A bill that would extend tax credits and other incentives toward new liquefied natural gas (LNG) storage facilities is advancing in the Alaska State Legislature.

Under HB 289 — also known as the Natural Gas Storage Tax Credit — new or expanded above-ground LNG storage facilities with a capacity of at least 25,000 gallons would qualify for a tax credit of $15 million or 50% of construction costs, whichever is less. Facilities built on state-owned land would also qualify for 10 calendar years of rental payment exemptions, provided the operations are continuous.

“We had to do major rewrite of this bill,” Jane Pierson, spokesperson for HB 289’s sponsor, Rep. Steve Thompson (R-Fairbanks), told NGI on Tuesday. “I don’t think it was too well received when it first came out; it was pretty Fairbanks-centric. But it’s become much more useable by different people in the state.”

Pierson said HB 289 passed the House Resources Committee on Monday and will be read to the full House before being submitted to the House Finance Committee on Wednesday.

The Golden Valley Electric Association and Flint Hills Resources Alaska plan to build an LNG facility on the North Slope and have it operational by 1Q2014 (see Daily GPI, Aug. 9, 2011). LNG would then be trucked to Alaska’s Interior until a pipeline solution is developed.

“It’s kind of a really nice step,” Pierson said. “I like that it’s lower than one million gallons because it would work along the coast if people wanted to have LNG storage. For places that are energy deprived, this is a step for setting up for natural gas to be an energy source.”

Pierson added that of the 40 members of the House, 16 represented districts that rely on diesel. She said a companion bill introduced by Sen. Joe Thomas (D-Coghill), SB 153, is in the Senate Resources Committee.

One proposal still under consideration is for the Alaska Gasline Development Corp. to build a 737-mile natural gas pipeline from the North Slope to the Cook Inlet region. The pipeline would service the state’s Southcentral region, which is running out of natural gas (see Daily GPI, Aug. 2, 2011; July 7, 2011).

Other proposals envision Alaska supplying Canada and the Lower 48 with natural gas through new pipelines. TransCanada Corp. and ExxonMobil are still reportedly considering such an endeavor, but BP plc and ConocoPhillips abandoned their plans last year (see Daily GPI, May 18, 2011; April 21, 2011).

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