SCS CSHB 276(FIN): "An Act relating to the oil and gas production tax; providing for a reduction in the production tax value in the amount of 30 percent of the gross value at the point of production for oil and gas produced from certain leases or properties north of 68 degrees North latitude that were not, as of January 1, 2008, in commercial production or within a unit; providing for a credit against the oil and gas production tax for costs incurred for conducting seismic exploration and drilling certain oil or natural gas exploration wells in certain basins; relating to the determination of the production tax value of oil and gas production; providing that the tax rate for new oil or gas production south of 68 degrees North latitude and outside of the Cook Inlet sedimentary basin may not exceed four percent of the gross value at the point of production; and providing for an effective date."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 276(FIN) 01 "An Act relating to the oil and gas production tax; providing for a reduction in the 02 production tax value in the amount of 30 percent of the gross value at the point of 03 production for oil and gas produced from certain leases or properties north of 68 04 degrees North latitude that were not, as of January 1, 2008, in commercial production or 05 within a unit; providing for a credit against the oil and gas production tax for costs 06 incurred for conducting seismic exploration and drilling certain oil or natural gas 07 exploration wells in certain basins; relating to the determination of the production tax 08 value of oil and gas production; providing that the tax rate for new oil or gas production 09 south of 68 degrees North latitude and outside of the Cook Inlet sedimentary basin may 10 not exceed four percent of the gross value at the point of production; and providing for 11 an effective date." 12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
01 * Section 1. AS 43.55.011(e) is amended to read: 02 (e) There is levied on the producer of oil or gas a tax for all oil and gas 03 produced each calendar year from each lease or property in the state, less any oil and 04 gas the ownership or right to which is exempt from taxation or constitutes a 05 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), [AND] 06 (o), and (p) of this section, the tax is equal to the sum of 07 (1) the annual production tax value of the taxable oil and gas as 08 calculated under AS 43.55.160(a)(1), as adjusted by AS 43.55.162, multiplied by 25 09 percent; and 10 (2) the sum, over all months of the calendar year, of the tax amounts 11 determined under (g) of this section. 12 * Sec. 2. AS 43.55.011(g) is amended to read: 13 (g) For each month of the calendar year for which the producer's average 14 monthly production tax value under AS 43.55.160(a)(2) of a [PER] BTU equivalent 15 barrel of the taxable oil and gas is more than $30, the amount of tax for purposes of 16 (e)(2) of this section is determined by multiplying the monthly production tax value of 17 the taxable oil and gas produced during the month, as adjusted by AS 43.55.162, by 18 the tax rate calculated as follows: 19 (1) if the producer's average monthly production tax value of a [PER] 20 BTU equivalent barrel of the taxable oil and gas for the month is not more than 21 $92.50, the tax rate is 0.4 percent multiplied by the number that represents the 22 difference between that average monthly production tax value of a [PER] BTU 23 equivalent barrel and $30; or 24 (2) if the producer's average monthly production tax value of a [PER] 25 BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50, 26 the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the 27 number that represents the difference between the average monthly production tax 28 value of a [PER] BTU equivalent barrel and $92.50, except that the sum determined 29 under this paragraph may not exceed 50 percent. 30 * Sec. 3. AS 43.55.011 is amended by adding a new subsection to read: 31 (p) For the seven years immediately following the commencement of
01 commercial production of oil or gas produced from leases or properties in the state 02 that are outside the Cook Inlet sedimentary basin and that do not include land located 03 north of 68 degrees North latitude, where that commercial production began after 04 December 31, 2012, and before January 1, 2022, the levy of tax under (e) of this 05 section for oil and gas may not exceed four percent of the gross value at the point of 06 production. 07 * Sec. 4. AS 43.55.020(a) is amended to read: 08 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 09 or (p) shall pay the tax as follows: 10 (1) an installment payment of the estimated tax levied by 11 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 12 month of the calendar year on the last day of the following month; except as otherwise 13 provided under (2) of this subsection, the amount of the installment payment is the 14 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 15 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 16 of the installment payment may not be less than zero: 17 (A) for oil and gas produced from leases or properties in the 18 state outside the Cook Inlet sedimentary basin but not subject to 19 AS 43.55.011(o) or (p), other than leases or properties subject to 20 AS 43.55.011(f), the greater of 21 (i) zero; or 22 (ii) the sum of 25 percent and the tax rate calculated for 23 the month under AS 43.55.011(g) multiplied by the remainder obtained 24 by subtracting 1/12 of the producer's adjusted lease expenditures for the 25 calendar year of production under AS 43.55.165 and 43.55.170 that are 26 deductible for the leases or properties under AS 43.55.160 and 1/12 of 27 the adjustment to production tax value for the calendar year under 28 AS 43.55.162 from the gross value at the point of production of the oil 29 and gas produced from the leases or properties during the month for 30 which the installment payment is calculated; 31 (B) for oil and gas produced from leases or properties subject
01 to AS 43.55.011(f), the greatest of 02 (i) zero; 03 (ii) zero percent, one percent, two percent, three 04 percent, or four percent, as applicable, of the gross value at the point of 05 production of the oil and gas produced from all leases or properties 06 during the month for which the installment payment is calculated; or 07 (iii) the sum of 25 percent and the tax rate calculated for 08 the month under AS 43.55.011(g) multiplied by the remainder obtained 09 by 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 for those leases or properties under AS 43.55.160 and 1/12 12 of the adjustment to production tax value for the calendar year 13 under AS 43.55.162 from the gross value at the point of production of 14 the oil and gas produced from those leases or properties during the 15 month for which the installment payment is calculated; 16 (C) for oil and gas produced from each lease or property 17 subject to AS 43.55.011(j), (k), [OR] (o), or (p), the greater of 18 (i) zero; or 19 (ii) the sum of 25 percent and the tax rate calculated for 20 the month under AS 43.55.011(g) multiplied by the remainder obtained 21 by subtracting 1/12 of the producer's adjusted lease expenditures for the 22 calendar year of production under AS 43.55.165 and 43.55.170 that are 23 deductible under AS 43.55.160 and 1/12 of the adjustment to 24 production tax value for the calendar year under AS 43.55.162 for 25 oil or gas, as applicable [RESPECTIVELY], produced from the lease 26 or property from the gross value at the point of production of the oil or 27 gas, as applicable [RESPECTIVELY], produced from the lease or 28 property during the month for which the installment payment is 29 calculated; 30 (2) an amount calculated under (1)(C) of this subsection for oil or gas 31 produced from a lease or property
01 (A) subject to AS 43.55.011(j), (k), or (o) may not exceed the 02 product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) 03 or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) 04 or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) 05 or 43.55.011(o), as applicable, the amount of taxable gas produced during the 06 month for the amount of taxable gas produced during the calendar year and 07 substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of 08 taxable oil produced during the month for the amount of taxable oil produced 09 during the calendar year; 10 (B) subject to AS 43.55.011(p) may not exceed four percent 11 of the gross value at the point of production of the oil or gas; 12 (3) an installment payment of the estimated tax levied by 13 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 14 on the last day of the following month; the amount of the installment payment is the 15 sum of 16 (A) the applicable tax rate for oil provided under 17 AS 43.55.011(i), multiplied by the gross value at the point of production of the 18 oil taxable under AS 43.55.011(i) and produced from the lease or property 19 during the month; and 20 (B) the applicable tax rate for gas provided under 21 AS 43.55.011(i), multiplied by the gross value at the point of production of the 22 gas taxable under AS 43.55.011(i) and produced from the lease or property 23 during the month; 24 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 25 credits applied as allowed by law, that exceeds the total of the amounts due as 26 installment payments of estimated tax is due on March 31 of the year following the 27 calendar year of production. 28 * Sec. 5. AS 43.55.025(a) is amended to read: 29 (a) Subject to the terms and conditions of this section, a credit against the 30 production tax levied by AS 43.55.011(e) is allowed for exploration expenditures that 31 qualify under (b) of this section in an amount equal to one of the following:
01 (1) 30 percent of the total exploration expenditures that qualify only 02 under (b) and (c) of this section; 03 (2) 30 percent of the total exploration expenditures that qualify only 04 under (b) and (d) of this section; 05 (3) 40 percent of the total exploration expenditures that qualify under 06 (b), (c), and (d) of this section; 07 (4) 40 percent of the total exploration expenditures that qualify only 08 under (b) and (e) of this section; [OR] 09 (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this 10 section, of the total exploration expenditures described in (b)(1) and (2) of this section 11 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this 12 section; 13 (6) the lesser of $25,000,000 or 80 percent of the total exploration 14 drilling expenditures described in (n) of this section and that qualify under (b) 15 and (c) of this section; or 16 (7) the lesser of $7,500,000 or 75 percent of the total seismic 17 exploration expenditures described in (o) of this section and that qualify under 18 (b) of this section. 19 * Sec. 6. AS 43.55.025(c) is amended to read: 20 (c) To be eligible for a [THE 30 PERCENT] production tax credit authorized 21 by (a)(1), (3), or (6) of this section [OR THE 40 PERCENT PRODUCTION TAX 22 CREDIT AUTHORIZED BY (a)(3) OF THIS SECTION], exploration expenditures 23 must 24 (1) qualify under (b) of this section; and 25 (2) be for an exploration well, subject to the following: 26 (A) before the well is spudded, 27 (i) the explorer shall submit to the commissioner of 28 natural resources the information necessary to determine whether the 29 geological objective of the well is a potential oil or gas trap that is 30 distinctly separate from any trap that has been tested by a preexisting 31 well;
01 (ii) at the time of the submittal of information under (i) 02 of this subparagraph, the commissioner of natural resources may 03 request from the explorer that specific data sets, ancillary data, and 04 reports including all results, and copies of well data collected and data 05 analyses for the well be provided to the Department of Natural 06 Resources upon completion of the drilling; in this sub-subparagraph, 07 well data include all analyses conducted on physical material, and well 08 logs collected from the well and sample analyses; testing geophysical 09 and velocity data including vertical seismic profiles and check shot 10 surveys; testing data and analyses; age data; geochemical analyses; and 11 access to tangible material; and 12 (iii) the commissioner of natural resources must make 13 an affirmative determination as to whether the geological objective of 14 the well is a potential oil or gas trap that is distinctly separate from any 15 trap that has been tested by a preexisting well and what information 16 under (ii) of this subparagraph must be submitted by the explorer after 17 completion, abandonment, or suspension under AS 31.05.030; the 18 commissioner of natural resources shall make that determination within 19 60 days after receiving all the necessary information from the explorer 20 based on the information received and on other information the 21 commissioner of natural resources considers relevant; 22 (B) for an exploration well other than a well to explore a Cook 23 Inlet prospect, the well must be located and drilled in such a manner that the 24 bottom hole is located not less than three miles away from the bottom hole of a 25 preexisting well drilled for oil or gas, irrespective of whether the preexisting 26 well has been completed, suspended, or abandoned; 27 (C) after completion, suspension, or abandonment under 28 AS 31.05.030 of the exploration well, the commissioner of natural resources 29 must determine that the well was consistent with achieving the explorer's 30 stated geological objective. 31 * Sec. 7. AS 43.55.025 is amended by adding new subsections to read:
01 (n) The persons that drill the first four exploration wells in the state and within 02 the areas described in (p) of this section on state lands, private lands, or federal 03 onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a 04 prospect in a basin described in (p) of this section are eligible for a credit under (a)(6) 05 of this section. A credit under this subsection may not be taken for more than two 06 exploration wells in a single area described in (p)(1) - (6) of this section. Exploration 07 expenditures eligible for the credit in this subsection must be incurred for work 08 performed after June 1, 2012, and before July 1, 2016. A person planning to drill an 09 exploration well on private land and to apply for a credit under this subsection shall 10 obtain written consent from the owner of the oil and gas interest for the full public 11 release of all well data after the expiration of the confidentiality period applicable to 12 information collected under (f) of this section. The written consent of the owner of the 13 oil and gas interest must be submitted to the commissioner of natural resources before 14 approval of the proposed exploration well. In addition to the requirements in (c) of this 15 section and submission of the written consent of the owner of the oil and gas interest, a 16 person planning to drill an exploration well shall obtain approval from the 17 commissioner of natural resources before the well is spudded. The commissioner of 18 natural resources shall make a written determination approving or rejecting an 19 exploration well within 60 days after receiving the request for approval or as soon as is 20 practicable thereafter. Before approving the exploration well, the commissioner of 21 natural resources shall consider the following: the location of the well; the proximity 22 to a community in need of a local energy source; the proximity of existing 23 infrastructure; the experience and safety record of the explorer in conducting 24 operations in remote or roadless areas; the projected cost schedule; whether seismic 25 mapping and seismic data sufficiently identify a particular trap for exploration; 26 whether the targeted and planned depth and range are designed to penetrate and fully 27 evaluate the hydrocarbon potential of the proposed prospect and reach the level below 28 which economic hydrocarbon reservoirs are likely to be found, or reach 12,000 feet or 29 more true vertical depth; and whether the exploration plan provides for a full 30 evaluation of the wellbore below surface casing to the depth of the well. Whether the 31 exploration well for which a credit is requested under this subsection is located within
01 an area and a basin described under (p) of this section shall be determined by the 02 commissioner of natural resources and reported to the commissioner. A taxpayer that 03 obtains a credit under this subsection may not claim a tax credit under AS 43.55.023 04 or another provision in this section for the same exploration expenditure. 05 (o) The persons that conduct the first four seismic exploration projects in the 06 state and within the areas described in (p) of this section for the purpose of discovering 07 oil or gas in a basin are eligible for the credit under (a)(7) of this section. A credit 08 under this subsection may not be taken for more than one seismic exploration project 09 in a single area described in (p)(1) - (6) of this section. Exploration expenditures 10 eligible for the credit in this subsection must be incurred for work performed after 11 June 1, 2012, and before July 1, 2016. A person planning to conduct a seismic 12 exploration project on private land and to apply for a credit under this subsection shall 13 obtain written consent from the owner of the oil and gas interest for the full public 14 release of all geophysical data and compliance with the data submission requirements 15 in (f)(2) of this section. Notwithstanding (f)(2)(C)(ii) of this section, to qualify for a 16 credit under this subsection, a person shall submit the written consent of the owner of 17 the oil and gas interest for the release of data if applicable, and all data required under 18 (f)(2) of this section to the Department of Natural Resources and shall agree in writing 19 that all seismic data requirements submitted under the requirements of (f)(2) of this 20 section may be made public two years after receiving a credit under this subsection. A 21 person intending to qualify for the tax credit under this subsection shall obtain 22 approval from the commissioner of natural resources before the commencement of the 23 seismic exploration activities. The commissioner of natural resources shall make a 24 written determination approving or rejecting a seismic project within 60 days after 25 receiving the request for approval or as soon as is practicable thereafter. Before 26 approving a seismic exploration project, the commissioner shall consider the 27 following: the location of the project; the projected cost schedule; the data acquisition 28 and data processing plan; the reasons for choosing the particular area for seismic 29 exploration; and the experience and safety record of the person in conducting seismic 30 exploration operations in remote or roadless areas. Whether the seismic exploration 31 project for which a credit is requested under this subsection is located in a basin
01 described in (p) of this section shall be determined by the commissioner of natural 02 resources and reported to the commissioner. A taxpayer that obtains a credit under this 03 subsection may not claim a tax credit under AS 43.55.023 or another provision in this 04 section for the same exploration expenditure. 05 (p) The activity that is the basis for a credit claimed under (a)(6) and (n) of 06 this section or (a)(7) and (o) of this section must be for the exploration of a basin and 07 within the following areas whose central points are determined using the World 08 Geographic System of 1984 datum, 09 (1) 100 miles from 66.896128 degrees North, -162.598187 degrees 10 West; 11 (2) 150 miles from 64.839474 degrees North, -147.72094 degrees 12 West; 13 (3) 50 miles from 62.776428 degrees North, -164.495201 degrees 14 West; 15 (4) 50 miles from 62.110357 degrees North, -145.530551 degrees 16 West; 17 (5) 100 miles from 58.189868 degrees North, -157.371104 degrees 18 West; 19 (6) 100 miles from 56.005988 degrees North, -160.56083 degrees 20 West. 21 * Sec. 8. AS 43.55.160(a) is amended to read: 22 (a) Except as provided in (b) of this section, and subject to adjustment 23 under AS 43.55.162, for the purposes of 24 (1) AS 43.55.011(e), the annual production tax value of the taxable oil, 25 gas, or [(A)] oil and gas subject to this paragraph produced during a calendar year 26 [FROM LEASES OR PROPERTIES IN THE STATE THAT INCLUDE LAND 27 NORTH OF 68 DEGREES NORTH LATITUDE] is the gross value at the point of 28 production of the oil, gas, or oil and gas taxable under AS 43.55.011(e) [AND 29 PRODUCED BY THE PRODUCER FROM THOSE LEASES OR PROPERTIES], 30 less the producer's lease expenditures under AS 43.55.165 for the calendar year 31 applicable to the oil, gas, or oil and gas, as applicable, produced by the producer from
01 [THOSE] leases or properties, as adjusted under AS 43.55.170; this paragraph 02 applies to 03 (A) oil and gas produced from leases or properties in the 04 state that include land north of 68 degrees North latitude, other than gas 05 produced before 2022 and used in the state; [THIS SUBPARAGRAPH 06 DOES NOT APPLY TO GAS SUBJECT TO AS 43.55.011(o);] 07 (B) oil and gas produced [DURING A CALENDAR YEAR] 08 from leases or properties in the state outside the Cook Inlet sedimentary basin, 09 no part of which is north of 68 degrees North latitude [, IS THE GROSS 10 VALUE AT THE POINT OF PRODUCTION OF THE OIL AND GAS 11 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 12 PRODUCER FROM THOSE LEASES OR PROPERTIES, LESS THE 13 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 14 CALENDAR YEAR APPLICABLE TO THE OIL AND GAS PRODUCED 15 BY THE PRODUCER FROM THOSE LEASES OR PROPERTIES, AS 16 ADJUSTED UNDER AS 43.55.170]; this subparagraph does not apply to gas 17 (i) produced before 2022 and used in the state; or 18 (ii) oil and gas subject to AS 43.55.011(p) [SUBJECT 19 TO AS 43.55.011(o)]; 20 (C) oil produced before 2022 [DURING A CALENDAR 21 YEAR] from a lease or property in the Cook Inlet sedimentary basin [IS THE 22 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 23 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 24 PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE 25 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 26 CALENDAR YEAR APPLICABLE TO THE OIL PRODUCED BY THE 27 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 28 UNDER AS 43.55.170]; 29 (D) gas produced before 2022 [DURING A CALENDAR 30 YEAR] from a lease or property in the Cook Inlet sedimentary basin [IS THE 31 GROSS VALUE AT THE POINT OF PRODUCTION OF THE GAS
01 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 02 PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE 03 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 04 CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE 05 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 06 UNDER AS 43.55.170]; 07 (E) gas produced before 2022 [DURING A CALENDAR 08 YEAR] from a lease or property in the state outside the Cook Inlet 09 sedimentary basin and used in the state [IS THE GROSS VALUE AT THE 10 POINT OF PRODUCTION OF THAT GAS TAXABLE UNDER 11 AS 43.55.011(e) AND PRODUCED BY THE PRODUCER FROM THAT 12 LEASE OR PROPERTY, LESS THE PRODUCER'S LEASE 13 EXPENDITURES UNDER AS 43.55.165 FOR THE CALENDAR YEAR 14 APPLICABLE TO THAT GAS PRODUCED BY THE PRODUCER FROM 15 THAT LEASE OR PROPERTY, AS ADJUSTED UNDER AS 43.55.170]; 16 (F) oil and gas subject to AS 43.55.011(p) produced from 17 leases or properties in the state; 18 (G) oil and gas produced from a lease or property no part 19 of which is north of 68 degrees North latitude, other than oil or gas 20 described in (B), (C), (D), (E), or (F) of this paragraph; 21 (2) AS 43.55.011(g), the monthly production tax value of the taxable 22 (A) oil and gas produced during a month from leases or 23 properties in the state that include land north of 68 degrees North latitude is the 24 gross value at the point of production of the oil and gas taxable under 25 AS 43.55.011(e) and produced by the producer from those leases or properties, 26 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 27 calendar year applicable to the oil and gas produced by the producer from 28 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 29 does not apply to gas subject to AS 43.55.011(o); 30 (B) oil and gas produced during a month from leases or 31 properties in the state outside the Cook Inlet sedimentary basin, no part of
01 which is north of 68 degrees North latitude, is the gross value at the point of 02 production of the oil and gas taxable under AS 43.55.011(e) and produced by 03 the producer from those leases or properties, less 1/12 of the producer's lease 04 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 05 gas produced by the producer from those leases or properties, as adjusted under 06 AS 43.55.170; this subparagraph does not apply to gas subject to 07 AS 43.55.011(o); 08 (C) oil produced during a month from a lease or property in the 09 Cook Inlet sedimentary basin is the gross value at the point of production of 10 the oil taxable under AS 43.55.011(e) and produced by the producer from that 11 lease or property, less 1/12 of the producer's lease expenditures under 12 AS 43.55.165 for the calendar year applicable to the oil produced by the 13 producer from that lease or property, as adjusted under AS 43.55.170; 14 (D) gas produced during a month from a lease or property in 15 the Cook Inlet sedimentary basin is the gross value at the point of production 16 of the gas taxable under AS 43.55.011(e) and produced by the producer from 17 that lease or property, less 1/12 of the producer's lease expenditures under 18 AS 43.55.165 for the calendar year applicable to the gas produced by the 19 producer from that lease or property, as adjusted under AS 43.55.170; 20 (E) gas produced during a month from a lease or property 21 outside the Cook Inlet sedimentary basin and used in the state is the gross 22 value at the point of production of that gas taxable under AS 43.55.011(e) and 23 produced by the producer from that lease or property, less 1/12 of the 24 producer's lease expenditures under AS 43.55.165 for the calendar year 25 applicable to that gas produced by the producer from that lease or property, as 26 adjusted under AS 43.55.170. 27 * Sec. 9. AS 43.55.160(e) is amended to read: 28 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 29 would otherwise be deductible by a producer in a calendar year but whose deduction 30 would cause an annual production tax value calculated under (a)(1) of this section of 31 taxable oil or gas produced during the calendar year to be less than zero may be used
01 to establish a carried-forward annual loss under AS 43.55.023(b). However, the 02 department shall provide by regulation a method to ensure that, for a period for which 03 a producer's tax liability is limited by AS 43.55.011(j), (k), [OR] (o), or (p), any 04 adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise 05 be deductible by a producer for that period but whose deduction would cause a 06 production tax value calculated under (a)(1)(C), (D), [OR] (E), or (F) of this section to 07 be less than zero are accounted for as though the adjusted lease expenditures had first 08 been used as deductions in calculating the production tax values of oil or gas subject to 09 any of the limitations under AS 43.55.011(j), (k), [OR] (o), or (p) that have positive 10 production tax values so as to reduce the tax liability calculated without regard to the 11 limitation to the maximum amount provided for under the applicable provision of 12 AS 43.55.011(j), (k), [OR] (o), or (p). Only the amount of those adjusted lease 13 expenditures remaining after the accounting provided for under this subsection may be 14 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 15 subsection, "producer" includes "explorer." 16 * Sec. 10. AS 43.55 is amended by adding a new section to read: 17 Sec. 43.55.162. Adjustment to production tax value for increasing oil and 18 gas production. The production tax value of oil and gas produced during the first 10 19 consecutive years after the start of sustained production or produced during the first 10 20 consecutive years after the effective date of this bill section, whichever is later, from a 21 lease or property north of 68 degrees North latitude that was not, as of January 1, 22 2008, within a unit or in commercial production, is reduced by, for the calendar year, 23 30 percent of the gross value at the point of production of that oil and gas. The rate of 24 tax under AS 43.55.011(g) shall be determined before the application of the 25 adjustment provided by this section. 26 * Sec. 11. This Act takes effect January 1, 2013.