Dave Donaldson, APRN – Juneau
Democrats are urging the Parnell administration to make better use of the incentives the state currently offers oil companies.
Senator Hollis French and Representative Les Gara, in a letter sent to Governor Sean Parnell today, say failure to promote the advantages of the state’s tax system is a deterrent to new investment in the state.
French says the oil industry is not hearing that the state offers substantial credits that will be returned to oil explorers. They are also eligible for reductions on the state’s royalty that can carry forward into the production phase of a well.
Conoco-Philips has reported that it has made $7.8 billion in profits since the current tax regime went into effect in 2007.
Representative Gara points to several specific highlights of the state’s tax system that need to be more widely discussed. He says the process is in place now for relief of the state’s royalty on oil if a company can prove that the reduction would make productive an otherwise-uneconomic project. He says another advantage is tax credits that companies can use totaling up to forty percent of their capital costs under some conditions.
The state budget presented for the legislature’s consideration this year includes appropriations to cover some $850 million in incentives already requested by producers. And Governor Parnell has introduced legislation that would make available an estimated billion dollars in incentives covering oil fields as they go into long-term operations. French pointedly did not criticize the governor’s proposals.
In an e-mail, Parnell says he has met with every energy company doing business or expressing interest in developing in Alaska, and he looks forward to working with French and Gara on his bills to improve the state’s tax regime.
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