HB 306: "An Act providing that the tax rate applicable to the production of oil as the average production tax value of oil, gas produced in the Cook Inlet sedimentary basin, and gas produced outside of the Cook Inlet sedimentary basin and used in the state increases above $30 shall be 0.4 percent multiplied by the number that represents the difference between that average monthly production tax value and $30, or the sum of 25 percent and the product of 0.1 percent multiplied by the number that represents the difference between that average monthly production tax value and $92.50, except that the total rate determined in the calculation may not exceed 50 percent; providing for an increase in the rate of tax on the production of gas as the average production tax value on a BTU equivalent barrel basis of gas produced outside of the Cook Inlet sedimentary basin and not used in the state increases above $30; relating to payments of the oil and gas production tax; relating to the lease expenditures that may be deducted when determining production tax value; relating to availability of a portion of the money received from the tax on oil and gas production for appropriation to the community revenue sharing fund; relating to the allocation of lease expenditures and adjustments to lease expenditures; and providing for an effective date."
00 HOUSE BILL NO. 306 01 "An Act providing that the tax rate applicable to the production of oil as the average 02 production tax value of oil, gas produced in the Cook Inlet sedimentary basin, and gas 03 produced outside of the Cook Inlet sedimentary basin and used in the state increases 04 above $30 shall be 0.4 percent multiplied by the number that represents the difference 05 between that average monthly production tax value and $30, or the sum of 25 percent 06 and the product of 0.1 percent multiplied by the number that represents the difference 07 between that average monthly production tax value and $92.50, except that the total rate 08 determined in the calculation may not exceed 50 percent; providing for an increase in 09 the rate of tax on the production of gas as the average production tax value on a BTU 10 equivalent barrel basis of gas produced outside of the Cook Inlet sedimentary basin and 11 not used in the state increases above $30; relating to payments of the oil and gas 12 production tax; relating to the lease expenditures that may be deducted when
01 determining production tax value; relating to availability of a portion of the money 02 received from the tax on oil and gas production for appropriation to the community 03 revenue sharing fund; relating to the allocation of lease expenditures and adjustments to 04 lease expenditures; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 29.60.850(b) is amended to read: 07 (b) Each fiscal year, the legislature may appropriate to the community revenue 08 sharing fund an amount equal to 20 percent of the money received by the state during 09 the previous calendar year under AS 43.55.011(g) and (p). The amount may not 10 exceed 11 (1) $60,000,000; or 12 (2) the amount that, when added to the fund balance on June 30 of the 13 previous fiscal year, equals $180,000,000. 14 * Sec. 2. AS 43.55.011(e) is amended to read: 15 (e) There is levied on the producer of oil or gas a tax for all oil and gas 16 produced each calendar year from each lease or property in the state, less any oil and 17 gas the ownership or right to which is exempt from taxation or constitutes a 18 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 19 this section, the tax is equal to the sum of 20 (1) the annual production tax value of the taxable oil and gas as 21 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 22 (2) the sum, over all months of the calendar year, of the tax amounts 23 determined under 24 (A) subsection (g) of this section; and 25 (B) subsection (p) of this section. 26 * Sec. 3. AS 43.55.011(g) is amended to read: 27 (g) For each month of the calendar year for which the producer's average 28 monthly production tax value under AS 43.55.160(a)(2)(A) - (E) of a 29 [AS 43.55.160(a)(2) PER] BTU equivalent barrel of [THE] taxable oil and gas is more
01 than $30, the amount of tax for purposes of (e)(2)(A) [(e)(2)] of this section is 02 determined by multiplying the monthly production tax value of the taxable oil [AND 03 GAS] produced during the month, gas produced during the month from a lease or 04 property in the Cook Inlet sedimentary basin, and gas produced during the 05 month from a lease or property outside the Cook Inlet sedimentary basin and 06 used in the state by the tax rate calculated as follows: 07 (1) if the producer's average monthly production tax value under 08 AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of [THE] taxable oil 09 and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by 10 the number that represents the difference between the producer's [THAT] average 11 monthly production tax value under AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU 12 equivalent barrel of taxable oil and gas and $30; [OR] 13 (2) if the producer's average monthly production tax value under 14 AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of [THE] taxable oil 15 and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and 16 the product of 0.1 percent multiplied by the number that represents the difference 17 between the producer's average monthly production tax value under 18 AS 43.55160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of taxable oil and gas 19 and $92.50, except that the sum determined under this paragraph may not exceed 50 20 percent; 21 (3) for purposes of this subsection, the average monthly 22 production tax value under AS 43.55.160(a)(2)(A) - (E) of a BTU equivalent 23 barrel of taxable oil and gas is calculated by 24 (A) adding all of the monthly production tax values 25 determined under AS 43.55.160(a)(2)(A) - (E); and 26 (B) dividing the sum calculated under (A) of this paragraph 27 by the total amount, in BTU equivalent barrels, of 28 (i) taxable oil produced by the producer during the 29 month; 30 (ii) taxable gas produced by the producer during the 31 month from a lease or property in the Cook Inlet sedimentary
01 basin; and 02 (iii) taxable gas produced by the producer during 03 the month from a lease or property outside the Cook Inlet 04 sedimentary basin and used in the state. 05 * Sec. 4. AS 43.55.011 is amended by adding a new subsection to read: 06 (p) For each month of the calendar year for which the producer's average 07 monthly production tax value under AS 43.55.160(a)(2)(F) and (G) of a BTU 08 equivalent barrel of taxable gas is more than $30, the amount of tax on the production 09 of gas for purposes of (e)(2)(B) of this section is determined by multiplying the 10 monthly production tax value of the taxable gas produced during the month other than 11 gas produced from a lease or property in the Cook Inlet sedimentary basin or gas 12 produced outside the Cook Inlet sedimentary basin and used in the state by the tax rate 13 calculated as follows: 14 (1) if the producer's average monthly production tax value under 15 AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of taxable gas for the 16 month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number 17 that represents the difference between the producer's average monthly production tax 18 value under AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of gas and $30; 19 (2) if the producer's average monthly production tax value under 20 AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of taxable gas for the 21 month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 22 percent multiplied by the number that represents the difference between the producer's 23 average monthly production tax value under AS 43.55.160(a)(2)(F) and (G) of a BTU 24 equivalent barrel of gas and $92.50, except that the sum determined under this 25 paragraph may not exceed 50 percent; 26 (3) for purposes of this subsection, the average monthly production tax 27 value under AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of taxable gas 28 is calculated by 29 (A) adding the monthly production tax value determined under 30 AS 43.55.160(a)(2)(F) to the monthly production tax value determined under 31 AS 43.55.160(a)(2)(G); and
01 (B) dividing the sum calculated under (A) of this paragraph by 02 the total amount, in BTU equivalent barrels, of the taxable gas produced by the 03 producer during the month, other than gas produced from a lease or property in 04 the Cook Inlet sedimentary basin or gas produced outside the Cook Inlet 05 sedimentary basin and used in the state. 06 * Sec. 5. AS 43.55.020(a) is repealed and reenacted to read: 07 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 08 and (p) shall pay the tax as follows: 09 (1) an installment payment of the estimated tax levied by 10 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 11 month of the calendar year on the last day of the following month; except as otherwise 12 provided under (2) of this subsection, the amount of the installment payment is the 13 sum of the following amounts in (A) - (C) of this paragraph, less 1/12 of the tax 14 credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) 15 for the calendar year, but the amount of the installment payment may not be less than 16 zero: 17 (A) the monthly production tax value for the month calculated 18 under AS 43.55.160(a)(2)(B) multiplied by the sum of 25 percent and the tax 19 rate calculated for the month under AS 43.55.011(g), added to the monthly 20 production tax value for the month calculated under AS 43.55.160(a)(2)(G) 21 multiplied by the sum of 25 percent and the tax rate calculated for the month 22 under AS 43.55.011(p); 23 (B) the greater of 24 (i) zero percent, one percent, two percent, three percent, 25 or four percent, as applicable under AS 43.55.011(f), of the gross value 26 at the point of production of the oil and gas produced during the month 27 from all leases or properties in the state that include land north of 68 28 degrees North latitude, other than oil and gas subject to 29 AS 43.55.011(i) and gas subject to AS 43.55.011(o); or 30 (ii) the monthly production tax value for the month 31 calculated under AS 43.55.160(a)(2)(A) multiplied by the sum of 25
01 percent and the tax rate calculated for the month under 02 AS 43.55.011(g), added to the monthly production tax value for the 03 month calculated under AS 43.55.160(a)(2)(F) multiplied by the sum of 04 25 percent and the tax rate calculated for the month under 05 AS 43.55.011(p); and 06 (C) for each lease or property, for gas subject to 07 AS 43.55.011(j), oil subject to AS 43.55.011(k), and gas subject to 08 AS 43.55.011(o), the monthly production tax value for the month calculated 09 under AS 43.55.160(a)(2)(C), (D), or (E), as applicable, multiplied by the sum 10 of 25 percent and the tax rate calculated for the month under AS 43.55.011(g); 11 (2) an amount calculated under (1)(C) of this subsection for oil or gas 12 produced from a particular lease or property may not exceed the product obtained by 13 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 14 applicable for gas, or set out in AS 43.55.011(k)(1) or (2), as applicable for oil, but 15 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 16 amount of taxable gas produced during the month for the amount of taxable gas 17 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 18 (2)(A), as applicable, the amount of taxable oil produced during the month for the 19 amount of taxable oil produced during the calendar year; 20 (3) an installment payment of the estimated tax levied by 21 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 22 on the last day of the following month; the amount of the installment payment is the 23 sum of 24 (A) the applicable tax rate for oil provided under 25 AS 43.55.011(i), multiplied by the gross value at the point of production of the 26 oil taxable under AS 43.55.011(i) and produced from the lease or property 27 during the month; and 28 (B) the applicable tax rate for gas provided under 29 AS 43.55.011(i), multiplied by the gross value at the point of production of the 30 gas taxable under AS 43.55.011(i) and produced from the lease or property 31 during the month;
01 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 02 credits applied as allowed by law, that exceeds the total of the amounts due as 03 installment payments of estimated tax is due on March 31 of the year following the 04 calendar year of production. 05 * Sec. 6. AS 43.55.020(d) is amended to read: 06 (d) In making settlement with the royalty owner for oil and gas that is taxable 07 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 08 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 09 time the tax becomes due to the amount of the tax paid. If the total deductions of 10 installment payments of estimated tax for a calendar year exceed the actual tax for that 11 calendar year, the producer shall, before April 1 of the following year, refund the 12 excess to the royalty owner. Unless otherwise agreed between the producer and the 13 royalty owner, the amount of the tax paid under AS 43.55.011(e) - (g) and (p) on 14 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 15 right to which constitutes a landowner's royalty interest, is considered to be the gross 16 value at the point of production of the taxable royalty oil and gas produced during the 17 calendar year multiplied by a figure that is a quotient, in which 18 (1) the numerator is the producer's total tax liability under 19 AS 43.55.011(e) - (g) and (p) for the calendar year of production; and 20 (2) the denominator is the total gross value at the point of production 21 of the oil and gas taxable under AS 43.55.011(e) - (g) and (p) produced by the 22 producer from all leases and properties in the state during the calendar year. 23 * Sec. 7. AS 43.55.160(a) is amended to read: 24 (a) Except as provided in (b) of this section, for the purposes of 25 (1) AS 43.55.011(e), the annual production tax value of the taxable 26 (A) oil [AND GAS] produced during a calendar year from 27 leases or properties in the state that include land north of 68 degrees North 28 latitude is the gross value at the point of production of the oil [AND GAS] 29 taxable under AS 43.55.011(e) and produced by the producer from those leases 30 or properties, less the producer's lease expenditures under AS 43.55.165 for the 31 calendar year applicable to the oil [AND GAS] produced by the producer from
01 those leases or properties and the portion allocated under (g) of this section 02 of the producer's lease expenditures under AS 43.55.165 for the calendar 03 year incurred to explore land that is not a lease or property or to explore 04 or develop a lease or property before commencement of commercial 05 production of oil or gas from the lease or property, if that land or any part 06 of the lease or property is located north of 68 degrees North latitude, as 07 adjusted under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY 08 TO GAS SUBJECT TO AS 43.55.011(o);] 09 (B) oil [AND GAS] produced during a calendar year from 10 leases or properties in the state outside the Cook Inlet sedimentary basin, no 11 part of which is north of 68 degrees North latitude, is the gross value at the 12 point of production of the oil [AND GAS] taxable under AS 43.55.011(e) and 13 produced by the producer from those leases or properties, less the producer's 14 lease expenditures under AS 43.55.165 for the calendar year applicable to the 15 oil [AND GAS] produced by the producer from those leases or properties and 16 the portion allocated under (g) of this section of the producer's lease 17 expenditures under AS 43.55.165 for the calendar year incurred to explore 18 land that is not a lease or property or to explore or develop a lease or 19 property before commencement of commercial production of oil or gas 20 from the lease or property, if that land or lease or property is located 21 outside the Cook Inlet sedimentary basin, and the land and all parts of the 22 lease or property are not north of 68 degrees North latitude, as adjusted 23 under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY TO 24 GAS SUBJECT TO AS 43.55.011(o);] 25 (C) oil produced during a calendar year from a lease or 26 property in the Cook Inlet sedimentary basin is the gross value at the point of 27 production of the oil taxable under AS 43.55.011(e) and produced by the 28 producer from that lease or property, less the producer's lease expenditures 29 under AS 43.55.165 for the calendar year applicable to the oil produced by the 30 producer from that lease or property and the portion allocated under (g) of 31 this section of the producer's lease expenditures under AS 43.55.165 for
01 the calendar year incurred to explore land that is not a lease or property 02 or to explore or develop a lease or property before commencement of 03 commercial production of oil or gas from the lease or property, if that 04 land or lease or property is located in the Cook Inlet sedimentary basin, as 05 adjusted under AS 43.55.170; 06 (D) gas produced during a calendar year from a lease or 07 property in the Cook Inlet sedimentary basin is the gross value at the point of 08 production of the gas taxable under AS 43.55.011(e) and produced by the 09 producer from that lease or property, less the producer's lease expenditures 10 under AS 43.55.165 for the calendar year applicable to the gas produced by the 11 producer from that lease or property and the portion allocated under (g) of 12 this section of the producer's lease expenditures under AS 43.55.165 for 13 the calendar year incurred to explore land that is not a lease or property 14 or to explore or develop a lease or property before commencement of 15 commercial production of oil or gas from the lease or property, if that 16 land or lease or property is located in the Cook Inlet sedimentary basin, as 17 adjusted under AS 43.55.170; 18 (E) gas produced during a calendar year from a lease or 19 property in the state outside the Cook Inlet sedimentary basin and used in the 20 state is the gross value at the point of production of that gas taxable under 21 AS 43.55.011(e) and produced by the producer from that lease or property, less 22 the producer's lease expenditures under AS 43.55.165 for the calendar year 23 applicable to that gas produced by the producer from that lease or property and 24 the portion allocated under (g) of this section of the producer's lease 25 expenditures under AS 43.55.165 for the calendar year incurred to explore 26 land that is not a lease or property or to explore or develop a lease or 27 property before commencement of commercial production of oil or gas 28 from the lease or property, if that land or lease or property is located 29 outside the Cook Inlet sedimentary basin, as adjusted under AS 43.55.170; 30 (F) gas produced during a calendar year from leases or 31 properties in the state that include land north of 68 degrees North latitude
01 is the gross value at the point of production of the gas taxable under 02 AS 43.55.011(e) and produced by the producer from those leases or 03 properties, less the producer's lease expenditures under AS 43.55.165 for 04 the calendar year applicable to the gas produced by the producer from 05 those leases or properties and the portion allocated under (g) of this 06 section of the producer's lease expenditures under AS 43.55.165 for the 07 calendar year incurred to explore land that is not a lease or property or to 08 explore or develop a lease or property before commencement of 09 commercial production of oil or gas from the lease or property, if that 10 land or any part of the lease or property is located north of 68 degrees 11 North latitude, as adjusted under AS 43.55.170; this subparagraph does 12 not apply to gas subject to AS 43.55.011(o); 13 (G) gas produced during a calendar year from leases or 14 properties in the state outside the Cook Inlet sedimentary basin, no part of 15 which is north of 68 degrees North latitude, is the gross value at the point 16 of production of the gas taxable under AS 43.55.011(e) and produced by 17 the producer from those leases or properties, less the producer's lease 18 expenditures under AS 43.55.165 for the calendar year applicable to the 19 gas produced by the producer from those leases or properties and the 20 portion allocated under (g) of this section of the producer's lease 21 expenditures under AS 43.55.165 for the calendar year incurred to explore 22 land that is not a lease or property or to explore or develop a lease or 23 property before commencement of commercial production of oil or gas 24 from the lease or property, if that land or lease or property is located 25 outside the Cook Inlet sedimentary basin, and the land and all parts of the 26 lease or property are not north of 68 degrees North latitude, as adjusted 27 under AS 43.55.170; this subparagraph does not apply to gas subject to 28 AS 43.55.011(o); 29 (2) AS 43.55.011(g) and (p), the monthly production tax value of the 30 taxable 31 (A) oil [AND GAS] produced during a month from leases or
01 properties in the state that include land north of 68 degrees North latitude is the 02 gross value at the point of production of the oil [AND GAS] taxable under 03 AS 43.55.011(e) and produced by the producer from those leases or properties, 04 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 05 calendar year applicable to the oil [AND GAS] produced by the producer from 06 those leases or properties and 1/12 of the portion allocated under (g) of this 07 section of the producer's lease expenditures under AS 43.55.165 for the 08 calendar year incurred to explore land that is not a lease or property or to 09 explore or develop a lease or property before commencement of 10 commercial production of oil or gas from the lease or property, if that 11 land or any part of the lease or property is located north of 68 degrees 12 North latitude, as adjusted under AS 43.55.170; [THIS SUBPARAGRAPH 13 DOES NOT APPLY TO GAS SUBJECT TO AS 43.55.011(o);] 14 (B) oil [AND GAS] produced during a month from leases or 15 properties in the state outside the Cook Inlet sedimentary basin, no part of 16 which is north of 68 degrees North latitude, is the gross value at the point of 17 production of the oil [AND GAS] taxable under AS 43.55.011(e) and produced 18 by the producer from those leases or properties, less 1/12 of the producer's 19 lease expenditures under AS 43.55.165 for the calendar year applicable to the 20 oil [AND GAS] produced by the producer from those leases or properties and 21 1/12 of the portion allocated under (g) of this section of the producer's 22 lease expenditures under AS 43.55.165 for the calendar year incurred to 23 explore land that is not a lease or property or to explore or develop a lease 24 or property before commencement of commercial production of oil or gas 25 from the lease or property, if that land or lease or property is located 26 outside the Cook Inlet sedimentary basin, and the land and all parts of the 27 lease or property are not north of 68 degrees North latitude, as adjusted 28 under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY TO 29 GAS SUBJECT TO AS 43.55.011(o);] 30 (C) oil produced during a month from a lease or property in the 31 Cook Inlet sedimentary basin is the gross value at the point of production of
01 the oil taxable under AS 43.55.011(e) and produced by the producer from that 02 lease or property, less 1/12 of the producer's lease expenditures under 03 AS 43.55.165 for the calendar year applicable to the oil produced by the 04 producer from that lease or property and 1/12 of the portion allocated under 05 (g) of this section of the producer's lease expenditures under AS 43.55.165 06 for the calendar year incurred to explore land that is not a lease or 07 property or to explore or develop a lease or property before 08 commencement of commercial production of oil or gas from the lease or 09 property, if that land or lease or property is located in the Cook Inlet 10 sedimentary basin, as adjusted under AS 43.55.170; 11 (D) gas produced during a month from a lease or property in 12 the Cook Inlet sedimentary basin is the gross value at the point of production 13 of the gas taxable under AS 43.55.011(e) and produced by the producer from 14 that lease or property, less 1/12 of the producer's lease expenditures under 15 AS 43.55.165 for the calendar year applicable to the gas produced by the 16 producer from that lease or property and 1/12 of the portion allocated under 17 (g) of this section of the producer's lease expenditures under AS 43.55.165 18 for the calendar year incurred to explore land that is not a lease or 19 property or to explore or develop a lease or property before 20 commencement of commercial production of oil or gas from the lease or 21 property, if that land or lease or property is located in the Cook Inlet 22 sedimentary basin, as adjusted under AS 43.55.170; 23 (E) gas produced during a month from a lease or property in 24 the state outside the Cook Inlet sedimentary basin and used in the state is the 25 gross value at the point of production of that gas taxable under 26 AS 43.55.011(e) and produced by the producer from that lease or property, less 27 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar 28 year applicable to that gas produced by the producer from that lease or 29 property and 1/12 of the portion allocated under (g) of this section of the 30 producer's lease expenditures under AS 43.55.165 for the calendar year 31 incurred to explore land that is not a lease or property or to explore or
01 develop a lease or property before commencement of commercial 02 production of oil or gas from the lease or property, if that land or lease or 03 property is located outside of the Cook Inlet sedimentary basin, as adjusted 04 under AS 43.55.170; 05 (F) gas produced during a month from leases or properties 06 in the state that include land north of 68 degrees North latitude is the 07 gross value at the point of production of the gas taxable under 08 AS 43.55.011(e) and produced by the producer from those leases or 09 properties, less 1/12 of the producer's lease expenditures under 10 AS 43.55.165 for the calendar year applicable to the gas produced by the 11 producer from those leases or properties and 1/12 of the portion allocated 12 under (g) of this section of the producer's lease expenditures under 13 AS 43.55.165 for the calendar year incurred to explore land that is not a 14 lease or property or to explore or develop a lease or property before 15 commencement of commercial production of oil or gas from the lease or 16 property, if that land or any part of the lease or property is located north 17 of 68 degrees North latitude, as adjusted under AS 43.55.170; this 18 subparagraph does not apply to gas subject to AS 43.55.011(o); 19 (G) gas produced during a month from leases or properties 20 in the state outside the Cook Inlet sedimentary basin, no part of which is 21 north of 68 degrees North latitude, 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 those leases or properties, less 1/12 of the producer's lease 24 expenditures under AS 43.55.165 for the calendar year applicable to the 25 gas produced by the producer from those leases or properties and 1/12 of 26 the portion allocated under (g) of this section of the producer's lease 27 expenditures under AS 43.55.165 for the calendar year incurred to explore 28 land that is not a lease or property or to explore or develop a lease or 29 property before commencement of commercial production of oil or gas 30 from the lease or property, if that land or lease or property is located 31 outside the Cook Inlet sedimentary basin, and the land and all parts of the
01 lease or property are not north of 68 degrees North latitude, as adjusted 02 under AS 43.55.170; this subparagraph does not apply to gas subject to 03 AS 43.55.011(o). 04 * Sec. 8. AS 43.55.160 is amended by adding new subsections to read: 05 (f) For purposes of (a) of this section, a lease expenditure is applicable to oil 06 or gas produced from a lease or property, or to oil or gas produced from leases or 07 properties in an area of the state, if the lease expenditure is 08 (1) a cost to explore, develop, or produce oil or gas from that lease or 09 property, or to explore, develop, or produce oil or gas from one of those leases or 10 properties in that area of the state, respectively; and 11 (2) incurred on or after the commencement of commercial production 12 of oil or gas from the lease or property. 13 (g) For purposes of (a) of this section, a lease expenditure incurred during a 14 calendar year to explore land that is not a lease or property, or to explore or develop a 15 lease or property before commencement of commercial production of oil or gas from 16 the lease or property, shall be allocated as provided in a regulation adopted by the 17 department under AS 43.55.165(h) to and among oil, gas subject to AS 43.55.011(o), 18 and gas not subject to AS 43.55.011(o) produced by the producer during that calendar 19 year from leases or properties in the same area of the state as the land being explored 20 or the lease or property being explored or developed, respectively. 21 (h) For purposes of (f) and (g) of this section, an area of the state is one of the 22 following: 23 (1) land north of 68 degrees North latitude; 24 (2) land outside the Cook Inlet sedimentary basin not including any 25 land north of 68 degrees North latitude; or 26 (3) the Cook Inlet sedimentary basin. 27 * Sec. 9. AS 43.55.165(h) is amended to read: 28 (h) The department shall adopt regulations that provide for reasonable 29 methods of allocating costs between oil and gas, between gas subject to 30 AS 43.55.011(o) and other gas, and between leases or properties in those 31 circumstances where an allocation of costs is required to determine lease expenditures
01 that are costs of exploring for, developing, or producing oil deposits or costs of 02 exploring for, developing, or producing gas deposits, or that are costs of exploring for, 03 developing, or producing oil or gas deposits located within different leases or 04 properties. When adopting a regulation for determining a reasonable method of 05 allocating lease expenditures between the production of oil and the production of 06 gas, the department shall, to the extent possible, provide for the allocation of 07 lease expenditures in proportion to the gross value at the point of production for 08 oil produced and gas produced. 09 * Sec. 10. AS 43.55.170 is amended by adding a new subsection to read: 10 (d) The department shall adopt regulations that provide for reasonable 11 methods of allocating the adjustments to a producer's lease expenditures in (a) of this 12 section and the payments and credits described in (b) of this section between oil and 13 gas, between gas subject to AS 43.55.011(o) and other gas, and between leases or 14 properties in those circumstances where an allocation of costs is required to determine 15 lease expenditures that are costs of exploring for, developing, or producing oil 16 deposits, or costs of exploring for, developing, or producing gas deposits, or that are 17 costs of exploring for, developing, or producing oil or gas deposits located within 18 different leases or properties. When determining a reasonable method of allocating the 19 adjustments to a producer's lease expenditures between the production of oil and the 20 production of gas, the department shall consider allocating the adjustments in 21 proportion to the lease expenditures allocated to the production of oil and the 22 production of gas under regulations adopted by the department under 23 AS 43.55.165(h). 24 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 TRANSITION: INSTALLMENT PAYMENTS OF TAX. A producer required to 27 make an installment payment of tax under AS 43.55.020(a)(1) after December 31, 2011, and 28 before the effective date of this Act, and that underpaid the amount due for the installment 29 payment because of the retroactive application of secs. 2 - 5, 7, and 8 of this Act, shall submit 30 the amount of any underpayment on the date the first installment payment is due under 31 AS 43.55.020(a)(1) after the effective date of this Act. Interest on the amount of an
01 underpayment due because of the retroactive application of secs. 2 - 5, 7, and 8 of this Act 02 does not accrue until the day after the date the first installment payment is due under 03 AS 43.55.020(a)(1) after the effective date of this Act. 04 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 07 contrary provision of AS 44.62.240, if the Department of Revenue expressly designates in the 08 regulation that the regulation applies retroactively to that date, a regulation adopted by the 09 Department of Revenue to implement, interpret, make specific, or otherwise carry out secs. 2 10 - 5, 7, and 8 of this Act may apply retroactively to January 1, 2012. 11 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 RETROACTIVITY. Sections 2 - 5, 7, and 8 of this Act are retroactive to January 1, 14 2012. 15 * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).