Alaska offers incentives for natural gas drilling at Cook Inlet

Anxiety about the future of Southcentral Alaska's major source of heating fuel and electricity — Cook Inlet natural gas — pervaded the state Capitol this year.

Though the Inlet still contains vast quantities of natural gas, geologists say, exploration and production drilling have ebbed to the point that Southcentral utilities could begin importing gas from the Lower 48 or overseas within a few years until they can secure new in-state supplies.

Gov. Sean Parnell last week signed a pair of bills crafted by Anchorage and Kenai legislators to try to boost Cook Inlet gas exploration and create natural gas storage options for reducing the winter supply crunch. The state tax concessions in the bills are huge: for their drilling, companies can shave tens of millions of dollars off their income and production tax liabilities.

State Sen. Tom Wagoner, R-Kenai, predicted a "stampede" of companies will descend on the Inlet to drill.

Some major Cook Inlet producers like Conoco Phillips, Marathon Oil and Chevron so far have not expressed any interest in bringing an offshore exploration rig to the inlet.

Still, at least two small companies are assembling plans to drill on their Cook Inlet leases next year: Houston-based Escopeta Oil & Gas, and Sydney, Australia-based Buccaneer Energy. No work contracts have been signed yet.

The two firms are enthusiastic about the tax incentives but said they could not secure a drilling rig this year.

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