Legislature(2023 - 2024)SENATE FINANCE 532
05/08/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB50 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 19 | TELECONFERENCED | |
| *+ | HB 144 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 50 | TELECONFERENCED | |
| + | HB 81 | TELECONFERENCED | |
| += | HB 126 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 50(FIN)
"An Act relating to carbon storage on state land;
relating to the powers and duties of the Alaska Oil
and Gas Conservation Commission; relating to carbon
storage exploration licenses; relating to carbon
storage leases; relating to carbon storage operator
permits; relating to enhanced oil or gas recovery;
relating to long-term monitoring and maintenance of
storage facilities; relating to carbon oxide
sequestration tax credits; relating to the duties of
the Department of Natural Resources; relating to
carbon dioxide pipelines; and providing for an
effective date."
9:31:29 AM
Co-Chair Olson discussed housekeeping.
9:31:52 AM
JOHN CROWTHER, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, continued to address the presentation from the
previous day entitled "HB 50 Carbon Capture, Utilization,
and Storage" (copy on file).
Mr. Crowther addressed slide 14, "HB 50 Commercial Terms":
Commercial Minimums AS 38.05.705 (sec. 17)
• Minimum rental rate of $20 per acre
• Minimum injection charge of $2.50 per ton of
carbon dioxide
CSHB 50 SRES
• AS 38.05.715(c) enables the commissioner to
evaluate economic feasibility of the terms at the
time of lease conversion and set alternative
terms, if necessary, in a best interest finding.
Flexibility in Commercial Terms improves the State's
ability to maximize the resource:
• The value of pore space is highly dependent on:
• Geotechnical factors: depth, porosity,
permeability, seal, under burden, faults,
geochemistry, total dissolved solids, etc.
• Non-technical factors: source of CO2,
transportation distance, proximity to
infrastructure, complexity of land ownership
• DNR is adept at evaluating the State's interest
to account for other non-monetary factors
9:33:35 AM
Mr. Crowther addressed slide 15, "Peer State Leasing
Terms." The slide showed a table with information from
other state's provisions related to carbon capture
projects.
9:34:28 AM
Mr. Crowther displayed slide 16, "Addressed In Other
Committees":
• EPA Class VI amendments (sec. 34):
• Certificate of completion 50-year default
period AS 41.06.170
• Removal of "good cause" exemption AS
41.06.110
• Title to carbon dioxide to pore space owner
unless contrary agreement AS 41.06.165
• Carbon storage facility injection surcharge:
annual surcharge to project specific $7.5 million
account AS 41.06.175
• Long-term monitoring and maintenance:
authorizing DNR to enter and inspect closed
storage facilities and perform discretionary
activities beyond regulatory responsibilities of
Class VI well permit. AS 41.06.305
• Dismantlement, removal, and restoration (DRandR)
(sec. 17):
• Modified AS 38.05.720 to account for DRandR
obligations of an enhanced oil recovery reservoir
transitioning to a carbon storage lease
• Added AS 38.05.750 to direct DRandR on closed
licenses and leases
• Carbon dioxide pipelines: Amended AS 46.03.020 to
add CO2 pipelines to the regulatory authority given to
the Alaska
Department of Environmental Conservation (sec. 55)
• Evaluate gas storage proposals: Directs DNR to call
for proposals for gas storage when noticing carbon
storage application
AS 38.05.710 (sec. 17)
• 45Q tax credits: new section to exempt the use of
45Q tax credits against state corporate tax income
liability (sec. 49)
Mr. Crowther noted that the bill before the committee
addressed the suite of regulatory provisions needed by the
department. The department strongly supported the current
version of the legislation.
9:36:33 AM
Mr. Crowther addressed slide 17, "HB 50 Components":
Carbon Capture, Utilization, and Storage (CCUS)
(sections 134; 3740; 4950; 5557; 61)
• DNR carbon storage leasing framework (sec. 17
pore space, secs. 1824 pipelines)
• AOGCC Class VI regulatory framework (sec. 34)
• Decouple Alaska Corporate Income Tax from 45Q
(sec. 49)
• CO2 EOR and lease expenditures (sec. 50)
Other Issues
• Cook Inlet seismic data (secs. 3536)
• Department of Natural Resources, Division of
Geological and Geophysical Surveys
• Language from HB 257
• Gas storage facilities regulation (secs. 4147 and
56)
• Regulatory Commission of Alaska (RCA)
• Language from SB 220 and HB 394
• Corporate income tax on oil and gas companies (secs.
48, 58-59, 63)
• Department of Revenue
• Language from SB 114
• Cook Inlet reserve-based lending (secs. 5154)
• Alaska Industrial Development and Export
Authority (AIDEA)
• Concepts from HB 388
9:38:08 AM
NICHOLAS FULFORD, SENIOR DIRECTOR, GAFFNEYCLINE, discussed
a presentation entitled "HB 50 Economic and Fiscal
Features," (copy on file).
Mr. Fulford offered introductory comments and explained
that he had been working on carbon capture and
sequestration projects around the world over the last 5
years. His particular interest was in the commercial and
contractual features of projects and investment. He
explained that the EPA monitored emissions very closely and
produced a comprehensive database of emissions.
9:39:32 AM
AT EASE
9:40:50 AM
RECONVENED
Mr. Fulford showed slide 2, "Scale - How big is the
opportunity?":
• Total State CO2 emissions amount to 14.3 MTPA
• Of that, the vast majority(62%) arises from Prudhoe
Bay / North Slope operations
• A 2 MTPA plant would reduce total state emissions by
14%
• It would reduce the carbon intensity of Prudhoe Bay
oil by 140 kg CO2e/barrel
• Federal 45Q tax credits would amount to up to $170
million per annum
Mr. Fulford observed that the pie chart showed the
breakdown of Alaska GHG emissions.
Mr. Fulford relayed that over the next three slides, he
would paint a picture of what a hypothetical case would
look like, broken down by carbon capture elements,
transportation, and storage. He urged the committee to
consider that for any of the schemes to work the numbers
had to reach the economic limit presented by the 45Q
credits, or $85 per ton.
9:44:43 AM
Mr. Fulford stated that to bring the number down to what
would be a commercial investment case some aggressive
assumptions had been included in the hypothesis.
9:45:33 AM
Mr. Fulford showed slide 3, "Capture Financials 2 MTPA
hypothetical case," which showed a graph entitled "Capture
Cash Flows," and a table depicting capture cost. He
directed attention to the financial inflows and outflows on
the graph. He said that the effective income that would
need to be gained to justify the $500 million of capital
expenditure required would be $60 per ton.
Mr. Fulford pointed out the feature of the capture element,
and how it would apply to different facilities. He said
that the key question would be the ability to install a
capture plant within the economic parameters.
9:47:43 AM
Senator Bishop asked about the baseline for the
hypothetical scenario on the slide.
Mr. Fulford shared that the financial features reflected
what one might find in a capture plant in Louisiana or
Texas. He continued that investors might be looking for a
more aggressive return on investment. He thought the slide
was reflective of projects that were currently being
invested in but with less generous returns.
Senator Bishop asked whether the slide reflected a direct
air capture point source or an air capture. He asked
whether the numbers reflected $130-ton 45Q credit.
Mr. Fulford replied that direct air capture would be an
order of magnitude higher cost than reflected on the slide.
Senator Bishop understood that the slide reflected a point
source.
Mr. Fulford relayed that the scenario involved an
amalgamation of gas turbines, compressive facilities, and
things that lent themselves to an economic capture
mechanism. He used the example of one of the biggest
refineries in Texas, which had 3 or 4 major CO2 sources
that lent themselves to capture. He said looking at the
North Slope emissions it could be assumed that two-thirds
of the emission would not be feasibly capturable.
9:50:35 AM
Mr. Fulford addressed slide 4, "Transportation Financials
2 MTPA hypothetical case," which showed the previous slide
but addressed transport cash flows. He said that to create
an economic business case he had assumed shorter distances.
He noted that most of the tariff would arise from OPEX and
compression. He noted that the slide, along with the
subsequent slide, represented more predictable financials,
akin to the construction of a reasonably substantial gas
pipeline.
9:51:58 AM
Mr. Fulford turned to slide 5, "Storage Financials 2 MTPA
hypothetical case," which showed a graph of storage cash
flows and a table depicting storage cost. He noted that
there was an error on the slide and would provide a
corrected slide for the record. The corrected number would
reflect a tariff of $5 per ton of CO2. He relayed that the
drilling of injection wells, monitoring wells, and other
infrastructure would be included. He said that carefully
measuring the stored CO2 would be critical. He stated that
the unintuitive cashflows involved CO2 being injected into
a particular strata, which would be filled up and plugged.
He said that additional CAPEX would be necessary and was
reflected on the slide.
Mr. Fulford explained that the three slides with the
hypothetical cases added together reflected what a project
on the North Slope might generate.
9:54:33 AM
Co-Chair Stedman wondered if a state fee for the storage
could be negated by tax credits offered to industry. He
cited previous conversation concerning carbon that had not
reflected a financial benefit to the state.
Mr. Fulford thought that the question involved a series of
policy and taxation issues. He noted that later the
presentation would include some hypothetical scenarios that
could be helpful. He stressed that mitigation of CO2 was
becoming increasingly important. He discussed the feature
of increased tendency for carbon contents from oil
production to be factored into the price of oil. He
mentioned the increase in the carbon intensive nature of
production. He believed that the question was twofold; the
direct impact of incurred storage fees, and the broader
strategic benefits that might arise from indirect features.
He said that now that the 45Q tax consequences were
isolated from state corporate income tax, the revenues
should generate additional tax revenue to the state
provided the $85 limit could be exceeded.
9:59:03 AM
Co-Chair Stedman stressed the importance that carbon
capture policy be crafted carefully and with financial
benefit to the state.
9:59:46 AM
Mr. Fulford referenced slide 6, "Where are the
opportunities for State revenue":
• For Carbon Capture, transportation and storage
• Property tax
• Corporate income tax
• Storage fee revenue (per acre / per tonne)
• For EOR where feasible
• Increased production tax and royalty
• Longer term
• Premium pricing (or avoided discount) by
reducing carbon intensity of North Slope oil and
gas
• Downward influence on cost of capital for oil /
gas investment in Alaska
Mr. Fulford relayed that the slide summarized much of what
had already been discussed.
10:01:59 AM
Co-Chair Stedman wanted more detail in differentiating
between storage for a fee versus enhanced oil recovery on
the North Slope. He considered Cook Inlet as a storage
basin and cautioned that positive cashflow to the state
could be offset by tax credits to industry.
Mr. Fulford thought the concept of large-scale imports from
other countries could be an investment opportunity for
Alaska that did not exist anywhere else in the Unites
States. He said that Alaska would be competing with other
potential takers for imported CO2. He said that the
contractual features around long-term liabilities would be
key in insuring that the state carried no liability and
would require a dialogue between the state and the
exporting government. He concluded that there was a host of
features that would apply to a scheme involving
international import and appreciated the caution taken by
the committee.
10:05:27 AM
Co-Chair Stedman wondered whether Mr. Fulford could assist
with information about what other countries charged for
storage. He asserted that his was a very new concept for
the state. He contended that Alaska was able to market
storage space at a significant price.
Mr. Fulford agreed that cook Inlet held potentially high
value in global terms. He relayed that he could do some
modeling for the state that set out a cost base for each
part of the chain in the supply environment. He said that
the order of magnitude transoceanic transport of CO2 from
Asia to Alaska would be $50 per ton, a ten-fold increase
from moving the CO2 a few miles. He considered the capture
side of the scenario and said that the reason that
countries like Japan were interested in CO2 capture and
export was because they had a huge array of coal and gas
fired power generation, which were assets that had many
decades of life. He said that the implications of having to
decommission the plants and replace them with low or zero
carbon generation provided a strong economic driver to find
ways to export CO2.
10:08:29 AM
Co-Chair Stedman recognized that other states have similar
potential. He noted that Cook Inlet was a tidewater area
and thought it was difficult to compare to other states
when determining storage price.
Mr. Fulford commented that while there was a flurry of
investments in places such as Louisiana and Texas, the
design in those places was not comparable to the longer-
term import model unique to Alaska.
10:10:39 AM
Mr. Fulford addressed slide 7, "Geological Sequestration vs
EOR":
• Some states have assessed that CO2 capture
incentives are too heavily skewed towards geological
sequestration
• Risk to upside state revenues from oil and gas
royalty and taxes
• Wyoming recently enacted a $10/tonne incentive for
EOR to supplement 45Q
• Many states have EOR tax incentives that predate 45Q
Mr. Fulford noted that the right-hand side of the slide
showed a table with a high-level comparison of geological
sequestration versus capture, versus Enhanced Oil Recovery
(EOR).
10:13:21 AM
Mr. Fulford spoke to slide 8, "Commercial Structure and
Accounting Treatment":
• Carbon capture projects are typically structured as
a Special Purpose Vehicle (SPV)
• Optimisation of tax credit value is often achieved
through a "partnership flip" tax equity transaction
with an investor(s)
• Projects can be structured to receive enhanced
depreciation treatment from IRS (Modified Accelerated
Cost Recovery System, or MACRS) with depreciation
occurring over 7 years.
• Capture associated with EOR is often achieved
through an arms length sale of CO2
• Blend of EOR and geological sequestration possible,
with 45Q allocations according to CO2 flows
Mr. Fulford discussed the yearly federal tax credits for a
project on the scale of the proposed project.
10:14:57 AM
Mr. Fulford discussed slide 9, "Other likely financial
outcomes for the State of Alaska - Carbon Intensity of oil
- CBAM":
• Differential oil blend pricing based on carbon
intensity is emerging, and is likely to be applied in
at least some jurisdictions in the US (eg California,
Washington state)
• CBAM or Carbon Border Adjustment Mechanism
introduced in 2023
• From 2026 European importers will have to start
paying for the carbon content of imported goods,
will be fully implemented by 2034
• Alaskan oil could be disproportionately
impacted due to its high carbon intensity
• A 2 MTPA capture project would reduce carbon
intensity by about 140kg per barrel.
• At a price fully reflective of EU ETS current
trading levels of 85 Euro/tonne, this could
result in around $90m per annum in increased
production tax and royalty (or avoidance of a
price penalty)
Mr. Fulford detailed the slide.
10:16:37 AM
Senator Bishop noted that the legislation could be viewed
as an incentive for future oil production. He asked whether
it was true that there could be incentives in a premium for
oil sales, depending on the client.
Mr. Fulford replied that an investment in carbon capture
could enhance the value of Alaskan oil; by not investing
the value could evolve at a discount.
10:17:49 AM
Mr. Fulford displayed slide 10, "Other likely financial
outcomes for the State of Alaska - Cost of Capital":
• Attracting capital for oil and gas investment is
becoming increasingly challenging
• Especially so given Alaska's high carbon intensity,
and environmental vulnerability
• For every $1bn invested, a saving of $6 million
results for each 10 mils on cost of debt (60% project
finances)
Mr. Fulford concluded his remarks.
10:18:52 AM
Co-Chair Stedman thanked Mr. Fulford for the presentation
and coming to committee on such short notice.
10:19:30 AM
AT EASE
10:20:35 AM
RECONVENED
Co-Chair Olson explained that the committee would consider
a Committee Substitute (CS).
Co-Chair Hoffman MOVED to ADOPT proposed committee
substitute for CSSB 50(FIN), Work Draft 33-GH1567\N
(Dunmire, 5/7/24).
Co-Chair Olson OBJECTED for discussion.
10:21:25 AM
KEN ALPER, STAFF TO CO-CHAIR OLSON, spoke to the Summary of
Changes, version P to N:
Change #1 Removed sections related to making available
certain seismic survey and geophysical data. These
were sections 35-36 of the Senate Resources version.
Change #2 Removed sections related to regulating gas
storage facilities. These were sections 41-47 and 56
of the Senate Resources version.
Change #3 Removed sections related to taxation on
income attributable to a qualified entity. These were
sections 48, 58-59, and 62-64 of the Senate Resources
version.
Change #4 Removed sections related to a reserves-based
lending program at the Alaska Industrial Development
and Export Authority. These were sections 51-54 of the
Senate Resources version.
Mr. Alper relayed that the changes reflected no policy
changes to the original legislation but removed language
inserted in previous committees.
10:23:22 AM
Senator Kiehl asked about Change #3, and whether it removed
language pertaining to S-Corporations.
Mr. Alper answered affirmatively.
Senator Kiehl thought the change was significant when
compared to the bill drafted by the Senate resources
Committee. He considered that removing the language
maintained the massive tax advantage given to only one of
the three producers on the North Slope. He believed that
the issue still needed to be addressed.
Co-Chair Olson WITHDREW his objection. There being NO
OBJECTION, it was so ordered.
10:24:46 AM
Co-Chair Stedman reiterated that the legislation had been
paired down, in the interest of time, to deal mainly with
the issue of carbon storage. He said that the items that
had been removed could be considered later in another bill.
10:25:38 AM
Co-Chair Hoffman agreed with Senator Kiehl, but considered
that given the timeline, the legislation should be
considered with the changes intact.
10:26:36 AM
CHRISTY RESLER, PRESIDENT, ARCTIC SLOPE REGIONAL
CORPORATION ENERGY SERVICES (via teleconference), read from
a prepared statement:
Good [morning/afternoon] Co-Chair Olson and honorable
members of the Senate Finance Committee, for the
record my name is Christine Resler and I am the
President and CEO of ASRC Energy Services, a wholly
owned subsidiary of Arctic Slope Regional Corporation.
Arctic Slope Regional Corporation is an Alaska Native
Corporation, established pursuant to the Alaska Native
Claims Settlement Act with a dual mission to support
the economic, social and cultural well-being of its
nearly 14,000 Inupiat shareholders.
With more than 40 years of experience serving Alaska
and working in the Arctic, AES is the state's largest
oil services provider with over 2,300 Alaska full-time
and seasonal employees.
We are seeing firsthand the growing interest in Alaska
as a place to pursue carbon management. Passage of SB
48 last year and allowing the state to start the
process of pursuing primacy for class VI wells has
started to attract interest from across the globe.
But without action now to pass both the DNR and AOGCC
authorities included in HB50, Alaska will lose
momentum and we will see the interest and expertise
currently focused on Alaska go to states that are
taking the steps to put in place their regulatory
frameworks.
It is our goal at AES to be a center of innovation for
Alaska and to lead in the development and deployment
of technologies that will ensure Alaska remains at the
forefront of responsible resource development for the
benefit of all Alaskans.
By establishing a regulatory framework for carbon
storage on state lands, HB 50 is crucial to that
future.
For over 40 years, we have helped companies manage
every part of the upstream and midstream development
of oil and gas in Alaska.
Systems for managing the associated water, natural gas
and other hydrocarbons are integral to producing each
and every barrel of oil.
As fields have evolved on the North Slope, we have
treated seawater to enhance oil recovery, developed
miscible injectant from other hydrocarbons and as
part of Alaska's regulatory environment, reinjected
immense amounts of natural gas.
10:29:54 AM
Ms. Resler continued her testimony:
However, it is important to remember that we are a
long way off from carbon management being a viable
business, much less a major part of the investment
being deployed on the slope.
AES is currently partnered with Santos and Repsol
pursuing federal support through the Infrastructure
Law to explore the possibility of capturing carbon
from point sources like gas turbines on the North
Slope.
While we are in the early stages of exploring
technologies and designs, having the regulatory
framework HB 50 would establish is absolutely
essential to our efforts for two reasons.
First, injecting carbon for storage requires a class
VI well and the state is currently pursuing primacy
thanks to the legislature's actions last year.
We understand that HB 50 includes specific changes to
state law based on guidance from the EPA.
Second, without the regulatory and commercial
framework for state pore-space we cannot do even the
basic technical, economic and engineering work
required to even advance the technology because we
don't know what rules we are designing for.
We are deeply concerned to see a straightforward
establishment of a basic regulatory framework to
enable companies like AES to begin exploring what is
required for carbon management become a vehicle for
tax and other controversial policies with potentially
unintended consequences.
Mr. Chairman, members of the committee, I want to be
clear that I am not a tax expert or specifically well-
versed in our state's lease expenditure systems.
At a high level I understand some of the concerns that
have been expressed.
But as one of the people working to actually explore
whether carbon is a viable business and support our
efforts as Alaskans to always be on the forefront of
responsible development, I want to assure you that we
have years of work to do before there are serious or
substantial investments in projects.
However, I also want to assure you that failing to
enact the basic regulatory framework HB 50 envisions
this year will set Alaska back significantly and delay
the critical work that needs to be done now to protect
our state's oil and gas industry.
10:32:40 AM
KARA MORIARTY, EXECUTIVE DIRECTOR, ALASKA OIL AND GAS
ASSOCIATION, read from a prepared document:
The Alaska Oil & Gas Association (AOGA) is a
professional trade association representing the
majority of production, exploration, refining and
transportation activities of the oil and gas industry
in Alaska. Our mission is to advocate for the long-
term viability of the industry.
We support the original policy objective of House Bill
50 to encourage investment in Alaska and to reduce
carbon dioxide emissions through carbon capture,
utilization, and storage (CCUS).
It is no secret the federal government has developed a
robust CCUS regulatory framework to protect the
environment and public health, and now for Alaska to
compete with other states to attract current industry
investment in these types of CCUS activities, the
state needs this regulatory framework contained in HB
50.
As it relates to CCUS, there is one section of the
bill that we do not support; Section 50.
As we understand, for a carbon capture and storage
project that only captures and stores carbon without
exploring for, developing, or producing, oil or gas
deposits those costs would not, under the current
production tax statutes, qualify as an allowable lease
expenditure. Costs associated with enhanced oil
recovery (EOR), including EOR using carbon, are
currently and should remain an allowable lease
expenditure.
As the committee evaluates creating a CCUS program in
HB 50, we recommend the state's CCUS program be
designed in a manner that does not impact currently
allowable lease expenditures. If the committee
believes clarifying language regarding allowable lease
expenditures remains a necessary path forward for HB
50, AOGA stands by as an available resource.
Now I'd like to move to other provisions of HB 50 that
were added in the Senate Resources Committee. AOGA
acknowledges the anticipated shortfall of Cook Inlet
natural gas to meet local demand in the years ahead.
The Cook Inlet Basin has been and will continue to be
a critical source of oil, natural gas, and refined
products for Alaskans. As policymakers consider energy
solutions for the Railbelt, it is important to keep in
mind there are known, substantial natural gas reserves
remaining. However, economics and unique market
conditions remain challenging in the Inlet.
For that reason, AOGA is supportive of policies that
improve the economics and viability of Cook Inlet
projects, while ensuring a stable and predictable
business climate.
With that in mind, AOGA supports Sections 41-47 of the
bill that relates to natural gas storage. Commercial
gas storage facilities have an important role to play
in the Railbelt's energy security. The current
language in HB 50 ensures new participants have a
clear understanding of the rules, economics and
processes related to the gas storage business.
Further, operators of commercial gas storage
facilities must have confidence in the basic
confidentiality of sensitive business records, or less
legislation will not be successful in attracting new
participants.
We support Section 44 as the current confidentiality
language is consistent with current state statutes and
is an absolute necessity for the desired investment in
gas storage and can be done without degrading
regulatory transparency requirements.
We also support Section 46 clarifying that the Federal
Energy Regulatory Commission (FERC) has regulatory
jurisdiction over LNG import facilities, eliminating
any potential for federal and state oversight
conflict, therefore removing any unnecessary and
unforeseen regulatory burden for the Regulatory
Commission of Alaska (RCA).
AOGA also supports sections 53 and 54 related to
reserve based, or asset based financing. Innovative
funding options, such as developmental loans secured
by the value of undeveloped known reserves, could be
helpful in unlocking new developments and producing
more natural gas. A state-backed asset-based lending
program would allow loans to be made based on
undeveloped oil and gas reserves, diminishing the need
for restrictive and often unobtainable commercial
financing.
I would be remiss if I did not mention another Cook
Inlet incentive that has been evaluated this session
that is not in the bill, and that is related to
royalty relief. AOGA supports royalty relief as it
will incentivize production and improve economics for
some member companies.
Finally, Section 48 of the bill, imposes a new
retroactive income tax on a limited number of firms in
one sector of the economy. For independent companies
in the Cook Inlet this will have the opposite effect
of increasing investment. The vague and uncertain
language of Section 48 has not been discussed or
evaluated in any committee this session, either in
this body or the other body. It introduces undefined
terms and defers significant policy decisions to the
regulatory process. And, as currently drafted appears
to double tax entities already subject to corporate
income tax.
AOGA strongly opposes targeting only one sector of the
economy, particularly with the legislature's and
administration's focus on incentivizing Cook Inlet gas
production. Increasing taxes on the industry will not
generate new investment and will accelerate the
uncertainty of gas supply in the very near term,
compounding the challenges in providing stable,
reliable, and affordable energy for Alaskans.
Thank you for the opportunity to provide testimony on
behalf of the AOGA membership.
We urge the Legislature to adopt a meaningful CCUS
structure, create policies to incentivize gas
production in Cook Inlet, and reject policies like
Sections 50 and 48, that harm Alaska's investment
climate.
10:36:20 AM
Co-Chair Olson considered Section 40, which he thought was
a concern shared by many producers on the North Slope. He
asked whether AOGA could support the legislation if Section
40 remained in the legislation.
Ms. Moriarty relayed that AOGA was evaluating the matter.
She said that the current language would affect current
lease expenditures, which was cause for concern and had not
been part of the original legislation.
Co-Chair Olson admitted that the committee had only just
received the CS and had yet to fully digest the changes
from the original legislation.
HB 50 was heard and HELD in Committee for further
consideration.
Co-Chair Olson discussed housekeeping.