Consultants suggest possibly revisiting Cook Inlet credits

  • By Becky Bohrer
  • Thursday, January 29, 2015 10:40pm
  • News

JUNEAU, Alaska — Legislative consultants this week suggested that it may be wise for lawmakers to examine their approach to creating incentives for oil and gas development from Cook Inlet.

The issue of oil and gas tax credits received renewed attention earlier this month, when Gov. Bill Walker wrote an opinion piece that said Alaska is projected to pay about $100 million more in oil and gas production credits this year than it collects in production taxes.

State revenue officials have said the $625 million in so-called refundable credits referred to in that piece are primarily for small explorers or those developing new oil and gas fields that have no tax liability. Revenue Commissioner Randall Hoffbeck has said the credits are split pretty evenly between the North Slope and Cook Inlet.

Consultants from the firm Enalytica, in a report accompanying their testimony before the Senate Finance Committee on Tuesday, said that some small producer credits are slated to expire on Jan. 1. The report said that is because in passing an oil tax overhaul in 2013, the legislature decided not to extend those credits.

But that will not affect Cook Inlet, where the report said producers largely pay no oil production taxes and a low, fixed rate on gas production. The report said a pre-2006 tax regime largely still holds there, along with credits.

Given the state’s budget situation, it may be worth looking at whether some of the same benefits that those credits provide to companies in Cook Inlet could be given in a different way, the report suggested.

Sen. Peter Micciche, R-Soldotna, and a member of the committee, said the energy outlook in south-central Alaska, which benefits from Cook Inlet production, is getting better. But he said now is not the time to change the state’s approach to Cook Inlet.

Production there helped alleviate what had been a crisis mode for much of Alaska’s population, he said in an interview.

The state should continue on its current course until it knows those energy supplies are secure, Micciche said.

Sen. Bill Wielechowski, D-Anchorage, said it’s worth evaluating the state’s approach to Cook Inlet credits.

“I think we’ve got to get to that point where, if it’s uneconomical, that’s when you get the credits,” Wielechowski said. It is not smart policy to give credits to companies if they don’t need them, he said.

More in News

Montessori materials sit on shelves in a classroom at Soldotna Montessori Charter School on Tuesday, Sept. 20, 2022 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Education debate draws state attention to peninsula charter schools

Dunleavy would like to see a shift of authority over charter school approvals from local school districts to the state

The Nikiski Senior Center stands under sunlight in Nikiski, Alaska, on Thursday, March 14, 2024. (Jake Dye/Peninsula Clarion)
Support available for community caregivers

Nikiski Senior Center hosts relaunched Kenai Peninsula Family Caregiver Support Program

Flags flank the entrance to Gov. Mike Dunleavy’s office on Thursday, March 14, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Dunleavy vetoes bipartisan education bill

Senate Bill 140 passed the House by a vote of 38-2 and the Senate by a vote of 18-1 last month

The Alaska State Capitol on Friday, March 1, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
House passes bill altering wording of sex crimes against children

The bill is sponsored by Rep. Sarah Vance, R-Homer

Ben Meyer and Brandon Drzazgowski present to the Soldotna and Kenai Chambers of Commerce at the Soldotna Regional Sports Complex in Soldotna, Alaska, on Wednesday, March 13, 2024. (Jake Dye/Peninsula Clarion)
Kenai Watershed Forum gives update on streambank restoration

The watershed forum and other organizations are working to repair habitat and mitigate erosion

The entrance to the Kenai Police Department, as seen in Kenai, Alaska, on April 1, 2020. (Photo by Brian Mazurek/Peninsula Clarion)
Kenai resident arrested on charges of arson

Kenai Police and Kenai Fire Department responded to a structure fire near Mountain View Elementary

Sen. Jesse Bjorkman, R-Nikiski, speaks in opposition to an executive order that would abolish the Board of Certified Direct-Entry Midwives during a joint legislative session on Tuesday, March 12, 2024 in Juneau, Alaska. (Ashlyn O'Hara/Peninsula Clarion)
Legislature kills most of Dunleavy’s executive orders in rare joint session

All the proposed orders would have shuffled or eliminated the responsibilities of various state boards

Nikiski Middle/High School student Maggie Grenier testifies in favor of a base student allocation increase before the Alaska Senate Education Committee on Monday, Feb. 12, 2024, in Juneau, Alaska. (Screenshot)
Students report mixed responses from lawmakers in education discussions

Delegates from the Kenai Peninsula Borough School District lobbied the Alaska Legislature for more state funding and other education priorities

A child waves from the back of a truck as the 32nd annual Sweeney’s St. Patrick’s Day Parade proceeds down Fireweed Street in Soldotna, Alaska on Friday, March 17, 2023. (Jake Dye/Peninsula Clarion)
St. Patrick’s Day parade set for Sunday

The annual Sweeney’s St. Patrick’s Day Parade, hosted by the Soldotna Chamber of Commerce, kicks off at 2 p.m.

Most Read