CSSB 21(RES): "An Act relating to appropriations from taxes paid under the Alaska Net Income Tax Act; providing a tax credit against the corporation income tax for qualified oil and gas service industry expenditures; relating to the oil and gas production tax rate; relating to gas used in the state; relating to monthly installment payments of the oil and gas production tax; relating to oil and gas production tax credits for certain losses and expenditures; relating to oil and gas production tax credit certificates; relating to nontransferable tax credits based on production; relating to the oil and gas tax credit fund; relating to annual statements by producers and explorers; relating to the determination of annual oil and gas production tax value including adjustments based on a percentage of gross value at the point of production from certain leases or properties; establishing the Oil and Gas Competitive Review Board; making conforming amendments; and providing for an effective date."
00 CS FOR SENATE BILL NO. 21(RES) 01 "An Act relating to appropriations from taxes paid under the Alaska Net Income Tax 02 Act; providing a tax credit against the corporation income tax for qualified oil and gas 03 service industry expenditures; relating to the oil and gas production tax rate; relating to 04 gas used in the state; relating to monthly installment payments of the oil and gas 05 production tax; relating to oil and gas production tax credits for certain losses and 06 expenditures; relating to oil and gas production tax credit certificates; relating to 07 nontransferable tax credits based on production; relating to the oil and gas tax credit 08 fund; relating to annual statements by producers and explorers; relating to the 09 determination of annual oil and gas production tax value including adjustments based 10 on a percentage of gross value at the point of production from certain leases or 11 properties; establishing the Oil and Gas Competitive Review Board; making conforming 12 amendments; and providing for an effective date."
01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 02 * Section 1. AS 29.60.850(b) is amended to read: 03 (b) Each fiscal year, the legislature may appropriate to the community revenue 04 sharing fund [AN AMOUNT EQUAL TO 20 PERCENT OF THE] money received by 05 the state during the previous calendar year under AS 43.20.030(c) [AS 43.55.011(g)]. 06 The amount may not exceed 07 (1) $60,000,000; or 08 (2) the amount that, when added to the fund balance on June 30 of the 09 previous fiscal year, equals $180,000,000. 10 * Sec. 2. AS 43.20 is amended by adding a new section to read: 11 Sec. 43.20.049. Qualified oil and gas industry service expenditure credit. 12 (a) For a tax year ending after the effective date of this section, a taxpayer is entitled to 13 a credit against the tax due under this chapter in the amount of 10 percent of a 14 qualified oil and gas service industry expenditure of the taxpayer incurred in the state. 15 A taxpayer may not, in one tax year, apply more than $10,000,000 in tax credits 16 received under this section. A tax credit under this section may not be used to reduce a 17 tax liability under this chapter below zero. 18 (b) A tax credit under this section may be transferred to a taxpayer subject to 19 tax under this chapter upon filing notice with the department in a format prescribed by 20 the department. The department shall issue a certificate in the amount of the tax credit 21 received under this section. A taxpayer receiving the transfer of a certificate under this 22 subsection may not apply more than $10,000,000 in tax credits authorized by this 23 section in a single tax year and may not use a tax credit authorized by this section to 24 reduce a tax liability under this chapter below zero. Transfer of a credit does not limit 25 the ability of the department to audit a tax credit claim and adjust the credit if the 26 department determines, as a result of the audit, that the taxpayer that incurred the 27 expenditure that is the basis of the credit was not entitled to the amount of the credit 28 claimed. If, as a result of the audit, the department determines that the amount of the 29 credit exceeds the proper amount, the department may, at the time the credit is used, 30 increase by the amount determined to exceed the proper value of the credit the taxes 31 calculated under this chapter for the taxpayer whose expenditure was the basis of the
01 credit. 02 (c) A tax credit certificate issued under this section may not be applied against 03 a tax liability more than seven calendar years after the date the credit is claimed. 04 (d) An expenditure that is the basis of the credit under this section 05 (1) may not be the basis for a credit or reduction in tax liability 06 claimed under another provision of this title; or 07 (2) may not be the basis for any federal credit claimed under this title. 08 (e) Notwithstanding any contrary provision of AS 40.25.100(a) or 09 AS 43.05.230(e), for a year that three or more taxpayers claim a tax credit under this 10 section, the department may publish the total amount of tax credits claimed under this 11 section and a description of the qualified oil and gas service industry expenditures that 12 were the basis for a tax credit under this section. 13 (f) In this section, 14 (1) "manufacture" means to perform substantial industrial operations in 15 the state to transform raw material into tangible personal property with a useful life of 16 three years or more for use in the exploration, development, or production of oil and 17 gas; 18 (2) "modification" means an adjustment, equipping, or other alteration 19 to existing tangible personal property that has a useful life of three years or more and 20 is for use in the exploration, development, or production of oil and gas reserves; 21 "modification" does not include minor product alterations or inventory activities; 22 (3) "qualified oil and gas service industry expenditure" means an 23 expenditure directly attributable to an in-state manufacture or in-state modification of 24 tangible personal property used in the exploration, development, or production of oil 25 or gas, but does not include components or equipment used for or in the process of that 26 manufacturing or modification. 27 * Sec. 3. AS 43.55.011(e) is amended to read: 28 (e) There is levied on the producer of oil or gas a tax for all oil and gas 29 produced each calendar year from each lease or property in the state, less any oil and 30 gas the ownership or right to which is exempt from taxation or constitutes a 31 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), (o), and
01 (p) of this section, the tax is equal to [THE SUM OF 02 (1)] the annual production tax value of the taxable oil and gas as 03 calculated under AS 43.55.160(a) [AS 43.55.160(a)(1)] multiplied by 35 [25] percent 04 [; AND 05 (2) THE SUM, OVER ALL MONTHS OF THE CALENDAR YEAR, 06 OF THE TAX AMOUNTS DETERMINED UNDER (g) OF THIS SECTION]. 07 * Sec. 4. AS 43.55.011(o) is amended to read: 08 (o) Notwithstanding other provisions of this section, for a calendar year before 09 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas 10 produced from a lease or property outside the Cook Inlet sedimentary basin and used 11 in the state, other than gas subject to (p) of this section, may not exceed the amount 12 of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section. 13 * Sec. 5. AS 43.55.020(a) is amended to read: 14 (a) For a calendar year, a producer subject to tax under AS 43.55.011 15 [AS 43.55.011(e) - (i) OR (p)] shall pay the tax as follows: 16 (1) an installment payment of the estimated tax levied by 17 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 18 month of the calendar year on the last day of the following month; except as otherwise 19 provided under (2) of this subsection, the amount of the installment payment is the 20 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 21 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 22 of the installment payment may not be less than zero: 23 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 24 produced from leases or properties in the state outside the Cook Inlet 25 sedimentary basin [BUT NOT SUBJECT TO AS 43.55.011(o) OR (p)], other 26 than leases or properties subject to AS 43.55.011(f), the greater of 27 (i) zero; or 28 (ii) the sum of 25 percent and the tax rate calculated for 29 the month under AS 43.55.011(g) multiplied by the remainder obtained 30 by subtracting 1/12 of the producer's adjusted lease expenditures for the 31 calendar year of production under AS 43.55.165 and 43.55.170 that are
01 deductible for the oil and gas [LEASES OR PROPERTIES] under 02 AS 43.55.160 from the gross value at the point of production of the oil 03 and gas produced from the leases or properties during the month for 04 which the installment payment is calculated; 05 (B) for oil and gas produced from leases or properties subject 06 to AS 43.55.011(f), the greatest of 07 (i) zero; 08 (ii) zero percent, one percent, two percent, three 09 percent, or four percent, as applicable, of the gross value at the point of 10 production of the oil and gas produced from the [ALL] leases or 11 properties during the month for which the installment payment is 12 calculated; or 13 (iii) the sum of 25 percent and the tax rate calculated for 14 the month under AS 43.55.011(g) multiplied by the remainder obtained 15 by subtracting 1/12 of the producer's adjusted lease expenditures for the 16 calendar year of production under AS 43.55.165 and 43.55.170 that are 17 deductible for the oil and gas [THOSE LEASES OR PROPERTIES] 18 under AS 43.55.160 from the gross value at the point of production of 19 the oil and gas produced from those leases or properties during the 20 month for which the installment payment is calculated; 21 (C) for oil or [AND] gas [PRODUCED FROM EACH LEASE 22 OR PROPERTY] subject to AS 43.55.011(j), (k), or (o) [, OR (p)], for each 23 lease or property, the greater of 24 (i) zero; or 25 (ii) the sum of 25 percent and the tax rate calculated for 26 the month under AS 43.55.011(g) multiplied by the remainder obtained 27 by subtracting 1/12 of the producer's adjusted lease expenditures for the 28 calendar year of production under AS 43.55.165 and 43.55.170 that are 29 deductible under AS 43.55.160 for the oil or gas, respectively, 30 produced from the lease or property from the gross value at the point of 31 production of the oil or gas, respectively, produced from the lease or
01 property during the month for which the installment payment is 02 calculated; 03 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 04 (i) the sum of 25 percent and the tax rate calculated 05 for the month under AS 43.55.011(g) multiplied by the remainder 06 obtained by subtracting 1/12 of the producer's adjusted lease 07 expenditures for the calendar year of production under 08 AS 43.55.165 and 43.55.170 that are deductible for the oil and gas 09 under AS 43.55.160 from the gross value at the point of production 10 of the oil and gas produced from the leases or properties during the 11 month for which the installment payment is calculated, but not less 12 than zero; or 13 (ii) four percent of the gross value at the point of 14 production of the oil and gas produced from the leases or 15 properties during the month, but not less than zero; 16 (2) an amount calculated under (1)(C) of this subsection for oil or gas 17 [PRODUCED FROM A LEASE OR PROPERTY 18 (A)] subject to AS 43.55.011(j), (k), or (o) may not exceed the 19 product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) 20 or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) 21 or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) 22 or 43.55.011(o), as applicable, the amount of taxable gas produced during the 23 month for the amount of taxable gas produced during the calendar year and 24 substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of 25 taxable oil produced during the month for the amount of taxable oil produced 26 during the calendar year; 27 [(B) SUBJECT TO AS 43.55.011(p) MAY NOT EXCEED 28 FOUR PERCENT OF THE GROSS VALUE AT THE POINT OF 29 PRODUCTION OF THE OIL OR GAS;] 30 (3) an installment payment of the estimated tax levied by 31 AS 43.55.011(i) for each lease or property is due for each month of the calendar year
01 on the last day of the following month; the amount of the installment payment is the 02 sum of 03 (A) the applicable tax rate for oil provided under 04 AS 43.55.011(i), multiplied by the gross value at the point of production of the 05 oil taxable under AS 43.55.011(i) and produced from the lease or property 06 during the month; and 07 (B) the applicable tax rate for gas provided under 08 AS 43.55.011(i), multiplied by the gross value at the point of production of the 09 gas taxable under AS 43.55.011(i) and produced from the lease or property 10 during the month; 11 (4) any amount of tax levied by AS 43.55.011 [AS 43.55.011(e) OR 12 (i)], net of any credits applied as allowed by law, that exceeds the total of the amounts 13 due as installment payments of estimated tax is due on March 31 of the year following 14 the calendar year of production. 15 * Sec. 6. AS 43.55.020(a), as amended by sec. 5 of this Act, is amended to read: 16 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 17 the tax as follows: 18 (1) an installment payment of the estimated tax levied by 19 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 20 month of the calendar year on the last day of the following month; except as otherwise 21 provided under (2) of this subsection, the amount of the installment payment is the 22 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 23 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 24 of the installment payment may not be less than zero: 25 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 26 produced from leases or properties in the state outside the Cook Inlet 27 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 28 the greater of 29 (i) zero; or 30 (ii) 35 [THE SUM OF 25] percent of [AND THE TAX 31 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g)
01 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 02 producer's adjusted lease expenditures for the calendar year of 03 production under AS 43.55.165 and 43.55.170 that are deductible for 04 the oil and gas under AS 43.55.160 from the gross value at the point of 05 production of the oil and gas produced from the leases or properties 06 during the month for which the installment payment is calculated; 07 (B) for oil and gas produced from leases or properties subject 08 to AS 43.55.011(f), the greatest of 09 (i) zero; 10 (ii) zero percent, one percent, two percent, three 11 percent, or four percent, as applicable, of the gross value at the point of 12 production of the oil and gas produced from the leases or properties 13 during the month for which the installment payment is calculated; or 14 (iii) 35 [THE SUM OF 25] percent of [AND THE TAX 15 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 16 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 17 producer's adjusted lease expenditures for the calendar year of 18 production under AS 43.55.165 and 43.55.170 that are deductible for 19 oil and gas under AS 43.55.160 from the gross value at the point of 20 production of the oil and gas produced from those leases or properties 21 during the month for which the installment payment is calculated, 22 except that, for the purposes of this calculation, the gross value at 23 the point of production of oil and gas subject to AS 43.55.160(f) is 24 reduced by 30 percent; 25 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 26 each lease or property, the greater of 27 (i) zero; or 28 (ii) 35 [THE SUM OF 25] percent of [AND THE TAX 29 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 30 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 31 producer's adjusted lease expenditures for the calendar year of
01 production under AS 43.55.165 and 43.55.170 that are deductible under 02 AS 43.55.160 for the oil or gas, respectively, produced from the lease 03 or property from the gross value at the point of production of the oil or 04 gas, respectively, produced from the lease or property during the month 05 for which the installment payment is calculated; 06 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 07 (i) 35 [THE SUM OF 25] percent of [AND THE TAX 08 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 09 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 10 producer's adjusted lease expenditures for the calendar year of 11 production under AS 43.55.165 and 43.55.170 that are deductible for 12 the oil and gas under AS 43.55.160 from the gross value at the point of 13 production of the oil and gas produced from the leases or properties 14 during the month for which the installment payment is calculated, but 15 not less than zero; or 16 (ii) four percent of the gross value at the point of 17 production of the oil and gas produced from the leases or properties 18 during the month, but not less than zero; 19 (2) an amount calculated under (1)(C) of this subsection for oil or gas 20 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 21 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 22 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 23 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 24 amount of taxable gas produced during the month for the amount of taxable gas 25 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 26 (2)(A), as applicable, the amount of taxable oil produced during the month for the 27 amount of taxable oil produced during the calendar year; 28 (3) an installment payment of the estimated tax levied by 29 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 30 on the last day of the following month; the amount of the installment payment is the 31 sum of
01 (A) the applicable tax rate for oil provided under 02 AS 43.55.011(i), multiplied by the gross value at the point of production of the 03 oil taxable under AS 43.55.011(i) and produced from the lease or property 04 during the month; and 05 (B) the applicable tax rate for gas provided under 06 AS 43.55.011(i), multiplied by the gross value at the point of production of the 07 gas taxable under AS 43.55.011(i) and produced from the lease or property 08 during the month; 09 (4) any amount of tax levied by AS 43.55.011, net of any credits 10 applied as allowed by law, that exceeds the total of the amounts due as installment 11 payments of estimated tax is due on March 31 of the year following the calendar year 12 of production. 13 * Sec. 7. AS 43.55.020(d) is amended to read: 14 (d) In making settlement with the royalty owner for oil and gas that is taxable 15 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 16 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 17 time the tax becomes due to the amount of the tax paid. If the total deductions of 18 installment payments of estimated tax for a calendar year exceed the actual tax for that 19 calendar year, the producer shall, before April 1 of the following year, refund the 20 excess to the royalty owner. Unless otherwise agreed between the producer and the 21 royalty owner, the amount of the tax paid under AS 43.55.011(e) [AS 43.55.011(e) - 22 (g)] on taxable royalty oil and gas for a calendar year, other than oil and gas the 23 ownership or right to which constitutes a landowner's royalty interest, is considered to 24 be the gross value at the point of production of the taxable royalty oil and gas 25 produced during the calendar year multiplied by a figure that is a quotient, in which 26 (1) the numerator is the producer's total tax liability under 27 AS 43.55.011(e) [AS 43.55.011(e) - (g)] for the calendar year of production; and 28 (2) the denominator is the total gross value at the point of production 29 of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(e) - (g)] produced by 30 the producer from all leases and properties in the state during the calendar year. 31 * Sec. 8. AS 43.55.023(a) is amended to read:
01 (a) A producer or explorer may take a tax credit for a qualified capital 02 expenditure as follows: 03 (1) notwithstanding that a qualified capital expenditure may be a 04 deductible lease expenditure for purposes of calculating the production tax value of oil 05 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 06 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 07 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 08 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 09 expenditure; [HOWEVER, NOT MORE THAN HALF OF THE TAX CREDIT MAY 10 BE APPLIED FOR A SINGLE CALENDAR YEAR;] 11 (2) a producer or explorer may take a credit for a qualified capital 12 expenditure incurred in connection with geological or geophysical exploration or in 13 connection with an exploration well only if the producer or explorer 14 (A) agrees, in writing, to the applicable provisions of 15 AS 43.55.025(f)(2); and 16 (B) submits to the Department of Natural Resources all data 17 that would be required to be submitted under AS 43.55.025(f)(2); 18 (3) a credit for a qualified capital expenditure incurred to explore 19 for, develop, or produce oil or gas deposits located north of 68 degrees North 20 latitude may be taken only if the expenditure is incurred before January 1, 2014. 21 * Sec. 9. AS 43.55.023(a), as amended by sec. 8 of this Act, is amended to read: 22 (a) Except as provided in AS 43.55.025(q), a [A] producer or explorer may 23 take a tax credit for a qualified capital expenditure as follows: 24 (1) notwithstanding that a qualified capital expenditure may be a 25 deductible lease expenditure for purposes of calculating the production tax value of oil 26 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 27 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 28 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 29 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 30 expenditure; 31 (2) a producer or explorer may take a credit for a qualified capital
01 expenditure incurred in connection with geological or geophysical exploration or in 02 connection with an exploration well only if the producer or explorer 03 (A) agrees, in writing, to the applicable provisions of 04 AS 43.55.025(f)(2); and 05 (B) submits to the Department of Natural Resources all data 06 that would be required to be submitted under AS 43.55.025(f)(2); 07 (3) a credit for a qualified capital expenditure incurred to explore for, 08 develop, or produce oil or gas deposits located north of 68 degrees North latitude may 09 be taken only if the expenditure is incurred before January 1, 2014. 10 * Sec. 10. AS 43.55.023(b) is amended to read: 11 (b) A producer or explorer may elect to take a tax credit in the amount of 25 12 percent of a carried-forward annual loss based on lease expenditures incurred to 13 explore for, develop, or produce oil or gas deposits located south of 68 degrees 14 North latitude. Except as provided in AS 43.55.025(q), a producer or explorer 15 subject to the requirements in (p) - (u) of this section may elect to take a tax 16 credit in the amount of 35 percent of a carried-forward annual loss based on 17 lease expenditures incurred after December 31, 2013, to explore for, develop, or 18 produce oil or gas deposits located north of 68 degrees North latitude. A credit 19 under this subsection may be applied against a tax levied by AS 43.55.011(e). For 20 purposes of this subsection, a carried-forward annual loss is the amount of a producer's 21 or explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 22 previous calendar year that was not deductible in calculating production tax values for 23 that calendar year under AS 43.55.160. 24 * Sec. 11. AS 43.55.023(c) is amended to read: 25 (c) A credit or portion of a credit under this section may not be used to reduce 26 a person's tax liability under AS 43.55.011(e) for any calendar year below zero. 27 Except as otherwise provided under (p) - (u) of this section, [AND] any unused 28 credit or portion of a credit not used under this subsection may be applied in a later 29 calendar year. 30 * Sec. 12. AS 43.55.023(d) is amended to read: 31 (d) Except as limited by (i) of this section, a person that is entitled to take a tax
01 credit under this section that wishes to transfer the unused credit to another person or 02 obtain a cash payment under AS 43.55.028 may apply to the department for a 03 transferable tax credit certificate [CERTIFICATES]. An application under this 04 subsection must be in a form prescribed by the department and must include 05 supporting information and documentation that the department reasonably requires. 06 The department shall grant or deny an application, or grant an application as to a lesser 07 amount than that claimed and deny it as to the excess, not later than 120 days after the 08 latest of (1) March 31 of the year following the calendar year in which the qualified 09 capital expenditure or carried-forward annual loss for which the credit is claimed was 10 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 11 the calendar year in which the qualified capital expenditure or carried-forward annual 12 loss for which the credit is claimed was incurred; or (3) the date the application was 13 received by the department. If, based on the information then available to it, the 14 department is reasonably satisfied that the applicant is entitled to a credit, the 15 department shall issue the applicant a [TWO] transferable tax credit certificate for 16 [CERTIFICATES, EACH FOR HALF OF] the amount of the credit. [THE CREDIT 17 SHOWN ON ONE OF THE TWO CERTIFICATES IS AVAILABLE FOR 18 IMMEDIATE USE. THE CREDIT SHOWN ON THE SECOND OF THE TWO 19 CERTIFICATES MAY NOT BE APPLIED AGAINST A TAX FOR A CALENDAR 20 YEAR EARLIER THAN THE CALENDAR YEAR FOLLOWING THE 21 CALENDAR YEAR IN WHICH THE CERTIFICATE IS ISSUED, AND THE 22 CERTIFICATE MUST CONTAIN A CONSPICUOUS STATEMENT TO THAT 23 EFFECT.] A certificate issued under this subsection does not expire. 24 * Sec. 13. AS 43.55.023(d), as amended by sec. 12 of this Act, is amended to read: 25 (d) Except for a tax credit based on a lease expenditure incurred after 26 December 31, 2013, to explore for, develop, or produce oil or gas deposits located 27 north of 68 degrees North latitude [AS LIMITED BY (i) OF THIS SECTION], a 28 person that is entitled to take a tax credit under this section that wishes to transfer the 29 unused credit to another person or obtain a cash payment under AS 43.55.028 may 30 apply to the department for a transferable tax credit certificate. An application under 31 this subsection must be in a form prescribed by the department and must include
01 supporting information and documentation that the department reasonably requires. 02 The department shall grant or deny an application, or grant an application as to a lesser 03 amount than that claimed and deny it as to the excess, not later than 120 days after the 04 latest of (1) March 31 of the year following the calendar year in which the qualified 05 capital expenditure or carried-forward annual loss for which the credit is claimed was 06 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 07 the calendar year in which the qualified capital expenditure or carried-forward annual 08 loss for which the credit is claimed was incurred; or (3) the date the application was 09 received by the department. If, based on the information then available to it, the 10 department is reasonably satisfied that the applicant is entitled to a credit, the 11 department shall issue the applicant a transferable tax credit certificate for the amount 12 of the credit. A certificate issued under this subsection does not expire. 13 * Sec. 14. AS 43.55.023(g) is amended to read: 14 (g) The issuance of a transferable tax credit certificate under (d) of this 15 section or former (m) of this section or the purchase of a certificate under 16 AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to 17 which the certificate relates or to adjust the claim if the department determines, as a 18 result of the audit, that the applicant was not entitled to the amount of the credit for 19 which the certificate was issued. The tax liability of the applicant under 20 AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit 21 that exceeds that to which the applicant was entitled, or the applicant's available valid 22 outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced 23 by that amount. If the applicant's tax liability is increased under this subsection, the 24 increase bears interest under AS 43.05.225 from the date the transferable tax credit 25 certificate was issued. For purposes of this subsection, an applicant that is an explorer 26 is considered a producer subject to the tax levied by AS 43.55.011(e). 27 * Sec. 15. AS 43.55.023(n) is amended to read: 28 (n) For the purposes of (l) [AND (m)] of this section, a well lease expenditure 29 incurred in the state south of 68 degrees North latitude is a lease expenditure that is 30 (1) directly related to an exploration well, a stratigraphic test well, a 31 producing well, or an injection well other than a disposal well, located in the state
01 south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure 02 and an intangible drilling and development cost authorized under 26 U.S.C. (Internal 03 Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made 04 under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well 05 includes an expenditure for well sidetracking, well deepening, well completion or 06 recompletion, or well workover, regardless of whether the well is or has been a 07 producing well; or 08 (2) an expense for seismic work conducted within the boundaries of a 09 production or exploration unit. 10 * Sec. 16. AS 43.55.023 is amended by adding new subsections to read: 11 (p) A tax credit under (b) of this section that is based on a lease expenditure 12 incurred after December 31, 2013, to explore for, develop, or produce oil or gas 13 deposits located north of 68 degrees North latitude may not be applied against a tax 14 liability for a calendar year that is 15 (1) two or more calendar years later than the calendar year during 16 which the lease expenditure was incurred, unless the producer has complied with the 17 requirements of AS 43.55.030(g); 18 (2) more than 10 calendar years later than the calendar year during 19 which the lease expenditure was incurred. 20 (q) A person may not apply a tax credit under (b) of this section that is based 21 on a lease expenditure incurred after December 31, 2014, to explore for, develop, or 22 produce oil or gas deposits located north of 68 degrees North latitude against a 23 person's tax liability unless the person has applied against the person's tax liability the 24 entire amount of all available tax credits under (b) of this section that are based on 25 lease expenditures incurred after December 31, 2013, and before the calendar year in 26 which the person seeks to apply the credit to explore for, develop, or produce oil or 27 gas deposits located north of 68 degrees North latitude. 28 (r) Except as otherwise provided under (s) of this section, a tax credit or a 29 portion of a tax credit subject to (p)(1) of this section that is carried forward in 30 compliance with AS 43.55.030(g) increases at a rate of 15 percent, compounded 31 annually, as provided in this subsection. A tax credit or a portion of a tax credit begins
01 to increase under this subsection on January 1 of the second calendar year immediately 02 following the calendar year during which the lease expenditure on which the credit is 03 based was incurred, unless that second calendar year is the calendar year for which the 04 credit or portion of a credit is applied against the person's tax liability. A tax credit or a 05 portion of a tax credit stops increasing under this subsection on December 31 of the 06 calendar year immediately preceding the calendar year for which the credit or a 07 portion of the credit is applied against the person's tax liability. An increase in the 08 amount of a tax credit under this subsection has no value except as applied against the 09 person's tax liability within the time period described in (p)(2) of this section. 10 (s) A tax credit or a portion of a tax credit subject to (p)(1) of this section does 11 not increase under (r) of this section for a period during or after a calendar year for 12 which the credit or portion of the credit could have been applied against a person's tax 13 liability. For purposes of this subsection, the portion of a tax credit subject to (p)(1) of 14 this section that could have been applied against a person's tax liability for a calendar 15 year is determined by performing the following calculation, as applicable: 16 (1) subtract the amount, if any, of the person's tax credits under 17 AS 43.55.019 and 43.55.024 that has been applied against the person's tax liability for 18 the calendar year under AS 43.55.011(e) from the amount, if any, of that tax; if the 19 remainder is less than zero, the portion of the tax credit subject to (p)(1) of this section 20 that could have been applied against a person's tax liability for the calendar year is 21 zero; 22 (2) if the remainder obtained under (1) of this subsection is greater 23 than zero, subtract that remainder from the total amount of the person's tax credits 24 under (b) of this section that are based on lease expenditures incurred after 25 December 31, 2013, to explore for, develop, or produce oil or gas deposits located 26 north of 68 degrees North latitude that was available, without regard to the limitation 27 under (q) of this section, to be applied against the person's tax liability for the calendar 28 year under AS 43.55.011(e), including any increase in the amount of the tax credits 29 under (r) of this section through December 31 of the previous calendar year; if the 30 remainder is less than zero, the portion of the tax credit is considered to be equal to 31 zero for purposes of this paragraph;
01 (3) subtract the remainder obtained under (2) of this subsection from 02 the amount, if any, of the person's tax credits under (b) of this section that are based on 03 lease expenditures incurred after December 31, 2013, to explore for, develop, or 04 produce oil or gas deposits located north of 68 degrees North latitude that was 05 available, without regard to the limitation under (q) of this section, to be applied 06 against the tax levied on the person for the calendar year under AS 43.55.011(e), 07 including any increase in the amount of the tax credits under (r) of this section through 08 December 31 of the previous calendar year, but that was not applied against that tax; 09 the remainder is the portion of a tax credit subject to (p)(1) of this section that could 10 have been applied against the person's tax liability for the calendar year. 11 (t) A tax credit under (b) of this section based on a lease expenditure incurred 12 after December 31, 2013, to explore for, develop, or produce oil or gas deposits 13 located north of 68 degrees North latitude is not transferable except as provided in this 14 subsection. A person that is entitled to take a tax credit under (b) of this section based 15 on a lease expenditure incurred after December 31, 2013, to explore for, develop, or 16 produce oil or gas deposits located north of 68 degrees North latitude may transfer the 17 tax credit to another person that acquires from the transferor an operating right, 18 operating interest, or working interest in a lease or property in the state that includes 19 land north of 68 degrees North latitude in which the transferor owned an operating 20 right, operating interest, or working interest at the time the lease expenditure was 21 incurred. A transferee may transfer the tax credit to another person that acquires from 22 the transferee an operating right, operating interest, or working interest in that lease or 23 property. A transferee's use of a tax credit is subject to the provisions of (u) of this 24 section. A transfer is conditioned on the filing with the department by the transferor 25 and transferee of notices or a joint notice in a form and manner prescribed by the 26 department and the providing of information and certifications required by the 27 department by regulation. A transferee's application of a tax credit against the 28 transferee's production tax liability is subject to audit by the department to the same 29 extent as a tax credit that has not been transferred. 30 (u) The provisions of this subsection apply to a tax credit under (b) of this 31 section based on a lease expenditure incurred after December 31, 2013, to explore for,
01 develop, or produce oil or gas deposits located north of 68 degrees North latitude 02 when the tax credit is used by a producer to which the tax credit has been transferred 03 under (t) of this section, by a producer or the successor of a producer that has acquired 04 the person that incurred the lease expenditure on which the tax credit is based, or by a 05 producer or the successor of a producer created by the merger of the person that 06 incurred the lease expenditures on which the tax credit is based with another person. 07 The total amount of a producer's tax credits subject to this subsection that may be 08 applied against the producer's tax liability under AS 43.55.011(e) for a calendar year 09 may not exceed 20 percent of the sum of the amounts calculated by applying the 10 following formula for each lease or property in the state that includes land north of 68 11 degrees North latitude from which the producer produces oil or gas during the 12 calendar year and in which the person that incurred the lease expenditure on which the 13 tax credit is based had owned an operating right, operating interest, or working interest 14 when the lease expenditure was incurred: 15 GV X OS 16 where GV = the gross value at the point of production of the oil and gas taxable under 17 AS 43.55.011(e) produced by the producer during the calendar year from the lease or 18 property; and OS = the percentage operating right, operating interest, or working interest in 19 the lease or property that had been owned by the person that incurred the lease expenditure on 20 which the tax credit is based when the lease expenditure was incurred. 21 * Sec. 17. AS 43.55.024(d) is amended to read: 22 (d) A producer may not take a tax credit under (c) of this section for any 23 calendar year after the later of 24 (1) 2022 [2016]; or 25 (2) if the producer did not have commercial oil or gas production from 26 a lease or property in the state before April 1, 2006, the ninth calendar year after the 27 calendar year during which the producer first has commercial oil or gas production 28 before May 1, 2022 [2016], from at least one lease or property in the state. 29 * Sec. 18. AS 43.55.024(e) is amended to read: 30 (e) On written application by a producer that includes any information the 31 department may require, the department shall determine whether the producer
01 qualifies for a calendar year under (a) and (c) of this section. To qualify under (a) and 02 (c) of this section, a producer must demonstrate that its operation in the state or its 03 ownership of an interest in a lease or property in the state as a distinct producer would 04 not result in the division among multiple producer entities of any production tax 05 liability under AS 43.55.011(e) that reasonably would be expected to be attributed to a 06 single producer if the tax credit provisions of (a) or (c) of this section did not exist. 07 * Sec. 19. AS 43.55.024 is amended by adding a new subsection to read: 08 (i) A producer may apply a tax credit of $5 for each barrel of oil taxable under 09 AS 43.55.011(e) produced during a calendar year against the producer's tax liability 10 for the calendar year under AS 43.55.011(e). A tax credit authorized by this subsection 11 may not reduce a producer's tax liability for a calendar year under AS 43.55.011(e) to 12 below zero. 13 * Sec. 20. AS 43.55.025(b) is amended to read: 14 (b) To qualify for the production tax credit under (a) of this section, an 15 exploration expenditure must be incurred for work performed after June 30, 2008, and 16 before July 1, 2022 [2016], and 17 (1) may be for seismic or other geophysical exploration costs not 18 connected with a specific well; 19 (2) if for an exploration well, 20 (A) must be incurred by an explorer that holds an interest in the 21 exploration well for which the production tax credit is claimed; 22 (B) may be for either a well that encounters an oil or gas 23 deposit or a dry hole; 24 (C) must be for a well that has been completed, suspended, or 25 abandoned at the time the explorer claims the tax credit under (f) of this 26 section; and 27 (D) must be for goods, services, or rentals of personal property 28 reasonably required for the surface preparation, drilling, casing, cementing, 29 and logging of an exploration well, and, in the case of a dry hole, for the 30 expenses required for abandonment if the well is abandoned within 18 months 31 after the date the well was spudded;
01 (3) may not be for administration, supervision, engineering, or lease 02 operating costs; geological or management costs; community relations or 03 environmental costs; bonuses, taxes, or other payments to governments related to the 04 well; costs, including repairs and replacements, arising from or associated with fraud, 05 wilful misconduct, gross negligence, criminal negligence, or violation of law, 06 including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or 07 other costs that are generally recognized as indirect costs or financing costs; and 08 (4) may not be incurred for an exploration well or seismic exploration 09 that is included in a plan of exploration or a plan of development for any unit before 10 May 14, 2003. 11 * Sec. 21. AS 43.55.025(c) is amended to read: 12 (c) To be eligible for a production tax credit authorized by (a)(1), (3), or (6) of 13 this section, exploration expenditures must 14 (1) qualify under (b) of this section; and 15 (2) be for an exploration well, subject to the following: 16 (A) before the well is spudded, 17 (i) the explorer shall submit to the commissioner of 18 natural resources the information necessary to determine whether the 19 geological objective of the well is a potential oil or gas trap that is 20 distinctly separate from any trap that has been tested by a preexisting 21 well; 22 (ii) at the time of the submittal of information under (i) 23 of this subparagraph, the commissioner of natural resources may 24 request from the explorer that specific data sets, ancillary data, and 25 reports including all results, and copies of well data collected and data 26 analyses for the well be provided to the Department of Natural 27 Resources upon completion of the drilling; in this sub-subparagraph, 28 well data include all analyses conducted on physical material, and well 29 logs collected from the well and sample analyses; testing geophysical 30 and velocity data including vertical seismic profiles and check shot 31 surveys; testing data and analyses; age data; geochemical analyses; and
01 access to tangible material; and 02 (iii) the commissioner of natural resources must make 03 an affirmative determination as to whether the geological objective of 04 the well is a potential oil or gas trap that is distinctly separate from any 05 trap that has been tested by a preexisting well and what information 06 under (ii) of this subparagraph must be submitted by the explorer after 07 completion, abandonment, or suspension under AS 31.05.030; the 08 commissioner of natural resources shall make that determination within 09 60 days after receiving all the necessary information from the explorer 10 based on the information received and on other information the 11 commissioner of natural resources considers relevant; 12 (B) [FOR AN EXPLORATION WELL OTHER THAN A 13 WELL TO EXPLORE A COOK INLET PROSPECT, THE WELL MUST BE 14 LOCATED AND DRILLED IN SUCH A MANNER THAT THE BOTTOM 15 HOLE IS LOCATED NOT LESS THAN THREE MILES AWAY FROM 16 THE BOTTOM HOLE OF A PREEXISTING WELL DRILLED FOR OIL 17 OR GAS, IRRESPECTIVE OF WHETHER THE PREEXISTING WELL 18 HAS BEEN COMPLETED, SUSPENDED, OR ABANDONED; 19 (C)] after completion, suspension, or abandonment under 20 AS 31.05.030 of the exploration well, the commissioner of natural resources 21 must determine that the well was consistent with achieving the explorer's 22 stated geological objective. 23 * Sec. 22. AS 43.55.025 is amended by adding a new subsection to read: 24 (q) An exploration expenditure incurred after December 31, 2013, to explore 25 for oil or gas located north of 68 degrees North latitude that is the basis for a credit 26 under (a)(1), (2), or (3) of this section may not also be the basis for a credit claimed 27 under AS 43.55.023 or this section. 28 * Sec. 23. AS 43.55.028(e) is amended to read: 29 (e) The department, on the written application of a person to whom a 30 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 31 AS 43.55.023(m) [(m)] or to whom a production tax credit certificate has been issued
01 under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 02 purchase, in whole or in part, the certificate if the department finds that 03 (1) the calendar year of the purchase is not earlier than the first 04 calendar year for which the credit shown on the certificate would otherwise be allowed 05 to be applied against a tax; 06 (2) the applicant does not have an outstanding liability to the state for 07 unpaid delinquent taxes under this title; 08 (3) the applicant's total tax liability under AS 43.55.011(e), after 09 application of all available tax credits, for the calendar year in which the application is 10 made is zero; 11 (4) the applicant's average daily production of oil and gas taxable 12 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 13 the application is made was not more than 50,000 BTU equivalent barrels; and 14 (5) the purchase is consistent with this section and regulations adopted 15 under this section. 16 * Sec. 24. AS 43.55.028(g) is amended to read: 17 (g) The department may adopt regulations to carry out the purposes of this 18 section, including standards and procedures to allocate available money among 19 applications for purchases under this chapter and claims for refunds and payments 20 under AS 43.20.046 or 43.20.047 when the total amount of the applications for 21 purchase and claims for refund exceed the amount of available money in the fund. The 22 regulations adopted by the department may not, when allocating available money in 23 the fund under this section, distinguish an application for the purchase of a credit 24 certificate issued under former AS 43.55.023(m) or a claim for a refund or payment 25 under AS 43.20.046 or 43.20.047 [AS 43.20.047]. 26 * Sec. 25. AS 43.55.030(e) is amended to read: 27 (e) An explorer or producer that incurs a lease expenditure under 28 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 29 year but does not produce oil or gas from a lease or property in the state during the 30 calendar year shall file with the department, on March 31 of the following year, a 31 statement, under oath, in a form prescribed by the department, giving, with other
01 information required, the following: 02 (1) the explorer's or producer's qualified capital expenditures, as 03 defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and 04 adjustments or other payments or credits under AS 43.55.170; and 05 (2) if the explorer or producer receives a payment or credit under 06 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 07 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 08 * Sec. 26. AS 43.55.030 is amended by adding a new subsection to read: 09 (g) A person that intends to carry forward a tax credit subject to 10 AS 43.55.023(p)(1) so that the credit will be available to be applied against the 11 person's tax liability for a calendar year that is two or more calendar years later than 12 the calendar year during which the lease expenditure on which the credit is based was 13 incurred, subject to the limitation of AS 43.55.023(p)(2), shall file with the department 14 a statement, under oath, in a form prescribed by the department, on March 31 of the 15 year immediately following the calendar year during which the lease expenditure on 16 which the credit is based was incurred, and on March 31 of each subsequent year, 17 including the last calendar year for which the credit or a portion of the credit is applied 18 against the person's tax liability. The statement must include 19 (1) documentation of the nature and amount of adjusted lease 20 expenditures for which a credit is claimed and intended to be carried forward, unless 21 provided in a previously filed statement under this subsection; 22 (2) calculation of the amount of the claimed credit, unless provided in 23 a previously filed statement under this subsection, and of any increase in an amount of 24 credit under AS 43.55.023(r) and documentation of compliance with the limitations 25 provided in AS 43.55.023(s); 26 (3) identification of the portion of the credit that was applied against 27 the person's tax liability for the calendar year preceding the year for which the 28 statement is due and of the amount of the credit that continues to be carried forward; 29 (4) other information required by the department. 30 * Sec. 27. AS 43.55.160(a) is amended to read: 31 (a) Except as provided in (b) of this section, for the purposes of
01 (1) AS 43.55.011(e), the annual production tax value of the taxable oil, 02 gas, or oil and gas subject to this paragraph produced during a calendar year is the 03 gross value at the point of production of the oil, gas, or oil and gas taxable under 04 AS 43.55.011(e), less the producer's lease expenditures under AS 43.55.165 for the 05 calendar year applicable to the oil, gas, or oil and gas, as applicable, produced by the 06 producer from leases or properties, as adjusted under AS 43.55.170; this paragraph 07 applies to 08 (A) oil and gas produced from leases or properties in the state 09 that include land north of 68 degrees North latitude, other than gas produced 10 before 2022 and used in the state; 11 (B) oil and gas produced from leases or properties in the state 12 outside the Cook Inlet sedimentary basin, no part of which is north of 68 13 degrees North latitude; this subparagraph does not apply to [GAS] 14 (i) gas produced before 2022 and used in the state; or 15 (ii) oil and gas subject to AS 43.55.011(p); 16 (C) oil produced before 2022 from each [A] lease or property 17 in the Cook Inlet sedimentary basin; 18 (D) gas produced before 2022 from each [A] lease or property 19 in the Cook Inlet sedimentary basin; 20 (E) gas produced before 2022 from each [A] lease or property 21 in the state outside the Cook Inlet sedimentary basin and used in the state, 22 other than gas subject to AS 43.55.011(p); 23 (F) oil and gas subject to AS 43.55.011(p) produced from 24 leases or properties in the state; 25 (G) oil and gas produced from a lease or property in the state 26 no part of which is north of 68 degrees North latitude, other than oil or gas 27 described in (B), (C), (D), (E), or (F) of this paragraph; 28 (2) AS 43.55.011(g), the monthly production tax value of the taxable 29 (A) oil and gas produced during a month from leases or 30 properties in the state that include land north of 68 degrees North latitude is the 31 gross value at the point of production of the oil and gas taxable under
01 AS 43.55.011(e) and produced by the producer from those leases or properties, 02 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 03 calendar year applicable to the oil and gas produced by the producer from 04 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 05 does not apply to gas subject to AS 43.55.011(o); 06 (B) oil and gas produced during a month from leases or 07 properties in the state outside the Cook Inlet sedimentary basin, no part of 08 which is north of 68 degrees North latitude, is the gross value at the point of 09 production of the oil and gas taxable under AS 43.55.011(e) and produced by 10 the producer from those leases or properties, less 1/12 of the producer's lease 11 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 12 gas produced by the producer from those leases or properties, as adjusted under 13 AS 43.55.170; this subparagraph does not apply to gas subject to 14 AS 43.55.011(o); 15 (C) oil produced during a month from a lease or property in the 16 Cook Inlet sedimentary basin is the gross value at the point of production of 17 the oil taxable under AS 43.55.011(e) and produced by the producer from that 18 lease or property, less 1/12 of the producer's lease expenditures under 19 AS 43.55.165 for the calendar year applicable to the oil produced by the 20 producer from that lease or property, as adjusted under AS 43.55.170; 21 (D) gas produced during a month from a lease or property in 22 the Cook Inlet sedimentary basin is the gross value at the point of production 23 of the gas taxable under AS 43.55.011(e) and produced by the producer from 24 that lease or property, less 1/12 of the producer's lease expenditures under 25 AS 43.55.165 for the calendar year applicable to the gas produced by the 26 producer from that lease or property, as adjusted under AS 43.55.170; 27 (E) gas produced during a month from a lease or property 28 outside the Cook Inlet sedimentary basin and used in the state is the gross 29 value at the point of production of that gas taxable under AS 43.55.011(e) and 30 produced by the producer from that lease or property, less 1/12 of the 31 producer's lease expenditures under AS 43.55.165 for the calendar year
01 applicable to that gas produced by the producer from that lease or property, as 02 adjusted under AS 43.55.170. 03 * Sec. 28. AS 43.55.160(a) is repealed and reenacted to read: 04 (a) Except as provided in (b) and (f) of this section, for the purposes of 05 AS 43.55.011(e), the annual production tax value of taxable oil, gas, or oil and gas 06 produced by a producer during a calendar year in a specific category for which a 07 separate production tax value is required to be calculated under this subsection is equal 08 to the gross value at the point of production of that oil, gas, or oil and gas, 09 respectively, taxable under AS 43.55.011(e), less the producer's lease expenditures 10 under AS 43.55.165 for the calendar year that are applicable to the oil, gas, or oil and 11 gas, respectively, in that category produced by the producer during the calendar year, 12 as adjusted under AS 43.55.170. A separate annual production tax value must be 13 calculated for 14 (1) oil and gas produced from leases or properties in the state that 15 include land north of 68 degrees North latitude, other than gas produced before 2022 16 and used in the state; 17 (2) oil and gas produced from leases or properties in the state outside 18 the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North 19 latitude, during a calendar year before or during the last calendar year under 20 AS 43.55.024(b) for which the producer could take a tax credit under 21 AS 43.55.024(a); this paragraph does not apply to 22 (A) gas produced before 2022 and used in the state; or 23 (B) oil and gas subject to AS 43.55.011(p); 24 (3) oil produced before 2022 from each lease or property in the Cook 25 Inlet sedimentary basin; 26 (4) gas produced before 2022 from each lease or property in the Cook 27 Inlet sedimentary basin; 28 (5) gas produced before 2022 from each lease or property in the state 29 outside the Cook Inlet sedimentary basin and used in the state, other than gas subject 30 to AS 43.55.011(p); 31 (6) oil and gas subject to AS 43.55.011(p) produced from leases or
01 properties in the state; 02 (7) oil and gas produced from a lease or property in the state no part of 03 which is north of 68 degrees North latitude, other than oil or gas described in (2), (3), 04 (4), (5), or (6) of this subsection. 05 * Sec. 29. AS 43.55.160(e) is amended to read: 06 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 07 would otherwise be deductible by a producer in a calendar year but whose deduction 08 would cause an annual production tax value calculated under (a) [(a)(1)] of this 09 section of taxable oil or gas produced during the calendar year to be less than zero 10 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 11 However, the department shall provide by regulation a method to ensure that, for a 12 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 13 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 14 otherwise be deductible by a producer for that period but whose deduction would 15 cause a production tax value calculated under (a)(3), (4), (5), or (6) [(a)(1)(C), (D), 16 (E), OR (F)] of this section to be less than zero are accounted for as though the 17 adjusted lease expenditures had first been used as deductions in calculating the 18 production tax values of oil or gas subject to any of the limitations under 19 AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to 20 reduce the tax liability calculated without regard to the limitation to the maximum 21 amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p). 22 Only the amount of those adjusted lease expenditures remaining after the accounting 23 provided for under this subsection may be used to establish a carried-forward annual 24 loss under AS 43.55.023(b). In this subsection, "producer" includes "explorer." 25 * Sec. 30. AS 43.55.160 is amended by adding a new subsection to read: 26 (f) In the calculation of an annual production tax value of a producer under 27 (a)(1) of this section, the gross value at the point of production of oil or gas meeting 28 one or more of the following criteria is reduced by 30 percent: (1) the oil or gas is 29 produced from a lease or property that does not contain a lease that was within a unit 30 on January 1, 2003; (2) the oil or gas is produced from a participating area established 31 after December 31, 2011, that is within a unit formed under AS 38.05.180(p) before
01 January 1, 2003, if the participating area does not contain a reservoir that had 02 previously been in a participating area established before December 31, 2011; (3) the 03 oil or gas is produced from acerage that was not in a participating area before 04 December 31, 2011, but was added to an existing participating area by the Department 05 of Natural Resources after December 31, 2011, and the producer demonstrates to the 06 department that the volume of oil and gas produced is from acerage added to an 07 existing participating area. A reduction in gross value at the point of production under 08 this subsection may not reduce the production tax value of a producer below zero. In 09 this subsection, "participating area" means a reservoir or portion of a reservoir 10 contributing to production approved by the Department of Natural Resources. 11 * Sec. 31. AS 43.98 is amended by adding new sections to read: 12 Article 2. Oil and Gas Competitiveness Review Board. 13 Sec. 43.98.040. Oil and Gas Competitiveness Review Board. (a) The Oil and 14 Gas Competitiveness Review Board is established in the department. 15 (b) The board shall consist of nine members as follows: 16 (1) two members appointed by the governor and nominated by the two 17 leading nonprofit trade associations representing the oil and gas industry in the state, 18 as identified by the governor, with one member nominated by each association; 19 (2) the chair of the Alaska Oil and Gas Conservation Commission; 20 (3) three members of the public appointed by the governor, including 21 at least one member who is a petroleum engineer, one member who is a geologist, and 22 one member who is an economist, each of whom has at least three years of experience 23 in the member's field; 24 (4) the commissioner of environmental conservation or the 25 commissioner's designee; 26 (5) the commissioner of natural resources or the commissioner's 27 designee; and 28 (6) the commissioner of revenue or the commissioner's designee. 29 (c) The governor shall, every two years, designate one of the members as 30 chair. 31 (d) Members of the board appointed under (b)(1) and (b)(3) of this section
01 serve for six years. An individual who has served on the board may be reappointed. 02 (e) A vacancy on the board shall be filled in the manner of the original 03 appointment. 04 (f) A member of the board may be removed and replaced at the discretion of 05 the governor. 06 (g) The members of the board appointed under (b)(1) and (b)(3) of this section 07 serve without compensation but shall receive per diem and travel expenses authorized 08 for boards and commissions under AS 39.20.180. 09 (h) The board may enter into contracts for professional services and may 10 employ staff for administrative support for the board. 11 (i) The board shall meet at least four times each calendar year. 12 Sec. 43.98.050. Duties. The duties of the board include the following: 13 (1) establish and maintain a salient collection of information related to 14 oil and gas exploration, development, and production in the state and related to tax 15 structures, rates, and credits in other regions with oil and gas resources; 16 (2) evaluate and suggest changes to state laws and regulations 17 governing the oil and gas industry; 18 (3) review historical, current, and potential levels of investment in the 19 state's oil and gas sector; 20 (4) identify factors that affect investment in oil and gas exploration, 21 development, and production in the state, including tax structure, rates, and credits; 22 royalty requirements; infrastructure; workforce availability; and regulatory 23 requirements; 24 (5) review the competitive position of the state to attract and maintain 25 investment in the oil and gas sector in the state as compared to the competitive 26 position of other regions with oil and gas resources; 27 (6) in order to facilitate the work of the board, establish procedures to 28 accept and keep confidential information that is beneficial to the work of the board, 29 including the creation of a secure data room and confidentiality agreements to be 30 signed by individuals having access to confidential information; 31 (7) make written findings and recommendations, together with
01 suggested legislation, to the Alaska State Legislature before December 1 of each year, 02 or as soon thereafter as practicable, regarding 03 (A) changes to the state's regulatory environment that would be 04 conducive to encouraging increased investment while protecting the interests 05 of the people of the state and the environment; 06 (B) changes to the state's fiscal regime that would be conducive 07 to increased and ongoing long-term investment in and development of the 08 state's oil and gas resources; and 09 (C) alternative means for increasing the state's ability to attract 10 and maintain investment in and development of the state's oil and gas 11 resources. 12 Sec. 43.98.060. Information to be provided to board. (a) The commissioner 13 of natural resources, the commissioner of revenue, the commissioner of environmental 14 conservation, and other commissioners and state agencies that have responsibility for 15 and maintain information related to oil and gas investment and activity in the state 16 shall, at the request of the board, provide information required by the board to carry 17 out the duties described in AS 43.98.050. 18 (b) At the request of the board, and except for information that is confidential 19 under AS 40.25.100(a) or AS 43.05.230, a commissioner may disclose to the board 20 information that is otherwise confidential after each member of the board and each 21 staff member for the board with access to the information signs a confidentiality 22 agreement prepared by the commissioner making the disclosure. Information that is 23 confidential under AS 43.05.230 may not be disclosed to the board. 24 Sec. 43.98.070. Definition. In AS 43.98.040 - 43.98.070, "board" means the 25 Oil and Gas Competitiveness Review Board. 26 * Sec. 32. AS 43.55.023(m) is repealed. 27 * Sec. 33. AS 43.55.011(g), 43.55.023(i), and 43.55.160(c) are repealed January 1, 2014. 28 * Sec. 34. AS 43.98.040, 43.98.050, 43.98.060, and 43.98.070 are repealed December 31, 29 2022. 30 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 APPLICABILITY. (a) Sections 3, 6, 7, and 28 - 30 of this Act apply to oil and gas 02 produced after December 31, 2013. 03 (b) Sections 4 and 27 of this Act apply to oil and gas produced after December 31, 04 2012. 05 (c) Sections 8, 12, 13, 14, and 15 of this Act and AS 43.55.023(a)(1), as amended by 06 sec. 8 of this Act, apply to expenditures incurred after December 31, 2012. 07 (d) Sections 9 - 11, 13, 16, 21 - 23, and 26 of this Act apply to expenditures incurred 08 after December 31, 2013. 09 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: OIL AND GAS COMPETITIVENESS REVIEW BOARD. The 12 governor shall appoint the initial members of the Oil and Gas Competitive Review Board, 13 established in sec. 31 of this Act, before January 1, 2014, or as soon thereafter as is 14 practicable. The initial terms of the members of the board appointed under 15 AS 43.98.040(b)(1) and (b)(3) shall be set by the governor and staggered so that one member 16 serves one year, two members serve four years, and two members serve six years. The first 17 written findings and recommendations, together with suggested legislation, shall be delivered 18 to the Alaska State Legislature on December 1, 2015, or as soon thereafter as is practicable. 19 * Sec. 37. The uncodified law of the State of Alaska is amending by adding a new section to 20 read: 21 TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations 22 to implement this Act. The regulations take effect under AS 44.62 (Administrative Procedure 23 Act), but not before the effective date of the respective provision of this Act. 24 * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 RETROACTIVITY. Sections 4, 12, 14, 15, 23, 27, and 32 of this Act and 27 AS 43.55.023(a)(1), as amended by sec. 8 of this Act, are retroactive to January 1, 2013. 28 * Sec. 39. Sections 1, 3, 6, 7, 9 - 11, 13, 16, 18, 19, 21, 22, 26, and 28 - 30 of this Act take 29 effect January 1, 2014. 30 * Sec. 40. Except as provided in sec. 39 of this Act, this Act takes effect immediately under 31 AS 01.10.070(c).