Many states and countries offer tax credits as a way to incentivize companies to do business in their state or nation. By bringing more business into the area, more jobs are created and more money is fed into the economy.	The costs of exploring and drilling for oil and gas in alaska are among the highest in the world. Tax credits help offset these expenses to make Alaska a more attractive place to do business. By encouraging oil and gas companies, big and small, to do business in Alaska – as opposed to another state or country – the state sees more oil and gas exploration and production, more jobs and more revenue to the state treasury for roads and services.	Credits are paid to oil and gas companies after they spend a significant amount of money (i.e. millions of dollars) on oil and gas exploration and/or production. Only a portion of company expenses qualify for credits – such as those expenses that help fund new oil exploration, support Alaska businesses and lead to a more secure future for the state.

 
 

 
Tax credits have proven to be effective in terms of bringing more investment to
Alaska and increasing oil and gas production. Here are some examples.

Oil and gas production increased substantially after passage of the Cook Inlet Recovery Act, which provided oil and gas companies tax credits for exploring and drilling for gas/oil in the Cook Inlet. The Act also boosted local economies, as it encouraged companies to spend hundreds of millions of dollars to get their operations up and running.	Caelus has invested hundreds of millions of dollars in Alaska exploring for, developing and producing new oil. One project, Nuna, would be a new oil development that could produce up to 20,000 barrels a day in just a few years!	Repsol has spent nearly $1 billion on the North Slope.

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