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Parnell signs Interior exploration bill
Alaska Gov. Sean Parnell signed Senate Bill 23 May 30 in Fairbanks.
The bill authorizes tax credits for exploration and drilling in remote areas of Alaska with a promise of hydrocarbons, including the Nenana, Yukon Flats and Selawik basins.
Rep. Steve Thompson, R-Fairbanks, sponsored the Interior basins exploration credits and another bill wrapped into SB 23 which provides credit for construction of liquefied natural gas storage tanks.
House Rules rolled the exploration and LNG tank storage credit bills into a Senate bill extending the Alaska Film and Television Production Incentive Program.
The so-called “middle earth” or “frontier basins stampede” provisions provide exploration credits for drilling and seismic, and a reduced production tax, to 4 percent, for the first seven years of production for oil and gas produced outside the Cook Inlet sedimentary basin and not including land north of 68 degrees latitude — i.e. the North Slope.
Drilling and seismic credits The exploration drilling credit is for the lesser of $25 million or 80 percent of total exploration drilling expenditures; the seismic credit is the lesser of $7.5 million or 75 percent of total seismic exploration expenditures and covers basins within 100 miles of Kotzebue; within 150 miles of Fairbanks (Nenana and Yukon Flats); within 50 miles of Emmonak; within 50 miles of Glennallen; within 100 miles of Egegik; and within 100 miles of Port Moller.
Before work is done the explorer must submit to the commissioner of the Department of Natural Resources “the information necessary to determine whether the geologic objective of the well is a potential oil or gas trap that is distinctly separate from any trap that has been tested by a preexisting well,” the bill says.
The bill also provides a tax credit for investment in LNG storage facilities that begin operation before Jan. 1, 2020, and applies only to facilities regulated as utilities and available to furnish LNG storage to customers, utilities or industrial facilities. The credit is designed as an incentive for private sector delivery of lower cost natural gas to Interior Alaska.
—Petroleum News
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