News from the Senate Majority
Alaska State Legislature

Wendy Lindskoog, Senate Majority Press Secretary
State Capitol
Juneau, AK 99801-1182
Phone: 907/465-4582
http://www.akrepublicans.org
Broadcast Actualities: 800/478-6540

Senator Pearce Introduces Cook Inlet Royalty Holiday Bill

Incentive Will Stimulate Gas Production

For Immediate Release: January 23, 1998 Contact: Krag Johnsen, Assistant to Senator Drue Pearce, at (907) 465-6594.

Juneau – To spur gas production in the Cook Inlet, Senator Drue Pearce (R-Anchorage) introduced legislation that offers the oil and gas industry an incentive to develop known but undeveloped fields.

"Cook Inlet has not been a hotbed of new activity for many years," said Pearce. "Providing responsible incentives might result in increased activity that will greatly benefit our State, specifically the Anchorage bowl and Kenai Peninsula residents."

The primary focus of Senate Bill 256 is to develop new sources of natural gas to offset potential shortages and declining production in the Inlet which would clearly have adverse effects on private and commercial users in the area. New gas reserves developed as a result of this legislation will help defer those shortages, and will be instrumental in maintaining economically priced gas supplies.

SB 256 provides a short window of opportunity for lease holders to take advantage of reduced State royalties. The lease holders qualify if they own leases that overlie previously discovered oil or gas fields in Cook Inlet which have remained undeveloped or shut in from at least January 1, 1988 through December 31, 1997.

If production begins before January 1, 2004, companies would receive a 7 ½ reduction in their royalty fees (a reduction from 12 ½ to 5 percent) for a period of 10 years following the date on which production begins.

"Reducing the initial start-up costs of undeveloped fields will help make gas production of these fields more feasible," said Senator Pearce. "In exchange for the short-term break in State fees, Southcentral Alaska can be assured of a long-term stable gas supply and continued low energy costs."

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