JUNEAU, Alaska - One of the hottest hot button issues this legislative session - the separation of Alaska oil and gas taxes - passed the state Senate with little dissent Thursday. The measure changes Alaska's system of taxing oil and natural gas production together. The bill now goes to the House, with lawmakers facing adjournment in just over two weeks.

JUNEAU, Alaska - One of the hottest hot button issues this legislative session - the separation of Alaska oil and gas taxes - passed the state Senate with little dissent Thursday.

The measure changes Alaska's system of taxing oil and natural gas production together. The bill now goes to the House, with lawmakers facing adjournment in just over two weeks.

Currently, gas gets treated essentially like oil with calculations based on gas' energy value relative to oil. With oil still king and natural gas production very limited, there hasn't been much concern about this. Indeed, the existing system brought in $3.1 billion in production tax revenue during the last fiscal year.

That started to change, though, with plans for major natural gas pipeline projects moving forward. Open seasons, allowing competing projects to court gas producers and seek shipping commitments, are set for this year, with the first expected as early as May 1. The way some senators see it, if oil prices remain high relative to gas as gas begins flowing through a mega line, the state could lose up to $2 billion a year in revenue due to a "dilution effect."

Under the bill, progressivity surcharges for oil and for natural gas produced in Cook Inlet or for in-state use would be calculated separately from gas produced for export. Export gas is the type envisioned as fitting in with pipeline proposals

that would carry gas into Canada or have it shipped overseas or to the Lower 48. The existing base tax structure and progressivity rates are maintained for that gas.

Sen. Bert Stedman, a finance committee co-chairman, said the bill doesn't raise taxes on existing production. Provisions pertaining to oil and Cook Inlet and in-state gas would be in place until 2022.

While the issue has gotten considerable attention this session, it garnered little discussion on the floor - mostly long-winded, detailed descriptions of the bill and what supporters see as the need for it. Sen. Bill Wielechowski, D-Anchorage, said he maintained concerns about the allocation of production costs, between oil and gas, and he hoped that would get attention in the House. However, Wielechowski said he felt there was more good in the bill than bad.

After the bill passed, Senate Minority Leader Con Bunde asked that the issue be held over for reconsideration. He said it's a complex issue to digest. He was rebuffed, and senators passed the measure 15-3.

The bill could face a tough road ahead. Gov. Sean Parnell doesn't think it's necessary and "remains concerned about a major change in taxes just weeks before" the upcoming open season, spokeswoman Sharon Leighow said.

Rep. Harry Crawford, D-Anchorage, said he's glad progressivity is included but he agrees with Parnell, and doesn't think something must be done this year. "We need to proceed with great caution," he said.