HB 351: "An Act authorizing tax credits for certain costs associated with recovery and production of oil or gas; and providing for an effective date."
00HOUSE BILL NO. 351 01 "An Act authorizing tax credits for certain costs associated with recovery and 02 production of oil or gas; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.20 is amended by adding new sections to read: 05 Sec. 43.20.076. CREDIT FOR DIFFICULT OR MARGINAL OIL OR GAS 06 PRODUCTION. (a) As a credit against the tax due under this chapter, a producer of 07 oil or gas is allowed an amount equal to 20 percent of the cost of drilling and 08 completing a difficult or marginal production well. 09 (b) The credit authorized by this section arises in the tax year in which the 10 difficult or marginal production well giving rise to the credit commences difficult or 11 marginal production on a sustained basis. 12 (c) The total of all credits taken by a taxpayer under this section may not 13 exceed 50 percent of the taxpayer's total tax liability under this chapter during the tax 14 year in which the credit arises. The taxpayer may carry forward the portion of the
01 credit that exceeds the limitation on use of the credit under this subsection and claim 02 the excess as a credit against taxes due under this chapter for succeeding tax years. 03 Sec. 43.20.077. CREDIT FOR STEAM-FLOOD PROJECT INVESTMENT 04 TO RECOVER AND PRODUCE HEAVY OIL. (a) As a credit against the taxes due 05 under this chapter, a producer of oil or gas is allowed an amount equal to 20 percent 06 of the capital cost of installing a steam-flood project to enhance the recovery and 07 production of heavy oil. 08 (b) The credit authorized by this section arises in the tax year in which the 09 steam-flood project is placed into service. 10 (c) The total of all credits taken by a taxpayer under this section may not 11 exceed 50 percent of the taxpayer's total tax liability under this chapter during the tax 12 year in which the credit arises. The taxpayer may carry forward the portion of the 13 credit that exceeds the limitation on use of the credit under this subsection and claim 14 the excess as a credit against taxes for succeeding tax years. 15 Sec. 43.20.078. LIMITATION ON USE OF CREDITS FOR RECOVERY OF 16 OIL AND GAS. An investment or expenditure giving rise to a credit under 17 AS 43.20.076 or 43.20.077 may not give rise to a credit against any other tax imposed 18 under this title. 19 Sec. 43.20.079. DEFINITIONS RELATING TO CREDITS FOR RECOVERY 20 OF OIL AND GAS. In AS 43.20.076 - 43.20.079, 21 (1) "difficult or marginal production" means oil or gas that is produced 22 from a difficult or marginal production well; 23 (2) "difficult or marginal production well" means a well, the drilling 24 of which began on or after January 1, 1997, that is directed toward and completed in 25 a zone or reservoir known to contain 26 (A) heavy oil and that only produces heavy oil; or 27 (B) gas at an absolute pressure of less than 1,000 pounds per 28 square inch and that only produces gas from that zone or reservoir; 29 (3) "heavy oil" means oil 30 (A) with a viscosity greater than 10 centipoise as measured in 31 the reservoir at initial conditions; or
01 (B) with an API gravity of less than 22 degrees; 02 (4) "steam-flood project" means a project involving the injection of 03 steam into one or more injection wells or other source to effect oil displacement 04 toward and oil production from one or more production wells. 05 * Sec. 2. AS 43.55 is amended by adding new sections to read: 06 Sec. 43.55.021. CREDIT FOR DIFFICULT OR MARGINAL OIL OR GAS 07 PRODUCTION. (a) As a credit against the taxes due under this chapter, a producer 08 of oil or gas is allowed an amount equal to 20 percent of the cost of drilling and 09 completing a difficult or marginal production well. 10 (b) The credit authorized by this section arises in the month in which the 11 difficult or marginal production well giving rise to the credit commences difficult or 12 marginal production on a sustained basis. 13 (c) The credit authorized by this section may be taken against the tax levied 14 under this chapter for any lease or property in the state from which the taxpayer 15 produces oil or gas subject to the tax levied by this chapter, and is not limited to tax 16 on production from the same lease or property in which the difficult or marginal 17 production well is completed. 18 (d) The total of all credits taken by a taxpayer under this section may not 19 exceed 50 percent of the taxpayer's total tax liability under this chapter during the 20 month in which the credit arises. The taxpayer may carry forward the portion of the 21 credit that exceeds the limitation on use of the credit under this subsection and claim 22 the excess as a credit against taxes for succeeding months. 23 Sec. 43.55.022. CREDIT FOR STEAM-FLOOD PROJECT INVESTMENT 24 TO RECOVER AND PRODUCE HEAVY OIL. (a) As a credit against the taxes due 25 under this chapter, a producer of oil or gas is allowed an amount equal to 20 percent 26 of the capital cost of installing a steam-flood project to enhance the recovery and 27 production of heavy oil. 28 (b) The credit authorized by this section arises in the month in which the 29 steam-flood project is placed into service. 30 (c) The credit authorized by this section may be taken against the tax levied 31 under this chapter for any lease or property in the state from which the taxpayer
01 produces oil or gas subject to the tax levied by this chapter, and is not limited to tax 02 on production from the same lease or property for which the steam-flood project is 03 installed. 04 (d) The total of all credits taken by a taxpayer under this section may not 05 exceed 50 percent of the taypayer's total tax liability during the month in which the 06 credit arises. The taxpayer may carry forward the portion of the credit that exceeds 07 the limitation on use of the credit under this subsection and claim the excess as a 08 credit against taxes for succeeding months. 09 Sec. 43.55.023. LIMITATION ON USE OF CREDITS FOR RECOVERY OF 10 OIL AND GAS. An investment or expenditure giving rise to a credit taken under 11 AS 43.55.021 or 43.55.022 may not give rise to a credit against any other tax imposed 12 under this title. 13 Sec. 43.55.025. DEFINITIONS. In AS 43.55.021 - 43.55.025, 14 (1) "difficult or marginal production" means oil or gas that is produced 15 from a difficult or marginal production well; 16 (2) "difficult or marginal production well" means a well, the drilling 17 of which began on or after January 1, 1997, that is directed toward and completed in 18 a zone or reservoir known to contain 19 (A) heavy oil and that only produces heavy oil; or 20 (B) gas at an absolute pressure of less than 1,000 pounds per 21 square inch and that only produces gas from that zone or reservoir; 22 (3) "heavy oil" means oil 23 (A) with a viscosity greater than 10 centipoise as measured in 24 the reservoir at initial conditions; or 25 (B) with an API gravity of less than 22 degrees; 26 (4) "steam-flood project" means a project involving the injection of 27 steam into one or more injection wells or other injection source to effect oil 28 displacement toward and oil production from one or more production wells. 29 * Sec. 3. APPLICABILITY OF CREDITS UNDER ALASKA NET INCOME TAX ACT. 30 The credits established by AS 43.20.076 - 43.20.079, added by sec. 1 of this Act, apply to 31 income taxes of a taxpayer that become due on or after the effective date of sec. 1 of this Act.
01 * Sec. 4. APPLICABILITY OF CREDITS AGAINST OIL AND GAS PRODUCTION 02 TAXES. The credits established by AS 43.55.021 - 43.55.025, added by sec. 2 of this Act, 03 apply to production taxes of a taxpayer that become due on or after the first day of the month 04 in which sec. 2 of this Act takes effect. 05 * Sec. 5. This Act takes effect January 1, 1997.