HB 71: "An Act relating to a credit for certain exploration expenses against oil and gas properties production taxes on oil and gas produced from a lease or property in the state; relating to the deadline for certain exploration expenditures used as credits against production tax on oil and gas produced from a lease or property in the Alaska Peninsula competitive oil and gas areawide lease sale area after July 1, 2004; and providing for an effective date."
00 HOUSE BILL NO. 71 01 "An Act relating to a credit for certain exploration expenses against oil and gas 02 properties production taxes on oil and gas produced from a lease or property in the 03 state; relating to the deadline for certain exploration expenditures used as credits 04 against production tax on oil and gas produced from a lease or property in the Alaska 05 Peninsula competitive oil and gas areawide lease sale area after July 1, 2004; and 06 providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 43.55.025(a) is amended to read: 09 (a) Subject to the terms and conditions of this section, on oil and gas produced 10 from an oil and gas lease, or on gas produced from a gas only lease, on or after July 1, 11 2004, a credit against the production tax due under this chapter is allowed for 12 exploration expenditures that qualify under (b) of this section in an amount equal 13 to
01 (1) 20 percent of the total exploration expenditures that qualify under 02 [(b) AND] (c) of this section or [,] 20 percent of the total exploration expenditures that 03 qualify under [(b) AND] (d) of this section, or both, for a total production tax credit 04 that does not exceed 40 percent of the total exploration expenditures that qualify 05 under this paragraph; and [; OR] 06 (2) 40 percent of the total exploration expenditures that qualify under 07 [(b) AND] (e) of this section [, FOR A TOTAL PRODUCTION TAX CREDIT THAT 08 DOES NOT EXCEED 40 PERCENT OF THE TOTAL QUALIFIED 09 EXPLORATION EXPENDITURES]. 10 * Sec. 2. AS 43.55.025(b) is amended to read: 11 (b) To qualify for the production tax credit under (a) of this section, an 12 exploration expenditure must be incurred for work performed on or after July 1, 2003, 13 and before July 1, 2007, or on or after July 1, 2003 and before July 1, 2010 for 14 exploration expenditures incurred in the Alaska Peninsula competitive oil and 15 gas areawide lease sale area described in sec. 5 of this Act, and 16 (1) may be for seismic or geophysical exploration costs not connected 17 with a specific well; 18 (2) if for an exploration well, 19 (A) must be incurred by an explorer that holds an interest in the 20 exploration well for which the production tax credit is claimed; 21 (B) may be for either an oil or gas discovery well or a dry hole; 22 and 23 (C) must be for goods, services, or rentals of personal property 24 reasonably required for the surface preparation, drilling, casing, cementing, 25 and logging of an exploration well, and, in the case of a dry hole, for the 26 expenses required for abandonment if the well is abandoned within 18 months 27 after the date the well was spudded; 28 (3) may not be for testing, stimulation, or completion costs; 29 administration, supervision, engineering, or lease operating costs; geological or 30 management costs; community relations or environmental costs; bonuses, taxes, or 31 other payments to governments related to the well; or other costs that are generally
01 recognized as indirect costs or financing costs; and 02 (4) may not be incurred for an exploration well or seismic exploration 03 that is included in a plan of exploration or a plan of development for any unit on May 04 13, 2003. 05 * Sec. 3. AS 43.55.025(d) is amended to read: 06 (d) To be eligible for a [AN ADDITIONAL] 20 percent production tax credit, 07 an exploration expenditure must 08 (1) qualify under (b) of this section; and 09 (2) be for an exploration well that is located not less than 25 miles 10 outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under a 11 plan of development. 12 * Sec. 4. AS 43.55.025(e) is amended to read: 13 (e) To be eligible for the 40 percent production tax credit in (a)(2) [(a)] of this 14 section, the exploration expenditure must 15 (1) qualify under (b) of this section; 16 (2) be for seismic exploration; and 17 (3) have been conducted outside the boundaries of a production unit or 18 an exploration unit; however, the amount of the expenditure that is otherwise eligible 19 under this subsection is reduced proportionately by the portion of the seismic 20 exploration activity that crossed into a production unit or an exploration unit. 21 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 LEGAL DESCRIPTION OF ALASKA PENINSULA COMPETITIVE OIL AND 24 GAS AREAWIDE LEASE SALE AREA. For purposes of AS 43.55.025(b), as amended by 25 sec. 2 of this Act, the following comprises the area of the Alaska Peninsula competitive oil 26 and gas areawide lease sale: 27 (1) Township 17 South, Ranges 44 West - 58 West, Seward Meridian; 28 (2) Township 18 South, Ranges 44 West - 58 West, Seward Meridian; 29 (3) Township 19 South, Ranges 44 West - 58 West, Seward Meridian; 30 (4) Township 20 South, Ranges 45 West - 61 West, Seward Meridian; 31 (5) Township 21 South, Ranges 46 West - 54 West, Seward Meridian;
01 (6) Township 21 South, Ranges 57 West - 61 West, Seward Meridian; 02 (7) Township 22 South, Ranges 47 West - 53 West, Seward Meridian; 03 (8) Township 22 South, Ranges 58 West - 61 West, Seward Meridian; 04 (9) Township 23 South, Ranges 47 West - 52 West, Seward Meridian; 05 (10) Township 24 South, Ranges 47 West - 52 West, Seward Meridian; 06 (11) Township 25 South, Ranges 47 West - 52 West, Seward Meridian; 07 (12) Township 26 South, Ranges 47 West - 53 West, Seward Meridian; 08 (13) Township 27 South, Ranges 47 West - 53 West, Seward Meridian; 09 (14) Township 28 South, Ranges 48 West - 53 West, Seward Meridian; 10 (15) Township 29 South, Ranges 48 West - 54 West, Seward Meridian; 11 (16) Township 30 South, Ranges 48 West - 55 West, Seward Meridian; 12 (17) Township 31 South, Ranges 49 West - 56 West, Seward Meridian; 13 (18) Township 32 South, Ranges 51 West - 57 West, Seward Meridian; 14 (19) Township 33 South, Ranges 52 West - 58 West, Seward Meridian; 15 (20) Township 34 South, Ranges 53 West - 59 West, Seward Meridian; 16 (21) Township 35 South, Ranges 51 West - 59 West, Seward Meridian; 17 (22) Township 36 South, Ranges 51 West - 52 West, Seward Meridian; 18 (23) Township 36 South, Ranges 55 West - 60 West, Seward Meridian; 19 (24) Township 37 South, Ranges 57 West - 62 West, Seward Meridian; 20 (25) Township 38 South, Ranges 58 West - 63 West, Seward Meridian; 21 (26) Township 39 South, Ranges 59 West - 64 West, Seward Meridian; 22 (27) Township 40 South, Ranges 59 West - 65 West, Seward Meridian; 23 (28) Township 41 South, Ranges 63 West - 68 West, Seward Meridian; 24 (29) Township 42 South, Ranges 63 West - 69 West, Seward Meridian; 25 (30) Township 43 South, Ranges 65 West - 70 West, Seward Meridian; 26 (31) Township 44 South, Ranges 65 West - 71 West, Seward Meridian; 27 (32) Township 45 South, Ranges 67 West - 72 West, Seward Meridian; 28 (33) Township 46 South, Ranges 68 West - 73 West, Seward Meridian; 29 (34) Township 47 South, Ranges 69 West - 78 West, Seward Meridian; 30 (35) Township 48 South, Ranges 70 West - 81 West, Seward Meridian; 31 (36) Township 49 South, Ranges 70 West - 83 West, Seward Meridian;
01 (37) Township 50 South, Ranges 71 West - 84 West, Seward Meridian; 02 (38) Township 51 South, Ranges 71 West - 85 West, Seward Meridian; 03 (39) Township 52 South, Ranges 74 West - 75 West, Seward Meridian; 04 (40) Township 52 South, Ranges 79 West - 86 West, Seward Meridian; 05 (41) Township 53 South, Ranges 85 West - 87 West, Seward Meridian; 06 (42) Township 54 South, Ranges 85 West - 87 West, Seward Meridian; 07 (43) any adjustment to (1) - (42) of this section as described in the Department 08 of Natural Resources' final written finding of best interest made under AS 38.05.035. 09 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 CONTINGENT EFFECT OF SECTIONS. Sections 2 and 5 of this Act take effect 12 only if the commissioner of natural resources finds that the requirements of AS 38.05.035(e) 13 and (g) are met and the Alaska Peninsula competitive oil and gas areawide lease sale occurs. 14 * Sec. 7. If secs. 2 and 5 of this Act take effect under sec. 6 of this Act, they take effect the 15 day the commissioner of natural resources notifies the revisor of statutes that the lease sale 16 described in sec. 6 of this Act has occurred. 17 * Sec. 8. Except as provided in sec. 7 of this Act, this Act takes effect immediately under 18 AS 01.10.070(c).