txt

SB 53: "An Act relating to a credit for certain exploration expenses against oil and gas properties production taxes on oil and gas produced from a lease or property in the state; relating to the deadline for certain exploration expenditures used as credits against production tax on oil and gas produced from a lease or property in the Alaska Peninsula competitive oil and gas areawide lease sale area after July 1, 2004; and providing for an effective date."

00                             SENATE BILL NO. 53                                                                          
01 "An Act relating to a credit for certain exploration expenses against oil and gas                                       
02 properties production taxes on oil and gas produced from a lease or property in the                                     
03 state; relating to the deadline for certain exploration expenditures used as credits                                    
04 against production tax on oil and gas produced from a lease or property in the Alaska                                   
05 Peninsula competitive oil and gas areawide lease sale area after July 1, 2004; and                                      
06 providing for an effective date."                                                                                       
07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
08    * Section 1.  AS 43.55.025(a) is amended to read:                                                                  
09            (a)  Subject to the terms and conditions of this section, on oil and gas produced                            
10       from an oil and gas lease, or on gas produced from a gas only lease, on or after July 1,                          
11       2004, a credit against the production tax due under this chapter is allowed for                           
12       exploration expenditures that qualify under (b) of this section in an amount equal                            
13       to                                                                                                                
01                 (1)  20 percent of the total exploration expenditures that qualify under                                
02       [(b) AND] (c) of this section or [,] 20 percent of the total exploration expenditures that                    
03       qualify under [(b) AND] (d) of this section, or both, for a total production tax credit                       
04       that does not exceed 40 percent of the total exploration expenditures that qualify                            
05       under this paragraph; and [; OR]                                                                              
06                 (2)  40 percent of the total exploration expenditures that qualify under                                
07       [(b) AND] (e) of this section [, FOR A TOTAL PRODUCTION TAX CREDIT THAT                                           
08       DOES NOT EXCEED 40 PERCENT OF THE TOTAL QUALIFIED                                                                 
09       EXPLORATION EXPENDITURES].                                                                                        
10    * Sec. 2.  AS 43.55.025(b) is amended to read:                                                                     
11            (b)  To qualify for the production tax credit under (a) of this section, an                                  
12       exploration expenditure must be incurred for work performed on or after July 1, 2003,                             
13       and before July 1, 2007, or on or after July 1, 2003 and before July 1, 2010 for                              
14       exploration expenditures incurred in the Alaska Peninsula competitive oil and                                 
15       gas areawide lease sale area described in sec. 5 of this Act, and                                             
16                 (1)  may be for seismic or geophysical exploration costs not connected                                  
17       with a specific well;                                                                                             
18                 (2)  if for an exploration well,                                                                        
19                      (A)  must be incurred by an explorer that holds an interest in the                                 
20            exploration well for which the production tax credit is claimed;                                             
21                      (B)  may be for either an oil or gas discovery well or a dry hole;                                 
22            and                                                                                                          
23                      (C)  must be for goods, services, or rentals of personal property                                  
24            reasonably required for the surface preparation, drilling, casing, cementing,                                
25            and logging of an exploration well, and, in the case of a dry hole, for the                                  
26            expenses required for abandonment if the well is abandoned within 18 months                                  
27            after the date the well was spudded;                                                                         
28                 (3)  may not be for testing, stimulation, or completion costs;                                          
29       administration, supervision, engineering, or lease operating costs; geological or                                 
30       management costs; community relations or environmental costs; bonuses, taxes, or                                  
31       other payments to governments related to the well; or other costs that are generally                              
01       recognized as indirect costs or financing costs; and                                                              
02                 (4)  may not be incurred for an exploration well or seismic exploration                                 
03       that is included in a plan of exploration or a plan of development for any unit on May                            
04       13, 2003.                                                                                                         
05    * Sec. 3.  AS 43.55.025(d) is amended to read:                                                                     
06            (d)  To be eligible for a [AN ADDITIONAL] 20 percent production tax credit,                              
07       an exploration expenditure must                                                                                   
08                 (1)  qualify under (b) of this section; and                                                             
09                 (2)  be for an exploration well that is located not less than 25 miles                                  
10       outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under a                         
11       plan of development.                                                                                              
12    * Sec. 4.  AS 43.55.025(e) is amended to read:                                                                     
13            (e)  To be eligible for the 40 percent production tax credit in (a)(2) [(a)] of this                     
14       section, the exploration expenditure must                                                                         
15                 (1)  qualify under (b) of this section;                                                                 
16                 (2)  be for seismic exploration; and                                                                    
17                 (3)  have been conducted outside the boundaries of a production unit or                                 
18       an exploration unit; however, the amount of the expenditure that is otherwise eligible                            
19       under this subsection is reduced proportionately by the portion of the seismic                                    
20       exploration activity that crossed into a production unit or an exploration unit.                                  
21    * Sec. 5.  The uncodified law of the State of Alaska is amended by adding a new section to                         
22 read:                                                                                                                   
23       LEGAL DESCRIPTION OF ALASKA PENINSULA COMPETITIVE OIL AND                                                         
24 GAS AREAWIDE LEASE SALE AREA.  For purposes of AS 43.55.025(b), as amended by                                           
25 sec. 2 of this Act, the following comprises the area of the Alaska Peninsula competitive oil                            
26 and gas areawide lease sale:                                                                                            
27            (1)  Township 17 South, Ranges 44 West - 58 West, Seward Meridian;                                           
28            (2)  Township 18 South, Ranges 44 West - 58 West, Seward Meridian;                                           
29            (3)  Township 19 South, Ranges 44 West - 58 West, Seward Meridian;                                           
30            (4)  Township 20 South, Ranges 45 West - 61 West, Seward Meridian;                                           
31            (5)  Township 21 South, Ranges 46 West - 54 West, Seward Meridian;                                           
01            (6)  Township 21 South, Ranges 57 West - 61 West, Seward Meridian;                                           
02            (7)  Township 22 South, Ranges 47 West - 53 West, Seward Meridian;                                           
03            (8)  Township 22 South, Ranges 58 West - 61 West, Seward Meridian;                                           
04            (9)  Township 23 South, Ranges 47 West - 52 West, Seward Meridian;                                           
05            (10)  Township 24 South, Ranges 47 West - 52 West, Seward Meridian;                                          
06            (11)  Township 25 South, Ranges 47 West - 52 West, Seward Meridian;                                          
07            (12)  Township 26 South, Ranges 47 West - 53 West, Seward Meridian;                                          
08            (13)  Township 27 South, Ranges 47 West - 53 West, Seward Meridian;                                          
09            (14)  Township 28 South, Ranges 48 West - 53 West, Seward Meridian;                                          
10            (15)  Township 29 South, Ranges 48 West - 54 West, Seward Meridian;                                          
11            (16)  Township 30 South, Ranges 48 West - 55 West, Seward Meridian;                                          
12            (17)  Township 31 South, Ranges 49 West - 56 West, Seward Meridian;                                          
13            (18)  Township 32 South, Ranges 51 West - 57 West, Seward Meridian;                                          
14            (19)  Township 33 South, Ranges 52 West - 58 West, Seward Meridian;                                          
15            (20)  Township 34 South, Ranges 53 West - 59 West, Seward Meridian;                                          
16            (21)  Township 35 South, Ranges 51 West - 59 West, Seward Meridian;                                          
17            (22)  Township 36 South, Ranges 51 West - 52 West, Seward Meridian;                                          
18            (23)  Township 36 South, Ranges 55 West - 60 West, Seward Meridian;                                          
19            (24)  Township 37 South, Ranges 57 West - 62 West, Seward Meridian;                                          
20            (25)  Township 38 South, Ranges 58 West - 63 West, Seward Meridian;                                          
21            (26)  Township 39 South, Ranges 59 West - 64 West, Seward Meridian;                                          
22            (27)  Township 40 South, Ranges 59 West - 65 West, Seward Meridian;                                          
23            (28)  Township 41 South, Ranges 63 West - 68 West, Seward Meridian;                                          
24            (29)  Township 42 South, Ranges 63 West - 69 West, Seward Meridian;                                          
25            (30)  Township 43 South, Ranges 65 West - 70 West, Seward Meridian;                                          
26            (31)  Township 44 South, Ranges 65 West - 71 West, Seward Meridian;                                          
27            (32)  Township 45 South, Ranges 67 West - 72 West, Seward Meridian;                                          
28            (33)  Township 46 South, Ranges 68 West - 73 West, Seward Meridian;                                          
29            (34)  Township 47 South, Ranges 69 West - 78 West, Seward Meridian;                                          
30            (35)  Township 48 South, Ranges 70 West - 81 West, Seward Meridian;                                          
31            (36)  Township 49 South, Ranges 70 West - 83 West, Seward Meridian;                                          
01            (37)  Township 50 South, Ranges 71 West - 84 West, Seward Meridian;                                          
02            (38)  Township 51 South, Ranges 71 West - 85 West, Seward Meridian;                                          
03            (39)  Township 52 South, Ranges 74 West - 75 West, Seward Meridian;                                          
04            (40)  Township 52 South, Ranges 79 West - 86 West, Seward Meridian;                                          
05            (41)  Township 53 South, Ranges 85 West - 87 West, Seward Meridian;                                          
06            (42)  Township 54 South, Ranges 85 West - 87 West, Seward Meridian;                                          
07            (43)  any adjustment to (1) - (42) of this section as described in the Department                            
08 of Natural Resources' final written finding of best interest made under AS 38.05.035.                                   
09    * Sec. 6.  The uncodified law of the State of Alaska is amended by adding a new section to                         
10 read:                                                                                                                   
11       CONTINGENT EFFECT OF SECTIONS.  Sections 2 and 5 of this Act take effect                                          
12 only if the commissioner of natural resources finds that the requirements of AS 38.05.035(e)                            
13 and (g) are met and the Alaska Peninsula competitive oil and gas areawide lease sale occurs.                            
14    * Sec. 7.  If secs. 2 and 5 of this Act take effect under sec. 6 of this Act, they take effect the                 
15 day the commissioner of natural resources notifies the revisor of statutes that the lease sale                          
16 described in sec. 6 of this Act has occurred.                                                                           
17    * Sec. 8.  Except as provided in sec. 7 of this Act, this Act takes effect immediately under                       
18 AS 01.10.070(c).