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Leaders of the Alaska House of Representatives, including House Speaker Mike Chenault, are questioning whether Alaska’s high tax rate on oil and gas is hampering new exploration.

“We think that there are some issues there with the ACES language and we’d like to get some clarifications so that we can determine if the legislation is working properly, or if we need to make changes,” Chenault said. “We’re focusing on how it affects job opportunities and exploration opportunities today versus 2007, when the tax was enacted.”

ACES is the Alaska Clear and Equitable Share statute, Alaska’s oil and gas production tax law.

Chenault and 14 others in the Republican Majority of the in the 40-member state House sent a letter Dec. 4 to Gov. Sean Parnell, a Republican, asking the governor to examine the tax.

The move indicates a likely battle over the tax when the Legislature convenes its 2010 session in January. Parnell, who took office last summer when former Gov. Sarah Palin resigned, inherited the tax system and much of oil and gas tax policies of the Palin’s administration, including the ACES tax.

In the letter legislators said they are concerned over slowing industry activity and cited ConocoPhillips’ recent decision to cease onshore exploration in Alaska in favor of offshore, where state taxes do not apply, and BP’s reduction in its 2010 capital spending plans, as examples of adverse impacts of the tax

BP and ConocoPhillips both have said recently that the Alaska tax, coupled with high costs of working in remote areas, creates a poor investment climate in the state.

The four-page letter presents nine questions to the administration concerning the production tax, asking for information in industry bidding in state lease sales, oil and gas employment numbers and requests for new drilling permits and rig counts.

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