This editorial appeared in The Anchorage Daily News.
The Palin Administration is taking some grief for taking a hard line with Exxon at the long-undeveloped Point Thomson oil and gas field. The state won't let Exxon and its partners build an ice road to the field, needed for drilling this winter, because the companies no longer have valid drilling rights there. They have not done the drilling they promised, so the Palin administration is taking back the leases.
Point Thomson is not the only place the state has refused to let oil and gas leaseholders slide when they don't live up to their work commitments. The Palin administration has declared default on two oil and gas units in Cook Inlet, Kitchen and Corsair, because the leaseholders aren't making the progress they had promised.
For companies that do explore or drill as promised, the state offers generous financial rewards. Under the state's new tax structure, companies that invest in Alaska oil and gas fields get big credits, and possibly even cash refunds, on their severance tax bills.
The new severance tax is based on net profits. For every dollar spent on exploration and development, the company can deduct a dollar straight from profits. The state also gives back at least 20 percent of exploration and development costs through credits on the severance tax. Companies that don't owe severance taxes can collect a refund check or sell their unused credits to companies that do owe taxes.
To read the complete editorial, visit The Anchorage Daily News.