The American Jobs Creation Act of 2004 became law on October 22, 2004. Most of the act's provisions pertain to tax law changes, a few of which apply to natural gas and oil such as tax credits for production from marginal wells and tax incentives for the Alaska natural gas pipeline and gas processing facilities. These provisions include:

• A new tax credit of up to $3 per barrel for the production of crude oil and a credit of up to $0.50 per thousand cubic feet (Mcf) for the production of natural gas from qualified marginal wells. A marginal well is defined as one that produces less than 25 barrels per day of oil equivalent and produces water at a rate not less than 95 percent of total well effluent. Full credit is provided to such marginal wells at reference prices less than or equal to $15 per barrel for oil and $1.67 per Mcf for natural gas. The credit declines linearly to zero when reference prices, adjusted for inflation, reach $18 per barrel of oil and $2 per Mcf of natural gas. The tax credit applies to the first 1,095 barrels of oil equivalent produced, and the limit is reduced in proportion to the number of days in the taxable year for which the well is not in production. The tax credit takes effect in taxable years beginning after December 31, 2004.
• A 7-year cost-of-investment recovery period for the Alaska natural gas pipeline, as opposed to the currently allowed 15-year recovery period, for tax purposes. The provision would be effective for property placed in service after 2013, or treated as such.
• Extension of the 15-percent tax credit applied to costs related to enhanced oil recovery to include construction costs for a gas treatment plant that supplies natural gas to a 2 trillion Btu per day pipeline, lies in Northern Alaska, and produces carbon dioxide (CO2) for injection into hydrocarbon-bearing geological formations. A gas treatment plant on the North Slope that feeds gas into an Alaska pipeline to Canada is expected to satisfy this requirement. The provision would be effective for costs incurred after 2004.

The legislation has had no direct impact on natural gas production, as natural gas prices have been higher than the reference $2-per-Mcf level since enactment. However, the law appears to have encouraged investment in an Alaska natural gas pipeline and gas treatment plant. Several project sponsors have expressed interest in going forward with an Alaska pipeline (see The Alaska Natural Gas Pipeline Act). In August 2008, the Alaska Legislature awarded a license under the Alaska Gasline Inducement Act (enacted May 2007) to TransCanada Pipelines Ltd., which entitles TransCanada to State-matching funds of up to $500 million for pipeline construction. (Five projects had applied for the AGIA license.) BP p.l.c. and ConocoPhillips Co. have plans for a competing pipeline system between the Alaska North Slope and Alberta, Canada, and for construction of a new gas treatment plant on the Alaska North Slope. Spokespersons for both the TransCanada and BP and ConocoPhillips projects have stated their intentions to begin service in 2018.