Energy Task Force Meeting Summary August 18, 2010
The Energy Task Force meeting on August 18, 2010, discussed various topics including new legislation, entrants in Alaska's energy sector, the Alaskan Clear & Equitable Share program, gas storage proposals, and incentives for companies like Apache and Buccaneer. The meeting highlighted the importance of addressing the energy needs of Railbelt consumers and promoting exploration within Alaska through tax credits and incentives.
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Presentation Transcript
Mayors Energy Task Force August 18, 2010
Agenda New Legislation New Entrants Gas Storage E & P Activities
New Legislation HB 369 - Creates Alaska Gas Development Corporation In-state Pipeline plan to Legislature July 1, 2011 due date Address needs of Railbelt consumers (residential and commercial) HB 280 Cook Inlet Incentives Gas Storage $1.50 / M Credit 10 year rent holiday, LIFO treatment Investment Incentives 40% production tax credit on qualified capital 25% Income tax credit on qualified expenditures HB 309 Jack-up Rig - 100%, 90%, and 80% credit (up to $25MM) on 1st three wells drilled from jack-up
New Entrants to Alaska Apache - $34 B company, start-up 1954 S-48, Canada, Egypt, North Sea, Australia Buccaneer Alaska Linc Energy
Alaskan Clear & Equitable Share (ACES) In 2007 the Alaskan Government introduced the ACES program to incent new entrants to explore within Alaska. This program takes the form of a rebate of between 45 - 65% of direct exploration costs and up to 55% on development costs. This is a significant incentive and substantially reduces the commercial discovery threshold. On 19 April 2010 the Alaskan Legislature approved a significant amendment to Alaska s AC ES program. The Governor signed this legislation into law on May 10, 2010. Most significantly, the statutory amendments enacted with this legislation will establish a tax credit of up to US $25 million for new wells drilled into the pre-Tertiary strata of the Cook Inlet with a jack-up drilling rig. The new incentive provides for the following: If Buccaneer drills the first well in the Cook Inlet using a jack-up rig, it will be eligible to claim up to US $25 million of all drilling costs (including rig mobilization costs). If it drills the second well, the claim will be US $22.5 million. if its drills the third well, it is entitled to claim US $20 million. A company is eligible for only one of these incentives and is required to repay one-half (50%) the incentive equally over 10 years, but only if hydrocarbons are successfully produced. On any subsequent well Buccaneer will still be eligible for the standard AC ES incentive of 45 65% of drilling and development costs. The above incentives apply irrespective of the success of any well or development program.
Gas Storage Proposals CINGS, 11 BCF initial capacity Nicolai Creek, 1 BCF
CINGS SEMCO (Enstar parent) formerly TransCanada Initial Capacity 11 BCF expandable, $180 MM Applications in to RCA, AOGCC, DNR Initial deliveries during Winter 2012 / 2013 Customers, capacity, withdrawal, injection CEA, 2.4 B, 35 MM/D, 27 MM/D Enstar, 5B, 91 MM/D, 113 MM/D ML&P, 0.6B, 10 MM/D, 10 MM/D
Nicolai Creek Aurora Gas is developer Initial Capacity 0.7 BCF Applications in to AOGCC, DNR Initial deliveries during Winter 2011 / 2012? Likely customer is a Utility
