SB 112 Summary

• Establishes tax credits against oil and gas production tax for the first three unaffiliated persons drilling offshore exploration wells in Cook Inlet's pre-Tertiary zone using a jack-up rig, plus the first person using a second jack-up rig.

• First well receives 100 percent credit up to $25,000,000; second well receives 90 percent credit up to $22,500,000; third well receives 80 percent credit up to $20,000,000; first well using second jack-up rig receives 100 percent credit up to $20,000,000.

• Eligible exploration expenditures include costs to modify existing jack-up rigs but exclude construction or manufacturing costs, and must be incurred after March 31, 2010.

• If a credited exploration well results in sustained production, the credit recipient must repay 50 percent of the credit in equal monthly installments over 10 years beginning 60 days after production starts.

• Department of Natural Resources determines whether wells penetrated the pre-Tertiary zone and resulted in sustained production; order of wells determined by date and time drill bit first turns against the seafloor.