Governor Signs Sen. McGuire's SB 309 Into Law
Governor Signs Bill Encouraging Exploration and Development in Cook Inlet
Kenai – Governor Parnell signed Senate Bill 309, sponsored by Senator Lesil McGuire, R-Anchorage, yesterday at the Challenger Learning Center in Kenai. SB 309 changes Alaska’s oil and gas tax system to facilitate investment in Alaska while ensuring Alaskans receive the maximum benefit for their resources. “At a time when natural gas production and supply in the Cook Inlet is declining and demand continues to grow, this legislation will strongly encourage companies to invest additional capital in exploring for new gas reserves,” said Senator McGuire. “This will be another step that will alleviate the potential for gas shortages in South Central Alaska.”
SB 309 revises the special Gas Exploration and Development Tax credit against Alaska’s corporate income tax on oil and gas. The bill increases the credit from 10% to 25% and specifically applies to gas exploration outside the North Slope and is an important incentive to development in the Cook Inlet. The bill also makes two important revisions to Alaska’s production tax system (most commonly known as ACES) by enabling small oil and gas explorers to sell credits back to the state and waiving interest on the underpayment of taxes when the underpayment is due to a retroactive regulation change by the Department of Revenue. Finally, SB 309 creates a new exploration incentive credit for offshore exploration in the Cook Inlet. The incentive in SB 309 creates a rush to explore the pre-tertiary strata by providing an incentive of 100% for the first, 90% for the second and 80% for third well drilled from a jack-up rig. This provision was first introduced by Senator Tom Wagoner and integrated into SB 309. “SB 309 is a result of compromise and collaboration and all that matters is that we spur development in the Cook Inlet area, where Alaskans need it most,” emphasized Senator McGuire. SB 309 passed the House of Representatives by a vote of 37-2, and passed the Senate unanimously.
Posted: May 11, 2010
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