Bill would make inlet orphan pools more viable

Petroleum News Alaska Staff

Legislation that would make development of small pools of oil near Cook Inlet’s producing fields economically viable to develop is unlikely to be introduced in the current legislative session, an aide to Sen. Jerry Ward, R-Nikiski, told PNA April 11.

But Ward and Rep. Mike Chenault, R-Nikiski, intend to introduce the bill next session, Ward’s aide said.

The draft legislation proposes amending the oil and gas leasing provisions of the Alaska Land Act by granting a one-year waiver of state royalty payments to companies that develop certain orphan pools.

According to Jack Chenoweth, legal counsel for the Alaska Legislative Affairs Agency’s Division of Legal and Research Services, the proposed bill’s tax waiver “could” also be applied to the six fields in the inlet which are eligible for the 5 percent discovery royalty credits.

“Under some set of circumstances,” he said the 5 percent royalty on one or more of those fields “could go to zero for one year.”

The orphan pool legislation was not proposed by the oil companies; rather it was put together by Kenai and Nikiski residents looking for a way to extend the life of the area’s oil fields.