Alaska state legislators have tacked an amendment to a tax incentives bill to force oil and natural gas lease operators to develop reserves.

Under House Bill 71, an amendment was added to the current exploration tax incentive law, which was extended to 2010. The bill is scheduled for hearings in a state senate committee on Tuesday.

Ostensibly, the amendment would force North Slope producers to develop the natural gas on their leases. The North Slope is estimated to hold about 35 Tcf of proven reserves. Producers now are in talks with state officials about developing a gas pipeline from the North Slope to the Lower 48, and have requested special tax and royalty terms for a project under the state’s Stranded Gas Act.

State. Rep. Ralph Samuels, cochairman of the House Natural Resources Committee, developed the amendment following a recent presentation to the legislature on the rights of the state versus lease holders (see Daily GPI, April 25).

The amendment would give Alaska’s Commissioner of Natural Resources guidance to interpret the terms in existing state oil and gas leases on due diligence and obligations to develop discovered resources. The amendment would allow the commissioner to use an economic model to predict the projected rates of return on the oil and gas leases.

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