property tax structure for natural gas — one that reflects the industry’s actual economics, competes credibly, and positions Alaska to capture a share of global LNG demand before that window closes.

We built our oil tax system for oil. It is past time to build a gas tax system for gas.

The authors are former members of the Alaska Legislature. Mike Chenault represented the Kenai Peninsula and served as Speaker of the House. John Coghill, Jr. represented the Fairbanks region and served as Senate Majority Leader. Jay Ramas represented the Fairbanks region and served as Chair of the House Judiciary Committee and Co-chair of the House Resources Committee.

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