Heavy-oil tax credits moving in Senate, could boost production

Petroleum News Anchorage staff

Alaska Gov. Frank Murkowski told the Anchorage Chamber of Commerce April 7 that there is considerable support in Washington “for a $3 per barrel heavy oil subsidy or offset as they call it under Section 29” (of the tax law).

Increased heavy oil production could do a lot to increase oil production in the state, the governor said, because there is a lot of heavy oil under infrastructure on the North Slope.

He said he thinks a $3 a barrel incentive for heavy oil “will be instrumental in increasing oil production. And the state’s cash flow that comes off that.”

Murkowski credited work by the Alaska congressional delegation in moving the measure through the Senate Finance Committee.

The measure went on to Senate Energy and U.S. Sen. Lisa Murkowski said April 9 that the Energy Committee approved Section 29 tax credits for development of heavy oil, and for coalbed methane and hydrate production.

An amendment discussed in the committee, but not voted on, would extend royalty tax reductions for frontier area oil, natural gas, coalbed methane and gas-liquids projects to onshore areas of Alaska, the senator said. The amendment will either arise again in committee or possibly as an amendment on the floor when the full Senate debates the energy bill in May.