SB 114: "An Act relating to high cost marginal oil wells."

00SENATE BILL NO. 114 01 "An Act relating to high cost marginal oil wells." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 31.05 is amended by adding new sections to read: 04 ARTICLE 4. HIGH COST MARGINAL OIL WELLS. 05  Sec. 31.05.200. CERTIFICATION OF HIGH COST MARGINAL OIL 06 WELLS. (a) The commission shall, by regulation, establish procedures under which 07 a producer of oil may apply to the commission and obtain from the commission a 08 certificate that a producing oil well is a high cost marginal oil well. Before issuing 09 a certificate under this subsection, the commission shall determine that an oil well for 10 which certification as a high cost marginal oil well is sought meets all of the following 11 criteria: 12  (1) the well produces at a maximum average production of not more 13 than 100 barrels of oil per day; 14  (2) the percentage of water produced from the well is not less than 70

01 percent; and 02  (3) during the six-month period for which the certificate is sought, the 03 well is in production for at least 120 days. 04  (b) To obtain the certificate authorized by (a) of this section, a producer shall 05  (1) make application to the commission on a form provided by the 06 commission; and 07  (2) provide to the commission the production data that the commission 08 may require to determine whether the well qualifies for certification as a high cost 09 marginal well. 10  (c) Unless earlier revoked under this subsection, a certificate issued by the 11 commission is valid for six months. After notice to a producer holding a certificate 12 and opportunity for hearing, the commission shall revoke a certificate if the 13 commission determines that the oil well fails to meet the criteria established for 14 certification in (a) of this section. 15  Sec. 31.05.210. HIGH COST MARGINAL OIL WELL CREDIT. (a) The 16 producer of oil from an oil well for which a valid certificate as a high cost marginal 17 oil well has been issued may apply to the commissioner of revenue for a high cost 18 marginal oil well credit. 19  (b) The amount of a credit extended under (a) of this section 20  (1) is equal to $2 per barrel of production from a well for which the 21 credit is given; and 22  (2) may not exceed the lowest of the following: 23  (A) 50 percent of the taxes payable under AS 43.55 on 24 production from the well, as determined by the commissioner of revenue; 25  (B) $1,000,000 per well; or 26  (C) $5,000,000 per producer. 27  (c) A credit extended under (a) of this section may be applied against 28  (1) an oil or gas rental or royalty payment payable to the sate; 29  (2) taxes payable under AS 43.20 or AS 43.55; and 30  (3) oil and gas bonus payments due the state under AS 38.05.180(f). 31  (d) A credit approved by the commissioner of revenue

01  (1) must be used within five years after it is extended under (a) of this 02 section; and 03  (2) may be assigned by the producer to another person. 04  Sec. 31.05.290. DEFINITIONS. In AS 31.05.200 - 31.05.290, 05  (1) "barrel" has the meaning given in AS 46.04.900; 06  (2) "certificate" means the certificate of a producing well as a high cost 07 marginal oil well; 08  (3) "credit" means the high cost marginal oil well credit authorized by 09 AS 31.05.210.