Bill Includes “Cook Inlet Stampede” Tax Credits to Incentivize Jack-Up Drill Rig Exploration of Cook Inlet

Juneau – Sen. Tom Wagoner, R-Kenai, today said the inclusion in SB 309 of incentives for deep level exploration of the Cook Inlet basin will trigger a stampede to bring a jack-up drill rig into the area. Amendments made in the Senate Finance committee incorporate the incentives from Wagoner’s SB 290. Wagoner worked with Sen. Lesil McGuire, R-Anchorage, to put the language in SB 309, and with House Speaker Mike Chenault, R-Nikiski, who introduced a companion bill in the House of Representatives.

“The only way we are ever going to offset the declining oil and gas production in Cook Inlet is to get down to the Jurassic zone and start producing the hydrocarbons in those reservoirs,” Wagoner said. “Cook Inlet is an underexplored basin, and there has not been a jack-up drill rig operating there since the early 1990s. I believe the way these credits are structured will cause a stampede by independents to the Inlet.”

“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 help provide energy for South Central Alaska.”

The tax credits will apply to the first three unaffiliated explorers to drill down to the pre-Tertiary, or into the Jurassic zone, and are structured as follows:

• First explorer is credited 100 percent of costs, or up to $25 million;
• Second explorer is credited 90 percent, or up to $22.5 million;
• Third explorer is credited 80 percent, or up to $20 million.

If the exploration results in sustained oil and/or gas production from a reservoir discovered by the drilling, then 50 percent of the credits awarded would be repaid to the state.

A jack-up drill rig is a mobile drilling platform that uses extendable legs that reach the ocean floor for support and stability.

SB 309 passed the House of Representatives by a vote of 37-2 and passed the Senate unanimously last week.

Therriault and Wagoner to Attend Legislative Energy Horizon Institute

Juneau – Sen. Gene Therriault, R-North Pole, and Sen. Tom Wagoner, R-Kenai, have been selected among 32 legislators from both the US and Canada to attend a comprehensive series of energy forums, the Legislative Energy Horizon Institute, which will examine the full spectrum of energy generation, infrastructure, regulation and government oversight. The objective of the Institute, which is sponsored in part by the University of Idaho with the support of the US Department of Energy, is to examine the complexity and policy questions surrounding current North American energy generation and distribution issues.

“It is an honor to be selected to attend the Energy Horizon Institute, which has the goal to keep a core group of policy makers up to date on the multitude of energy issues states will be wrestling with over the coming years,” Therriault said. “Energy, whether it is oil and gas, coal, electricity, or biomass, is vital to Alaska’s future, as an exporter of energy as well as for our own consumers. I look forward to putting the knowledge I gain at the Institute to work for Alaskans.”

“Maintaining a continuity of knowledgeable members in a legislative body, who are intimately familiar with the complex details you find with all energy issues, is really crucial to crafting productive, appropriate energy policy,” Wagoner said. “This is important to protecting the interests of Alaskans in these energy debates.”

Attendance at all sessions is mandatory for participants, who will receive a University of Idaho certificate at the conclusion of the program.  The first session of the program will be held in Boise, ID from July 12-16, and will include overviews of electric generation and transmission, natural gas, petroleum and strategic leadership. The program curriculum extends over a period of 18 months and will include seminar training as well as monthly “webinars” and other training materials.

“By accepting the invitation to participate in the Legislative Energy Horizon Institute, I look forward to not only bringing information back to Alaska, but also taking information about Alaska’s role in the global energy markets for members from other jurisdictions to consider” said Therriault.