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NEWS BULLETIN

April 02, 2003 --- Vol. 9, No. 35April 2003

Federal gasline incentives back in the energy package

Gasline incentives are back on the table in Washington, D.C.

U.S. Senators Lisa Murkowski and Ted Stevens said this morning that they have won Senate Finance Committee approval for a major financial package for an Alaska natural pipeline.html'>gas pipeline to the Lower 48.

The financial incentive package includes: a marginal well credit granting a federal income tax credit to Alaska gas produced if the wellhead price goes below $1.35 per million Btus; accelerated depreciation for the pipeline; and expanded tax credits for development of heavy oil and coalbed methane and hydrates.

Senate Finance Committee Chairman Sen. Charles Grassley, R-Iowa, included the delegation's financial incentive package in his tax proposal for a major energy bill. Murkowski and Stevens said the measure is slated to be added to major energy legislation being developed by the Senate Energy and Natural Resources Committee and debated in the Senate between late April and mid-May.

Alaska Gov. Frank Murkowski said at a press conference today that last week's agreement between the state and the major gas owners — BP, ConocoPhillips and ExxonMobil —to move ahead on state fiscal negotiations once the Alaska Stranded Gas Development Act is reauthorized set some parameters.

But, he said, significant things required for a gas pipeline to move ahead had to happen in Washington, D.C.

The financial incentive package, added to the bill by Grassley in what the governor described as an amendment to the chairman's mark, includes a differential production tax credit of as much as 52 cents per million Btu for wellhead gas prices below $1.35, a seven-year depreciation on the pipeline and a $3 a barrel credit for heavy oil.

The governor said the heavy-oil credit "could have a significant impact and an immediate impact" on production and "could be a substantial revenue enhancer" for the state.

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