JUNEAU (AP) Gov. Frank Murkowski said Monday he's backing a tax break intended to encourage new oil exploration.
He said he'll support a severance tax credit of up to 40 percent of the cost of new exploration wells.
The tax credit will be introduced Tuesday as an amendment to a related bill proposed by Sen. Tom Wagoner, R-Kenai, Murkowski said. Wagoner's bill would reduce the state's share of revenues from some Cook Inlet oil wells.
The bill is scheduled for a hearing Tuesday in the Senate Finance Committee.
The proposed severance tax credit would apply to new exploration wells begun after July 1, 2004, Murkowski said.
It would provide a credit of 20 percent of the cost for wells drilled more than three miles from an existing well, and an additional 20 percent for those drilled more than 25 miles from production facilities.
The credit could carry forward if not used by the company, and credits could be sold by a company that does not pay severance tax to one that does.
Department of Revenue Commissioner Bill Corbus said the credit would cost the state about $50 million a year.
The provision would go away after four years if the Legislature did not renew it.
Murkowski campaigned on a promise to help close the state's fiscal gap by increasing development of Alaska's resources. He says this is an important tool in accomplishing that goal.
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