SB 100: "An Act relating to the assessment of property for oil and gas exploration, production, and pipeline transportation property tax on a North Slope natural gas project; amending the definition of "taxable property"; adding a definition for "North Slope natural gas project"; and making conforming amendments."
00 SENATE BILL NO. 100 01 "An Act relating to the assessment of property for oil and gas exploration, production, 02 and pipeline transportation property tax on a North Slope natural gas project; 03 amending the definition of "taxable property"; adding a definition for "North Slope 04 natural gas project"; and making conforming amendments." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 43.56.060(a) is amended to read: 07 (a) The department shall assess property for the tax levied under 08 AS 43.56.010(b) and AS 29.45.080 on property exclusively used for a North Slope 09 natural gas project and on property used or committed by contract or other 10 agreement for use for the pipeline transportation of gas or unrefined oil or for the 11 production of gas or unrefined oil at its full and true value as of January 1 of the 12 assessment year. 13 * Sec. 2. AS 43.56.060(e) is amended to read: 14 (e) Except as provided in (h), the [The] full and true value of taxable
01 property used or committed by contract or other agreement for pipeline transportation 02 of gas or unrefined oil or in the operation or maintenance of facilities for the pipeline 03 transportation of gas or unrefined oil is: 04 (1) on the construction commencement date and until January 1 05 following the date the pipeline begins to transport gas or unrefined oil, the actual cost 06 incurred or accrued with respect to the property as of the date of assessment; 07 (2) determined on each January 1 thereafter with due regard to the 08 economic value of the property based on the estimated life of the proven reserves of 09 gas or unrefined oil then technically, economically, and legally deliverable into the 10 transportation facility; however, if the proven reserves of gas or unrefined oil then 11 technically, economically, and legally deliverable indicate an economic life materially 12 shorter than the estimated physical life of the transportation facility, the full and true 13 value is the actual cost reduced by an annual allowance for depreciation on a straight 14 line basis over an economic life based on the actual elapsed life from the 15 commencement of full operation to the date of assessment plus the estimated 16 remaining life of the proven reserves of gas and unrefined oil then technically, 17 economically, and legally deliverable into the transportation facility as of the date of 18 the assessment; 19 (3) on the assessment date next following inability to use or construct 20 all or a substantial part of the facility for a period of 90 or more consecutive days 21 because of natural disaster or legal prohibition, or other events beyond the control of a 22 person having ownership or control of the property, adjusted to take into account any 23 diminution in value. 24 * Sec. 3. AS 43.56.060 is amended by adding a new subsection to read: 25 (h) Starting on the construction commencement date, the full and true value of 26 taxable property exclusively used for a North Slope natural gas project is determined 27 on each January 1. On January 1 following the date a North Slope natural gas project 28 begins to transport gas, the full and true value is the original cost adjusted for inflation, 29 the product of which is reduced by an annual allowance for depreciation, and the 30 remainder of which is subject to a throughput factor. The throughput factor includes 31 the estimated annual throughput as measured in thousands of cubic feet of gas
01 transported divided by the original annual throughput design basis as measured in 02 thousands of cubic feet of gas. 03 * Sec. 4. AS 43.56.210(5) is amended to read: 04 (5) "taxable property" 05 (A) means real and tangible personal property exclusively used 06 for a North Slope natural gas project or real and tangible personal 07 property used or committed by contract or other agreement for use within this 08 state primarily in the exploration for, production of, or pipeline transportation 09 of gas or unrefined oil (except for property used solely for the retail 10 distribution or liquefaction of natural gas unless the property is exclusively 11 used for a North Slope natural gas project), or in the operation or 12 maintenance of facilities used in the exploration for, production of, or pipeline 13 transportation of gas or unrefined oil; "taxable property" includes 14 (i) machinery, appliances, supplies, and equipment; 15 (ii) drilling rigs, wells (whether producing or not), 16 gathering lines and transmission lines, pumping stations, compressor 17 stations, power plants, topping plants, and processing units; 18 (iii) roads, tank farms, tanker terminals, docks and other 19 port facilities, and air strips; 20 (iv) aircraft and motor vehicles owned by a person 21 whose principal business in the state is the exploration for, production 22 of, or pipeline transportation of gas or unrefined oil and whose 23 operation of the aircraft or motor vehicle directly relates to the conduct 24 of that business; 25 (v) maintenance equipment and facilities, and 26 maintenance camps and other related facilities; and 27 (vi) communications facilities owned by a person 28 whose principal business in the state is the exploration for, production 29 of, or pipeline transportation of gas or unrefined oil and whose 30 operation of the communications facilities directly relates to the 31 conduct of that business;
01 (B) does not include 02 (i) permanent residences; 03 (ii) office buildings requiring substantial local 04 government services; 05 (iii) oil and gas pipeline systems owned and operated by 06 a public utility that is certificated under AS 42.05.221 and is regulated 07 by the Regulatory Commission of Alaska; 08 (iv) aircraft and motor vehicles, except aircraft and 09 motor vehicles taxable under (A)(iv) of this paragraph; and 10 (v) communications facilities, except communications 11 facilities taxable under (A)(vi) of this paragraph; 12 * Sec. 5. AS 43.56.210 is amended by adding a new paragraph to read: 13 (7) "North Slope natural gas project" means a project to transport gas 14 produced north of 68 degrees North latitude through a gas treatment plant, a gas 15 pipeline, a liquefaction plant, and a marine terminal; in this paragraph, 16 (A) "gas pipeline" means a pipeline transporting gas beginning 17 at the outlet flange of a gas treatment plant terminating at the inlet flange of a 18 liquefaction plant, including all pipe, compressor stations, station equipment, 19 and all other facilities necessary for an integral line of pipe to effectuate the 20 transportation of gas from point to point, excluding any pipelines downstream 21 of an offtake point between a gas treatment plant and a liquefaction plant; 22 (B) "gas treatment plant" means a facility located north of 68 23 degrees North latitude to treat natural gas to pipeline specifications and deliver 24 treated natural gas to the inlet flange of a gas pipeline, excluding any 25 transmission lines that deliver gas to the inlet flange of the facility; 26 (C) "liquefaction plant" means a facility that receives from the 27 outlet flange of a gas pipeline gas for liquefaction in the facility, including 28 storage and facilities for off-loading liquefied natural gas; 29 (D) "marine terminal" means a terminal and those facilities 30 required to receive liquefied natural gas from the boundary of a liquefaction 31 plant for marine transportation, including storage and facilities for off-loading
01 liquefied natural gas. 02 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 APPLICABILITY. Sections 1 - 5 of this Act apply to tax years beginning after 05 December 31, 2015.