CSSB 192(FIN): "An Act relating to the oil and gas production tax; providing for a minimum tax on oil and gas production so that the state receives a minimum production tax of 10 percent of the gross value at the point of production for certain oil and gas production; relating to that part of the monthly production tax on the gross value at the point of production of oil produced by a producer that produced oil in 2008 and 2011 and produces a volume of taxable oil for the year in excess of a defined target volume, and providing that the applicable tax rate on the gross value at the point of production for that category of oil production is 0.14 percent multiplied by the number that represents the difference between that average monthly gross value at the point of production for a barrel of oil and the base amount of $75 or, if the average gross value at the point of production is greater than $60 above the base amount of $75, that the applicable tax rate is the sum of 8.4 percent and the product of 0.03 percent multiplied by the number that represents the difference between the average monthly gross value at the point of production for a barrel of oil and $60 above the base amount of $75, except that the tax rate applicable to that category of oil production may not exceed 10 percent; relating to that part of the tax on the gross value at the point of production of oil produced by a producer during the first 10 consecutive years after the start of sustained production or during the first 10 consecutive years of sustained production after December 31, 2012, whichever is later, from a lease or property containing land that was not or previously had not been within a unit or in commercial production before January 1, 2008, and providing that the applicable tax rate on the gross value at the point of production for that category of oil is determined by multiplying the monthly gross value at the point of production of the taxable oil produced during the month by the tax rate determined by multiplying 0.05 percent by the number that represents the difference between that average monthly gross value at the point of production for a barrel of oil and the base amount of $90, except that the tax rate determined for that category of oil production may not exceed five percent; relating to that part of the monthly production tax on the gross value at the point of production of oil produced by a producer and not otherwise described above, and providing that the applicable tax rate on the gross value at the point of production on that category of oil production is 0.27 percent multiplied by the number that represents the difference between the average gross value at the point of production for a barrel of oil and $60 or, if the average gross value at the point of production is greater than $60 above the base amount of $60, that the applicable tax rate is the sum of 16.2 percent and the product of 0.03 percent multiplied by the number that represents the difference between the average monthly gross value at the point of production for a barrel of oil and $60 above the base amount of $60, except that the tax rate applicable to that category of oil production may not exceed 20 percent; relating to payments of the oil and gas production tax; relating to an adjustment to the base amounts of $60, $75, $90 based on an increase in the United States Consumer Price Index for all urban consumers for the most recent year; relating to the allocation of lease expenditures and adjustments to lease expenditures; relating to the duties of the Department of Revenue; relating to a petroleum information management system; relating to the duties of the Alaska Oil and Gas Conservation Commission, the Department of Natural Resources, and the Department of Labor and Workforce Development that relate to providing the Department of Revenue with certain information relating to oil and gas; and providing for an effective date."
00 CS FOR SENATE BILL NO. 192(FIN) 01 "An Act relating to the oil and gas production tax; providing for a minimum tax on oil 02 and gas production so that the state receives a minimum production tax of 10 percent of 03 the gross value at the point of production for certain oil and gas production; relating to 04 that part of the monthly production tax on the gross value at the point of production of 05 oil produced by a producer that produced oil in 2008 and 2011 and produces a volume 06 of taxable oil for the year in excess of a defined target volume, and providing that the 07 applicable tax rate on the gross value at the point of production for that category of oil 08 production is 0.14 percent multiplied by the number that represents the difference 09 between that average monthly gross value at the point of production for a barrel of oil 10 and the base amount of $75 or, if the average gross value at the point of production is 11 greater than $60 above the base amount of $75, that the applicable tax rate is the sum of 12 8.4 percent and the product of 0.03 percent multiplied by the number that represents the
01 difference between the average monthly gross value at the point of production for a 02 barrel of oil and $60 above the base amount of $75, except that the tax rate applicable to 03 that category of oil production may not exceed 10 percent; relating to that part of the 04 tax on the gross value at the point of production of oil produced by a producer during 05 the first 10 consecutive years after the start of sustained production or during the first 06 10 consecutive years of sustained production after December 31, 2012, whichever is 07 later, from a lease or property containing land that was not or previously had not been 08 within a unit or in commercial production before January 1, 2008, and providing that 09 the applicable tax rate on the gross value at the point of production for that category of 10 oil is determined by multiplying the monthly gross value at the point of production of 11 the taxable oil produced during the month by the tax rate determined by multiplying 12 0.05 percent by the number that represents the difference between that average monthly 13 gross value at the point of production for a barrel of oil and the base amount of $90, 14 except that the tax rate determined for that category of oil production may not exceed 15 five percent; relating to that part of the monthly production tax on the gross value at the 16 point of production of oil produced by a producer and not otherwise described above, 17 and providing that the applicable tax rate on the gross value at the point of production 18 on that category of oil production is 0.27 percent multiplied by the number that 19 represents the difference between the average gross value at the point of production for 20 a barrel of oil and $60 or, if the average gross value at the point of production is greater 21 than $60 above the base amount of $60, that the applicable tax rate is the sum of 16.2 22 percent and the product of 0.03 percent multiplied by the number that represents the 23 difference between the average monthly gross value at the point of production for a 24 barrel of oil and $60 above the base amount of $60, except that the tax rate applicable to
01 that category of oil production may not exceed 20 percent; relating to payments of the 02 oil and gas production tax; relating to an adjustment to the base amounts of $60, $75, 03 $90 based on an increase in the United States Consumer Price Index for all urban 04 consumers for the most recent year; relating to the allocation of lease expenditures and 05 adjustments to lease expenditures; relating to the duties of the Department of Revenue; 06 relating to a petroleum information management system; relating to the duties of the 07 Alaska Oil and Gas Conservation Commission, the Department of Natural Resources, 08 and the Department of Labor and Workforce Development that relate to providing the 09 Department of Revenue with certain information relating to oil and gas; and providing 10 for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 43.55.011(e) is amended to read: 13 (e) There is levied on the producer of oil or gas a tax for all oil and gas 14 produced each calendar year from each lease or property in the state, less any oil and 15 gas the ownership or right to which is exempt from taxation or constitutes a 16 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 17 this section, the tax is equal to the sum of 18 (1) the annual production tax value of the taxable oil and gas as 19 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 20 (2) the sum, over all months of the calendar year, of the tax amounts 21 determined under (g) of this section on the gross value at the point of production of 22 oil. 23 * Sec. 2. AS 43.55.011(f) is repealed and reenacted to read: 24 (f) Except for oil and gas subject to (i) of this section and gas subject to (o) of 25 this section, the provisions of this subsection apply to oil and gas produced by a 26 producer that had average daily oil and gas production during the most recent calendar 27 year of more than 50,000 BTU equivalent barrels. Notwithstanding any contrary
01 provision of law, a producer may not apply tax credits to reduce its total tax liability 02 under (e) and (g) of this section for oil and gas produced from all leases or properties 03 below 10 percent of the total gross value at the point of production of that oil and gas. 04 If the amount of tax calculated by applying the tax rates in (e) and (g) of this section to 05 the total production tax value of the oil and gas taxable under (e) and (g) of this 06 section produced from all of the producer's leases or properties is less than 10 percent 07 of the total gross value at the point of production of that oil and gas, the tax levied by 08 (e) and (g) of this section for that oil and gas is equal to 10 percent of the total gross 09 value at the point of production of that oil and gas. 10 * Sec. 3. AS 43.55.011(g) is repealed and reenacted to read: 11 (g) For each month of the calendar year for which the producer's average 12 monthly gross value at the point of production for a barrel of taxable oil is above the 13 base amount, the producer shall determine the tax for the purposes of (e)(2) of this 14 section as follows: 15 (1) for oil not subject to (2) or (3) of this subsection produced by a 16 producer that produced oil in 2008 and 2011, for oil not subject to (3) of this 17 subsection produced by a producer who did not produce oil in 2008 and 2011, and for 18 oil production that was subject to (3) of this subsection but is no longer subject to (3) 19 of this subsection, the amount of tax is determined by multiplying the monthly gross 20 value at the point of production of the taxable oil produced during the month by the 21 tax rate calculated as follows: 22 (A) if the producer's average monthly gross value at the point 23 of production for a barrel of the taxable oil for the month is not more than $60 24 above the base amount of $60, the tax rate is 0.27 percent multiplied by the 25 number that represents the difference between that average monthly gross 26 value at the point of production for a barrel of oil and the base amount of $60; 27 or 28 (B) if the producer's average monthly gross value at the point 29 of production for a barrel of taxable oil is more than $60 above the base 30 amount of $60, the tax rate is the sum of 16.2 percent and the product of 0.03 31 percent multiplied by the number that represents the difference between the
01 average monthly gross value at the point of production for a barrel of oil and 02 $60 above the base amount of $60, except that the tax rate determined under 03 this subparagraph may not exceed 20 percent; 04 (2) for oil not subject to (3) of this subsection produced by a producer 05 that produced taxable oil in 2008 and 2011 that is in excess of the target volume 06 determined under (q) of this section, the amount of tax on the volume of oil above the 07 target volume is determined by multiplying the monthly gross value at the point of 08 production of the taxable oil produced during the month by the tax rate calculated as 09 follows: 10 (A) if the producer's average monthly gross value at the point 11 of production for a barrel of the taxable oil for the month is not more than $60 12 above the base amount of $75, the tax rate is 0.14 percent multiplied by the 13 number that represents the difference between that average monthly gross 14 value at the point of production for a barrel of oil and the base amount of $75; 15 or 16 (B) if the producer's average monthly gross value at the point 17 of production for a barrel of taxable oil is more than $60 above the base 18 amount of $75, the tax rate is the sum of 8.4 percent and the product of 0.03 19 percent multiplied by the number that represents the difference between the 20 average monthly gross value at the point of production for a barrel of oil and 21 $60 above the base amount of $75, except that the tax rate determined under 22 this subparagraph may not exceed 10 percent; 23 (3) for oil produced by a producer during the first 10 consecutive years 24 after the start of sustained production or during the first 10 consecutive years of 25 sustained production after December 31, 2012, whichever is later, from a lease or 26 property containing land that was not or previously had not been within a unit or in 27 commercial production before January 1, 2008, the amount of tax is determined by 28 multiplying the monthly gross value at the point of production of the taxable oil 29 produced during the month by the tax rate determined by multiplying 0.05 percent by 30 the number that represents the difference between that average monthly gross value at 31 the point of production for a barrel of oil and $90, except that the tax rate determined
01 under this paragraph may not exceed five percent; after the rate determination of this 02 paragraph no longer applies, oil produced from a lease or property that was subject to 03 the rate determination under this paragraph is subject to the rate determination under 04 (1) of this subsection; in this paragraph, "sustained production" has the meaning given 05 in AS 43.55.025(l). 06 * Sec. 4. AS 43.55.011 is amended by adding new subsections to read: 07 (p) Beginning on March 1, 2014, and on March 1 of each year thereafter, the 08 commissioner shall adjust the base amount of $60 in (g)(1) of this section, the base 09 amount of $75 in (g)(2) of this section, and the base amount of $90 in (g)(3) of this 10 section by the percent increase in the annual United States Consumer Price Index for 11 all urban consumers for the most recent year. The index for January 2013 is the 12 reference base index. The commissioner shall publish the percent increase and the 13 adjusted base amounts on the department's Internet website as soon as is practicable 14 after the commissioner determines the adjusted base amounts. The adjustments made 15 by the commissioner are retroactive to January 1 of the year in which the adjustments 16 are made. The department shall adopt a regulation providing for the payment of the 17 increase in an installment payment required under AS 43.55.020(a) that results from 18 the retroactive application of the adjustments to the base amount of $60 in (g)(1) of 19 this section, the base amount of $75 in (g)(2) of this section, and the base amount of 20 $90 in (g)(3) of this section. 21 (q) When determining whether a producer is subject to (g)(1) or (2) of this 22 section, 23 (1) the target volume is determined under the following formula, 24 where V is the volume of the oil produced by the producer in 2011, D is the decline 25 percentage calculated by taking the cube root of the ratio of the volume of taxable oil 26 produced by the producer in 2011 to the volume of taxable oil produced by the 27 producer in 2008, and Y is the year, expressed in four digits, for which the target 28 volume is being determined: 29 Target Volume = V x D ; and 30 (2) the target volume for a producer that increases its volume of 31 production through the purchase, merger, or other acquisition of another producer is
01 the sum of the producer's target volume and the target volume for the producer that is 02 purchased, merged with, or otherwise acquired; however, if the producer that is 03 purchased, merged with, or otherwise acquired did not have production in 2008 and 04 2011, the volume of the increased production that is attributable to the purchase, 05 merger, or other acquisition may not be considered for the purpose of determining 06 whether the producer that acquired the additional production has increased the volume 07 of production above its target volume. 08 * Sec. 5. AS 43.55.020(a) is amended to read: 09 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 10 shall pay the tax as follows: 11 (1) an installment payment of the estimated tax levied by 12 AS 43.55.011(e) and (g), net of any tax credits applied as allowed by law, is due for 13 each month of the calendar year on the last day of the following month; except as 14 otherwise provided under (2) of this subsection, the amount of the installment payment 15 is the sum of the following amounts, less 1/12 of the tax credits that are allowed by 16 law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but 17 the amount of the installment payment may not be less than zero: 18 (A) for oil and gas produced from leases or properties in the 19 state outside the Cook Inlet sedimentary basin but not subject to 20 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), the 21 greater of 22 (i) zero; or 23 (ii) the sum of the tax determined under 24 AS 43.55.011(g) on the gross value at the point of production for oil 25 produced for the month added to the product of 25 percent and 26 [THE TAX RATE CALCULATED FOR THE MONTH UNDER 27 AS 43.55.011(g) MULTIPLIED BY] the remainder obtained by 28 subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the leases or properties under AS 43.55.160 from the 31 gross value at the point of production of the oil and gas produced from
01 the leases or properties during the month for which the installment 02 payment is calculated; 03 (B) for oil and gas produced from leases or properties subject 04 to AS 43.55.011(f), the greater [GREATEST] of 05 (i) 10 percent of the gross value at the point of 06 production for oil and gas described in AS 43.55.011(f) [ZERO; 07 (ii) ZERO PERCENT, ONE PERCENT, TWO 08 PERCENT, THREE PERCENT, OR FOUR PERCENT, AS 09 APPLICABLE, OF THE GROSS VALUE AT THE POINT OF 10 PRODUCTION OF THE OIL AND GAS] produced [FROM ALL 11 LEASES OR PROPERTIES] during the month for which the 12 installment payment is calculated; or 13 (ii) [(iii)] the sum of the tax determined under 14 AS 43.55.011(g) on the gross value at the point of production for oil 15 produced for the month added to the product of 25 percent and the 16 tax rate calculated for the month under AS 43.55.011(g) 17 [MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 18 producer's adjusted lease expenditures for the calendar year of 19 production under AS 43.55.165 and 43.55.170 that are deductible for 20 those leases or properties under AS 43.55.160 from the gross value at 21 the point of production of the oil and gas produced from those leases or 22 properties during the month for which the installment payment is 23 calculated; 24 (C) for oil and gas produced from each lease or property 25 subject to AS 43.55.011(j), (k), or (o), the greater of 26 (i) zero; or 27 (ii) the sum of the tax determined under 28 AS 43.55.011(g) on the gross value at the point of production for 29 the oil produced for the month added to the product of 25 percent 30 and [THE TAX RATE CALCULATED FOR THE MONTH UNDER 31 AS 43.55.011(g) MULTIPLIED BY] the remainder obtained by
01 subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible under AS 43.55.160 for oil or gas, respectively, produced 04 from the lease or property from the gross value at the point of 05 production of the oil or gas, respectively, produced from the lease or 06 property during the month for which the installment payment is 07 calculated; 08 (2) an amount calculated under (1)(C) of this subsection for oil or gas 09 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not 10 exceed the product obtained by carrying out the calculation set out in 11 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 12 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 13 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 14 gas produced during the month for the amount of taxable gas produced during the 15 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 16 amount of taxable oil produced during the month for the amount of taxable oil 17 produced during the calendar year; 18 (3) an installment payment of the estimated tax levied by 19 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 20 on the last day of the following month; the amount of the installment payment is the 21 sum of 22 (A) the applicable tax rate for oil provided under 23 AS 43.55.011(i), multiplied by the gross value at the point of production of the 24 oil taxable under AS 43.55.011(i) and produced from the lease or property 25 during the month; and 26 (B) the applicable tax rate for gas provided under 27 AS 43.55.011(i), multiplied by the gross value at the point of production of the 28 gas taxable under AS 43.55.011(i) and produced from the lease or property 29 during the month; 30 (4) any amount of tax levied by AS 43.55.011(e) and (g) or (i), net of 31 any credits applied as allowed by law, that exceeds the total of the amounts due as
01 installment payments of estimated tax is due on March 31 of the year following the 02 calendar year of production. 03 * Sec. 6. AS 43.55.160(c) is amended to read: 04 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 05 calculating the tax due under AS 43.55.011(g) [A MONTHLY PRODUCTION TAX 06 VALUE UNDER (a)(2) OF THIS SECTION], the gross value at the point of 07 production of the oil and gas is calculated under regulations adopted by the department 08 that provide for using an appropriate monthly share of the producer's costs of 09 transportation for the calendar year. 10 * Sec. 7. AS 43.55.160 is amended by adding new subsections to read: 11 (f) For purposes of (a) of this section, a lease expenditure is applicable to oil 12 or gas produced from a lease or property, or to oil or gas produced from leases or 13 properties in an area of the state, if the lease expenditure is 14 (1) a cost to explore, develop, or produce oil or gas from that lease or 15 property, or to explore, develop, or produce oil or gas from one of those leases or 16 properties in that area of the state, respectively; and 17 (2) incurred on or after the commencement of commercial production 18 of oil or gas from the lease or property. 19 (g) For purposes of (a) of this section, a lease expenditure incurred during a 20 calendar year to explore land that is not a lease or property, or to explore or develop a 21 lease or property before commencement of commercial production of oil or gas from 22 the lease or property, shall be allocated as provided in a regulation adopted by the 23 department under AS 43.55.165(h) to and among oil, gas subject to AS 43.55.011(o), 24 and gas not subject to AS 43.55.011(o) produced by the producer during that calendar 25 year from leases or properties in the same area of the state as the land being explored 26 or the lease or property being explored or developed, respectively. 27 (h) For purposes of (f) and (g) of this section, an area of the state is one of the 28 following: 29 (1) land north of 68 degrees North latitude; 30 (2) land outside the Cook Inlet sedimentary basin not including any 31 land north of 68 degrees North latitude; or
01 (3) the Cook Inlet sedimentary basin. 02 * Sec. 8. AS 43.55.165(h) is amended to read: 03 (h) The department shall adopt regulations that provide for reasonable 04 methods of allocating costs between oil and gas, between gas subject to 05 AS 43.55.011(o) and other gas, and between leases or properties in those 06 circumstances where an allocation of costs is required to determine lease expenditures 07 that are costs of exploring for, developing, or producing oil deposits or costs of 08 exploring for, developing, or producing gas deposits, or that are costs of exploring for, 09 developing, or producing oil or gas deposits located within different leases or 10 properties. When adopting a regulation for determining a reasonable method of 11 allocating lease expenditures between the production of oil and the production of 12 gas, the department shall, to the extent possible, provide for the allocation of 13 lease expenditures in proportion to the gross value at the point of production for 14 oil produced and gas produced. 15 * Sec. 9. AS 43.55.170 is amended by adding a new subsection to read: 16 (d) The department shall adopt regulations that provide for reasonable 17 methods of allocating the adjustments to a producer's lease expenditures in (a) of this 18 section and the payments and credits described in (b) of this section between oil and 19 gas, between gas subject to AS 43.55.011(o) and other gas, and between leases or 20 properties in those circumstances where an allocation of costs is required to determine 21 lease expenditures that are costs of exploring for, developing, or producing oil 22 deposits, or costs of exploring for, developing, or producing gas deposits, or that are 23 costs of exploring for, developing, or producing oil or gas deposits located within 24 different leases or properties. When determining a reasonable method of allocating the 25 adjustments to a producer's lease expenditures between the production of oil and the 26 production of gas, the department shall consider allocating the adjustments in 27 proportion to the lease expenditures allocated to the production of oil and the 28 production of gas under regulations adopted by the department under 29 AS 43.55.165(h). 30 * Sec. 10. AS 44.25 is amended by adding a new section to read: 31 Sec. 44.25.025. Petroleum information management system. (a) The
01 Department of Revenue shall develop and maintain an electronic petroleum 02 information management system to collect, secure, distribute, store, retrieve, and 03 archive information related to oil and gas exploration, development, and production in 04 the state. The purposes of the petroleum information management system are to 05 improve the administration of the oil and gas production tax and to facilitate 06 exploration, development, and production of oil and gas resources. The petroleum 07 information management system shall be accessible by the public. 08 (b) To the extent the information is available and is not confidential, the 09 petroleum information management system must include the following information: 10 (1) unit and joint operating agreements; 11 (2) state oil and gas exploration licenses and oil and gas leases; 12 (3) for exploration activities, 13 (A) exploration work programs and budgets; 14 (B) seismic data; 15 (C) drilling reports; 16 (D) logs; 17 (E) well tests; 18 (F) geological models and maps; 19 (4) for development activities, 20 (A) development plans with operating and capital expenditure 21 projections; 22 (B) construction progress reports; 23 (C) drilling reports; 24 (D) reservoir characterization; 25 (5) for production activities, 26 (A) production work programs and budgets; 27 (B) oil and gas sales, revenue, and pricing; 28 (C) transportation agreements; 29 (D) production data; 30 (E) injection data; 31 (F) operating and capital expenditures;
01 (G) facility maps and studies; 02 (6) for abandonment of oil and gas wells, leases, and production and 03 transportation facilities, 04 (A) abandonment plans and budgets; 05 (B) progress reports; 06 (7) for oil and gas related employment information, 07 (A) the number of resident and nonresident hires for each year; 08 (B) training opportunities; and 09 (8) other information the Department of Revenue determines necessary 10 and relevant to the oil and gas production tax and to the exploration, development, and 11 production of oil and gas resources. 12 (c) The Alaska Oil and Gas Conservation Commission, the Department of 13 Natural Resources, and the Department of Labor and Workforce Development, in 14 consultation with the Department of Revenue, shall provide information described in 15 (b) of this section that is not confidential and within the control of the commission and 16 each department to the Department of Revenue for inclusion in the petroleum 17 information management system. The information provided by the Alaska Oil and Gas 18 Conservation Commission or by a department under this subsection shall be in a form 19 suitable for the Department of Revenue to include in the petroleum information 20 management system. 21 * Sec. 11. AS 43.55.160(a)(2) is repealed. 22 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 IMPLEMENTATION OF THE PETROLEUM INFORMATION MANAGEMENT 25 SYSTEM. The Department of Revenue shall develop and implement a work plan for the 26 development of the petroleum information management system required by AS 44.25.025, 27 enacted by sec. 10 of this Act, so that the system is operational before January 1, 2014. 28 * Sec. 13. Sections 1 - 9 and 11 of this Act take effect January 1, 2013. 29 * Sec. 14. Except as provided in sec. 13 of this Act, this Act takes effect immediately under 30 AS 01.10.070(c).