1993-03-05                     Senate Journal                      Page 0618
SB 151                                                                       
SENATE BILL NO. 151 by the Senate Rules Committee by request                   
of the Governor, entitled:                                                     
                                                                               
"An Act providing for oil and gas exploration                                 
incentive credits for certain activities on certain land                       
in the state; and providing for an effective date."                            
                                                                               
was read the first time and referred to the Senate Special Committee           
on Oil and Gas, Judiciary and Finance Committees.                              
                                                                               
Zero fiscal notes published today from Department of Revenue and               
Department of Natural Resources.                                               
                                                                               
Governor's transmittal letter dated March 5:                                   
                                                                               

1993-03-05                     Senate Journal                      Page 0619
SB 151                                                                       
Dear Mr. President:                                                            
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution,          
I am transmitting a bill providing for monetary incentives in the              
form of certain credits to be applied against taxes and other                  
obligations to the state for oil- and gas-related geophysical and              
exploratory activities performed by a qualified applicant.  This bill          
should provide a valuable tool for the state to encourage oil and gas          
exploration in Alaska.                                                         
                                                                               
The bill amends AS41 by adding a new chapter, 09.  The bill                    
would permit a qualified applicant to receive certain credits that             
could be used to offset taxes, royalties, or bonuses due the state, if         
the applicant performed certain defined exploratory work.  The bill            
does not require that the exploratory work be done exclusively on              
state land, since development on other land also benefits the state in         
the form of additional jobs, increased economic activity, and                  
development of infrastructure.  The bill, though, allows a credit not          
to exceed 50 percent of the eligible direct costs of activities                
performed on state-owned land as opposed to 25 percent of those                
costs on other land, to encourage development on state land.  The              
applicant would be able to assign the credit to any other entity,              
including banks and security holders.  The commissioner of natural             
resources is authorized to grant up to a total of $50 million for all          
incentive credits to applicants under this program, with no single             
project receiving more than $5,000,000 in credits.                             
                                                                               
The applicant also must submit to the commissioner copies of all               
data derived from the exploratory activity.                                    
                                                                               
The commissioner may display, but not distribute or transfer, certain          
geophysical data to others to generate interest in development of              
state oil and gas reserves.  The bill provides protection for                  
confidential data submitted similar to that already existing in other          
state laws for oil and gas exploration information submitted to the            
state.                                                                         
                                                                               
                                                                               

1993-03-05                     Senate Journal                      Page 0620
SB 151                                                                       
I urge your prompt and favorable consideration of this bill.                   
                                                                               
      Sincerely,                                                               
      /s/                                                                      
      Walter J. Hickel                                                         
      Governor