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Governor Signs Cook Inlet Recovery Act

May 12, 2010, Anchorage, Alaska - Governor Sean Parnell today signed into law House Bill 280, the Cook Inlet Recovery Act.

HB 280, sponsored by Representative Mike Hawker and House Speaker Mike Chenault, provides the legal framework and financial incentives for developing large-scale natural gas storage facilities throughout the state. The legislation is aimed at providing benefits for consumers not only in Southcentral but also in Fairbanks, where gas could be shipped from the North Slope.

The bill adjusts Cook Inlet tax credits to encourage exploration for and development of new gas. And the Regulatory Commission of Alaska is now required to consider the negative impacts to consumers when denying applications for gas supply contracts.

"By encouraging more gas development and the creation of storage facilities, consumers, utilities and producers will all benefit," Governor Parnell said. "Alaskans will have a more consistent supply of natural gas - both in the summer and in the long, unpredictable winter months."

HB 280 allows a gas storage income tax credit of $1.50 per 1,000 cubic feet of capacity up to a maximum of $15 million or 25 percent of the cost to create the storage. The legislation also increases the production tax credit from 20 percent to 40 percent for drilling-well-related costs within existing oil and gas fields outside the North Slope. Beginning July 1, capital and exploration production tax credits and the new 40 percent well cost credit will be fully available in the year they are incurred for all non-North Slope costs. These two changes are similar to those proposed by the governor in separate legislation.

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