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Mayor’s Energy Task Force August 18, 2010

Mayor’s Energy Task Force August 18, 2010. Agenda. New Legislation New Entrants Gas Storage E & P Activities. New Legislation. HB 369 - Creates Alaska Gas Development Corporation In-state Pipeline plan to Legislature July 1, 2011 due date

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Mayor’s Energy Task Force August 18, 2010

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  1. Mayor’s Energy Task ForceAugust 18, 2010

  2. Agenda • New Legislation • New Entrants • Gas Storage • E & P Activities

  3. New Legislation • HB 369 - Creates Alaska Gas Development Corporation • In-state Pipeline plan to Legislature • July 1, 2011 due date • Address needs of Railbelt consumers (residential and commercial) • HB 280 Cook Inlet Incentives • Gas Storage • $1.50 / M Credit • 10 year rent holiday, LIFO treatment • Investment Incentives • 40% production tax credit on qualified capital • 25% Income tax credit on qualified expenditures • HB 309 Jack-up Rig - 100%, 90%, and 80% credit (up to $25MM) on 1st three wells drilled from jack-up

  4. New Entrants to Alaska • Apache - $34 B company, start-up 1954 • S-48, Canada, Egypt, North Sea, Australia • Buccaneer Alaska • Linc Energy

  5. Alaskan Clear & Equitable Share (ACES) • In 2007 the Alaskan Government introduced the ACES program to incent new entrants to explore within Alaska. This program takes the form of a rebate of between 45 - 65% of direct exploration costs and up to 55% on development costs. This is a significant incentive and substantially reduces the commercial discovery threshold. • On 19 April 2010 the Alaskan Legislature approved a significant amendment to Alaska’s AC ES program. The Governor • signed this legislation into law on May 10, 2010. Most significantly, the statutory amendments enacted with this legislation will establish a tax credit of up to US $25 million for new wells drilled into the pre-Tertiary strata of the Cook Inlet with a jack-up drilling rig. The new incentive provides for the following: • • If Buccaneer drills the first well in the Cook Inlet using a jack-up rig, it will be eligible to claim up to US $25 million of all drilling costs (including rig mobilization costs). • If it drills the second well, the claim will be US $22.5 million. • if its drills the third well, it is entitled to claim US $20 million. A company is eligible for only one of these incentives and is required to repay one-half (50%) the incentive equally over 10 years, but only if hydrocarbons are successfully produced. • On any subsequent well Buccaneer will still be eligible for the standard AC ES incentive of 45 – 65% of drilling and development costs. • The above incentives apply irrespective of the success of any well or development program.

  6. Gas Storage Proposals • CINGS, 11 BCF initial capacity • Nicolai Creek, 1 BCF

  7. CINGS • SEMCO (Enstar parent) – formerly TransCanada • Initial Capacity 11 BCF expandable, $180 MM • Applications in to RCA, AOGCC, DNR • Initial deliveries during Winter 2012 / 2013 • Customers, capacity, withdrawal, injection • CEA, 2.4 B, 35 MM/D, 27 MM/D • Enstar, 5B, 91 MM/D, 113 MM/D • ML&P, 0.6B, 10 MM/D, 10 MM/D

  8. Nicolai Creek • Aurora Gas is developer • Initial Capacity 0.7 BCF • Applications in to AOGCC, DNR • Initial deliveries during Winter 2011 / 2012? • Likely customer is a Utility

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