Anchorage (Platts)--12May2010/545 pm EDT/2145 GMT

Alaska Governor Sean Parnell on Wednesday signed into law a bill to provide state tax credits for developers of natural gas storage facilities and expand an existing producer tax credit for well work and other in-field capital expenses outside the state's North Slope.

Parnell said he hopes to convince legislators to extend the credits next year for well workovers and field development on the North Slope.

The new law provides an investment tax credit of up to $15 million for storage facilities of 500,000 Mcf or more that have the capacity to withdraw at least 10,000 Mcf/d.

Parnell estimated the credit could pay for 10% of the estimated cost of a storage facility in south-central Alaska.

Enstar Natural Gas, the south-central Alaska regional gas utility, is now working on developing a storage facility with two regional electric utilities, Chugach Electric Association and Anchorage's city-owned utility, Municipal Light and Power.

There is now no large gas storage facility that Alaska utilities can draw on during winter. Marathon Oil and Chevron maintain small gas storage for their own use.

The law also expands tax credits for well work and other in-field capital expenses outside the North Slope from 20% to 40% and extends the 40% tax credits to seismic work.