(JUNEAU) - The Alaska House of Representatives approved House Bill 61 by a vote of 33 to four on Thursday. Sponsored by Rep. Mike Chenault (R-Nikiski/Ninilchik/Sterling), HB 61 provides a state tax credit to gas exploration operators on investments made for the purpose of gas exploration. The credit applies only to exploration south of 68-degrees latitude.

"The combination of exploration risk, high development costs and historic low natural gas prices has created a disincentive to drill for new reserves as compared to other areas of the world," Chenault said. "By providing a credit for successful efforts, more exploration will occur in Southern Alaska to provide much needed new natural gas reserves."

Under HB 61, operators can apply for a credit that equals ten-percent of their capital investments for gas exploration, such as drilling rigs, maintenance equipment, or port facilities. They can also receive a credit equal to ten-percent of their expenditures for services they use to operate those capital investments. However, the credit for capital investments only applies to equipment bought after June 30, 2003 and immediately applied to drilling in Alaska after the purchase. Only successful drilling efforts will receive the credit; operators who drill dry holes will not qualify. Chenault said Alaska has plenty of natural gas potential and that operators will see the credit as a worthwhile incentive.

"The Cook Inlet continues to have great potential for additional natural gas development, and, other Alaska basins outside of the North Slope have similar potential," Chenault said. "We must provide a catalyst for new gas exploration."

HB 61 moves to the Senate.

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