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HB 326: "An Act bearing the short title of the 'Fair Oil Share and Heavy Oil Production Incentive Act'; relating to the oil and gas production tax; relating to an adjustment to the calculation of the gross value at the point of production; relating to minimum production taxes for oil and gas; relating to a limitation on the use of certain tax credits; relating to the calculation of installment payments of the oil and gas production tax; creating a heavy oil production enhancement credit; and providing for an effective date."

00                             HOUSE BILL NO. 326                                                                          
01 "An Act bearing the short title of the 'Fair Oil Share and Heavy Oil Production                                         
02 Incentive Act'; relating to the oil and gas production tax; relating to an adjustment to                                
03 the calculation of the gross value at the point of production; relating to minimum                                      
04 production taxes for oil and gas; relating to a limitation on the use of certain tax credits;                           
05 relating to the calculation of installment payments of the oil and gas production tax;                                  
06 creating a heavy oil production enhancement credit; and providing for an effective                                      
07 date."                                                                                                                  
08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
09    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
10 to read:                                                                                                                
11       SHORT TITLE. This Act may be known as the Fair Oil Share and Heavy Oil                                            
12 Production Incentive Act.                                                                                               
13    * Sec. 2. AS 43.55.011(f) is amended to read:                                                                      
01            (f)  Except as provided in AS 43.55.160(f) and (g), the [THE] levy of tax                                
02       under (e) of this section for                                                                                     
03                 (1)  oil and gas produced before January 1, 2017 [JANUARY 1,                                        
04       2022], from leases or properties that include land north of 68 degrees North latitude,                            
05       other than gas subject to (o) of this section, may not be less than                                               
06                      (A)  four percent of the gross value at the point of production                                    
07            when the average price per barrel for Alaska North Slope crude oil for sale on                               
08            the United States West Coast during the calendar year for which the tax is due                               
09            is more than $25;                                                                                            
10                      (B)  three percent of the gross value at the point of production                                   
11            when the average price per barrel for Alaska North Slope crude oil for sale on                               
12            the United States West Coast during the calendar year for which the tax is due                               
13            is over $20 but not over $25;                                                                                
14                      (C)  two percent of the gross value at the point of production                                     
15            when the average price per barrel for Alaska North Slope crude oil for sale on                               
16            the United States West Coast during the calendar year for which the tax is due                               
17            is over $17.50 but not over $20;                                                                             
18                      (D)  one percent of the gross value at the point of production                                     
19            when the average price per barrel for Alaska North Slope crude oil for sale on                               
20            the United States West Coast during the calendar year for which the tax is due                               
21            is over $15 but not over $17.50; or                                                                          
22                      (E)  zero percent of the gross value at the point of production                                    
23            when the average price per barrel for Alaska North Slope crude oil for sale on                               
24            the United States West Coast during the calendar year for which the tax is due                               
25            is $15 or less; and                                                                                          
26                 (2)  oil and gas produced on and after January 1, 2022, from leases                                 
27       or properties that include land north of 68 degrees North latitude, may not be                                
28       less than the greater of the amount calculated in (q) of this section or                                      
29                      (A)  10 percent of the gross value at the point of production                                  
30            when the average price per barrel for Alaska North Slope crude oil for                                   
31            sale on the United States West Coast during the calendar year for which                                  
01            the tax is due is more than $65;                                                                         
02                      (B)  eight percent of the gross value at the point of                                          
03            production when the average price per barrel for Alaska North Slope                                      
04            crude oil for sale on the United States West Coast during the calendar                                   
05            year for which the tax is due is over $55 but not over $65;                                              
06                      (C)  six percent of the gross value at the point of production                                 
07            when the average price per barrel for Alaska North Slope crude oil for                                   
08            sale on the United States West Coast during the calendar year for which                                  
09            the tax is due is over $45 but not over $55; or                                                          
10                      (D)  five percent of the gross value at the point of production                                
11            when the average price per barrel for Alaska North Slope crude oil for                                   
12            sale on the United States West Coast during the calendar year for which                                  
13            the tax is due is $45 or less; and                                                                       
14                 (3)  oil produced on and after January 1, 2022, from leases or properties                           
15       that include land north of 68 degrees North latitude, may not be less than the greater                        
16       of the amount calculated in (q) of this section or                                                            
17                      (A)  10 [FOUR] percent of the gross value at the point of                                      
18            production when the average price per barrel for Alaska North Slope crude oil                                
19            for sale on the United States West Coast during the calendar year for which the                              
20            tax is due is more than $65 [$25];                                                                       
21                      (B)  eight [THREE] percent of the gross value at the point of                                  
22            production when the average price per barrel for Alaska North Slope crude oil                                
23            for sale on the United States West Coast during the calendar year for which the                              
24            tax is due is over $55 [$20] but not over $65 [$25];                                                 
25                      (C)  Six [TWO] percent of the gross value at the point of                                      
26            production when the average price per barrel for Alaska North Slope crude oil                                
27            for sale on the United States West Coast during the calendar year for which the                              
28            tax is due is over $45 [$17.50] but not over $55 [$20]; or                                       
29                      (D)  five [ONE PERCENT OF THE GROSS VALUE AT THE                                               
30            POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL                                                        
31            FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE UNITED                                                      
01            STATES WEST COAST DURING THE CALENDAR YEAR FOR WHICH                                                         
02            THE TAX IS DUE IS OVER $15 BUT NOT OVER $17.50; OR                                                           
03                      (E)  ZERO] percent of the gross value at the point of production                                   
04            when the average price per barrel for Alaska North Slope crude oil for sale on                               
05            the United States West Coast during the calendar year for which the tax is due                               
06            is $40 [$15] or less.                                                                                    
07    * Sec. 3. AS 43.55.011 is amended by adding a new subsection to read:                                              
08            (q)  The levy of tax under (e) of this section for                                                           
09                 (1)  oil and gas produced before January 1, 2022, except as otherwise                                   
10       provided in (f), (j), (k), (o), and (p) of this section, may not be less than the greater of                      
11       the amount calculated in (f) of this section or the production tax value of oil or gas                            
12       calculated under AS 43.55.160 multiplied by                                                                       
13                      (A)  if the annual average price per barrel for Alaska North                                       
14            Slope crude oil for sale on the United States West Coast during the calendar                                 
15            month is greater than $85, the sum of 20 percent and the product of 0.3 percent                              
16            multiplied by the number that represents the difference between the annual                                   
17            average price per barrel for Alaska North Slope crude oil for sale on the United                             
18            States West Coast during the calendar month and $85, except that the sum                                     
19            determined under this subparagraph may not exceed 50 percent; or                                             
20                      (B)  if the annual average price per barrel for Alaska North                                       
21            Slope crude oil for sale on the United States West Coast during the calendar                                 
22            month is less than or equal to $85, 20 percent;                                                              
23                 (2)  oil produced on and after January 1, 2022, may not be less than the                                
24       greater of the amount calculated in (f) of this section or the production tax value of oil                        
25       or gas calculated under AS 43.55.160 multiplied by                                                                
26                      (A)  if the annual average price per barrel for Alaska North                                       
27            Slope crude oil for sale on the United States West Coast during the calendar                                 
28            month is greater than $85, the sum of 20 percent and the product of 0.3 percent                              
29            multiplied by the number that represents the difference between the annual                                   
30            average price per barrel for Alaska North Slope crude oil for sale on the United                             
31            States West Coast during the calendar month and $85, except that the sum                                     
01            determined under this subparagraph may not exceed 50 percent; or                                             
02                      (B)  if the annual average price per barrel for Alaska North                                       
03            Slope crude oil for sale on the United States West Coast during the calendar                                 
04            month is less than or equal to $85, 20 percent.                                                              
05    * Sec. 4. AS 43.55.020(a) is amended to read:                                                                      
06            (a)  For a calendar year, a producer subject to tax under AS 43.55.011 shall pay                             
07       the tax as follows:                                                                                               
08                 (1)  for oil and gas produced before January 1, 2014, an installment                                    
09       payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied                            
10       as allowed by law, is due for each month of the calendar year on the last day of the                              
11       following month; except as otherwise provided under (2) of this subsection, the                                   
12       amount of the installment payment is the sum of the following amounts, less 1/12 of                               
13       the tax credits that are allowed by law to be applied against the tax levied by                                   
14       AS 43.55.011(e) for the calendar year, but the amount of the installment payment may                              
15       not be less than zero:                                                                                            
16                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                         
17            produced from leases or properties in the state outside the Cook Inlet                                       
18            sedimentary basin, other than leases or properties subject to AS 43.55.011(f),                               
19            the greater of                                                                                               
20                           (i)  zero; or                                                                                 
21                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
22                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
23                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
24                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
25                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
26                 at the point of production of the oil and gas produced from the leases or                               
27                 properties during the month for which the installment payment is                                        
28                 calculated;                                                                                             
29                      (B)  for oil and gas produced from leases or properties subject                                    
30            to AS 43.55.011(f), the greatest of                                                                          
31                           (i)  zero;                                                                                    
01                           (ii)  zero percent, one percent, two percent, three                                           
02                 percent, or four percent, as applicable, of the gross value at the point of                             
03                 production of the oil and gas produced from the leases or properties                                    
04                 during the month for which the installment payment is calculated; or                                    
05                           (iii)  the sum of 25 percent and the tax rate calculated for                                  
06                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
07                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
08                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
09                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
10                 at the point of production of the oil and gas produced from those leases                                
11                 or properties during the month for which the installment payment is                                     
12                 calculated;                                                                                             
13                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                                   
14            each lease or property, the greater of                                                                       
15                           (i)  zero; or                                                                                 
16                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
17                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
18                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
19                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
20                 deductible under AS 43.55.160 for the oil or gas, respectively,                                         
21                 produced from the lease or property from the gross value at the point of                                
22                 production of the oil or gas, respectively, produced from the lease or                                  
23                 property during the month for which the installment payment is                                          
24                 calculated;                                                                                             
25                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                     
26                           (i)  the sum of 25 percent and the tax rate calculated for                                    
27                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
28                 by 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 oil and gas under AS 43.55.160 from the gross value                                  
31                 at the point of production of the oil and gas produced from the leases or                               
01                 properties during the month for which the installment payment is                                        
02                 calculated, but not less than zero; or                                                                  
03                           (ii)  four percent of the gross value at the point of                                         
04                 production of the oil and gas produced from the leases or properties                                    
05                 during the month, but not less than zero;                                                               
06                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
07       subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by                                    
08       carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as                             
09       applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but                          
10       substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the                               
11       amount of taxable gas produced during the month for the amount of taxable gas                                     
12       produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or                                    
13       (2)(A), as applicable, the amount of taxable oil produced during the month for the                                
14       amount of taxable oil produced during the calendar year;                                                          
15                 (3)  an installment payment of the estimated tax levied by                                              
16       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
17       on the last day of the following month; the amount of the installment payment is the                              
18       sum of                                                                                                            
19                      (A)  the applicable tax rate for oil provided under                                                
20            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
21            oil taxable under AS 43.55.011(i) and produced from the lease or property                                    
22            during the month; and                                                                                        
23                      (B)  the applicable tax rate for gas provided under                                                
24            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
25            gas taxable under AS 43.55.011(i) and produced from the lease or property                                    
26            during the month;                                                                                            
27                 (4)  any amount of tax levied by AS 43.55.011, net of any credits                                       
28       applied as allowed by law, that exceeds the total of the amounts due as installment                               
29       payments of estimated tax is due on March 31 of the year following the calendar year                              
30       of production;                                                                                                    
31                 (5)  for oil and gas produced on and after January 1, 2014, and before                                  
01       January 1, 2017 [JANUARY 1, 2022], an installment payment of the estimated tax                                
02       levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for                           
03       each month of the calendar year on the last day of the following month; except as                                 
04       otherwise provided under (7) [(6)] of this subsection, the amount of the installment                          
05       payment is the sum of the following amounts, less 1/12 of the tax credits that are                                
06       allowed by law to be applied against the tax levied by AS 43.55.011(e) for the                                    
07       calendar year, but the amount of the installment payment may not be less than zero:                               
08                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                         
09            produced from leases or properties in the state outside the Cook Inlet                                       
10            sedimentary basin, other than leases or properties subject to AS 43.55.011(f),                               
11            the greater of                                                                                               
12                           (i)  zero; or                                                                                 
13                           (ii)  35 percent multiplied by the remainder obtained by                                      
14                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
15                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
16                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
17                 at the point of production of the oil and gas produced from the leases or                               
18                 properties during the month for which the installment payment is                                        
19                 calculated;                                                                                             
20                      (B)  for oil and gas produced from leases or properties subject                                    
21            to AS 43.55.011(f), the greatest of                                                                          
22                           (i)  zero;                                                                                    
23                           (ii)  zero percent, one percent, two percent, three                                           
24                 percent, or four percent, as applicable, of the gross value at the point of                             
25                 production of the oil and gas produced from the leases or properties                                    
26                 during the month for which the installment payment is calculated; or                                    
27                           (iii)  35 percent 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 oil and gas under AS 43.55.160 from the gross value                                  
31                 at the point of production of the oil and gas produced from those leases                                
01                 or properties during the month for which the installment payment is                                     
02                 calculated, except that, for the purposes of this calculation, a reduction                              
03                 from the gross value at the point of production may apply for oil and                                   
04                 gas subject to AS 43.55.160(f) or (g);                                                                  
05                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                                   
06            each lease or property, the greater of                                                                       
07                           (i)  zero; or                                                                                 
08                           (ii)  35 percent multiplied by the remainder obtained by                                      
09                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
10                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
11                 deductible under AS 43.55.160 for the oil or gas, respectively,                                         
12                 produced from the lease or property from the gross value at the point of                                
13                 production of the oil or gas, respectively, produced from the lease or                                  
14                 property during the month for which the installment payment is                                          
15                 calculated;                                                                                             
16                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                     
17                           (i)  35 percent multiplied by the remainder obtained by                                       
18                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
19                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
20                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
21                 at the point of production of the oil and gas produced from the leases or                               
22                 properties during the month for which the installment payment is                                        
23                 calculated, but not less than zero; or                                                                  
24                           (ii)  four percent of the gross value at the point of                                         
25                 production of the oil and gas produced from the leases or properties                                    
26                 during the month, but not less than zero;                                                               
27                 (6)  for oil and gas produced on and after January 1, 2017, and                                     
28       before January 1, 2022, an installment payment of the estimated tax levied by                                 
29       AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each                            
30       month of the calendar year on the last day of the following month; except as                                  
31       otherwise provided under (7) of this subsection, the amount of the installment                                
01       payment is the sum of the following amounts, less 1/12 of the tax credits that are                            
02       allowed by law to be applied against the tax levied by AS 43.55.011(e) for the                                
03       calendar year, but the amount of the installment payment may not be less than                                 
04       zero:                                                                                                         
05                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                     
06            produced from leases or properties in the state outside the Cook Inlet                                   
07            sedimentary basin, other than leases or properties subject to                                            
08            AS 43.55.011(f), the greater of                                                                          
09                           (i)  zero; or                                                                             
10                           (ii)  35 percent multiplied by the remainder obtained                                     
11                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
12                 for the calendar year of production under AS 43.55.165 and                                          
13                 43.55.170 that are deductible for the oil and gas under                                             
14                 AS 43.55.160 from the gross value at the point of production of the                                 
15                 oil and gas produced from the leases or properties during the                                       
16                 month for which the installment payment is calculated;                                              
17                      (B)  for oil and gas produced from leases or properties                                        
18            subject to AS 43.55.011(f) or (q), the greatest of                                                       
19                           (i)  zero;                                                                                
20                           (ii)  the amount applicable under AS 43.55.011(f) or                                      
21                 (q) during the month for which the installment payment is                                           
22                 calculated; or                                                                                      
23                           (iii)  35 percent multiplied by the remainder obtained                                    
24                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
25                 for the calendar year of production under AS 43.55.165 and                                          
26                 43.55.170 that are deductible for the oil and gas under                                             
27                 AS 43.55.160 from the gross value at the point of production of the                                 
28                 oil and gas produced from those leases or properties during the                                     
29                 month for which the installment payment is calculated, except that,                                 
30                 for the purposes of this calculation, a reduction from the gross                                    
31                 value at the point of production may apply for oil and gas subject                                  
01                 to AS 43.55.160(f) or (g);                                                                          
02                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                               
03            each lease or property, the greater of                                                                   
04                           (i)  zero; or                                                                             
05                           (ii)  35 percent multiplied by the remainder obtained                                     
06                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
07                 for the calendar year of production under AS 43.55.165 and                                          
08                 43.55.170 that are deductible under AS 43.55.160 for the oil or gas,                                
09                 respectively, produced from the lease or property from the gross                                    
10                 value at the point of production of the oil or gas, respectively,                                   
11                 produced from the lease or property during the month for which                                      
12                 the installment payment is calculated;                                                              
13                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                 
14                           (i)  35 percent multiplied by the remainder obtained                                      
15                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
16                 for the calendar year of production under AS 43.55.165 and                                          
17                 43.55.170 that are deductible for the oil and gas under                                             
18                 AS 43.55.160 from the gross value at the point of production of the                                 
19                 oil and gas produced from the leases or properties during the                                       
20                 month for which the installment payment is calculated, but not less                                 
21                 than zero; or                                                                                       
22                           (ii)  four percent of the gross value at the point of                                     
23                 production of the oil and gas produced from the leases or                                           
24                 properties during the month, but not less than zero;                                                
25                 (7)  an amount calculated under (5)(C) or (6)(C) of this subsection for                         
26       oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained                            
27       by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as                          
28       applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but                          
29       substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the                               
30       amount of taxable gas produced during the month for the amount of taxable gas                                     
31       produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or                                    
01       (2)(A), as applicable, the amount of taxable oil produced during the month for the                                
02       amount of taxable oil produced during the calendar year;                                                          
03                 (8) [(7)]  for oil and gas produced on or after January 1, 2022, an                                 
04       installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax                                
05       credits applied as allowed by law, is due for each month of the calendar year on the                              
06       last day of the following month; the amount of the installment payment is the sum of                              
07       the following amounts, less 1/12 of the tax credits that are allowed by law to be                                 
08       applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount                           
09       of the installment payment may not be less than zero:                                                             
10                      (A)  for oil produced from leases or properties that include land                                  
11            north of 68 degrees North latitude, the greatest of                                                          
12                           (i)  zero;                                                                                    
13                           (ii)  the amount [ZERO PERCENT, ONE PERCENT,                                              
14                 TWO PERCENT, THREE PERCENT, OR FOUR PERCENT, AS]                                                        
15                 applicable under AS 43.55.011(f) or (q) [, OF THE GROSS VALUE                                       
16                 AT THE POINT OF PRODUCTION OF THE OIL PRODUCED                                                          
17                 FROM THE LEASES OR PROPERTIES] during the month for which                                               
18                 the installment payment is calculated; or                                                               
19                           (iii)  35 percent multiplied by the remainder obtained by                                     
20                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
21                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
22                 deductible for the oil under AS 43.55.160(h)(1) from the gross value at                                 
23                 the point of production of the oil produced from those leases or                                        
24                 properties during the month for which the installment payment is                                        
25                 calculated, except that, for the purposes of this calculation, a reduction                              
26                 from the gross value at the point of production may apply for oil                                       
27                 subject to AS 43.55.160(f) or 43.55.160(f) and (g);                                                     
28                      (B)  for oil produced before or during the last calendar year                                      
29            under AS 43.55.024(b) for which the producer could take a tax credit under                                   
30            AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet                               
31            sedimentary basin, no part of which is north of 68 degrees North latitude, other                             
01            than leases or properties subject to AS 43.55.011(p), the greater of                                         
02                           (i)  zero; or                                                                                 
03                           (ii)  35 percent multiplied by the remainder obtained by                                      
04                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
05                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
06                 deductible for the oil under AS 43.55.160(h)(2) from the gross value at                                 
07                 the point of production of the oil produced from the leases or properties                               
08                 during the month for which the installment payment is calculated;                                       
09                      (C)  for oil and gas produced from leases or properties subject                                    
10            to AS 43.55.011(p), except as otherwise provided under (8) of this subsection,                               
11            the sum of                                                                                                   
12                           (i)  35 percent multiplied by the remainder obtained by                                       
13                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
14                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
15                 deductible for the oil under AS 43.55.160(h)(3) from the gross value at                                 
16                 the point of production of the oil produced from the leases or properties                               
17                 during the month for which the installment payment is calculated, but                                   
18                 not less than zero; and                                                                                 
19                           (ii)  13 percent of the gross value at the point of                                           
20                 production of the gas produced from the leases or properties during the                                 
21                 month, but not less than zero;                                                                          
22                      (D)  for oil produced from leases or properties in the state, no                                   
23            part of which is north of 68 degrees North latitude, other than leases or                                    
24            properties subject to (B) or (C) of this paragraph, the greater of                                           
25                           (i)  zero; or                                                                                 
26                           (ii)  35 percent multiplied by the remainder obtained by                                      
27                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
28                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
29                 deductible for the oil under AS 43.55.160(h)(4) from the gross value at                                 
30                 the point of production of the oil produced from the leases or properties                               
31                 during the month for which the installment payment is calculated;                                       
01                      (E)  for gas produced from each lease or property in the state,                                    
02            other than a lease or property subject to AS 43.55.011(p), 13 percent of the                                 
03            gross value at the point of production of the gas produced from the lease or                                 
04            property during the month for which the installment payment is calculated, but                               
05            not less than zero;                                                                                          
06                 (9) [(8)]  an amount calculated under (8)(C) [(7)(C)] of this subsection                        
07       may not exceed four percent of the gross value at the point of production of the oil and                          
08       gas produced from leases or properties subject to AS 43.55.011(p) during the month                                
09       for which the installment payment is calculated;                                                                  
10                 (10) [(9)]  for purposes of the calculation under (1)(B)(ii), (5)(B)(ii),                           
11       (6)(B)(ii), and (8)(A)(ii) [(7)(A)(ii)] of this subsection, the applicable amount                     
12       [PERCENTAGE OF THE GROSS VALUE AT THE POINT OF PRODUCTION] is                                                     
13       determined under AS 43.55.011(f) [AS 43.55.011(f)(1) OR (2)] but substituting,                            
14       where applicable, the phrase "month for which the installment payment is calculated"                          
15       in AS 43.55.011(f) [AS 43.55.011(f)(1) AND (2)] for the phrase "calendar year for                             
16       which the tax is due."                                                                                            
17    * Sec. 5. AS 43.55.020(g) is amended to read:                                                                      
18            (g)  Notwithstanding any contrary provision of AS 43.05.225,                                                 
19                 (1)  before January 1, 2014, an unpaid amount of an installment                                         
20       payment required under (a)(1) - (3) of this section that is not paid when due bears                               
21       interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal                              
22       Revenue Code), as amended, compounded daily, from the date the installment                                        
23       payment is due until March 31 following the calendar year of production, and (B) as                               
24       provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued                            
25       under (A) of this paragraph that remains unpaid after that March 31 is treated as an                              
26       addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax                          
27       due under (a)(4) of this section that is not paid when due bears interest as provided for                         
28       a delinquent tax under AS 43.05.225;                                                                              
29                 (2)  on and after January 1, 2014, an unpaid amount of an installment                                   
30       payment required under (a)(3), (5), (6), [OR] (7), or (8) of this section that is not paid                    
31       when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C.                              
01       6621 (Internal Revenue Code), as amended, compounded daily, from the date the                                     
02       installment payment is due until March 31 following the calendar year of production,                              
03       and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31;                                  
04       interest accrued under (A) of this paragraph that remains unpaid after that March 31 is                           
05       treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid                          
06       amount of tax due under (a)(4) of this section that is not paid when due bears interest                           
07       as provided for a delinquent tax under AS 43.05.225.                                                              
08    * Sec. 6. AS 43.55 is amended by adding a new section to read:                                                     
09            Sec. 43.55.022. Limitations on tax credits. (a) Notwithstanding any contrary                               
10       provision of this chapter, the application of tax credits under this chapter is subject to                        
11       the limitations set out in this section.                                                                          
12            (b)  A tax credit or a fraction of a tax credit under AS 43.55.023, 43.55.024,                               
13       and 43.55.025 may not be subtracted in calculating an installment payment of                                      
14       estimated tax required under AS 43.55.020(a) if the resulting amount of the                                       
15       installment payment would be less than the amount in AS 43.55.020(a)(5)(B)(ii),                                   
16       43.55.020(a)(6)(B)(ii), or 43.55.020(a)(8)(A)(ii), as applicable.                                                 
17            (c)  The total amount of tax credits under AS 43.55.023, 43.55.024, and                                      
18       43.55.025 that may be applied against a tax levied by AS 43.55.011(e) for a calendar                              
19       year may not exceed the sum of the amount of the tax credits or fractions of tax credits                          
20       that are allowed under (b) of this section to be subtracted in calculating the installment                        
21       payments of estimated tax for each month in the calendar year.                                                    
22    * Sec. 7. AS 43.55.023(c) is amended to read:                                                                      
23            (c)  A credit or portion of a credit under this section may not be used to reduce                            
24       a person's tax liability under AS 43.55.011(e) for any calendar year below the amount                         
25       calculated under AS 43.55.011(f) [ZERO], and any unused credit or portion of a                                
26       credit not used under this subsection may be applied in a later calendar year.                                    
27    * Sec. 8. AS 43.55.024(g) is amended to read:                                                                      
28            (g)  A tax credit authorized by (c) of this section may not be applied to reduce                             
29       a producer's tax liability for any calendar year under AS 43.55.011(e) below the                              
30       amount calculated under AS 43.55.011(f) [ZERO].                                                               
31    * Sec. 9. AS 43.55.025(i) is amended to read:                                                                      
01            (i)  For a production tax credit under this section,                                                         
02                 (1)  a credit may not be applied to reduce a taxpayer's tax liability under                             
03       AS 43.55.011(e) below the amount calculated under AS 43.55.011(f) [ZERO] for a                                
04       calendar year; and                                                                                                
05                 (2)  an amount of the production tax credit in excess of the amount that                                
06       may be applied for a calendar year under this subsection may be carried forward and                               
07       applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later                           
08       calendar years.                                                                                                   
09    * Sec. 10. AS 43.55 is amended by adding a new section to read:                                                  
10            Sec. 43.55.026. Heavy oil research or development expenditure credit. (a)                                  
11       A person may apply for a tax credit against the tax due under this chapter in the                                 
12       amount of (1) 25 percent of an expenditure for research or development of a new                                   
13       technology or method solely and directly aimed at producing or enhancing the                                      
14       production of heavy oil in the state; or (2) $2,500,000, whichever is less. A person                              
15       may not claim a credit under this section for research and development expenditures                               
16       that were deducted in the calculation of tax liability under AS 43.55.011(e).                                     
17            (b)  A taxpayer applying the credit under this section against a liability under                             
18       this chapter shall claim the credit on the taxpayer's return. A tax credit or portion of a                        
19       tax credit under this section may not be used to reduce the taxpayer's tax liability                              
20       under this chapter below zero.                                                                                    
21            (c)  An expenditure that is the basis of the credit under this section may not be                            
22       the basis for                                                                                                     
23                 (1)  a deduction against the tax levied under this chapter;                                             
24                 (2)  a credit or deduction under another provision of this title; or                                    
25                 (3)  any federal credit claimed under this title.                                                       
26            (d)  A person entitled to a tax credit under this section that is greater than the                           
27       person's tax liability under this chapter may request a refund or payment in the amount                           
28       of the unused portion of the tax credit. The department may use money available in the                            
29       oil and gas tax credit fund established in AS 43.55.028 to make a refund or payment                               
30       under this subsection in whole or in part if the department finds that                                            
31                 (1)  the claimant does not have an outstanding liability to the state for                               
01       unpaid delinquent taxes under this title; and                                                                     
02                 (2)  after application of all available tax credits, the claimant's total tax                           
03       liability under this chapter for the calendar year in which the claim is made is zero.                            
04            (e)  A refund under this section does not bear interest.                                                     
05            (f)  In this section, "heavy oil" means oil with an American Petroleum Institute                             
06       gravity of less than 18 degrees.                                                                                  
07    * Sec. 11. AS 43.55.028(a) is amended to read:                                                                     
08            (a)  The oil and gas tax credit fund is established as a separate fund of the state.                         
09       The purpose of the fund is to purchase transferable tax credit certificates issued under                          
10       AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to                              
11       pay refunds and payments claimed under AS 43.20.046, 43.20.047, [OR] 43.20.053,                               
12       or AS 43.55.026.                                                                                              
13    * Sec. 12. AS 43.55.028(g) is amended to read:                                                                     
14            (g)  The department may adopt regulations to carry out the purposes of this                                  
15       section, including standards and procedures to allocate available money among                                     
16       applications for purchases under this chapter and claims for refunds and payments                                 
17       under AS 43.20.046, 43.20.047, [OR] 43.20.053, or AS 43.55.026 when the total                                 
18       amount of the applications for purchase and claims for refund exceed the amount of                                
19       available money in the fund. The regulations adopted by the department may not,                                   
20       when allocating available money in the fund under this section, distinguish an                                    
21       application for the purchase of a credit certificate issued under former                                          
22       AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046, 43.20.047,                                 
23       [OR] 43.20.053, or AS 43.55.026.                                                                              
24    * Sec. 13. AS 43.55.160(f) is amended to read:                                                                     
25            (f)  On and after January 1, 2014, in the calculation of an annual production tax                            
26       value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the                             
27       point of production of oil or gas produced from a lease or property north of 68 degrees                           
28       North latitude meeting one or more of the following criteria is reduced by 20 percent:                            
29       (1) the oil or gas is produced from a lease or property that does not contain a lease that                        
30       was within a unit on January 1, 2003; (2) the oil or gas is produced from a                                       
31       participating area established after December 31, 2011, that is within a unit formed                              
01       under AS 38.05.180(p) before January 1, 2003, if the participating area does not                                  
02       contain a reservoir that had previously been in a participating area established before                           
03       December 31, 2011; (3) the oil or gas is produced from acreage that was added to an                               
04       existing participating area by the Department of Natural Resources on and after                                   
05       January 1, 2014, and the producer demonstrates to the department that the volume of                               
06       oil or gas produced is from acreage added to an existing participating area. This                                 
07       subsection does not apply to gas produced before 2022 that is used in the state or to                             
08       gas produced on and after January 1, 2022. For oil or gas produced after January 1,                           
09       2017, the reduction under this subsection shall apply to oil or gas produced from                             
10       a lease or property for the first four years after the commencement of production                             
11       in commercial quantities of oil or gas from that lease or property. For oil or gas                            
12       produced before January 1, 2017, the reduction under this subsection for a lease                              
13       or property shall expire January 1, 2021. A reduction under this subsection may not                           
14       reduce the gross value at the point of production below zero. Oil or gas produced                             
15       after January 1, 2017, that qualifies for a reduction under this subsection is not                            
16       subject to the minimum tax under AS 43.55.011(f). In this subsection, "participating                          
17       area" means a reservoir or portion of a reservoir producing or contributing to                                    
18       production as approved by the Department of Natural Resources.                                                    
19    * Sec. 14. This Act takes effect January 1, 2017.