"Increased tax revenue from additional gas production will more than offset any fiscal impact from the proposed credit."
- Rep. Chenault
"An Act establishing an exploration and development incentive tax credit for operators and working interest owners directly engaged in the exploration for and development of gas for sale and delivery without reference to volume from a lease or property in the state; and providing for an effective date."
HB 61 creates a new income tax credit to encourage increased exploration and development of natural gas reserves south of the Brooks Range. To qualify for the credit, operators must successfully drill and develop reserves that produce natural gas for sale and delivery. This is a successful efforts bill which means that no credits will be given for dry holes.
The Cook Inlet continues to have great potential for additional natural gas development. Other Alaska basins outside of the North Slope have similar potential. However, the combination of exploration risk, high development costs and historic low natural gas prices has created a disincentive to drill for new reserves as compared to other areas of the world. By providing a credit for successful efforts, more exploration will occur in Southern Alaska leading to much needed new natural gas reserves. This will benefit all residents and businesses at no direct cost to the state.
In addition to the benefit of developing new gas reserves, increased Cook Inlet drilling will also aid the general economic status on the Kenai Peninsula and in Anchorage as well as other areas of Alaska. Moreover, increased tax revenue from additional gas production will more than offset any fiscal impact from the proposed credit.