00 HOUSE BILL NO. 414 01 "An Act relating to the tax on oil and gas production; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04  * Section 1. AS 43.55.011(e) is amended to read: 05 (e) There is levied on the producer of oil or gas a tax for all oil and gas 06 produced each calendar year from each lease or property in the state, less any oil and 07 gas the ownership or right to which is exempt from taxation or constitutes a 08 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 09 this section, the tax is equal to the sum of 10 (1) the annual production tax value of the taxable oil and gas as 11 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 12 (2) the sum, over all months of the calendar year, of the tax amounts 13 determined under (g) of this section on the production of oil. 14  * Sec. 2. AS 43.55.011(g) is amended to read: 01 (g) For each month of the calendar year for which the producer's average 02 monthly production tax value under AS 43.55.160(a)(2) of a [PER BTU 03 EQUIVALENT] barrel of [THE] taxable oil [AND GAS] is more than $30, the 04 amount of tax for purposes of (e)(2) of this section is determined by multiplying the 05 monthly production tax value of the taxable oil [AND GAS] produced during the 06 month by the tax rate calculated as follows: 07 (1) if the producer's average monthly production tax value of a [PER 08 BTU EQUIVALENT] barrel of [THE] taxable oil [AND GAS] for the month is not 09 more than $92.50, the tax rate is 0.4 percent multiplied by the number that represents 10 the difference between the producer's [THAT] average monthly production tax value 11 of a [PER BTU EQUIVALENT] barrel of oil and $30; or 12 (2) if the producer's average monthly production tax value of a [PER 13 BTU EQUIVALENT] barrel of [THE] taxable oil [AND GAS] for the month is more 14 than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 percent 15 multiplied by the number that represents the difference between the producer's 16 average monthly production tax value of a [PER BTU EQUIVALENT] barrel of oil 17 and $92.50, except that the sum determined under this paragraph may not exceed 50 18 percent. 19  * Sec. 3. AS 43.55.011(j) is amended to read: 20 (j) For a calendar year before 2022, the tax levied by (e)(1) [(e)] of this section 21 for gas produced from a lease or property in the Cook Inlet sedimentary basin may not 22 exceed 23 (1) for a lease or property that first commenced commercial production 24 of gas before April 1, 2006, the product obtained by multiplying (A) the amount of 25 taxable gas produced during the calendar year from the lease or property, times (B) the 26 average rate of tax that was imposed under this chapter for taxable gas produced from 27 the lease or property for the 12-month period ending on March 31, 2006, times (C) the 28 quotient obtained by dividing the total gross value at the point of production of the 29 taxable gas produced from the lease or property during the 12-month period ending on 30 March 31, 2006, by the total amount of that gas; 31 (2) for a lease or property that first commences commercial production 01 of gas after March 31, 2006, the product obtained by multiplying (A) the amount of 02 taxable gas produced during the calendar year from the lease or property, times (B) the 03 average rate of tax that was imposed under this chapter for taxable gas produced from 04 all leases or properties in the Cook Inlet sedimentary basin for the 12-month period 05 ending on March 31, 2006, times (C) the average prevailing value for gas delivered in 06 the Cook Inlet area for the 12-month period ending March 31, 2006, as determined by 07 the department under AS 43.55.020(f). 08  * Sec. 4. AS 43.55.011(o) is amended to read: 09 (o) Notwithstanding other provisions of this section, for a calendar year before 10 2022, the tax levied under (e)(1) [(e)] of this section for each 1,000 cubic feet of gas 11 for gas produced from a lease or property outside the Cook Inlet sedimentary basin 12 and used in the state may not exceed the amount of tax for each 1,000 cubic feet of gas 13 that is determined under (j)(2) of this section. 14  * Sec. 5. AS 43.55.020(a) is amended to read: 15 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 16 shall pay the tax as follows: 17 (1) an installment payment of the estimated tax levied by 18 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 19 month of the calendar year on the last day of the following month; except as otherwise 20 provided under (2) of this subsection, the amount of the installment payment is the 21 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 22 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 23 of the installment payment may not be less than zero: 24 (A) for oil and gas produced from leases or properties in the 25 state outside the Cook Inlet sedimentary basin but not subject to 26 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), 27 [THE GREATER OF] 28 (i) [ZERO; OR 29 (ii)] the sum of 25 percent and the tax rate calculated 30 for the month under AS 43.55.011(g) multiplied by the remainder 31 obtained by subtracting 1/12 of the producer's adjusted lease 01 expenditures for the calendar year of production applicable to the oil  02 produced by the producer from those leases and properties under 03 AS 43.55.165 and 43.55.170 that are deductible for the leases or 04 properties under AS 43.55.160 from the gross value at the point of 05 production of the oil [AND GAS] produced from the leases or 06 properties during the month for which the installment payment is 07 calculated; and  08 (ii) 25 percent of the remainder obtained by  09 subtracting 1/12 of the producer's adjusted lease expenditures for  10 the calendar year of production applicable to the gas produced by  11 the producer from those leases and properties under AS 43.55.165  12 and 43.55.170 that are deductible for the leases or properties under  13 AS 43.55.160 from the gross value at the point of production of the  14 gas produced from the leases or properties during the month for  15 which the installment payment is calculated; 16 (B) for oil and gas produced from leases or properties subject 17 to AS 43.55.011(f), the greater [GREATEST] of 18 (i) [ZERO; 19 (ii)] zero percent, one percent, two percent, three 20 percent, or four percent, as applicable, of the gross value at the point of 21 production of the oil and gas produced from all leases or properties 22 during the month for which the installment payment is calculated; or 23 (ii) 25 percent of the remainder obtained by  24 subtracting 1/12 of the producer's adjusted lease expenditures for  25 the calendar year of production applicable to the gas produced by  26 the producer from those leases and properties under AS 43.55.165  27 and 43.55.170 that are deductible for those leases or properties  28 under AS 43.55.160 from the gross value at the point of production  29 of the gas produced from those leases or properties during the  30 month for which the installment payment is calculated and 31 [(iii)] the sum of 25 percent and the tax rate calculated 01 for the month under AS 43.55.011(g) multiplied by the remainder 02 obtained by subtracting 1/12 of the producer's adjusted lease 03 expenditures for the calendar year of production applicable to the oil  04 produced by the producer from those leases and properties under 05 AS 43.55.165 and 43.55.170 that are deductible for those leases or 06 properties under AS 43.55.160 from the gross value at the point of 07 production of the oil [AND GAS] produced from those leases or 08 properties during the month for which the installment payment is 09 calculated; 10 (C) for oil and gas produced from each lease or property 11 subject to AS 43.55.011(j), (k), or (o), 25 percent of the remainder obtained  12 by subtracting 1/12 of the producer's adjusted lease expenditures for the  13 calendar year of production applicable to the gas produced by the  14 producer from those leases and properties under AS 43.55.165 and  15 43.55.170 that are deductible for those leases or properties under  16 AS 43.55.160 from the gross value at the point of production of the gas  17 produced from those leases or properties during the month for which the  18 installment payment is calculated and [THE GREATER OF 19 (i) ZERO; OR 20 (ii)] the sum of 25 percent and the tax rate calculated 21 for the month under AS 43.55.011(g) multiplied by the remainder 22 obtained by subtracting 1/12 of the producer's adjusted lease 23 expenditures for the calendar year of production applicable to the oil  24 produced by the producer from those leases and properties under 25 AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 26 for oil [OR GAS, RESPECTIVELY,] produced from the lease or 27 property from the gross value at the point of production of the oil [OR 28 GAS, RESPECTIVELY,] produced from the lease or property during 29 the month for which the installment payment is calculated; 30 (2) an amount calculated under (1)(C) of this subsection for oil or gas 31 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not 01 exceed the product obtained by carrying out the calculation set out in 02 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 03 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 04 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 05 gas produced during the month for the amount of taxable gas produced during the 06 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 07 amount of taxable oil produced during the month for the amount of taxable oil 08 produced during the calendar year; 09 (3) an installment payment of the estimated tax levied by 10 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 11 on the last day of the following month; the amount of the installment payment is the 12 sum of 13 (A) the applicable tax rate for oil provided under 14 AS 43.55.011(i), multiplied by the gross value at the point of production of the 15 oil taxable under AS 43.55.011(i) and produced from the lease or property 16 during the month; and 17 (B) the applicable tax rate for gas provided under 18 AS 43.55.011(i), multiplied by the gross value at the point of production of the 19 gas taxable under AS 43.55.011(i) and produced from the lease or property 20 during the month; 21 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 22 credits applied as allowed by law, that exceeds the total of the amounts due as 23 installment payments of estimated tax is due on March 31 of the year following the 24 calendar year of production. 25  * Sec. 6. AS 43.55.160(a) is amended to read: 26 (a) Except as provided in (b) of this section, for the purposes of 27 (1) AS 43.55.011(e), the annual production tax value of the taxable 28 (A) oil and gas produced during a calendar year from leases or 29 properties in the state that include land north of 68 degrees North latitude is the 30 gross value at the point of production of the oil and gas taxable under 31 AS 43.55.011(e) and produced by the producer from those leases or properties, 01 less the producer's lease expenditures under AS 43.55.165 for the calendar year 02 applicable to the oil and gas produced by the producer from those leases or 03 properties, as adjusted under AS 43.55.170; this subparagraph does not apply 04 to gas subject to AS 43.55.011(o); 05 (B) oil and gas produced during a calendar year from leases or 06 properties in the state outside the Cook Inlet sedimentary basin, no part of 07 which is north of 68 degrees North latitude, is the gross value at the point of 08 production of the oil and gas taxable under AS 43.55.011(e) and produced by 09 the producer from those leases or properties, less the producer's lease 10 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 11 gas produced by the producer from those leases or properties, as adjusted under 12 AS 43.55.170; this subparagraph does not apply to gas subject to 13 AS 43.55.011(o); 14 (C) oil produced during a calendar year from a lease or 15 property in the Cook Inlet sedimentary basin is the gross value at the point of 16 production of the oil taxable under AS 43.55.011(e) and produced by the 17 producer from that lease or property, less the producer's lease expenditures 18 under AS 43.55.165 for the calendar year applicable to the oil produced by the 19 producer from that lease or property, as adjusted under AS 43.55.170; 20 (D) gas produced during a calendar year from a lease or 21 property in the Cook Inlet sedimentary basin is the gross value at the point of 22 production of the gas taxable under AS 43.55.011(e) and produced by the 23 producer from that lease or property, less the producer's lease expenditures 24 under AS 43.55.165 for the calendar year applicable to the gas produced by the 25 producer from that lease or property, as adjusted under AS 43.55.170; 26 (E) gas produced during a calendar year from a lease or 27 property outside the Cook Inlet sedimentary basin and used in the state is the 28 gross value at the point of production of that gas taxable under 29 AS 43.55.011(e) and produced by the producer from that lease or property, less 30 the producer's lease expenditures under AS 43.55.165 for the calendar year 31 applicable to that gas produced by the producer from that lease or property, as 01 adjusted under AS 43.55.170; 02 (2) AS 43.55.011(g), the monthly production tax value of the taxable 03 (A) oil [AND GAS] produced during a month from leases or 04 properties in the state that include land north of 68 degrees North latitude is the 05 gross value at the point of production of the oil [AND GAS] taxable under 06 AS 43.55.011(e) and produced by the producer from those leases or properties, 07 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 08 calendar year applicable to the oil [AND GAS] produced by the producer from 09 those leases or properties, as adjusted under AS 43.55.170; [THIS 10 SUBPARAGRAPH DOES NOT APPLY TO GAS SUBJECT TO 11 AS 43.55.011(o);] 12 (B) oil [AND GAS] produced during a month from leases or 13 properties in the state outside the Cook Inlet sedimentary basin, no part of 14 which is north of 68 degrees North latitude, is the gross value at the point of 15 production of the oil [AND GAS] taxable under AS 43.55.011(e) and produced 16 by the producer from those leases or properties, less 1/12 of the producer's 17 lease expenditures under AS 43.55.165 for the calendar year applicable to the 18 oil [AND GAS] produced by the producer from those leases or properties, as 19 adjusted under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY 20 TO GAS SUBJECT TO AS 43.55.011(o);] 21 (C) oil produced during a month from a lease or property in the 22 Cook Inlet sedimentary basin is the gross value at the point of production of 23 the oil taxable under AS 43.55.011(e) and produced by the producer from that 24 lease or property, less 1/12 of the producer's lease expenditures under 25 AS 43.55.165 for the calendar year applicable to the oil produced by the 26 producer from that lease or property, as adjusted under AS 43.55.170 [; 27 (D) GAS PRODUCED DURING A MONTH FROM A 28 LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN IS 29 THE GROSS VALUE AT THE POINT OF PRODUCTION OF THE GAS 30 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 31 PRODUCER FROM THAT LEASE OR PROPERTY, LESS 1/12 OF THE 01 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 02 CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE 03 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 04 UNDER AS 43.55.170; 05 (E) GAS PRODUCED DURING A MONTH FROM A 06 LEASE OR PROPERTY OUTSIDE THE COOK INLET SEDIMENTARY 07 BASIN AND USED IN THE STATE IS THE GROSS VALUE AT THE 08 POINT OF PRODUCTION OF THAT GAS TAXABLE UNDER 09 AS 43.55.011(e) AND PRODUCED BY THE PRODUCER FROM THAT 10 LEASE OR PROPERTY, LESS 1/12 OF THE PRODUCER'S LEASE 11 EXPENDITURES UNDER AS 43.55.165 FOR THE CALENDAR YEAR 12 APPLICABLE TO THAT GAS PRODUCED BY THE PRODUCER FROM 13 THAT LEASE OR PROPERTY, AS ADJUSTED UNDER AS 43.55.170]. 14  * Sec. 7. AS 43.55.160(c) is amended to read: 15 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 16 calculating a monthly production tax value under (a)(2) of this section, the gross value 17 at the point of production of the oil [AND GAS] is calculated under regulations 18 adopted by the department that provide for using an appropriate monthly share of the 19 producer's costs of transportation for the calendar year. 20  * Sec. 8. This Act takes effect immediately under AS 01.10.070(c).