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Oil Exploration Incentive Bill Passes House
Rep. Fate's HB 307 Would Extend Drilling Credit Program

(JUNEAU) - The state would continue to encourage exploration for new sources of oil and natural gas on state lands under a measure that passed the House today to extend a state incentive program for such exploration for three additional years.

"Alaska's economic health is closely tied to the production of oil and gas, so it is in the best interests of the people for the state to encourage private industry to continue searching for new petroleum deposits," said Rep. Hugh "Bud" Fate (R-Fairbanks), sponsor of House Bill 307, which passed the House unanimously.

The bill would extend until 2007 the Exploration Incentive Credit, a program under which the state Division of Oil and Gas may grant credit against state royalties or taxes to oil and gas exploration companies who agree to share seismic information or drilling core samples with the state.

"The Nenana Basin in the Interior is the kind of prospective gas field where incentives could play a decisive role in spurring development," Fate said. "There's an extremely high potential for finding deep natural gas in this area. Of course, you can only find gas in commercial quantities by actually drilling, but that's just the kind of outcome this bill seeks to support."

The amount of credit that the state may offer under the program is linked both to the amount of information shared with the state, and to the actual value of the information to the state. The program was established in 1994, and is set to expire in 2004. By continuing the program until 2007, HB 307 represents concrete evidence of the Legislature's efforts to encourage and reward new petroleum exploration in Alaska, Fate said.

"As some of our largest known deposits of oil approach or pass their projected peak production levels, it is even more important that we have such a program in place that generates important geophysical information for the state, and encourages continued exploration for new deposits," Fate said.

HB 307 moves next to the Senate for consideration.

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