CSSB 208(RES): "An Act requiring the Department of Natural Resources and the Department of Revenue to evaluate current incentives and recommend additional ways to increase gas exploration, development, and production in the Cook Inlet sedimentary basin; and providing for an effective date."
00 CS FOR SENATE BILL NO. 208(RES) 01 "An Act requiring the Department of Natural Resources and the Department of 02 Revenue to evaluate current incentives and recommend additional ways to increase gas 03 exploration, development, and production in the Cook Inlet sedimentary basin; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 SHORT TITLE. This Act may be known as the Cook Inlet Energy Incentive Act. 09 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 LEGISLATIVE FINDINGS. The legislature finds that 12 (1) natural gas produced in the Cook Inlet area is used to generate nearly 90 13 percent of the electricity used in Southcentral Alaska and to heat approximately 130,000 14 homes and businesses; gas from the Cook Inlet area is vital to the economic well-being of
01 Southcentral Alaska and has been the least expensive energy source available to more than 02 half of the state's population for over three decades; 03 (2) for many years, there was far more gas in the Cook Inlet area than could be 04 consumed by Alaskans, providing plentiful low-priced gas; however, in recent years, prices 05 have risen dramatically as reserves in the Cook Inlet area are being depleted; 06 (3) as of January 2010, more than 7.75 trillion cubic feet of natural gas have 07 been produced from the Cook Inlet area; original reserves of more than eight trillion cubic 08 feet have been reduced by production to approximately one trillion cubic feet, with relatively 09 few new proved reserves to replace the natural gas that has been produced in the past; 10 (4) new field exploration is required to augment remaining reserves and 11 replace historic production; without successful discoveries of new natural gas reserves, 12 natural gas reserves in the Cook Inlet area may be depleted within two decades, and yearly in- 13 state demand may exceed supply within one decade; 14 (5) federal geologists estimate that there are approximately 2.5 trillion cubic 15 feet of undiscovered and technically recoverable gas in the Cook Inlet area; 16 (6) additional investment in developing natural gas reserves in existing fields 17 in combination with exploration for new natural gas reserves will be necessary to ensure an 18 adequate future supply of natural gas for Southcentral Alaska; 19 (7) aggressive investment in exploration and development is constrained by 20 the small size of the in-state market, which prevents natural gas producers in the Cook Inlet 21 area from selling the natural gas they discover within a reasonable period of time; 22 (8) the purchase of gas from newly discovered proved reserves for later resale 23 could provide producers with the incentive to invest additional dollars in exploring for and 24 developing new natural gas reserves; and 25 (9) the state currently is paying for at least 45 percent of new exploration and 26 development in the Cook Inlet area through several tax credits. 27 * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 STUDY AND REPORT RELATING TO INCENTIVES FOR INCREASING GAS 30 PRODUCTION AND THE EXPLORATION FOR AND MARKETING OF GAS IN THE 31 COOK INLET SEDIMENTARY BASIN BY THE DEPARTMENT OF NATURAL
01 RESOURCES AND THE DEPARTMENT OF REVENUE. (a) The Department of Natural 02 Resources, in consultation with the Department of Revenue, shall 03 (1) evaluate the effectiveness of incentives the state currently offers to 04 increase exploration for, development of, and production of gas in the Cook Inlet sedimentary 05 basin; 06 (2) identify, evaluate, and recommend additional incentives or proposals that 07 may be enacted by the legislature to increase the exploration for, development of, and 08 production of gas in the Cook Inlet sedimentary basin. 09 (b) The Department of Natural Resources and the Department of Revenue shall report 10 the findings, conclusions, and recommendations on the subjects described in (a) of this section 11 to the legislature before December 1, 2010. 12 (c) In this section, "Cook Inlet sedimentary basin" has the meaning given in 13 regulations adopted to implement AS 38.05.180(f)(4). 14 * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).