Legislature(2013 - 2014)
2013-03-20 Senate Journal
Full Journal pdf2013-03-20 Senate Journal Page 0711 SB 21 CS FOR SENATE BILL NO. 21(FIN) am was before the Senate in second reading. Senators Gardner, Ellis, French, Wielechowski offered Amendment No. 8 : Page 22, line 7, following "section,": Insert "for oil and gas production commencing after the effective date of this section for the first seven years immediately following the commencement of production subject to tax under AS 43.55.011(e)," Senator Gardner moved for the adoption of Amendment No. 8. Senator Giessel objected. 2013-03-20 Senate Journal Page 0712 The question being: "Shall Amendment No. 8 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 8 YEAS: 4 NAYS: 16 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 8 failed. Senators Gardner, Ellis, French, Wielechowski offered Amendment No. 9 : Page 22, line 7: Delete "of oil or gas meeting" Insert "for that portion of oil or gas that exceeds the estimated production for the applicable field in the crude oil production forecast in the fall 2012 Revenue Sources Book published by the department and that meets" Senator Gardner moved for the adoption of Amendment No. 9. Senator McGuire objected. The question being: "Shall Amendment No. 9 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 9 YEAS: 5 NAYS: 15 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Hoffman, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 9 failed. 2013-03-20 Senate Journal Page 0713 Senators French, Ellis, Gardner, Wielechowski offered Amendment No. 10 : Page 1, line 9, following "explorers;": Insert "relating to the financing of oil processing facilities on the North Slope by the Alaska Industrial Development and Export Authority;" Page 25, following line 28: Insert new bill sections to read: "* Sec. 35. AS 44.88.080 is amended by adding a new paragraph to read: (32) to acquire an interest in a project as necessary or appropriate to provide working or venture capital for an oil or natural gas development project under AS 44.88.800 and 44.88.810, whether by purchase, gift, or lease. * Sec. 36. AS 44.88 is amended by adding new sections to read: Article 9A. Interest in Oil and Gas Resources. Sec. 44.88.800. Acquisition of interest in businesses. (a) The authority may acquire, through purchase or other means, an interest in a lease held by a corporation or other business entity in an oil or natural gas field in the state that has been explored, but only if the authority determines the leaseholder has made reasonable efforts to obtain financing from the private sector to develop the lease and those efforts have, in whole or part, been unsuccessful. The authority shall exercise due diligence in acquiring a leasehold interest under this section. (b) If the authority acquires a leasehold interest under this section, the authority may use the authority's assets, as appropriate, to aid in the development of the oil or natural gas field in which the business entity has a leasehold interest. Sec. 44.88.810. Alaska resource development fund. (a) The Alaska resource development fund is established in the authority for the purpose of developing oil and gas resources, and consists of appropriations to the fund. The authority shall manage the fund and may create separate accounts within it. Income of the fund or of enterprises of the authority shall be separately accounted for and may be appropriated to the fund. (b) The authority may use money from the fund to carry out the purpose of the fund set out in (a) of this section. 2013-03-20 Senate Journal Page 0714 * Sec. 37. AS 44.88.900(10) is amended to read: (10) "project" means (A) a plant or facility used or intended for use in connection with making, processing, preparing, transporting, or producing in any manner, goods, products, or substances of any kind or nature or in connection with developing or utilizing a natural resource, or extracting, smelting, transporting, converting, assembling, or producing in any manner, minerals, raw materials, chemicals, compounds, alloys, fibers, commodities and materials, products, or substances of any kind or nature; (B) a plant or facility used or intended for use in connection with a business enterprise; (C) commercial activity by a business enterprise; (D) a plant or facility demonstrating technological advances of new methods and procedures and prototype commercial applications for the exploration, development, production, transportation, conversion, and use of energy resources; (E) infrastructure for a new tourism destination facility or for the expansion of a tourism destination facility; in this subparagraph, "tourism destination facility" does not include a hotel or other overnight lodging facility; (F) a plant or facility, other than a plant or facility described in (D) of this paragraph, for the generation, transmission, development, transportation, conversion, or use of energy resources; (G) a plant or facility that enhances, provides for, or promotes economic development with respect to transportation, communications, community public purposes, technical innovations, prototype commercial applications of intellectual property, or research; (H) a plant or facility used or intended for use as a federal facility, including a United States military, national guard, or coast guard facility; (I) infrastructure for an area that is designated as a military facility zone under AS 26.30; (J) development of an oil and gas field by providing working or venture capital in exchange for an equity interest;" 2013-03-20 Senate Journal Page 0715 Renumber the following bill sections accordingly. Page 26, line 22: Delete "sec. 34" Insert "sec. 37" Page 26, line 30: Delete "35" Insert "38" Page 27, line 1: Delete "36" Insert "39" Page 27, line 4: Delete "secs. 42 and 43" Insert "secs. 45 and 46" Senator French moved for the adoption of Amendment No. 10. Senator Coghill objected. The question being: "Shall Amendment No. 10 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 10 YEAS: 4 NAYS: 16 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 10 failed. Senators Wielechowski, Ellis, French, Gardner offered Amendment No. 11 : 2013-03-20 Senate Journal Page 0716 Page 1, line 2, following "Revenue;": Insert "relating to oil and gas leasing;" Page 2, following line 16: Insert new bill sections to read: "* Sec. 4. AS 38.05.180(h) is amended to read: (h) The commissioner shall [MAY] include terms in a [ANY] lease that impose [IMPOSING] a minimum work commitment on the lessee to implement the plan of development submitted by the lessee with a bid for an oil and gas or gas only lease. The terms of the minimum work commitment must [. THESE TERMS SHALL BE MADE PUBLIC BEFORE THE SALE, AND MAY] include appropriate penalty provisions to take effect in the event the lessee does not fulfill the minimum work commitment. If it is demonstrated that a lease has been proven unproductive by actions of adjacent lease holders, the commissioner may set aside a work commitment. The commissioner may waive for a period not to exceed one two-year period any term of a minimum work commitment if the commissioner makes a written finding either that conditions preventing drilling or exploration were beyond the lessee's reasonable ability to foresee or control or that the lessee has demonstrated through good faith efforts an intent and ability to drill or develop the lease during the term of the waiver. * Sec. 5. AS 38.05.180(x) is amended to read: (x) A lessee conducting or permitting any exploration for, or development or production of, oil or gas on state land shall provide the commissioner: access to all noninterpretive data obtained from that lease; access to all information necessary to perform an economic analysis of the production capability of each participating area, including capital, operating, production, and development costs and an estimate of total reserves; and [SHALL PROVIDE] copies of the noninterpretive [THAT] data and economic and reserve information, as the commissioner may request. The confidentiality provisions of AS 38.05.035 apply to the information obtained under this subsection. * Sec. 6. AS 38.05.180 is amended by adding new subsections to read: 2013-03-20 Senate Journal Page 0717 (hh) The commissioner shall require each bidder for an oil and gas lease or gas only lease and each lessee applying for an extension or renewal of an oil and gas lease or gas only lease to submit a plan of development for exploring, developing, and producing from the lease within the period of the lease or the extension or renewal of the lease. The commissioner shall review each plan of development and determine whether the proposed plan of development is reasonably expected to develop the lease in the best interest of the state. The plan of development shall be included in a lease along with penalties for failing to comply with the plan of development and other terms of the lease. A bidder may not be a qualified bidder for the purposes of (f)(1) of this section if the commissioner finds that the bidder has not submitted a proposed plan of development that is in the best interest of the state or that the person that submitted the plan of development is not reasonably capable of implementing the plan. (ii) The commissioner shall (1) review each oil and gas lease or gas only lease each year for the purpose of determining whether a lease is being developed in the best interest of the state, whether the lessee is complying with the plan of development applicable to the lease, and whether revision of a plan of development, including the planned rate of development, would provide the maximum benefit to the people of the state; (2) every five years, perform an economic analysis on each participating area and determine whether the participating area is capable of increased production in paying quantities over the current rate of production or plan of development; (3) enforce the terms of each oil and gas lease or gas only lease, including imposing any applicable penalty or other remedy for noncompliance, within a reasonable time after finding that a lessee is out of compliance with the terms of the lease; (4) submit a report to the legislature before the first day of each regular session that lists each oil and gas or gas only lessee that is found to be out of compliance and the action by the commissioner to bring the lessee back into compliance or to terminate the lease. (jj) For the purposes of (hh) and (ii) of this section, a plan of development for a cooperative or unit under (p) of this section is the plan of development for a lease within the cooperative or unit, 2013-03-20 Senate Journal Page 0718 except where a different plan of development is established for a lease within the cooperative or unit. (kk) For purposes of (ii) of this section, (1) "participating area" means that part of an oil and gas lease unit area to which production is allocated in the manner described in a unit agreement; (2) "production in paying quantities" means production in quantities sufficient to yield a return in excess of drilling, development, and operating costs." Renumber the following bill sections accordingly. Page 8, line 21: Delete "sec. 11" Insert "sec. 14" Page 13, line 23: Delete "sec. 16" Insert "sec. 19" Page 14, line 29: Delete "sec. 18" Insert "sec. 21" Page 26, line 4: Delete "Sections 9, 12, 13, and 28 - 30" Insert "Sections 12, 15, 16, and 31 - 33" Page 26, line 6: Delete "Sections 10 and 27" Insert "Sections 13 and 30" Page 26, line 8: Delete "Sections 15 and 18 - 21" Insert "Sections 18 and 21 - 24" Delete "sec. 15" Insert "sec. 18" Page 26, line 10: Delete "Sections 16, 19, and 24" Insert "Sections 19, 22, and 27" 2013-03-20 Senate Journal Page 0719 Page 26, line 12: Delete "Section 17" Insert "Section 20" Page 26, following line 12: Insert a new subsection to read: "(f) Sections 4 and 5 of this Act, and AS 38.05.180(hh) enacted by sec. 6 of this Act, apply to a proposed lease sale and the renewal or extension of a lease on or after the effective date of secs. 4 - 6 of this Act." Page 26, line 22: Delete "sec. 34" Insert "sec. 37" Page 26, line 30: Delete "Sections 10, 18, 20, 21, 24, 27, and 35" Insert "Sections 13, 21, 23, 24, 27, 30, and 38" Page 26, line 31: Delete "sec. 15" Insert "sec. 18" Page 27, line 1: Delete "Sections 1 - 6, 8, 9, 12 - 14, 16, 19, 22, 23, 28 - 33, and 36" Insert "Sections 1 - 3, 7 - 9, 11, 12, 15 - 17, 19, 22, 25, 26, 31 - 36 and 39" Page 27, line 3: Delete "Section 17" Insert "Section 20" Page 27, line 4: Delete "secs. 42 and 43" Insert "secs. 45 and 46" Senator Wielechowski moved for the adoption of Amendment No. 11. Senator Coghill objected. 2013-03-20 Senate Journal Page 0720 The question being: "Shall Amendment No. 11 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 11 YEAS: 4 NAYS: 16 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 11 failed. Senators Wielechowski, Ellis, French, Gardner offered Amendment No. 12 : Page 13, line 10: Delete "January 1, 2014" Insert "the effective date of this paragraph" Page 25, following line 29: Insert a new bill section to read: "* Sec. 36. AS 43.55.011(g) and 43.55.160(c) are repealed." Renumber the following bill sections accordingly. Page 25, line 30: Delete "AS 43.55.011(g), 43.55.023(i), and 43.55.160(c) are" Insert "AS 43.55.023(i) is" Page 26, line 5: Delete "after December 31, 2013" Insert "on and after the effective date of secs. 9, 12, 13, and 28 - 30 of this Act" 2013-03-20 Senate Journal Page 0721 Page 26, lines 10 - 11: Delete "after December 31, 2013" Insert "on and after the effective date of secs. 16, 19, and 24 of this Act" Page 26, line 12: Delete "after December 31, 2016" Insert "on and after the effective date of sec. 17 of this Act" Page 26, following line 31: Insert a new bill section to read: "* Sec. 43. The uncodified law of the State of Alaska is amended by adding a new section to read: CONDITIONAL EFFECT. (a) Sections 9, 12, 13, 16, 22, 23, 28 - 30, and 36 of this Act, and AS 43.55.023(a)(3), added by sec. 15 of this Act, take effect only if the total volume of oil delivered to the Trans Alaska Pipeline System for transport in a calendar year after 2013 exceeds by more than 20 percent the volume of oil delivered to the Trans Alaska Pipeline System for transport during calendar year 2012. (b) Section 17 of this Act takes effect only if sec. 16 of this Act takes effect." Page 27, line 1: Delete "9, 12 - 14, 16, 19, 22, 23, 28 - 33, and 36" Insert "14, 19, 31 - 33, and 37" Page 27, line 3: Delete all material and insert: "* Sec. 45. If secs. 9, 12, 13, 16, 22, 23, 28 - 30, and 36 of this Act, and AS 43.55.023(a)(3), added by sec. 15 of this Act, take effect under sec. 43(a) of this Act, they take effect on January 1 of the calendar year immediately following the calendar year in which the commissioner of natural resources notifies the lieutenant governor and the revisor of statutes that the condition described in sec. 43(a) of this Act has been satisfied. * Sec. 46. If sec. 17 of this Act takes effect under sec. 43(b) of this Act, it takes effect three years after the effective date of sec. 16 of this Act." 2013-03-20 Senate Journal Page 0722 Page 27, line 4: Delete "secs. 42 and 43" Insert "secs. 44 - 46" Senator Wielechowski moved for the adoption of Amendment No. 12. Senator McGuire objected. The question being: "Shall Amendment No. 12 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 12 YEAS: 4 NAYS: 16 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 12 failed. Senators Wielechowski, Ellis, French, Gardner offered Amendment No. 13 : Page 1, line 4: Delete "rate" Insert "rates" Page 2, following line 11: Insert a new bill section to read: "* Sec. 3. AS 29.60.850(b), as amended by sec. 2 of this Act, is amended to read: (b) Each fiscal year, the legislature may appropriate [AN AMOUNT] to the community revenue sharing fund an amount equal to 20 percent of the money received by the state during the previous calendar year under AS 43.55.011(g). The amount may not exceed (1) $60,000,000; or (2) the amount that, when added to the fund balance on June 30 of the previous fiscal year, equals $180,000,000." 2013-03-20 Senate Journal Page 0723 Renumber the following bill sections accordingly. Page 5, following line 12: Insert a new bill section to read: "* Sec. 11. AS 43.55.011(e), as amended by sec. 10 of this Act, is amended to read: (e) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state, less any oil and gas the ownership or right to which is exempt from taxation or constitutes a landowner's royalty interest. Except as otherwise provided under (f), (j), (k), (o), and (p) of this section, the tax is equal to the sum of [THE ANNUAL PRODUCTION TAX VALUE OF THE TAXABLE OIL AND GAS AS CALCULATED UNDER AS 43.55.160(a) PRODUCED DURING A CALENDAR YEAR] (1) the annual production tax value of the taxable oil and gas as calculated under AS 43.55.160(a)(1) [BEFORE JANUARY 1, 2017,] multiplied by 25 [35] percent; and (2) the sum, over all months of the calendar year, of the tax amounts determined under (g) of this section [AFTER DECEMBER 31, 2016, MULTIPLIED BY 33 PERCENT]." Renumber the following bill sections accordingly. Page 5, following line 18: Insert new bill sections to read: "* Sec. 13. AS 43.55.011(o), as amended by sec. 12 of this Act, is amended to read: (o) Notwithstanding other provisions of this section, for a calendar year before 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas produced from a lease or property outside the Cook Inlet sedimentary basin and used in the state [, OTHER THAN GAS SUBJECT TO (p) OF THIS SECTION,] may not exceed the amount of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section. * Sec. 14. AS 43.55.011 is amended by adding a new subsection to read: (q) For each month of the calendar year for which the producer's average monthly production tax value under AS 43.55.160(a)(2) of a BTU equivalent barrel of the taxable oil 2013-03-20 Senate Journal Page 0724 and gas is more than $30, the amount of tax for purposes of (e)(2) of this section is determined by multiplying the monthly production tax value of the taxable oil and gas produced during the month by the tax rate calculated as follows: (1) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number that represents the difference between that average monthly production tax value of a BTU equivalent barrel and $30; or (2) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number that represents the difference between the average monthly production tax value of a BTU equivalent barrel and $92.50, except that the sum determined under this paragraph may not exceed 50 percent." Renumber the following bill sections accordingly. Page 8, line 21: Delete "sec. 11" Insert "sec. 15" Page 11, following line 21: Insert a new bill section to read: "* Sec. 17. AS 43.55.020(a), as amended by secs. 15 and 16 of this Act, is repealed and reenacted to read: (a) For a calendar year, a producer subject to tax under AS 43.55.011(e), (f), (h), (i), (p), or (q) shall pay the tax as follows: (1) an installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month; except as otherwise provided under (2) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment payment may not be less than zero: 2013-03-20 Senate Journal Page 0725 (A) for oil and gas produced from leases or properties in the state outside the Cook Inlet sedimentary basin but not subject to AS 43.55.011(o) or (p), other than leases or properties subject to AS 43.55.011(f), the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(q) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the leases or properties under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; (B) for oil and gas produced from leases or properties subject to AS 43.55.011(f), the greatest of (i) zero; (ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from all leases or properties during the month for which the installment payment is calculated; or (iii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(q) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for those leases or properties under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated; (C) for oil and gas produced from each lease or property subject to AS 43.55.011(j), (k), (o), or (p), the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(q) multiplied by the remainder obtained by subtracting 1/12 2013-03-20 Senate Journal Page 0726 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas, respectively, produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated; (2) an amount calculated under (1)(C) of this subsection for oil or gas produced from a lease or property (A) subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year; (B) subject to AS 43.55.011(p) may not exceed four percent of the gross value at the point of production of the oil or gas; (3) an installment payment of the estimated tax levied by AS 43.55.011(i) for each lease or property is due for each month of the calendar year on the last day of the following month; the amount of the installment payment is the sum of (A) the applicable tax rate for oil provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the oil taxable under AS 43.55.011(i) and produced from the lease or property during the month; and (B) the applicable tax rate for gas provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the gas taxable under AS 43.55.011(i) and produced from the lease or property during the month; 2013-03-20 Senate Journal Page 0727 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any credits applied as allowed by law, that exceeds the total of the amounts due as installment payments of estimated tax is due on March 31 of the year following the calendar year of production." Renumber the following bill sections accordingly. Page 12, following line 8: Insert a new bill section to read: "* Sec. 19. AS 43.55.020(d), as amended by sec. 18 of this Act, is amended to read: (d) In making settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes due to the amount of the tax paid. If the total deductions of installment payments of estimated tax for a calendar year exceed the actual tax for that calendar year, the producer shall, before April 1 of the following year, refund the excess to the royalty owner. Unless otherwise agreed between the producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) - (g) [AS 43.55.011(e)] on taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or right to which constitutes a landowner's royalty interest, is considered to be the gross value at the point of production of the taxable royalty oil and gas produced during the calendar year multiplied by a figure that is a quotient, in which (1) the numerator is the producer's total tax liability under AS 43.55.011(e) - (g) [AS 43.55.011(e)] for the calendar year of production; and (2) the denominator is the total gross value at the point of production of the oil and gas taxable under AS 43.55.011(e) - (g) [AS 43.55.011(e)] produced by the producer from all leases and properties in the state during the calendar year." Renumber the following bill sections accordingly. Page 13, following line 10: Insert a new bill section to read: 2013-03-20 Senate Journal Page 0728 "* Sec. 22. AS 43.55.023(a), as amended by sec. 21 of this Act, is amended to read: (a) A producer or explorer may take a tax credit for a qualified capital expenditure as follows: (1) notwithstanding that a qualified capital expenditure may be a deductible lease expenditure for purposes of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or explorer that incurs a qualified capital expenditure may also elect to apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that expenditure; however, not more than half of the tax credit may be applied for a single calendar year; (2) a producer or explorer may take a credit for a qualified capital expenditure incurred in connection with geological or geophysical exploration or in connection with an exploration well only if the producer or explorer (A) agrees, in writing, to the applicable provisions of AS 43.55.025(f)(2); and (B) submits to the Department of Natural Resources all data that would be required to be submitted under AS 43.55.025(f)(2) [; (3) A CREDIT FOR A QUALIFIED CAPITAL EXPENDITURE INCURRED TO EXPLORE FOR, DEVELOP, OR PRODUCE OIL OR GAS DEPOSITS LOCATED NORTH OF 68 DEGREES NORTH LATITUDE MAY BE TAKEN ONLY IF THE EXPENDITURE IS INCURRED BEFORE JANUARY 1, 2014]." Renumber the following bill sections accordingly. Page 13, line 23: Delete "sec. 16" Insert "sec. 23" Page 14, following line 3: Insert a new bill section to read: "* Sec. 25. AS 43.55.023(b), as amended by secs. 23 and 24 of this Act, is amended to read: 2013-03-20 Senate Journal Page 0729 (b) A producer or explorer may elect to take a tax credit in the amount of 25 percent of a carried-forward annual loss [FOR LEASE EXPENDITURES INCURRED TO EXPLORE FOR, DEVELOP, OR PRODUCE OIL OR GAS DEPOSITS LOCATED SOUTH OF 68 DEGREES NORTH LATITUDE, AND 33 PERCENT OF A CARRIED-FORWARD ANNUAL LOSS BASED ON LEASE EXPENDITURES INCURRED AFTER DECEMBER 31, 2016, TO EXPLORE FOR, DEVELOP, OR PRODUCE OIL OR GAS DEPOSITS LOCATED NORTH OF 68 DEGREES NORTH LATITUDE]. A credit under this subsection may be applied against a tax levied by AS 43.55.011(e). For purposes of this subsection, a carried- forward annual loss is the amount of a producer's or explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous calendar year that was not deductible in calculating production tax values for that calendar year under AS 43.55.160." Renumber the following bill sections accordingly. Page 14, line 29: Delete "sec. 18" Insert "sec. 26" Page 15, following line 15: Insert a new bill section to read: "* Sec. 28. AS 43.55.023(d), as amended by secs. 26 and 27 of this Act, is repealed and reenacted to read: (d) A person that is entitled to take a tax credit under this section that wishes to transfer the unused credit to another person or obtain a cash payment under AS 43.55.028 may apply to the department for transferable tax credit certificates. An application under this subsection must be in a form prescribed by the department and must include supporting information and documentation that the department reasonably requires. The department shall grant or deny an application, or grant an application as to a lesser amount than that claimed and deny it as to the excess, not later than 120 days after the latest of the following: March 31 of the year following the calendar year in which the qualified capital expenditure or carried-forward annual loss for which the credit is claimed was incurred; the date the 2013-03-20 Senate Journal Page 0730 statement required under AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified capital expenditure or carried- forward annual loss for which the credit is claimed was incurred; or the date the application was received by the department. If, based on the information then available to it, the department is reasonably satisfied that the applicant is entitled to a credit, the department shall issue the applicant two transferable tax credit certificates, each for half of the amount of the credit. The credit shown on one of the two certificates is available for immediate use. The credit shown on the second of the two certificates may not be applied against a tax for a calendar year earlier than the calendar year following the calendar year in which the certificate is issued, and the certificate must contain a conspicuous statement to that effect. A certificate issued under this subsection does not expire." Renumber the following bill sections accordingly. Page 15, following line 30: Insert a new bill section to read: "* Sec. 30. AS 43.55.023(g), as amended by sec. 29 of this Act, is amended to read: (g) The issuance of a transferable tax credit certificate under (d) or (p) of this section or former(m) of this section or the purchase of a certificate under AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to which the certificate relates or to adjust the claim if the department determines, as a result of the audit, that the applicant was not entitled to the amount of the credit for which the certificate was issued. The tax liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit that exceeds that to which the applicant was entitled, or the applicant's available valid outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is increased under this subsection, the increase bears interest under AS 43.05.225(1) from the date the transferable tax credit certificate was issued. For purposes of this subsection, an applicant that is an explorer is considered a producer subject to the tax levied by AS 43.55.011(e)." 2013-03-20 Senate Journal Page 0731 Renumber the following bill sections accordingly. Page 16, following line 13: Insert new bill sections to read: "* Sec. 32. AS 43.55.023(n), as amended by sec. 31 of this Act, is amended to read: (n) For the purposes of (l) and (p) of this section, a well lease expenditure incurred in the state south of 68 degrees North latitude is a lease expenditure that is (1) directly related to an exploration well, a stratigraphic test well, a producing well, or an injection well other than a disposal well, located in the state south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure and an intangible drilling and development cost authorized under 26 U.S.C. (Internal Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well includes an expenditure for well sidetracking, well deepening, well completion or recompletion, or well workover, regardless of whether the well is or has been a producing well; or (2) an expense for seismic work conducted within the boundaries of a production or exploration unit. * Sec. 33. AS 43.55.023 is amended by adding a new subsection to read: (p) For a lease expenditure incurred in the state south of 68 degrees North latitude after December 31, 2017, that qualifies for tax credits under (a) and (b) of this section, and for a well lease expenditure incurred in the state south of 68 degrees North latitude that qualifies for a tax credit under (l) of this section, the department shall issue transferable tax credit certificates to the person entitled to the credit for the full amount of the credit. The transferable tax credit certificates do not expire." Renumber the following bill sections accordingly. Page 17, following line 16: Insert a new bill section to read: "* Sec. 37. AS 43.55.028(e), as amended by sec. 36 of this Act, is amended to read: 2013-03-20 Senate Journal Page 0732 (e) The department, on the written application of a person to whom a transferable tax credit certificate has been issued under AS 43.55.023(d) or (p) or former AS 43.55.023(m) or to whom a production tax credit certificate has been issued under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to purchase, in whole or in part, the certificate if the department finds that (1) the calendar year of the purchase is not earlier than the first calendar year for which the credit shown on the certificate would otherwise be allowed to be applied against a tax; (2) the applicant does not have an outstanding liability to the state for unpaid delinquent taxes under this title; (3) the applicant's total tax liability under AS 43.55.011(e), after application of all available tax credits, for the calendar year in which the application is made is zero; (4) the applicant's average daily production of oil and gas taxable under AS 43.55.011(e) during the calendar year preceding the calendar year in which the application is made was not more than 50,000 BTU equivalent barrels; and (5) the purchase is consistent with this section and regulations adopted under this section." Renumber the following bill sections accordingly. Page 17, following line 26: Insert a new bill section to read: "* Sec. 39. AS 43.55.028(g), as amended by sec. 38 of this Act, is amended to read: (g) The department may adopt regulations to carry out the purposes of this section, including standards and procedures to allocate available money among applications for purchases under this chapter and claims for refunds and payments under AS 43.20.046 or 43.20.047 when the total amount of the applications for purchase and claims for refund exceed the amount of available money in the fund. The regulations adopted by the department may not, when allocating available money in the fund under this section, distinguish an application for the purchase of a credit certificate issued under AS 43.55.023(p) or former AS 43.55.023(m), or a claim for a refund or payment under AS 43.20.046 or 43.20.047." 2013-03-20 Senate Journal Page 0733 Renumber the following bill sections accordingly. Page 18, following line 8: Insert a new bill section to read: "* Sec. 41. AS 43.55.030(e), as amended by sec. 40 of this Act, is amended to read: (e) An explorer or producer that incurs a lease expenditure under AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar year but does not produce oil or gas from a lease or property in the state during the calendar year shall file with the department on March 31 of the following year a statement, under oath, in a form prescribed by the department, giving, with other information required, the following: (1) the [EXPLORER'S OR] producer's qualified capital expenditures, as defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other payments or credits under AS 43.55.170; and (2) if the explorer or producer receives a payment or credit under AS 43.55.170, calculations showing whether the explorer or producer is liable for a tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount." Renumber the following bill sections accordingly. Page 21, following line 15: Insert a new bill section to read: "* Sec. 44. AS 43.55.160(a), as amended by secs. 42 and 43 of this Act, is repealed and reenacted to read: (a) Except as provided in (b) of this section, for the purposes of (1) AS 43.55.011(e), the annual production tax value of the taxable oil, gas, or oil and gas subject to this paragraph produced during a calendar year is the gross value at the point of production of the oil, gas, or oil and gas taxable under AS 43.55.011(e), less the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil, gas, or oil and gas, as applicable, produced by the producer from leases or properties, as adjusted under AS 43.55.170; this paragraph applies to 2013-03-20 Senate Journal Page 0734 (A) oil and gas produced from leases or properties in the state that include land north of 68 degrees North latitude, other than gas produced before 2022 and used in the state; (B) oil and gas produced from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude; this subparagraph does not apply to (i) gas produced before 2022 and used in the state; or (ii) oil and gas subject to AS 43.55.011(p); (C) oil produced before 2022 from a lease or property in the Cook Inlet sedimentary basin; (D) gas produced before 2022 from a lease or property in the Cook Inlet sedimentary basin; (E) gas produced before 2022 from a lease or property in the state outside the Cook Inlet sedimentary basin and used in the state; (F) oil and gas subject to AS 43.55.011(p) produced from leases or properties in the state; (G) oil and gas produced from a lease or property no part of which is north of 68 degrees North latitude, other than oil or gas described in (B), (C), (D), (E), or (F) of this paragraph; (2) AS 43.55.011(q), the monthly production tax value of the taxable (A) oil and gas produced during a month from leases or properties in the state that include land north of 68 degrees North latitude is the gross value at the point of production of the oil and gas taxable under AS 43.55.011(e) and produced by the producer from those leases or properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas produced by the producer from those leases or properties, as adjusted under AS 43.55.170; this subparagraph does not apply to gas subject to AS 43.55.011(o); (B) oil and gas produced during a month from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, is the gross value at the point of production of the oil and gas taxable under AS 43.55.011(e) and produced by the producer 2013-03-20 Senate Journal Page 0735 from those leases or properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas produced by the producer from those leases or properties, as adjusted under AS 43.55.170; this subparagraph does not apply to gas subject to AS 43.55.011(o); (C) oil produced during a month from a lease or property in the Cook Inlet sedimentary basin is the gross value at the point of production of the oil taxable under AS 43.55.011(e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil produced by the producer from that lease or property, as adjusted under AS 43.55.170; (D) gas produced during a month from a lease or property in the Cook Inlet sedimentary basin is the gross value at the point of production of the gas taxable under AS 43.55.011(e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the gas produced by the producer from that lease or property, as adjusted under AS 43.55.170; (E) gas produced during a month from a lease or property outside the Cook Inlet sedimentary basin and used in the state is the gross value at the point of production of that gas taxable under AS 43.55.011(e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to that gas produced by the producer from that lease or property, as adjusted under AS 43.55.170." Renumber the following bill sections accordingly. Page 22, following line 4: Insert a new bill section to read: "* Sec. 46. AS 43.55.160(e), as amended by sec. 45 of this Act, is amended to read: (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer in a calendar year but whose deduction would cause an annual 2013-03-20 Senate Journal Page 0736 production tax value calculated under (a)(1) [(a)] of this section of taxable oil or gas produced during the calendar year to be less than zero may be used to establish a carried-forward annual loss under AS 43.55.023(b). However, the department shall provide by regulation a method to ensure that, for a period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer for that period but whose deduction would cause a production tax value calculated under (a)(1)(C), (D), (E), or (F) [(a)(3), (4), (5), OR (6)] of this section to be less than zero are accounted for as though the adjusted lease expenditures had first been used as deductions in calculating the production tax values of oil or gas subject to any of the limitations under AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to reduce the tax liability calculated without regard to the limitation to the maximum amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p). Only the amount of those adjusted lease expenditures remaining after the accounting provided for under this subsection may be used to establish a carried-forward annual loss under AS 43.55.023(b). In this subsection, "producer" includes "explorer."" Renumber the following bill sections accordingly. Page 22, following line 23: Insert a new bill section to read: "* Sec. 48. AS 43.55.160 is amended by adding a new subsection to read: (g) Notwithstanding any contrary provision of AS 43.55.150, for purposes of calculating a monthly production tax value under (a)(2) of this section, the gross value at the point of production of the oil and gas is calculated under regulations adopted by the department that provide for using an appropriate monthly share of the producer's costs of transportation for the calendar year." Renumber the following bill sections accordingly. 2013-03-20 Senate Journal Page 0737 Page 25, following line 30: Insert a new bill section to read: "* Sec. 55. AS 43.55.024(i), 43.55.030(g), and 43.55.160(f) are repealed January 1, 2018." Renumber the following bill sections accordingly. Page 26, line 4: Delete "Sections 9, 12, 13, and 28 - 30" Insert "Sections 10, 16, 18, 43, 45, and 47" Page 26, line 6: Delete "Sections 10 and 27" Insert "Sections 12 and 42" Page 26, line 8: Delete "Sections 15 and 18 - 21" Insert "Sections 21 and 26, 27, 29, and 31" Delete "sec. 15" Insert "sec. 21" Page 26, line 10: Delete "Sections 16, 19, and 24" Insert "Sections 23, 27, and 36" Page 26, line 12: Delete "Section 17" Insert "Section 24" Page 26, following line 12: Insert new subsections to read: "(f) Sections 11, 17, 19, 44, 46, and 48 of this Act apply to oil and gas produced after December 31, 2017. (g) Sections 25, 28, and 37 of this Act apply to expenditures incurred after December 31, 2017." Page 26, line 22: Delete "sec. 34" Insert "sec. 52" 2013-03-20 Senate Journal Page 0738 Page 26, line 30: Delete "Sections 10, 18, 20, 21, 24, 27, and 35" Insert "Sections 12, 26, 29, 31, 36, 42, and 53" Page 26, line 31: Delete "sec. 15" Insert "sec. 21" Page 26, following line 31: Insert a new bill section to read: "* Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section to read: CONDITIONAL EFFECT. Sections 3, 11, 13, 14, 17, 19, 22, 25, 30, 32, 33, 37, 39, 41, 44, 46, 48, 57(f), and 57(g) of this Act take effect only if the three-year average volume of oil production for calendar years 2014, 2015, and 2016 does not exceed by more than 10 percent the volume of oil produced for calendar year 2012. The commissioner of natural resources shall notify the lieutenant governor and the revisor of statutes before July 1, 2017, if the three-year average volume of oil production for calendar years 2014, 2015, and 2016 is more than 10 percent greater than the volume of oil produced during calendar year 2012." Renumber the following bill sections accordingly. Page 27, line 1: Delete "12 - 14, 16, 19, 22, 23, 28 - 33, and 36" Insert "16, 18, 20, 23, 26, 34, 35, 43, 45, 47, 49 - 51, and 54" Page 27, line 3: Delete "Section 17" Insert "Section 24" Page 27, following line 3: Insert a new bill section to read: "* Sec. 64. If secs. 3, 11, 13, 14, 17, 19, 22, 25, 30, 32, 33, 37, 39, 41, 44, 46, 48, 57(f), and 57(g) of this Act take effect under sec. 61 of this Act, secs. 3, 11, 13, 14, 17, 19, 22, 25, 30, 32, 33, 37, 39, 41, 44, 46, 48, 57(f), and 57(g) of this Act take effect January 1, 2018." 2013-03-20 Senate Journal Page 0739 Renumber the following bill section accordingly. Page 27, line 4: Delete "secs. 42 and 43" Insert "secs. 62 - 64" Senator Wielechowski moved for the adoption of Amendment No. 13. Senator Coghill objected. The question being: "Shall Amendment No. 13 be adopted?" The roll was taken with the following result: CSSB 21(FIN) am Second Reading Amendment No. 13 YEAS: 4 NAYS: 16 EXCUSED: 0 ABSENT: 0 Yeas: Ellis, French, Gardner, Wielechowski Nays: Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel, Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens and so, Amendment No. 13 failed. CS FOR SENATE BILL NO. 21(FIN) am was automatically in third reading.