SB 174: "An Act relating to the oil and gas properties production tax; providing for a reduction in the amount of taxable production; providing for an increase in the tax rate when the average Alaska North Slope crude oil West Coast price per barrel exceeds $40; providing for tax credits based on expenditures for oil and gas exploration, gas only exploration, and development wells; and providing for an effective date."
00 SENATE BILL NO. 174 01 "An Act relating to the oil and gas properties production tax; providing for a reduction 02 in the amount of taxable production; providing for an increase in the tax rate when the 03 average Alaska North Slope crude oil West Coast price per barrel exceeds $40; 04 providing for tax credits based on expenditures for oil and gas exploration, gas only 05 exploration, and development wells; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 43.55 is amended by adding new sections to read: 08 Sec. 43.55.001. Oil production tax; production tax on royalty oil or gas. (a) 09 There is levied upon the producer of oil a tax for all oil produced from each lease or 10 property in the Cook Inlet sedimentary basin, less any oil the ownership or right to 11 which is exempt from taxation or constitutes a landowner's royalty interest. The tax is 12 equal to either the percentage-of-value amount calculated under (b) of this section or 13 the cents-per-barrel amount calculated under (c) of this section, whichever is greater,
01 multiplied by the economic limit factor determined for the oil production of the lease 02 or property under AS 43.55.005. If the amounts calculated under (b) and (c) of this 03 section are equal, the amount calculated under (b) of this section shall be treated as if 04 it were the greater for purposes of this section. 05 (b) The percentage-of-value amount equals 15 percent of the gross value at the 06 point of production of taxable oil produced from the lease or property in the Cook 07 Inlet sedimentary basin, except that the percentage-of-value amount equals 12.25 08 percent of the gross value at the point of production of taxable oil produced from the 09 lease or property in the Cook Inlet sedimentary basin in the first five years after the 10 start of commercial oil production. 11 (c) The cents-per-barrel amount equals $0.80 per barrel for all taxable oil 12 produced from the lease or property, as adjusted by AS 43.55.003. 13 (d) There is levied upon the producer of oil a tax for all oil produced from 14 each lease or property in the state outside of the Cook Inlet sedimentary basin, less any 15 oil the ownership or right to which is exempt from taxation or constitutes a 16 landowner's royalty interest. The tax is equal to the greater of 17 (1) the cents-per-barrel amount calculated under (c) of this section; or 18 (2) the percentage-of-value amount calculated under (e) of this section 19 plus the tax determined under (f) of this section. 20 (e) The percentage-of-value amount equals 17 percent of the gross value at the 21 point of production of taxable oil produced from the lease or property in the state 22 outside of the Cook Inlet sedimentary basin, as adjusted under AS 43.55.022. 23 (f) In addition to the taxes levied using the percentage-of-value amount under 24 (d) of this section, if the average ANS West Coast price per barrel of oil during a 25 month exceeds $40, there is levied on the producer of oil a tax for oil produced during 26 that month from each lease or property in the state outside of the Cook Inlet 27 sedimentary basin, less any oil the ownership or right to which is exempt from 28 taxation. The tax levied under this subsection is equal to 29 [([ANS West Coast price - 40] x .003) x (ANS wellhead price x .85)] 30 x (total taxable barrels of oil at the point of production) 31 where "ANS wellhead price" means the prevailing value for oil produced in the
01 Alaska North Slope area. 02 (g) For purposes of (f) of this section, the department may calculate the 03 average price or may, by regulation, specify the method by which the average price 04 shall be calculated with reference to one or more published sources of price 05 information. If, in the department's judgment, reliable published sources of price 06 information on Alaska North Slope crude oil cease, or appear likely to soon cease, to 07 be available, or if, in the department's judgment, the price of Alaska North Slope crude 08 oil ceases, or appears likely to soon cease, to be a reliable indicator of the general 09 price level of crude oils, the department shall, by regulation, specify a substitute 10 formula for computing the oil price index. The substitute formula specified by the 11 department under this subsection must bear, as nearly as is reasonably possible, the 12 same relationship to the general price level of crude oils as did the price of Alaska 13 North Slope crude oil. 14 (h) There is levied on the producer of oil or gas a tax for all oil and gas 15 produced each month from each lease or property in the state the ownership or right to 16 which constitutes a landowner's royalty interest, except for oil and gas the ownership 17 or right to which is exempt from taxation. The provisions of this subsection apply to a 18 landowner's royalty interest as follows: 19 (1) the rate of tax levied on oil is equal to five percent of the gross 20 value at the point of production of the oil; 21 (2) the rate of tax levied on gas is equal to 1.667 percent of the gross 22 value at the point of production of the gas; 23 (3) if the department determines that, for purposes of reducing the 24 producer's tax liability under (1) or (2) of this subsection, the producer has received or 25 will receive consideration from the royalty owner offsetting all or a part of the 26 producer's royalty obligation, other than a deduction under AS 43.55.020(d) of the 27 amount of a tax paid, 28 (A) notwithstanding (1) of this subsection, the tax is equal to 29 (i) for oil that is produced from a lease or property in 30 the Cook Inlet sedimentary basin, five percent of the gross value at the 31 point of production of the oil;
01 (ii) for oil, except oil described in (i) of this 02 subparagraph, 22.8 percent of the gross value at the point of production 03 of the oil; and 04 (B) notwithstanding (2) of this subsection, for gas the tax is 05 equal to 11.25 percent of the gross value at the point of production of the gas. 06 Sec. 43.55.003. Adjustment in tax rates. The cents-per-barrel amount set out 07 in AS 43.55.001(c) applies to oil of 27 degrees API gravity. For each degree of API 08 gravity less than 27 degrees, the cents-per-barrel amount shall be reduced by $.005 09 and for each degree of API gravity greater than 27 degrees the cents-per-barrel amount 10 shall be increased by $.005 except that oil above 40 degrees API gravity shall be taxed 11 as 40 degree oil. In applying the gravity adjustment under this subsection, fractional 12 degrees of API gravity shall be disregarded. 13 Sec. 43.55.005. Economic limit factor. (a) The economic limit factor for oil 14 production of a lease or property shall be computed according to the following 15 formula: 16 (1-[PEL/TP]) exp ([150,000/(TP/Days)] exp [(460 X WD)/PEL]) 17 where: 18 PEL = the monthly production rate at the economic limit; 19 TP = the total production during the month for which the tax is to be paid; 20 WD = the total number of well days in the month for which the tax is to be 21 paid; 22 Days = the number of days in the month for which the tax is to be paid; and 23 exp = exponent. 24 (b) For oil, the monthly production rate at the economic limit for a lease or 25 property is 300 barrels times the number of well days for the lease or property during 26 the month for which the tax is to be paid. 27 (c) The economic limit factor for gas production of a lease or property equals 28 one minus the ratio of the monthly production rate at the economic limit to the 29 production during the month for which the tax is to be paid. 30 (d) For gas, the monthly production at the economic limit for a lease or 31 property is presumed to be 3,000 Mcf times the number of well days for the lease or
01 property during that month for which the tax is to be paid. The taxpayer may rebut this 02 presumption by providing clear and convincing evidence of a different monthly 03 production rate at the economic limit for the lease or property. The hearing shall be 04 held before February 15 of the year or within six months after commencement of gas 05 production for a lease or property. The monthly production rate at the economic limit 06 for the lease or property based upon the clear and convincing evidence of the taxpayer 07 shall be calculated by dividing the value determined under (f) of this section into the 08 average monthly direct operating cost determined under (e) of this section. 09 (e) The average monthly direct operating cost for gas production operations of 10 the lease or property shall be determined based on a period of not less than four 11 consecutive months. The direct operating costs include only royalty actually and 12 currently paid, production supplies, purchased fuel, routine maintenance, and wages 13 and benefits of employees working on the production operations. Additional direct 14 operating costs not listed in this subsection may be included only after their inclusion 15 in a regulation adopted by the department. The direct operating costs do not include 16 capital expenditures, tangible or intangible drilling expenses, costs of well workovers, 17 costs for replacement or repairs (other than routine maintenance), depreciation or 18 amortization, taxes, insurance, overhead, money paid or set aside (or booked as being 19 paid or set aside) to cover the cost of terminating the gas production operations of the 20 lease or property, or any other cost not directly related to the gas production operations 21 of the lease or property. 22 (f) For the purpose of calculating the economic limit, the value at the point of 23 production of gas produced from the lease or property shall be determined on the basis 24 of the volume weighted average price paid for gas of like quality and pressure in the 25 same field. 26 (g) The department may aggregate two or more leases or properties (or 27 portions of them), for purposes of determining economic limit factors under this 28 section and applying them to AS 43.55.001(a) and 43.55.007(a), when economically 29 interdependent oil or gas production operations are not confined to a single lease or 30 property. The department may also segregate a lease or property into two or more 31 parts, for purposes of determining economic limit factors under this section and
01 applying them under AS 43.55.001(a) and 43.55.007(a), when two or more 02 economically independent oil or gas production operations are being conducted on it, 03 or when old crude oil is produced from the same lease or property as other oil. 04 (h) A determination of the monthly production rate at the economic limit for a 05 lease or property is retroactive to January 1 of the current year. For production of a 06 lease or property commencing after January 1, the determination of the monthly 07 production rate at the economic limit for that lease or property made within six months 08 after the commencement of production is retroactive to the commencement of 09 production. 10 Sec. 43.55.007. Gas production tax. (a) There is levied upon the producer of 11 gas a tax for all gas produced from each lease or property in the Cook Inlet 12 sedimentary basin, less any gas the ownership or right to which is exempt from 13 taxation. The tax is equal to either the percentage-of-value amount calculated under 14 (b) of this section or the cents-per-Mcf amount calculated under (c) of this section, 15 whichever is greater, multiplied by the economic limit factor determined for gas 16 production of the lease or property under AS 43.55.005. If the amounts calculated 17 under (b) and (c) of this section are equal, the amount calculated under (b) of this 18 section shall be treated as if it were the greater for purposes of this section. 19 (b) The percentage-of-value amount equals 17 percent of the gross value at the 20 point of production of the taxable gas produced from the lease or property in the Cook 21 Inlet sedimentary basin. 22 (c) The cents-per-Mcf amount equals $.064 per 1,000 cubic feet of taxable gas 23 produced from the lease or property. 24 (d) There is levied upon the producer of gas a tax for all gas produced from 25 each lease or property in the state outside of the Cook Inlet sedimentary basin, less any 26 gas the ownership or right to which is exempt from taxation. The tax is equal to either 27 the cents-per-Mcf amount calculated under (c) of this section or the percentage-of- 28 value amount calculated under (e) of this section, whichever is greater. If the amounts 29 calculated under (c) and (e) of this section are equal, the amount calculated under (e) 30 of this section shall be treated as if it were the greater for purposes of this section. 31 (e) The percentage-of-value amount equals 17 percent of the gross value at the
01 point of production of the taxable gas produced from the lease or property in the state 02 outside of the Cook Inlet sedimentary basin, as adjusted under AS 43.55.022. 03 * Sec. 2. AS 43.55.020 is repealed and reenacted to read: 04 Sec. 43.55.020. Payment of tax. (a) The production tax on oil or gas shall be 05 paid monthly. The tax is due on the 20th day of each calendar month on oil or gas 06 produced from each lease or property during the preceding month. If the tax is not 07 paid before the end of the month in which it becomes due, the tax becomes delinquent. 08 (b) The production tax on oil or gas shall be paid by or on behalf of the 09 producer. 10 (c) In making settlement with the royalty owner, the producer may deduct the 11 amount of the tax paid on royalty oil or gas, or may deduct royalty oil or gas 12 equivalent in value at the time the tax becomes due to the amount of the tax paid. 13 (d) Gas flared, released, or allowed to escape in excess of the amount 14 authorized by the Alaska Oil and Gas Conservation Commission is considered, for the 15 purpose of AS 43.55.001 - 43.55.150, as gas produced from a lease or property. Oil or 16 gas used in the operation of a lease or property in the state in drilling for or producing 17 oil or gas, or for repressuring, except to the extent determined by the Alaska Oil and 18 Gas Conservation Commission to be waste, is not considered, for the purpose of 19 AS 43.55.001 - 43.55.150, as oil or gas produced from a lease or property. 20 (e) If oil or gas is produced but not sold, or if oil or gas is produced and is sold 21 under circumstances where the sale price does not represent the prevailing value for 22 oil or gas of like kind, character, or quality in the field or area from which the product 23 is produced, the department may require the tax to be paid on the basis of the value of 24 oil or gas of the same kind, quality, and character prevailing for that field or area 25 during the calendar month of production or sale. 26 * Sec. 3. AS 43.55 is amended by adding a new section to read: 27 Sec. 43.55.022. Production deduction. (a) A producer of oil subject to tax 28 using the percentage-of-value amount in AS 43.55.001(e) and a producer of gas using 29 the percentage-of-value amount in AS 43.55.007(e) may take a deduction against the 30 gross value at the point of production as provided in this section before applying the 31 percentage-of-value tax rate.
01 (b) Each operating unit in the state may reduce the volume of taxable oil and 02 gas produced from the operating unit by 7,500 barrels of oil equivalent for each day 03 during which oil or gas is produced from the operating unit. The lessees who are 04 producers having leases within an operating unit shall allocate the reduction 05 proportionately to the production in barrels of oil equivalent of oil and gas produced 06 from the unit and to each producer of oil and gas in proportion to the interest of the 07 producer in the oil and gas produced from the unit. 08 (c) Each producer of oil and each producer of gas may deduct the value of the 09 producer's pro rata share of the reduction provided for in (b) of this section from the 10 gross value at the point of production of oil and the gross value at the point of 11 production of gas produced from the unit before applying the applicable percentage- 12 of-value tax rate. 13 (d) The department may adopt regulations providing for the allocation of the 14 barrels of oil equivalent production deduction within an operating unit between the oil 15 and gas produced and between producers having an interest in the oil and gas 16 produced from the operating unit. 17 (e) In this section, 18 (1) "barrel of oil equivalent" means, 19 (A) one barrel, in the case of oil; 20 (B) the amount of gas that has an energy content of 6,000,000 21 British thermal units, in the case of gas; 22 (2) "operating unit" means all or part of an oil or gas pool, field, or like 23 area that is the subject of a cooperative or unit plan adopted or operated that is 24 approved by the commissioner of natural resources under AS 38.05.180(p). 25 * Sec. 4. AS 43.55.025(a) is amended to read: 26 (a) Subject to the terms and conditions of this section, on oil and gas 27 produced from an oil and gas lease, or on gas produced from a gas only lease, a 28 credit against the production tax due under this chapter [AS 43.55.011(e) OR (f)] is 29 allowed for 30 (1) exploration expenditures that qualify under (b) of this section in an 31 amount equal to one of the following:
01 (A) 50 [(1) 20] percent of the total exploration expenditures 02 that qualify only under (b) and (c) of this section; 03 (B) 50 [(2) 20] percent of the total exploration expenditures for 04 work performed before July 1, 2007, and that qualify only under (b) and (d) of 05 this section; 06 (C) 60 [(3) 40] percent of the total exploration expenditures 07 that qualify under (b), (c), and (d) of this section; or 08 (D) 60 [(4) 40] percent of the total exploration expenditures 09 that qualify only under (b) and (e) of this section; and 10 (2) 25 percent of the actual expenditures directly related to the 11 drilling of a development well, excluding expenditures related to corporate 12 overhead or for facilities other than the development well. 13 * Sec. 5. AS 43.55.025(c) is amended to read: 14 (c) To be eligible for the 50 [20] percent production tax credit authorized by 15 (a)(1)(A) [(a)(1)] of this section or the 60 [40] percent production tax credit authorized 16 by (a)(1)(C) [(a)(3)] of this section, exploration expenditures must 17 (1) qualify under (b) of this section; and 18 (2) be for an exploration well, subject to the following: 19 (A) for an exploration well other than a well that is described in 20 (B) of this paragraph, the well must be located and drilled in such a manner 21 that the bottom hole is located not less than three miles away from the bottom 22 hole of a preexisting suspended, completed, or abandoned oil or gas well; in 23 this subparagraph, "preexisting" means a well that was spudded more than 150 24 days but less than 35 years before the exploration well was spudded; 25 (B) for an exploration well that explores a Cook Inlet prospect, 26 the well must be located at least three miles from any other well drilled for oil 27 and gas with all distances measured as the horizontal distance between 28 exploration targets, except that the exploration well that is located within three 29 miles of a well drilled for oil and gas qualifies for the tax credit authorized by 30 this subsection if the exploration well tests potential hydrocarbon traps that the 31 commissioner of natural resources determines, after analyzing evidence
01 submitted by the explorer and from other information that the commissioner of 02 natural resources determines relevant, constitute a distinctly separate 03 exploration target. 04 * Sec. 6. AS 43.55.025(d) is amended to read: 05 (d) To be eligible for the 50 [20] percent production tax credit authorized by 06 (a)(1)(B) [(a)(2)] of this section or the 60 [40] percent production tax credit authorized 07 by (a)(1)(C) [(a)(3)] of this section, 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, except that for an exploration well for a Cook Inlet prospect to 12 qualify under this paragraph, the exploration well must be located not less than 10 13 miles outside the outer boundary, as delineated on July 1, 2003, of any unit that is 14 under a plan of development. 15 * Sec. 7. AS 43.55.025(e) is amended to read: 16 (e) To be eligible for the 60 [40] percent production tax credit authorized by 17 (a)(1)(D) [(a)(4)] of this section, the exploration expenditure must 18 (1) qualify under (b) of this section; 19 (2) be for seismic exploration; and 20 (3) have been conducted outside the boundaries of a production unit or 21 an exploration unit; however, the amount of the expenditure that is otherwise eligible 22 under this subsection is reduced proportionately by the portion of the seismic 23 exploration activity that crossed into a production unit or an exploration unit. 24 * Sec. 8. AS 43.55.025(f) is amended to read: 25 (f) For a production tax credit under this section, 26 (1) an explorer or a person drilling a development well shall, in a 27 form prescribed by the department and within six months of the completion of the 28 exploration activity or the development well, claim the credit and submit information 29 sufficient to demonstrate to the department's satisfaction that the claimed exploration 30 and development well expenditures qualify under this section; 31 (2) an explorer shall agree, in writing,
01 (A) to notify the Department of Natural Resources, within 30 02 days after completion of seismic or geophysical data processing, completion of 03 a well, or filing of a claim for credit, whichever is the latest, for which 04 exploration costs are claimed, of the date of completion and submit a report to 05 that department describing the processing sequence and providing a list of data 06 sets available; if, under (c)(2)(B) of this section, an explorer submits a claim 07 for a credit for expenditures for an exploration well that is located within three 08 miles of a well already drilled for oil and gas, in addition to the submissions 09 required under (1) of this subsection, the explorer shall submit the information 10 necessary for the commissioner of natural resources to evaluate the validity of 11 the explorer's claim that the well is directed at a distinctly separate exploration 12 target, and the commissioner of natural resources shall, upon receipt of all 13 evidence sufficient for the commissioner to evaluate the explorer's claim, make 14 that determination within 60 days; 15 (B) to provide to the Department of Natural Resources, within 16 30 days after the date of a request, specific data sets, ancillary data, and reports 17 identified in (A) of this paragraph; 18 (C) that, notwithstanding any provision of AS 38, information 19 provided under this paragraph will be held confidential by the Department of 20 Natural Resources for 10 years following the completion date, at which time 21 that department will release the information after 30 days' public notice; 22 (3) if more than one person [EXPLORER] holds an interest in a well, 23 [OR] seismic exploration, or development well, each person [EXPLORER] may 24 claim an amount of credit that is proportional to the [EXPLORER'S] cost incurred by 25 that person; 26 (4) the department may exercise the full extent of its powers as though 27 the explorer or the person drilling a development well were a taxpayer under this 28 title, in order to verify that the claimed expenditures are qualified exploration or 29 development well expenditures under this section; and 30 (5) if the department is satisfied that the [EXPLORER'S] claimed 31 expenditures are qualified under this section, the department shall issue to the explorer
01 or person drilling a development well a production tax credit certificate for the 02 amount of credit to be allowed against production taxes due under this chapter; 03 however, notwithstanding any other provision of this section, the department 04 may not issue a production tax credit certificate under this section if the total of 05 production tax credits submitted for Cook Inlet production, based on exploration 06 and development well expenditures for work performed during the period 07 described in (b) of this section for that production, that have been approved by 08 the department exceeds $20,000,000 [AS 43.55.011(e) OR (f)]. 09 * Sec. 9. AS 43.55.025(g) is amended to read: 10 (g) A person receiving a production tax credit certificate under this 11 section [AN EXPLORER] may transfer, convey, or sell its production tax credit 12 certificate to any person, and any person who receives a production tax credit 13 certificate may also transfer, convey, or sell the certificate. 14 * Sec. 10. AS 43.55.025(h) is amended to read: 15 (h) A producer that purchases a production tax credit certificate may apply the 16 credits against its production tax liability under this chapter [AS 43.55.011(e) OR 17 (f)]. Regardless of the price the producer paid for the certificate, the producer may 18 receive a credit against its production tax liability for the full amount of the credit, but 19 for not more than the amount for which the certificate is issued. A production tax 20 credit allowed under this section may not be applied more than once. 21 * Sec. 11. AS 43.55.025(i) is amended to read: 22 (i) For a production tax credit under this section, 23 (1) the amount of the credit that may be applied against the production 24 tax for each tax month [CALENDAR YEAR] may not exceed the total production tax 25 liability [UNDER AS 43.55.011(e) OR (f)] of the taxpayer applying the credit for the 26 same month [CALENDAR YEAR]; and 27 (2) an amount of the production tax credit that is greater than the total 28 tax liability [UNDER AS 43.55.011(e) OR (f)] of the taxpayer applying the credit for 29 a tax month [CALENDAR YEAR] may be carried forward and applied against the 30 taxpayer's production tax liability [UNDER AS 43.55.011(e) OR (f)] in one or more 31 immediately following months [CALENDAR YEARS].
01 * Sec. 12. AS 43.55.025(j) is amended to read: 02 (j) Notwithstanding any other provision of this title, of AS 31.05, or of 03 AS 40.25.100, the department shall provide to the Department of Natural Resources 04 information submitted with a claim under this section to support the eligibility of an 05 exploration or development well expenditure, including seismic exploration data and 06 well data, and any information described in (f)(2) of this section received by the 07 department. 08 * Sec. 13. AS 43.55.025(k) is amended by adding new paragraphs to read: 09 (4) "Cook Inlet production" means oil or gas production from the Cook 10 Inlet sedimentary basin; 11 (5) "development well" means a well drilled to a known producing 12 formation in a previously discovered field. 13 * Sec. 14. AS 43.55.030(a) is amended to read: 14 (a) The tax shall be paid to the department, and the person paying the tax 15 shall file with the department at the time the tax is required to be paid [ON 16 MARCH 31 OF THE YEAR FOLLOWING THE CALENDAR YEAR FOR WHICH 17 THE TAX WAS LEVIED] a statement, under oath, in a form prescribed by the 18 department, giving, with other information required, the following: 19 (1) a description of each lease or property from which the oil or 20 [AND] gas was [WERE] produced, by name, legal description, lease number, or 21 accounting codes assigned by the department; 22 (2) the names of the producer and the person paying the tax; 23 (3) the gross amount of oil or [AND THE GROSS AMOUNT OF] gas 24 produced from each lease or property, and the percentage of the gross amount [OF 25 OIL AND GAS] owned by each producer for whom the tax is paid; 26 (4) the total [GROSS] value at the point of production of the oil or 27 [AND OF THE] gas produced from each lease or property owned by each producer 28 for whom the tax is paid; and 29 (5) the name of the first purchaser and the price received for the oil and 30 for the gas, unless relieved from this requirement in whole or in part by the department 31 [; AND
01 (6) THE PRODUCER'S LEASE EXPENDITURES AND 02 ADJUSTMENTS AS CALCULATED UNDER AS 43.55.160 - 43.55.170]. 03 * Sec. 15. AS 43.55.080 is amended to read: 04 Sec. 43.55.080. Collection and deposit of revenue. Except as otherwise 05 provided under art. IX, sec. 17, Constitution of the State of Alaska, the department 06 shall deposit in the general fund the money collected by it under AS 43.55.001 - 07 43.55.150 [AS 43.55.011 - 43.55.180]. 08 * Sec. 16. AS 43.55.135 is amended to read: 09 Sec. 43.55.135. Measurement. For the purposes of AS 43.55.001 - 43.55.150 10 [AS 43.55.011 - 43.55.180], except as otherwise provided, oil is measured in terms of 11 a "barrel of oil" and gas is measured in terms of a "cubic foot of gas." 12 * Sec. 17. AS 43.55.150(a) is amended to read: 13 (a) For the purposes of AS 43.55.001 - 43.55.150 [AS 43.55.011 - 43.55.180], 14 the gross value at the point of production is calculated using the reasonable costs of 15 transportation of the oil or gas. The reasonable costs of transportation are the actual 16 costs, except when the 17 (1) parties to the transportation of oil or gas are affiliated; 18 (2) contract for the transportation of oil or gas is not an arm's length 19 transaction or is not representative of the market value of that transportation; and 20 (3) method of transportation of oil or gas is not reasonable in view of 21 existing alternative methods of transportation. 22 * Sec. 18. AS 43.55.201(b) is amended to read: 23 (b) The surcharge imposed by (a) of this section is in addition to the tax 24 imposed by AS 43.55.001 - 43.55.150 [AS 43.55.011] and is due on the last day of the 25 month on oil produced from each lease or property during the preceding month. The 26 surcharge is in addition to the surcharge imposed by AS 43.55.300 - 43.55.310. 27 * Sec. 19. AS 43.55.201(c) is amended to read: 28 (c) A producer of oil shall make a report of production [ON MARCH 31 OF 29 THE YEAR FOLLOWING THE CALENDAR YEAR OF PRODUCTION AND] in 30 the same manner and under the same penalties as required under AS 43.55.001 - 31 43.55.150 [AS 43.55.011 - 43.55.180].
01 * Sec. 20. AS 43.55.201(d) is amended to read: 02 (d) Oil not considered under AS 43.55.020(d) [AS 43.55.020(e)] to be 03 produced from a lease or property is not considered to be produced from a lease or 04 property for purposes of this section. 05 * Sec. 21. AS 43.55.300(b) is amended to read: 06 (b) The surcharge imposed by (a) of this section is in addition to the tax 07 imposed by AS 43.55.001 - 43.55.150 [AS 43.55.011] and is due on the last day of the 08 month on oil produced from each lease or property during the preceding month. The 09 surcharge is in addition to the surcharge imposed by AS 43.55.201 - 43.55.231. 10 * Sec. 22. AS 43.55.300(c) is amended to read: 11 (c) A producer of oil shall make a report of production [ON MARCH 31 OF 12 THE YEAR FOLLOWING THE CALENDAR YEAR OF PRODUCTION AND] in 13 the same manner and under the same penalties as required under AS 43.55.001 - 14 43.55.150 [AS 43.55.011 - 43.55.180]. 15 * Sec. 23. AS 43.55.300(d) is amended to read: 16 (d) Oil not considered under AS 43.55.020(d) [AS 43.55.020(e)] to be 17 produced from a lease or property is not considered to be produced from a lease or 18 property for purposes of this section. 19 * Sec. 24. AS 43.55.011, 43.55.023, 43.55.024, 43.55.160, 43.55.165, 43.55.170, 43.55.180, 20 43.55.900(2), 43.55.900(3), and 43.55.900(13) are repealed. 21 * Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 APPLICABILITY. Sections 1 - 24 of this Act apply to oil or gas produced after 24 December 31, 2006. 25 * Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 REVISOR INSTRUCTIONS. The revisor is statutes is advised to change the heading 28 of 29 (1) AS 43.55 from "Oil and Gas Production Tax and Oil Surcharge" to "Oil 30 and Gas Production Taxes and Oil Surcharge"; 31 (2) art. 1 of AS 43.55 from "Oil and Gas Production Tax" to "Oil and Gas
01 Properties Production Taxes"; 02 (3) AS 43.55.025 from "Alternative tax credit for oil and gas exploration" to 03 "Tax credit for development wells and exploration"; and 04 (4) AS 43.55.150 from "Determination of gross value at the point of 05 production" to "Determination of gross value." 06 * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 RETROACTIVITY. Sections 1 - 24 of this Act are retroactive to April 1, 2007. 09 * Sec. 28. This Act takes effect immediately under AS 01.10.070(c).