Finance and Taxation Committee adopts amendment and recommends due pass for exploratory-well incentive in SB 2397

The Finance and Taxation Committee voted to adopt an amendment and recommend a due pass for Senate Bill 2397 as amended during a committee meeting, advancing language that would create a development-incentive certification for exploratory oil wells.

Representative Doctor, who moved the amendment, told the committee the proposal is designed as a limited incentive: "it's an incentive. It's not a credit. It's only gonna be utilized if if a company is willing to put 12 to 15,000,000 into trying to, to do an exploratory well," he said, adding that operators must demonstrate use of new technology to qualify.

The amendment adds language (page 8, line 10 of the circulated draft) requiring an operator seeking certification of a well as a development-incentive well to "meet the burden of demonstrating to the Industrial Commission that the well meets the criteria," language committee members said meets the expectations of the Department of Mineral Resources and the Industrial Commission.

Doctor described a fiscal example presented to the committee, saying if the state provided a $5,000,000 incentive on $100,000,000 of private investment it could generate substantially larger state receipts: "If we give a hundred million dollars incentive, it costs the state 5,000,000. It produces almost 700,000,000 for the state," he said. He also said the industry has not drilled an exploratory well in about 11 years and portrayed the incentive as a tool to keep companies invested in-state.

Representative Anderson asked whether companies that "find the secret sauce" would share new technology; Doctor and other members acknowledged industry incentives to retain proprietary practices. Chairman Hedlund said the bill language had been included in the Department of Transportation's budget and that the amendment still fit the bill's purpose.

The committee adopted the amendment (amendment 01005) on a roll-call vote with all members recorded as "yes." Representative Doctor moved the amendment; the motion was seconded by Representative Wilson. The committee then voted to recommend a due pass for Senate Bill 2397 as amended; Representative Olson moved the due-pass recommendation, seconded by Representative Steiner. The clerk's roll calls recorded 14 "yes" votes on the due-pass motion and the committee announced the motions carried.

Committee members discussed who would carry the bill forward; Representative Olson volunteered. The committee chair closed by noting the panel had completed its business for the Sixty-ninth Legislative Assembly and adjourned.