Roads to resources, Bristol Bay exploration, Tundra Travel on tap
December 04, 2004
Included in the request is a $20 million state roads package that will fund transportation projects which spur oil and gas development, including funding to continue analysis of a road from Prudhoe Bay to Point Thompson.
"As a resource state, it is absolutely imperative that we invest in the infrastructure that will allow us to expand our economic base," Murkowski said. "North Slope oil and gas production pays for virtually everything we do, so much of what we are proposing today is in support of oil and gas activities, whether it is directly on the slope or not."
Murkowski said this administration has seen great progress in its first two years toward opening the Arctic National Wildlife Refuge to development, building a gas pipeline and increasing oil and gas exploration. His 2005 energy agenda will build upon that work. The governor made the announcement at the Laborer's Hall Local 341.
"When we talk about increasing oil and gas development in this state, what we are really talking about is increasing job opportunities for Alaskans. And so what I am asking the Legislature to do is create jobs for Alaskans by approving my request," Murkowski said.
The administration will also seek legislative approval to extend a 2003 exploration credit proposal to include upcoming oil and gas leases in Bristol Bay. The previous legislation opened an exploration incentive window of four years for oil and gas development that companies could use to reduce their state severance taxes.
The Bristol Bay areawide lease sale is expected for spring 2006, which would not give companies adequate time to take advantage of the incentive program. So the governor will ask the Legislature to open that window of eligibility until 2010 for the Alaska Peninsula lease area.
"The people of Bristol Bay now want oil and gas development in their region, and so do we. This bill will give them an even chance to enjoy the economic benefits that such an incentive program will bring," the governor said. "If we can bring the companies to their region, the jobs will follow."
Governor Murkowski also said he anticipates natural resource companies will see a greater window of arctic exploration following the conclusions of a new study on tundra travel by the U.S. Department of Energy and the state Department of Natural Resources.
"We've seen the winter exploration season cut in half since the early 1970s as a result of regulatory changes and a trend of warmer weather. But a fresh look at the science is telling us that perhaps we can begin traveling on the tundra earlier that was once thought," Murkowski said.
"We would like to open the season earlier and keep it open longer. But we are not going to do it at the expense of the tundra. And these exciting new conclusions are telling us that perhaps we can open the season as much as three weeks earlier, but that will depend on Old Man Winter cooperating," Murkowski said.
The transportation bills will include construction projects that aid construction of a natural gas pipeline to the Lower 48 and increased natural gas development around the state. This request will be made to the Legislature December 15 when the fiscal 2005 budget is unveiled and will be part of a larger and more regionally balanced roads package.
"We want to build roads that lead to jobs, whether the jobs are on the North Slope or downtown Anchorage," Murkowski said.
Roads to Resources:
Total package cost = $20 million
The Department of Natural Resources opens the North Slope tundra to exploration when the ground is frozen enough to transport equipment overland without damaging the tundra. Warming weather trends and regulatory changes have reduced the winter exploration season in half since the early 1970s.
The DNR Division of Mining, Land and Water worked with the U.S. Department of Energy to develop scientifically valid, peer-reviewed research to find ways to extend the season without compromising the environment. Specifically, they drove equipment out on the tundra roughly every two weeks from the end of October 2003 through late January 2004 and then came back this past summer to measure the effects on the environment.
An analysis of their work gives the state reason to believe the winter exploration seasoin can open at least 3 weeks earlier than previous openings. DNR staff are actively monitoring the tundra and will open it as soon as it is ready based on the new information.
Last year, DNR opened some areas to winter travel on December 23 and other areas as late as January 28. With the new data, it is now clear that DNR could have opened all of the North Slope area to winter travel in early December. Recent analysis shows that doing so would not have increased the damage to the tundra.
The management summary will be available on the DNR website at http://www.dnr.state.ak.us/. DNR will also have the raw data and the full report available online later this month.
Bristol Bay Exploration Credits
Governor Murkowski plans to introduce legislation to expand Senate Bill 185, approved in 2003, to expand severance tax credit provisions for oil and gas exploration to the Alaska Peninsula competitive oil and gas areawide lease sale.
Under the original bill, companies were able to deduct exploration expenses from future production taxes paid to the state. The legislation required companies to incur those expenses between July 1, 2003 and July 1, 2007.
The state Department of Natural Resources does not expect to hold a lease sale on the proposed Bristol Bay Competitive Oil and Gas Area Wide Lease Sale Area before fall of 2005. As a result, it is unlikely that companies would be able to post Bristol Bay exploration costs in time to receive the credit.
Governor Murkowski will propose legislation to extend the deadline until July 1, 2010 for the proposed Bristol Bay competitive lease sale. This would encourage development in the Bristol Bay area and make the credit consistent with development incentives offered in other regions of the state.
But the administration hopes the severance tax credits will yield revenues to the state by encouraging companies that would not otherwise participate in the lease sale.
The basin has significant potential
for oil and gas that could bring in millions of dollars in state
Sources of News & Audio Clips: