AS Title 43, Chapter 55: Oil and Gas Production Tax and Oil Surcharge

Article 1. Oil and Gas Production Tax. Chapter 55. Oil and Gas Production Tax and Oil Surcharge. Sec. 43.55.010. Gross production tax. [Repealed, § 9 ch 136 SLA 1977.] Sec. 43.55.011. Oil and gas production tax. (a) [Repealed, § 34 ch 2 TSSLA 2006.] (b) [Repealed, § 34 ch 2 TSSLA 2006.] (c) [Repealed, § 34 ch 2 TSSLA 2006.] (d) [Repealed, § 18 ch 116 SLA 1981.] (e) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state, less any oil and gas the ownership or right to which is exempt from taxation or constitutes a landowner's royalty interest or for which a tax is levied by AS 43.55.014 . Except as otherwise provided under (f), (j), (k), (o), and (p) of this section, for oil and gas produced (1) before January 1, 2014, the tax is equal to the sum of (A) the annual production tax value of the taxable oil and gas as calculated under AS 43.55.160 (a)(1) multiplied by 25 percent; and (B) the sum, over all months of the calendar year, of the tax amounts determined under (g) of this section; (2) on and after January 1, 2014, and before January 1, 2022, the tax is equal to the annual production tax value of the taxable oil and gas as calculated under AS 43.55.160 (a)(1) multiplied by 35 percent; (3) on and after January 1, 2022, the tax for (A) oil is equal to the annual production tax value of the taxable oil as calculated under AS 43.55.160 (h) multiplied by 35 percent; (B) gas is equal to 13 percent of the gross value at the point of production of the taxable gas; if the gross value at the point of production of gas produced from a lease or property is less than zero, that gross value at the point of production is considered zero for purposes of this subparagraph. (f) The levy of tax under (e) of this section for (1) oil and gas produced before January 1, 2022, from leases or properties that include land north of 68 degrees North latitude, other than gas subject to (o) of this section, may not be less than (A) four percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is more than $25; (B) three percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $20 but not over $25; (C) two percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $17.50 but not over $20; (D) one percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $15 but not over $17.50; or (E) zero percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is $15 or less; and (2) oil produced on and after January 1, 2022, from leases or properties that include land north of 68 degrees North latitude, may not be less than (A) four percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is more than $25; (B) three percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $20 but not over $25; (C) two percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $17.50 but not over $20; (D) one percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $15 but not over $17.50; or (E) zero percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is $15 or less. (g) For each month of a calendar year before 2014 for which the producer's average monthly production tax value under AS 43.55.160 (a)(2) of a BTU equivalent barrel of the taxable oil and gas is more than $30, the amount of tax for purposes of (e)(1)(B) of this section is determined by multiplying the monthly production tax value of the taxable oil and gas produced during the month by the tax rate calculated as follows: (1) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number that represents the difference between that average monthly production tax value of a BTU equivalent barrel and $30; or (2) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number that represents the difference between the average monthly production tax value of a BTU equivalent barrel and $92.50, except that the sum determined under this paragraph may not exceed 50 percent. (h) [Repealed, § 66 ch 1 SSSLA 2007.] (i) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state the ownership or right to which constitutes a landowner's royalty interest, except for oil and gas the ownership or right to which is exempt from taxation. The provisions of this subsection apply to a landowner's royalty interest as follows: (1) the tax levied for oil is equal to five percent of the gross value at the point of production of the oil; (2) the tax levied for gas is equal to 1.667 percent of the gross value at the point of production of the gas; (3) if the department determines that, for purposes of reducing the producer's tax liability under (1) or (2) of this subsection, the producer has received or will receive consideration from the royalty owner offsetting all or a part of the producer's royalty obligation, other than a deduction under AS 43.55.020 related to a settlement with a royalty owner of the amount of a tax paid, then, notwithstanding (1) and (2) of this subsection, the tax is equal to 25 percent of the gross value at the point of production of the oil and gas. (j) For a calendar year, the tax levied by (e) of this section for gas produced from a lease or property in the Cook Inlet sedimentary basin may not exceed (1) for a lease or property that first commenced commercial production of gas before April 1, 2006, the product obtained by multiplying (A) the amount of taxable gas produced during the calendar year from the lease or property, times (B) the average rate of tax that was imposed under this chapter for taxable gas produced from the lease or property for the 12-month period ending on March 31, 2006, times (C) the quotient obtained by dividing the total gross value at the point of production of the taxable gas produced from the lease or property during the 12-month period ending on March 31, 2006, by the total amount of that gas; (2) for a lease or property that first commences commercial production of gas after March 31, 2006, the product obtained by multiplying (A) the amount of taxable gas produced during the calendar year from the lease or property, times (B) the average rate of tax that was imposed under this chapter for taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin for the 12-month period ending on March 31, 2006, times (C) the average prevailing value for gas delivered in the Cook Inlet area for the 12-month period ending March 31, 2006, as determined by the department under AS 43.55.020 (f). (k) For a calendar year, the tax levied by (e) of this section may not exceed one dollar a barrel of oil for oil produced from a lease or property in the Cook Inlet sedimentary basin. (l) [Repealed, § 66 ch 1 SSSLA 2007.] (m) [Repealed, § 33 ch. 4 4SSLA 2016.] (n) [Repealed, § 66 ch 1 SSSLA 2007.] (o) Notwithstanding other provisions of this section, for a calendar year, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas produced from a lease or property outside the Cook Inlet sedimentary basin and used in the state, other than gas subject to (p) of this section, may not exceed the amount of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section. (p) For the seven years immediately following the commencement of commercial production of oil or gas produced from leases or properties in the state that are outside the Cook Inlet sedimentary basin and that do not include land located north of 68 degrees North latitude, where that commercial production began after December 31, 2012, and before January 1, 2027, the levy of tax under (e) of this section for oil and gas may not exceed four percent of the gross value at the point of production. Sec. 43.55.012. Adjustment in tax rates. [Repealed, § 34 ch 2 TSSLA 2006.] Sec. 43.55.013. Economic limit factor. [Repealed, § 34 ch 2 TSSLA 2006.] Sec. 43.55.014. Payment in gas of tax for gas. (a) For gas produced on and after January 1, 2022, other than gas described in (e) of this section, the department shall allow a producer to make an election, under regulations adopted by the department, to pay in gas the production tax levied by this section in lieu of the tax otherwise levied for the gas by AS 43.55.011 (e). An election under this subsection applies only to gas produced from oil and gas leases modified under AS 38.05.180 (hh) from which the commissioner of natural resources has determined to take royalty gas in kind under AS 38.05.182 . (b) A production tax levied by this section is equal to 13 percent of the gas otherwise taxable under AS 43.55.011 (e)(3) produced from each oil and gas lease to which an effective election under (a) of this section applies, when and as that gas is produced. The producer shall pay the tax in gas by delivering that 13 percent of the gas to the state at the point of production. (c) The Department of Natural Resources shall manage under AS 38.05.020 (b)(14) the custody and disposition of gas delivered to the state under (b) of this section. (d) An assessment under AS 43.05.245 against a producer for an underpayment of a tax levied by this section may be made in terms of an amount of gas or an amount of money, as determined under regulations adopted by the department. If the assessment is made in terms of money, the amount for a month of production for an oil and gas lease subject to an effective election under (a) of this section is the product of the number of units of gas by which the producer's delivery to the state was less than the amount required by (b) of this section, multiplied by the average gross value at the point of production for each unit of the gas produced by the producer from the lease during the month other than gas that was not subject to tax or gas that was delivered to the state under (b) of this section. The department may allow a credit or refund under AS 43.05.275 for an overpayment of a tax levied by this section that may be issued in the form of gas or money, as determined under regulations adopted by the department. If the credit or refund is allowed in terms of money, the amount of the credit or refund for a month of production for an oil and gas lease subject to an effective election under (a) of this section is the product of the number of units of gas by which the producer's delivery to the state was more than the amount required under (b) of this section, multiplied by the average gross value at the point of production for each unit of the gas produced by the producer from the lease during the month other than gas that was not subject to tax or gas that was delivered to the state under (b) of this section. Interest that is determined as a percentage of the amount of a tax underpayment or overpayment and a penalty that is a percentage of the amount of a tax underpayment are calculated as a percentage of the amount of money determined in this subsection. An amount of gas that was less than the amount required to be delivered to the state under (b) of this section or an amount of gas that was more than the amount required to be delivered to the state under (b) of this section that is adjusted as provided by a gas balancing agreement to which the state is a party under AS 38.05.020 (b)(11) is not subject to assessment under AS 43.05.245 or a credit or refund under AS 43.05.275 . In this subsection, “unit” means a unit of measurement for gas identified by the department under regulations adopted by the department and may be expressed as 1,000 cubic feet, 1,000,000 British thermal units, or another appropriate unit of measurement specified by the department under regulations adopted by the department. (e) This section does not apply to gas that, under AS 43.55.020 (e), is considered as gas produced from a lease or property for the purpose of AS 43.55.011 — 43.55.180. Sec. 43.55.015. Tax per barrel of oil. [Repealed, § 9 ch 136 SLA 1977.] Sec. 43.55.016. Gas production tax. [Repealed, § 34 ch 2 TSSLA 2006.] Sec. 43.55.017. Relation to other taxes. (a) Except as provided in this chapter, the taxes imposed by this chapter are in place of all taxes now imposed by the state or any of its municipalities, and neither the state nor a municipality may impose a tax on (1) producing oil or gas leases; (2) oil or gas produced or extracted in the state; (3) the value of intangible drilling and development costs, as described in 26 U.S.C. 263(c) (Internal Revenue Code), as amended through January 1, 1974. (b) The taxes imposed by this chapter are in place of all taxes imposed by a municipality upon oil or gas in place or nonproducing oil or gas leases or properties. (c) The taxes imposed by this chapter are not in place of the tax imposed by income taxes, franchise taxes, or taxes upon the retail sale of oil or gas products. Sec. 43.55.018. Credit against tax. [Repealed, § 18 ch 116 SLA 1981.] Sec. 43.55.019. Oil or gas producer education credit. [See delayed repeal note.] (a) A producer of oil or gas is allowed a credit against the tax levied by AS 43.55.011 (e) for (1) contributions of cash or equipment accepted for direct instruction, research, and educational support purposes, including library and museum acquisitions, and contributions to endowment, by an Alaska university foundation or by a nonprofit, public or private, Alaska two-year or four-year college accredited by a national or regional accreditation association; (2) contributions of cash or equipment accepted for secondary school level vocational education courses, programs, and facilities by a school district in the state; (3) contributions of cash or equipment accepted for vocational education courses, programs, equipment, and facilities by a state-operated vocational technical education and training school, a nonprofit regional training center recognized by the Department of Labor and Workforce Development, and an apprenticeship program in the state that is registered with the United States Department of Labor under 29 U.S.C. 50 — 50b (National Apprenticeship Act); (4) contributions of cash or equipment accepted for a facility by a nonprofit, public or private, Alaska two-year or four-year college accredited by a national or regional accreditation association; (5) contributions of cash or equipment accepted for Alaska Native cultural or heritage programs and educational support, including mentoring and tutoring, provided by a nonprofit agency for public school staff and for students who are in grades kindergarten through 12 in the state; (6) contributions of cash or equipment accepted for education, research, rehabilitation, and facilities by an institution that is located in the state and that qualifies as a coastal ecosystem learning center under the Coastal America Partnership established by the federal government; (7) contributions of cash or equipment accepted for the Alaska higher education investment fund under AS 37.14.750 ; (8) contributions of cash or equipment accepted for the operation of a nonprofit educational resource center that supports academic achievement in grades nine through 12 by coordinating curricula and statewide competition in the subject areas of economics, science, social science, literature, music, art, mathematics, writing, speech, and interview skills and by providing student scholarships; (9) expenditures made to operate a child care facility in the state for the children of the producer's employees; (10) contributions of cash or equipment accepted by a child care facility in the state operated by a nonprofit corporation and attended by one or more children of the producer's employees; and (11) a payment to an employee of the producer made by the producer for the purpose of offsetting the employee's child care costs incurred in the state. (b) The amount of the credit is 50 percent of contributions. (c) Each public college and university shall include in its annual operating budget request contributions received and how the contributions were used. (d) A contribution claimed as a credit under this section may not (1) be the basis for a credit claimed under another provision of this title; and (2) when combined with contributions that are the basis for credits taken during the taxpayer's tax year under AS 21.96.070 , AS 43.20.014 , AS 43.56.018 , AS 43.65.018 , AS 43.75.018 , or AS 43.77.045 , result in the total amount of credits exceeding $3,000,000; if the taxpayer is a member of an affiliated group, then the total amount of credits may not exceed $3,000,000 or the affiliated group; in this paragraph, “affiliated group” has the meaning given in AS 43.20.145 . (e) The credit under this section may not reduce a person's tax liability under AS 43.55.011 (e) to below zero for any tax year. An unused credit or portion of a credit not used under this section for a tax year may not be sold, traded, transferred, or applied in a subsequent tax year. (f) The department may, by regulation, establish procedures by which a taxpayer may allocate a pro rata share of a credit claimed under this section against monthly tax payments made during the tax year. (g) To qualify for a credit under this section, equipment must be appraised consistent with regulations adopted by the department to determine the value of the contribution for purposes of this section. (h) Beginning January 1, 2030, and every five years thereafter, the Department of Labor and Workforce Development shall adjust the limit under (d) of this section for inflation, using 100 percent of the change over the preceding five calendar years in the Consumer Price Index for all urban consumers for urban Alaska, compiled by the Bureau of Labor Statistics, United States Department of Labor. (i) In this section, (1) “school district” has the meaning given in AS 43.20.014 ; (2) “vocational education” has the meaning given in AS 43.20.014 . Sec. 43.55.020. Payment of tax. (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay the tax as follows: (1) for oil and gas produced before January 1, 2014, an installment payment of the estimated tax levied by AS 43.55.011 (e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month; except as otherwise provided under (2) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011 (e) for the calendar year, but the amount of the installment payment may not be less than zero: (A) for oil and gas not subject to AS 43.55.011 (o) or (p) produced from leases or properties in the state outside the Cook Inlet sedimentary basin, other than leases or properties subject to AS 43.55.011 (f), the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011 (g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; (B) for oil and gas produced from leases or properties subject to AS 43.55.011 (f), the greatest of (i) zero; (ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; or (iii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011 (g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated; (C) for oil or gas subject to AS 43.55.011 (j), (k), or (o), for each lease or property, the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011 (g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil or gas, respectively, produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated; (D) for oil and gas subject to AS 43.55.011 (p), the lesser of (i) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011 (g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated, but not less than zero; or (ii) four percent of the gross value at the point of production of the oil and gas produced from the leases or properties during the month, but not less than zero; (2) an amount calculated under (1)(C) of this subsection for oil or gas subject to AS 43.55.011 (j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011 (j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011 (k) for oil, but substituting in AS 43.55.011 (j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011 (k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year; (3) an installment payment of the estimated tax levied by AS 43.55.011 (i) for each lease or property is due for each month of the calendar year on the last day of the following month; the amount of the installment payment is the sum of (A) the applicable tax rate for oil provided under AS 43.55.011 (i), multiplied by the gross value at the point of production of the oil taxable under AS 43.55.011 (i) and produced from the lease or property during the month; and (B) the applicable tax rate for gas provided under AS 43.55.011 (i), multiplied by the gross value at the point of production of the gas taxable under AS 43.55.011 (i) and produced from the lease or property during the month; (4) any amount of tax levied by AS 43.55.011 , net of any credits applied as allowed by law, that exceeds the total of the amounts due as installment payments of estimated tax is due on March 31 of the year following the calendar year of production; (5) for oil and gas produced on and after January 1, 2014, and before January 1, 2022, an installment payment of the estimated tax levied by AS 43.55.011 (e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month; except as otherwise provided under (6) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011 (e) for the calendar year, but the amount of the installment payment may not be less than zero: (A) for oil and gas not subject to AS 43.55.011 (o) or (p) produced from leases or properties in the state outside the Cook Inlet sedimentary basin, other than leases or properties subject to AS 43.55.011 (f), the greater of (i) zero; or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; (B) for oil and gas produced from leases or properties subject to AS 43.55.011 (f), the greatest of (i) zero; (ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; or (iii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated, except that, for the purposes of this calculation, a reduction from the gross value at the point of production may apply for oil and gas subject to AS 43.55.160 (f) or (g); (C) for oil or gas subject to AS 43.55.011 (j), (k), or (o), for each lease or property, the greater of (i) zero; or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil or gas, respectively, produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated; (D) for oil and gas subject to AS 43.55.011 (p), the lesser of (i) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated, but not less than zero; or (ii) four percent of the gross value at the point of production of the oil and gas produced from the leases or properties during the month, but not less than zero; (6) an amount calculated under (5)(C) of this subsection for oil or gas subject to AS 43.55.011 (j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011 (j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011 (k) for oil, but substituting in AS 43.55.011 (j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011 (k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year; (7) for oil and gas produced on or after January 1, 2022, an installment payment of the estimated tax levied by AS 43.55.011 (e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month; except as otherwise provided under (10) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011 (e) for the calendar year, but the amount of the installment payment may not be less than zero: (A) for oil produced from leases or properties subject to AS 43.55.011 (f), the greatest of (i) zero; (ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated; or (iii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160 (h)(1) from the gross value at the point of production of the oil produced from those leases or properties during the month for which the installment payment is calculated, except that, for the purposes of this calculation, a reduction from the gross value at the point of production may apply for oil subject to AS 43.55.160 (f) or 43.55.160(f) and (g); (B) for oil produced before or during the last calendar year under AS 43.55.024 (b) for which the producer could take a tax credit under AS 43.55.024 (a), from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, other than leases or properties subject to AS 43.55.011 (o) or (p), the greater of (i) zero; or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160 (h)(2) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated; (C) for oil and gas produced from leases or properties subject to AS 43.55.011 (p), except as otherwise provided under (8) of this subsection, the sum of (i) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160 (h)(3) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated, but not less than zero; and (ii) 13 percent of the gross value at the point of production of the gas produced from the leases or properties during the month, but not less than zero; (D) for oil produced from leases or properties in the state, no part of which is north of 68 degrees North latitude, other than leases or properties subject to (B), (C), or (F) of this paragraph, the greater of (i) zero; or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160 (h)(4) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated; (E) for gas produced from each lease or property in the state outside the Cook Inlet sedimentary basin, other than a lease or property subject to AS 43.55.011 (o) or (p), 13 percent of the gross value at the point of production of the gas produced from the lease or property during the month for which the installment payment is calculated, but not less than zero; (F) for oil subject to AS 43.55.011 (k), for each lease or property, the greater of (i) zero; or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil produced from the lease or property from the gross value at the point of production of the oil produced from the lease or property during the month for which the installment payment is calculated; (G) for gas subject to AS 43.55.011 (j) or (o), for each lease or property, the greater of (i) zero; or (ii) 13 percent of the gross value at the point of production of the gas produced from the lease or property during the month for which the installment payment is calculated; (8) an amount calculated under (7)(C) of this subsection may not exceed four percent of the gross value at the point of production of the oil and gas produced from leases or properties subject to AS 43.55.011 (p) during the month for which the installment payment is calculated; (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point of production is determined under AS 43.55.011 (f)(1) or (2) but substituting the phrase “month for which the installment payment is calculated” in AS 43.55.011 (f)(1) and (2) for the phrase “calendar year for which the tax is due”; (10) an amount calculated under (7)(F) or (G) of this subsection for oil or gas subject to AS 43.55.011 (j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011 (j)(1) or (2) or 43.55.011(o), as applicable, for gas, or set out in AS 43.55.011 (k) for oil, but substituting in AS 43.55.011 (j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011 (k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year. (b) The production tax on oil and gas shall be paid to the department by or on behalf of the producer. (c) [Repealed, § 7 ch 101 SLA 1972.] (d) [Repealed, § 33, ch. 10, SLA 2013.] (e) Gas flared, released, or allowed to escape in excess of the amount authorized by the Alaska Oil and Gas Conservation Commission is considered, for the purpose of AS 43.55.011 — 43.55.180, as gas produced from a lease or property. Oil or gas used in the operation of a lease or property in the state in drilling for or producing oil or gas, or for repressuring, except to the extent determined by the Alaska Oil and Gas Conservation Commission to be waste, is not considered, for the purpose of AS 43.55.011 — 43.55.180, as oil or gas produced from a lease or property. (f) If oil or gas is produced but not sold, gas is produced but is stored in a gas storage facility, or oil or gas is produced and sold under circumstances where the sale price does not represent the prevailing value for oil or gas of like kind, character, or quality in the field or area from which the product is produced, the department may require the tax to be paid upon the basis of the value of oil or gas of the same kind, quality, and character prevailing for that field or area during the calendar month of production or sale. (g) Notwithstanding any contrary provision of AS 43.05.225 , (1) before January 1, 2014, an unpaid amount of an installment payment required under (a)(1) — (3) of this section that is not paid when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date the installment payment is due until March 31 following the calendar year of production, and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued under (A) of this paragraph that remains unpaid after that March 31 is treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax due under (a)(4) of this section that is not paid when due bears interest as provided for a delinquent tax under AS 43.05.225 ; (2) on and after January 1, 2014, an unpaid amount of an installment payment required under (a)(3), (5), (6), or (7) of this section that is not paid when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date the installment payment is due until March 31 following the calendar year of production, and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued under (A) of this paragraph that remains unpaid after that March 31 is treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax due under (a)(4) of this section that is not paid when due bears interest as provided for a delinquent tax under AS 43.05.225 . (h) Notwithstanding any contrary provision of AS 43.05.280 , (1) an overpayment of an installment payment required under (a)(1), (2), (3), (5), (6), or (7) of this section bears interest at the rate provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the later of the date the installment payment is due or the date the overpayment is made, until the earlier of (A) the date it is refunded or is applied to an underpayment; or (B) March 31 following the calendar year of production; (2) except as provided under (1) of this subsection, interest with respect to an overpayment is allowed only on any net overpayment of the payments required under (a) of this section that remains after the later of March 31 following the calendar year of production or the date that the statement required under AS 43.55.030 (a) is filed; (3) interest is allowed under (2) of this subsection only from a date that is 90 days after the later of March 31 following the calendar year of production or the date that the statement required under AS 43.55.030 (a) is filed; interest is not allowed if the overpayment was refunded within the 90-day period; (4) interest under (2) and (3) of this subsection is paid at the rate and in the manner provided in AS 43.05.225 (1). (i) Notwithstanding any contrary provision of AS 43.05.225 or (g) or (h) of this section, if the amount of a tax payment, including an installment payment, due under (a)(1) — (4) of this section is affected by the retroactive application of a regulation adopted under this chapter, the department shall determine whether the retroactive application of the regulation caused an underpayment or an overpayment of the amount due and adjust the interest due on the affected payment as follows: (1) if an underpayment of the amount due occurred, the department shall waive interest that would otherwise accrue for the underpayment before the first day of the second month following the month in which the regulation became effective, if (A) the department determines that the producer's underpayment resulted because the regulation was not in effect when the payment was due; and (B) the producer demonstrates that it made a good faith estimate of its tax obligation in light of the regulations then in effect when the payment was due and paid the estimated tax; (2) if an overpayment of the amount due occurred and the department determines that the producer's overpayment resulted because the regulation was not in effect when the payment was due, the obligation for a refund for the overpayment does not begin to accrue interest earlier than the following, as applicable: (A) except as otherwise provided under (B) of this paragraph, the first day of the second month following the month in which the regulation became effective; (B) 90 days after an amended statement under AS 43.55.030 (a) and an application to request a refund of production tax paid is filed, if the overpayment was for a period for which an amended statement under AS 43.55.030 (a) was required to be filed before the regulation became effective. (j) Cushion gas in a gas storage facility is not considered to be gas used in the operation of a lease or property or gas used for repressuring as described in (e) of this section. Gas withdrawn from a gas storage facility regulated under AS 42.05 is considered to be non-native gas until all non-native gas injected into the gas storage facility has been withdrawn from the gas storage facility. Non-native gas withdrawn from a gas storage facility is not considered to be gas produced for the purposes of AS 43.55.011 — 43.55.180. Gas withdrawn from a gas storage facility after all non-native gas previously injected into the gas storage facility has been withdrawn is gas considered to be produced from the lease or property for the purposes of AS 43.55.011 — 43.55.180. In this subsection, “native gas” and “non-native gas” have the meanings given in AS 31.05.032 . (k) For oil and gas produced on and after January 1, 2014, and before January 1, 2022, in making settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011 , the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes due to the amount of the tax paid. If the total deductions of installment payments of estimated tax for a calendar year exceed the actual tax for that calendar year, the producer shall, before April 1 of the following year, refund the excess to the royalty owner. Unless otherwise agreed between the producer and the royalty owner, the amount of the tax paid under AS 43.55.011 (e) on taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or right to which constitutes a landowner's royalty interest, is considered to be the gross value at the point of production of the taxable royalty oil and gas produced during the calendar year multiplied by a figure that is a quotient, in which (1) the numerator is the producer's total tax liability under AS 43.55.011 (e)(2) for the calendar year of production; and (2) the denominator is the total gross value at the point of production of the oil and gas taxable under AS 43.55.011 (e) produced by the producer from all leases and properties in the state during the calendar year. (l) For oil and gas produced on and after January 1, 2022, in making settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011 , the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes due to the amount of the tax paid. If the total deductions of installment payments of estimated tax for a calendar year exceed the actual tax for that calendar year, the producer shall, before April 1 of the following year, refund the excess to the royalty owner. In making settlement with the royalty owner for gas that is taxable under AS 43.55.014 , the producer may deduct the amount of the gas paid as in-kind tax on taxable royalty gas or may deduct the gross value at the point of production of the gas paid as in-kind tax on taxable royalty gas. Unless otherwise agreed between the producer and the royalty owner, the amount of the tax paid under AS 43.55.011 (e) on taxable royalty oil for a calendar year, other than oil the ownership or right to which constitutes a landowner's royalty interest, is considered to be the gross value at the point of production of the taxable royalty oil produced during the calendar year multiplied by a figure that is a quotient, in which (1) the numerator is the producer's total tax liability under AS 43.55.011 (e)(3)(A) for the calendar year of production; and (2) the denominator is the total gross value at the point of production of the oil taxable under AS 43.55.011 (e) produced by the producer from all leases and properties in the state during the calendar year. (m) In this section, “gas storage facility” has the meaning given in AS 31.05.032 . Sec. 43.55.021. Alaska veterans' memorial endowment fund contribution credit. [Repealed, § 25 ch 46 SLA 2002.] Sec. 43.55.023. Tax credits for certain losses and expenditures. (a) A producer or explorer may take a tax credit for a qualified capital expenditure as follows: (1) notwithstanding that a qualified capital expenditure may be a deductible lease expenditure for purposes of calculating the production tax value of oil and gas under AS 43.55.160 (a), unless a credit for that expenditure is taken under former AS 43.20.043 or AS 43.55.025 , a producer or explorer that incurs a qualified capital expenditure may also elect to apply a tax credit against a tax levied by AS 43.55.011 (e) in the amount of 10 percent of that expenditure; (2) a producer or explorer may take a credit for a qualified capital expenditure incurred in connection with geological or geophysical exploration or in connection with an exploration well only if the producer or explorer (A) agrees, in writing, to the applicable provisions of AS 43.55.025 (f)(2); and (B) submits to the Department of Natural Resources all data that would be required to be submitted under AS 43.55.025 (f)(2); (3) a credit for a qualified capital expenditure incurred to explore for, develop, or produce oil or gas deposits located (A) north of 68 degrees North latitude may be taken only if the expenditure is incurred before January 1, 2014; (B) in the Cook Inlet sedimentary basin may be taken only if the expenditure is incurred before January 1, 2018. (b) [Repealed, § 30 ch 3 SSSLA 2017.] (c) A credit or portion of a credit under this section (1) may not be used to reduce a person's tax liability under AS 43.55.011 (e) for any calendar year below zero; (2) may, if not used under this subsection, be applied in a later calendar year; (3) may, regardless of when the credit was earned, be used to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter for a prior year, except for a surcharge under AS 43.55.201 — 43.55.299 or 43.55.300 or the tax levied by AS 43.55.011 (i) or 43.55.014; and (B) has not, for the purpose of art. IX, sec. 17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation.

(d) A person that is entitled to take a tax credit under this section that wishes to transfer the unused credit to another person or, for a credit for a lease expenditure incurred before July 1, 2017, obtain a cash payment under AS 43.55.028 may apply to the department for a transferable tax credit certificate. An application under this subsection must be in a form prescribed by the department and must include supporting information and documentation that the department reasonably requires. The department shall grant or deny an application, or grant an application as to a lesser amount than that claimed and deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the year following the calendar year in which the qualified capital expenditure or carried-forward annual loss for which the credit is claimed was incurred; (2) the date the statement required under AS 43.55.030 (a) or (e) was filed for the calendar year in which the qualified capital expenditure or carried-forward annual loss for which the credit is claimed was incurred; or (3) the date the application was received by the department. If, based on the information then available to it, the department is reasonably satisfied that the applicant is entitled to a credit, the department shall issue the applicant a transferable tax credit certificate for the amount of the credit. A certificate issued under this subsection does not expire. (e) A person to which a transferable tax credit certificate is issued under (d) of this section may transfer the certificate to another person, and a transferee may further transfer the certificate. Subject to the limitations set out in (a) — (d) of this section, and notwithstanding any action the department may take with respect to the applicant under (g) of this section, the owner of a certificate may apply the credit or a portion of the credit shown on the certificate (1) against a tax levied by AS 43.55.011 (e); however, a credit shown on a transferable tax credit certificate may not be applied under this paragraph to reduce a transferee's total tax liability under AS 43.55.011 (e) for oil and gas produced during a calendar year to less than 80 percent of the tax that would otherwise be due without applying that credit; any portion of a credit not used under this paragraph may be applied in a later period; or (2) regardless of when the credit was earned, to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter, except for a surcharge under AS 43.55.201 — 43.55.299 or 43.55.300 or the tax levied by AS 43.55.011 (i) or 43.55.014; (B) is for a calendar year before the year in which the certificate is applied; and (C) has not, for the purpose of art. IX, sec. 17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation. (f) [Repealed, § 67 ch 1 SSSLA 2007.] (g) The issuance of a transferable tax credit certificate under (d) of this section or former (m) of this section or the purchase of a certificate under AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to which the certificate relates or to adjust the claim if the department determines, as a result of the audit, that the applicant was not entitled to the amount of the credit for which the certificate was issued. The tax liability of the applicant under AS 43.55.011 (e) and 43.55.017 — 43.55.180 is increased by the amount of the credit that exceeds that to which the applicant was entitled, or the applicant's available valid outstanding credits applicable against the tax levied by AS 43.55.011 (e) are reduced by that amount. If the applicant's tax liability is increased under this subsection, the increase bears interest under AS 43.05.225 from the date the transferable tax credit certificate was issued. For purposes of this subsection, an applicant that is an explorer is considered a producer subject to the tax levied by AS 43.55.011 (e). (h) Regulations adopted to implement this section must include provisions prescribing reporting, record keeping, and certification procedures and requirements to verify the accuracy of credits claimed and to ensure that a credit is not used more than once. (i) [Repealed, § 33 ch 10 SLA 2013.] (j) As a condition of receiving a tax credit under this section, a producer or explorer that obtains the tax credit for or directly related to a pipeline, facility, or other asset that is or becomes subject to regulation by the Federal Energy Regulatory Commission, the Regulatory Commission of Alaska, or a successor regulatory body shall at all times support and in all rate proceedings file to flow through 100 percent of the tax credits to ratepayers as a reduction in the costs of service for the pipeline, facility, or other asset. (k) An entity that is exempt from taxation under this chapter may not apply for a transferable tax credit certificate. (l) A producer or explorer may apply for a tax credit for a well lease expenditure incurred in the state south of 68 degrees North latitude after June 30, 2010, as follows: (1) notwithstanding that a well lease expenditure incurred in the state south of 68 degrees North latitude may be a deductible lease expenditure for purposes of calculating the production tax value of oil and gas under AS 43.55.160 (a), unless a credit for that expenditure is taken under (a) of this section, AS 43.20.043 , or AS 43.55.025 , a producer or explorer that incurs a well lease expenditure in the state south of 68 degrees North latitude may elect to apply a tax credit against a tax levied by AS 43.55.011 (e) in the amount of (A) 40 percent of that expenditure incurred before January 1, 2017; (B) 20 percent of that expenditure incurred on or after January 1, 2017; (2) a producer or explorer may take a credit for a well lease expenditure incurred in the state south of 68 degrees North latitude in connection with geological or geophysical exploration or in connection with an exploration well only if the producer or explorer (A) agrees, in writing, to the applicable provisions of AS 43.55.025 (f)(2); and (B) submits to the Department of Natural Resources all data that would be required to be submitted under AS 43.55.025 (f)(2); (3) a credit for a well lease expenditure incurred to explore for, develop, or produce oil or gas deposits located in the Cook Inlet sedimentary basin may be taken only if the expenditure is incurred before January 1, 2018. (m) [Repealed, § 32 ch 10 SLA 2013.] (n) For the purposes of (l) of this section, a well lease expenditure incurred in the state south of 68 degrees North latitude is a lease expenditure that is (1) directly related to an exploration well, a stratigraphic test well, a producing well, or an injection well other than a disposal well, located in the state south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure and an intangible drilling and development cost authorized under 26 U.S.C. (Internal Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well includes an expenditure for well sidetracking, well deepening, well completion or recompletion, or well workover, regardless of whether the well is or has been a producing well; or (2) an expense for seismic work conducted within the boundaries of a production or exploration unit. (o) In this section, “qualified capital expenditure” (1) means, except as otherwise provided in (2) of this subsection, an expenditure that is a lease expenditure under AS 43.55.165 and is (A) incurred for geological or geophysical exploration; or (B) treated as a capitalized expenditure under 26 U.S.C. (Internal Revenue Code), as amended, regardless of elections made under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is (i) treated as a capitalized expenditure for federal income tax reporting purposes by the person incurring the expenditure; or (ii) eligible to be deducted as an expense under 26 U.S.C. 263(c) (Internal Revenue Code), as amended; (2) does not include an expenditure incurred to acquire an asset (A) the cost of previously acquiring which was a lease expenditure under AS 43.55.165 or would have been a lease expenditure under AS 43.55.165 if it had been incurred after March 31, 2006; for purposes of this subparagraph, “asset” includes geological, geophysical, and well data and interpretations; or (B) that has previously been placed in service in the state; an expenditure to acquire an asset is not excluded under this paragraph if not more than an immaterial portion of the asset meets a description under this paragraph. (p) [Repealed, § 33 ch 10 SLA 2013.] Sec. 43.55.024. Additional nontransferable tax credits. (a) For a calendar year for which a producer's tax liability under AS 43.55.011 (e) on oil and gas produced from leases or properties outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, exceeds zero before application of any credits under this chapter, a producer that is qualified under (e) of this section may apply a tax credit against that liability of not more than $6,000,000. (b) A producer may not take a tax credit under (a) of this section for any calendar year after the later of (1) 2016; or (2) the ninth calendar year after the calendar year during which the producer first has commercial oil or gas production before May 1, 2016, from at least one lease or property in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, if the producer did not have commercial oil or gas production from a lease or property in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, before April 1, 2006. (c) For a calendar year for which a producer's tax liability under AS 43.55.011 (e) exceeds zero before application of any credits under this chapter, other than a credit under (a) of this section but after application of any credit under (a) of this section, a producer that is qualified under (e) of this section and whose average amount of oil and gas produced a day and taxable under AS 43.55.011 (e) is less than 100,000 BTU equivalent barrels a day may apply a tax credit under this subsection against that liability. A producer whose average amount of oil and gas produced a day and taxable under AS 43.55.011 (e) is (1) not more than 50,000 BTU equivalent barrels may apply a tax credit of not more than $12,000,000 for the calendar year; (2) more than 50,000 and less than 100,000 BTU equivalent barrels may apply a tax credit of not more than $12,000,000 multiplied by the following fraction for the calendar year: 1 - [2 X (AP - 50,000)] ÷ 100,000 where AP = the average amount of oil and gas taxable under AS 43.55.011 (e), produced a day during the calendar year in BTU equivalent barrels. (d) A producer may not take a tax credit under (c) of this section for any calendar year after the later of (1) 2016; or (2) if the producer did not have commercial oil or gas production from a lease or property in the state before April 1, 2006, the ninth calendar year after the calendar year during which the producer first has commercial oil or gas production before May 1, 2016, from at least one lease or property in the state. (e) On written application by a producer that includes any information the department may require, the department shall determine whether the producer qualifies for a calendar year under (a) and (c) of this section. To qualify under (a) and (c) of this section, a producer must demonstrate that its operation in the state or its ownership of an interest in a lease or property in the state as a distinct producer would not result in the division among multiple producer entities of any production tax liability under AS 43.55.011 (e) that reasonably would be expected to be attributed to a single producer if the tax credit provisions of (a) or (c) of this section did not exist. (f) A tax credit authorized by (a) of this section may not be applied to reduce a producer's tax liability for any calendar year under AS 43.55.011 (e) on oil and gas produced from leases or properties outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, below zero. (g) A tax credit authorized by (c) of this section may not be applied to reduce a producer's tax liability for any calendar year under AS 43.55.011 (e) below zero. (h) An unused tax credit or portion of a tax credit under this section is not transferable and may not be carried forward for use in a later calendar year. (i) A producer may apply against the producer's tax liability for the calendar year under AS 43.55.011 (e) a tax credit of $5 for each barrel of oil taxable under AS 43.55.011 (e) that receives a reduction in the gross value at the point of production under AS 43.55.160 (f) or (g) and that is produced during a calendar year after December 31, 2013. A tax credit authorized by this subsection may not reduce a producer's tax liability for a calendar year under AS 43.55.011 (e) below zero. (j) A producer may apply against the producer's tax liability for the calendar year under AS 43.55.011 (e) a tax credit in the amount specified in this subsection for each barrel of oil taxable under AS 43.55.011 (e) that does not receive a reduction in the gross value at the point of production under AS 43.55.160 (f) or (g) and that is produced during a calendar year after December 31, 2013, from leases or properties north of 68 degrees North latitude. A tax credit under this subsection may not reduce a producer's tax liability for a calendar year under AS 43.55.011 (e) below the amount calculated under AS 43.55.011 (f). The amount of the tax credit for a barrel of taxable oil subject to this subsection produced during a month of the calendar year is (1) $8 for each barrel of taxable oil if the average gross value at the point of production for the month is less than $80 a barrel; (2) $7 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $80 a barrel, but less than $90 a barrel; (3) $6 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $90 a barrel, but less than $100 a barrel; (4) $5 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $100 a barrel, but less than $110 a barrel; (5) $4 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $110 a barrel, but less than $120 a barrel; (6) $3 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $120 a barrel, but less than $130 a barrel; (7) $2 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $130 a barrel, but less than $140 a barrel; (8) $1 for each barrel of taxable oil if the average gross value at the point of production for the month is greater than or equal to $140 a barrel, but less than $150 a barrel; (9) zero if the average gross value at the point of production for the month is greater than or equal to $150 a barrel. Sec. 43.55.025. Alternative tax credit for oil and gas exploration. (a) Subject to the terms and conditions of this section, a credit against the tax levied by AS 43.55.011 (e) or, if the credit is for exploration expenditures incurred for work performed on or after July 1, 2016, against the tax levied by AS 43.20 is allowed for exploration expenditures that qualify under (b) of this section in an amount equal to one of the following: (1) 30 percent of the total exploration expenditures that qualify only under (b) and (c) of this section; (2) 30 percent of the total exploration expenditures that qualify only under (b) and (d) of this section; (3) 40 percent of the total exploration expenditures that qualify under (b), (c), and (d) of this section; (4) 40 percent of the total exploration expenditures that qualify only under (b) and (e) of this section; (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this section, of the total exploration expenditures described in (b)(2) and (3) of this section and not excluded by (b)(4) and (5) of this section that qualify only under (l) of this section; (6) the lesser of $25,000,000 or 80 percent of the total exploration drilling expenditures described in (m) of this section and that qualify under (b) and (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or (7) the lesser of $7,500,000 or 75 percent of the total seismic exploration expenditures described in (n) of this section and that qualify under (b) of this section. (b) To qualify for the production tax credit under (a) of this section, an exploration expenditure (1) must be incurred for work performed after June 30, 2008, and before July 1, 2016, except that, for exploration conducted outside of the Cook Inlet sedimentary basin and south of 68 degrees North latitude, to qualify for the production tax credit under (A) (a)(1), (2), or (3) of this section, an exploration expenditure must be incurred for work performed after June 30, 2008, and before January 1, 2022; and (B) (a)(4) of this section, an exploration expenditure must be incurred for work performed after June 30, 2008, and before January 1, 2018; (2) may be for seismic or other geophysical exploration costs not connected with a specific well; (3) if for an exploration well, (A) must be incurred by an explorer that holds an interest in the exploration well for which the production tax credit is claimed; (B) may be for either a well that encounters an oil or gas deposit or a dry hole; (C) must be for a well that has been completed, suspended, or abandoned at the time the explorer claims the tax credit under (f) of this section; and (D) must be for goods, services, or rentals of personal property reasonably required for the surface preparation, drilling, casing, cementing, and logging of an exploration well, and, in the case of a dry hole, for the expenses required for abandonment if the well is abandoned within 18 months after the date the well was spudded; (4) may not be for administration, supervision, engineering, or lease operating costs; geological or management costs; community relations or environmental costs; bonuses, taxes, or other payments to governments related to the well; costs, including repairs and replacements, arising from or associated with fraud, wilful misconduct, gross negligence, criminal negligence, or violation of law, including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs that are generally recognized as indirect costs or financing costs; and (5) may not be incurred for an exploration well or seismic exploration that is included in a plan of exploration or a plan of development for any unit before May 14, 2003. (c) To be eligible for a production tax credit authorized by (a)(1), (3), or (6) of this section, exploration expenditures must (1) qualify under (b) of this section; and (2) be for an exploration well, subject to the following: (A) before the well is spudded, (i) the explorer shall submit to the commissioner of natural resources the information necessary to determine whether the geological objective of the well is a potential oil or gas trap that is distinctly separate from any trap that has been tested by a preexisting well; (ii) at the time of the submittal of information under (i) of this subparagraph, the commissioner of natural resources may request from the explorer that specific data sets, ancillary data, and reports including all results, and copies of well data collected and data analyses for the well be provided to the Department of Natural Resources upon completion of the drilling; in this sub-subparagraph, well data include all analyses conducted on physical material, and well logs collected from the well and sample analyses; testing geophysical and velocity data including vertical seismic profiles and check shot surveys; testing data and analyses; age data; geochemical analyses; and access to tangible material; and (iii) the commissioner of natural resources must make an affirmative determination as to whether the geological objective of the well is a potential oil or gas trap that is distinctly separate from any trap that has been tested by a preexisting well and what information under (ii) of this subparagraph must be submitted by the explorer after completion, abandonment, or suspension under AS 31.05.030 ; the commissioner of natural resources shall make that determination within 60 days after receiving all the necessary information from the explorer based on the information received and on other information the commissioner of natural resources considers relevant; (B) for an exploration well other than a well to explore a Cook Inlet prospect, the well must be located and drilled in such a manner that the bottom hole is located not less than three miles away from the bottom hole of a preexisting well drilled for oil or gas, irrespective of whether the preexisting well has been completed, suspended, or abandoned; (C) after completion, suspension, or abandonment under AS 31.05.030 of the exploration well, the commissioner of natural resources must determine that the well was consistent with achieving the explorer's stated geological objective. (d) To be eligible for the 30 percent production tax credit authorized by (a)(2) of this section or the 40 percent production tax credit authorized by (a)(3) of this section, an exploration expenditure must (1) qualify under (b) of this section; and (2) be for an exploration well that is located not less than 25 miles outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under a plan of development, except that for an exploration well for a Cook Inlet prospect to qualify under this paragraph, the exploration well must be located not less than 10 miles outside the outer boundary, as delineated on July 1, 2003, of any unit that is under a plan of development. (e) To be eligible for the 40 percent production tax credit authorized by (a)(4) of this section, the exploration expenditure must (1) qualify under (b) of this section; (2) be for seismic exploration; and (3) have been conducted outside the boundaries of a production unit or an exploration unit; however, the amount of the expenditure that is otherwise eligible under this subsection is reduced proportionately by the portion of the seismic exploration activity that crossed into a production unit or an exploration unit. (f) For a production tax credit under this section, (1) an explorer shall, in a form prescribed by the department and, except for a credit under (k) of this section, within six months of the completion of the exploration activity, claim the credit and submit information sufficient to demonstrate to the department's satisfaction that the claimed exploration expenditures qualify under this section; in addition, the explorer shall submit information necessary for the commissioner of natural resources to evaluate the validity of the explorer's compliance with the requirements of this section; (2) an explorer shall agree, in writing, (A) to notify the Department of Natural Resources, within 30 days after completion of seismic or geophysical data processing, completion of well drilling, or filing of a claim for credit, whichever is the latest, for which exploration costs are claimed, of the date of completion and submit a report to that department describing the processing sequence and providing a list of data sets available; (B) to provide to the Department of Natural Resources, within 30 days after the date of a request, unless a longer period is provided by the Department of Natural Resources, specific data sets, ancillary data, and reports identified in (A) of this paragraph; in this subparagraph, (i) a seismic or geophysical data set includes the data for an entire seismic survey, irrespective of whether the survey area covers nonstate land in addition to state land or land in a unit in addition to land outside a unit; (ii) well data include all analyses conducted on physical material, and well logs collected from the well, results, and copies of data collected and data analyses for the well, including well logs; sample analyses; testing geophysical and velocity data including seismic profiles and check shot surveys; testing data and analyses; age data; geochemical analyses; and tangible material; (C) that, notwithstanding any provision of AS 38 , information provided under this paragraph will be held confidential by the Department of Natural Resources, (i) in the case of well data, until the expiration of the 24-month period of confidentiality described in AS 31.05.035 (c), at which time the Department of Natural Resources will release the information after 30 days' public notice unless, in the discretion of the commissioner of natural resources, it is necessary to protect information relating to the valuation of unleased acreage in the same vicinity, or unless the well is on private land and the owner, including the lessor but not the lessee, of the oil and gas resources has not given permission to release the well data; (ii) in the case of seismic or other geophysical data, other than seismic data acquired by seismic exploration subject to (k) of this section, for 10 years following the completion date, at which time the Department of Natural Resources will release the information after 30 days' public notice, except as to seismic or other geophysical data acquired from private land, unless the owner, including a lessor but not a lessee, of the oil and gas resources in the private land gives permission to release the seismic or other geophysical data associated with the private land; (iii) in the case of seismic data obtained by seismic exploration subject to (k) of this section, only until the expiration of 30 days' public notice issued on or after the date the production tax credit certificate is issued under (5) of this subsection; (3) if more than one explorer holds an interest in a well or seismic exploration, each explorer may claim an amount of credit that is proportional to the explorer's cost incurred; (4) the department may exercise the full extent of its powers as though the explorer were a taxpayer under this title, in order to verify that the claimed expenditures are qualified exploration expenditures under this section; and (5) if the department is satisfied that the explorer's claimed expenditures are qualified under this section and that all data required to be submitted under this section have been submitted, the department shall issue to the explorer a production tax credit certificate for the amount of credit to be allowed against production taxes levied by AS 43.55.011 (e) and, if the credit is for exploration expenditures incurred for work performed on or after July 1, 2016, against taxes levied by AS 43.20 ; notwithstanding any contrary provision of AS 38 , AS 40.25.100 , or AS 43.05.230 , the following information is not confidential: (A) the explorer's name; (B) the date of the application; (C) the location of the well or seismic exploration; (D) the date of the department's issuance of the certificate; and (E) the date on which the information required to be submitted under this section will be released. (g) An explorer, other than an entity that is exempt from taxation under this chapter, may transfer, convey, or sell its production tax credit certificate to any person, and any person who receives a production tax credit certificate may also transfer, convey, or sell the certificate. A production tax credit certificate that is transferred, conveyed, or sold under this section may not be applied against the tax levied by AS 43.20 . (h) A producer that purchases a production tax credit certificate may apply the credits against its production tax levied by AS 43.55.011 (e). Regardless of the price the producer paid for the certificate, the producer may receive a credit against its production tax liability for the full amount of the credit, but for not more than the amount for which the certificate is issued. A production tax credit or a portion of a production tax credit or a production tax credit certificate or a portion of a production tax credit certificate allowed under this section (1) may not be applied more than once; (2) may be applied in a later calendar year; (3) may, regardless of when the credit was earned, be applied to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter for a prior year, except for a surcharge under AS 43.55.201 — 43.55.299 or 43.55.300 or the tax levied by AS 43.55.011 (i) or 43.55.014; and (B) has not, for the purpose of art. IX, sec. 17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation. (i) For a production tax credit under this section, (1) a credit may not be applied to reduce a taxpayer's tax liability under AS 43.55.011 (e) below zero for a calendar year; (2) if the production tax credit is for exploration expenditures incurred for work performed on or after July 1, 2016, the explorer may apply the credit to reduce the explorer's tax liability under AS 43.20 , except that the credit may not be applied to reduce the explorer's tax liability under AS 43.20 below zero for a tax year; and (3) an amount of the production tax credit in excess of the amount that may be applied for a calendar or tax year under this subsection may be carried forward and applied against the taxpayer's tax liability under AS 43.55.011 (e) in one or more later calendar years or under AS 43.20 in one or more later tax years. (j) Notwithstanding any other provision of this title, of AS 31.05 , or of AS 40.25.100 , the department shall provide to the Department of Natural Resources information submitted with a claim under this section to support the eligibility of an exploration expenditure, including seismic exploration data and well data, and any information described in (f)(2) of this section received by the department. (k) Subject to the terms and conditions of this section, if a claim is filed under (f)(1) of this section before January 1, 2016, a credit against the production tax levied by AS 43.55.011 (e) is allowed in an amount equal to five percent of an eligible expenditure under this subsection incurred for seismic exploration performed before July 1, 2003. To be eligible under this subsection, an expenditure must (1) have been for seismic exploration that (A) obtained data that the commissioner of natural resources considers to be in the best interest of the state to acquire for public distribution; and (B) was conducted outside the boundaries of a production unit; however, the amount of the expenditure that is otherwise eligible under this section is reduced proportionately by the portion of the seismic exploration activity that crossed into a production unit; and (2) qualify under (b)(4) of this section. (l) The first three unaffiliated persons that drill an offshore exploration well for the purpose of discovering oil or gas in Cook Inlet that penetrates and evaluates a prospect in the pre-Tertiary zone using a jack-up rig are eligible for the credit under this subsection. The person that drills the first exploration well is entitled to a credit in the amount of 100 percent of its exploration expenditures or $25,000,000, whichever is less; the person that drills the second exploration well using the same jack-up rig is entitled to a credit in the amount of 90 percent of its exploration expenditures or $22,500,000, whichever is less; and the person that drills the third exploration well using the same jack-up rig is entitled to a credit in the amount of 80 percent of its exploration expenditures or $20,000,000, whichever is less. A person or an affiliate of a person drilling an exploration well is not entitled to a credit for more than one exploration well under this subsection. The department shall make a determination of the order in which the wells are drilled based on the date and time that the drill bit first turns to the right against the seafloor for the purpose of drilling the well. Exploration expenditures eligible for the credit in this subsection may include the necessary and reasonable costs to modify an existing jack-up rig for use in Cook Inlet, may not include the cost to construct or manufacture a jack-up rig, and, notwithstanding (b) of this section, must be incurred for work performed after March 31, 2010. If the exploration well for which a credit is received under this subsection results in sustained production of oil or gas from a reservoir discovered by the exploration well, and notwithstanding that the credit may have been transferred under (g) of this section, 50 percent of the amount of the credit received shall be repaid to the department by the person that received the credit in equal monthly installments over a 10-year period commencing 60 days after the start of sustained production of oil or gas. Whether the exploration well for which a credit is requested under this subsection penetrated and evaluated a prospect in the pre-Tertiary zone and the exploration well resulted in sustained production of oil or gas from a reservoir discovered by the exploration well shall be determined by the commissioner of natural resources and reported to the commissioner. A taxpayer that obtains a credit under this subsection may not claim a tax credit under AS 43.55.023 or another provision in this section for the same exploration expenditure. In this subsection, (1) “jack-up rig” means a mobile drilling platform with extendible legs for support on the ocean floor; (2) “reservoir” means an oil and gas accumulation, discovered and evaluated by testing, that is separate from any other accumulation of oil and gas; (3) “sustained production” means production of oil or gas from a reservoir into a pipeline or other means of transportation to market, but does not include testing, evaluation, or pilot production. (m) The persons that drill the first four exploration wells in the state and within the areas described in (o) of this section on state lands, private lands, or federal onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a prospect in a basin described in (o) of this section are eligible for a credit under (a)(6) of this section. A credit under this subsection may not be taken for more than two exploration wells in a single area described in (o)(1) — (6) of this section. Notwithstanding (b) of this section, exploration expenditures eligible for the credit in this subsection must be incurred for work performed after June 1, 2012, and before July 1, 2017, except that expenditures to complete an exploration well that was spudded but not completed before July 1, 2017, are eligible for the credit under this subsection. A person planning to drill an exploration well on private land and to apply for a credit under this subsection shall obtain written consent from the owner of the oil and gas interest for the full public release of all well data after the expiration of the confidentiality period applicable to information collected under (f) of this section. The written consent of the owner of the oil and gas interest must be submitted to the commissioner of natural resources before approval of the proposed exploration well. In addition to the requirements in (c)(1), (c)(2)(A), and (c)(2)(C) of this section and submission of the written consent of the owner of the oil and gas interest, a person planning to drill an exploration well shall obtain approval from the commissioner of natural resources before the well is spudded. The commissioner of natural resources shall make a written determination approving or rejecting an exploration well within 60 days after receiving the request for approval or as soon as is practicable thereafter. Before approving the exploration well, the commissioner of natural resources shall consider the following: the location of the well; the proximity to a community in need of a local energy source; the proximity of existing infrastructure; the experience and safety record of the explorer in conducting operations in remote or roadless areas; the projected cost schedule; whether seismic mapping and seismic data sufficiently identify a particular trap for exploration; whether the targeted and planned depth and range are designed to penetrate and fully evaluate the hydrocarbon potential of the proposed prospect and reach the level below which economic hydrocarbon reservoirs are likely to be found, or reach 12,000 feet or more true vertical depth; and whether the exploration plan provides for a full evaluation of the wellbore below surface casing to the depth of the well. Whether the exploration well for which a credit is requested under this subsection is located within an area and a basin described under (o) of this section shall be determined by the commissioner of natural resources and reported to the commissioner. A taxpayer that obtains a credit under this subsection may not claim a tax credit under AS 43.55.023 or another provision in this section for the same exploration expenditure. (n) The persons that conduct the first four seismic exploration projects in the state and within the areas described in (o) of this section for the purpose of discovering oil or gas in a basin are eligible for the credit under (a)(7) of this section. A credit under this subsection may not be taken for more than one seismic exploration project in a single area described in (o)(1) — (6) of this section. Exploration expenditures eligible for the credit in this subsection must be incurred for work performed after June 1, 2012, and before July 1, 2016. A person planning to conduct a seismic exploration project on private land and to apply for a credit under this subsection shall obtain written consent from the owner of the oil and gas interest for the full public release of all geophysical data and compliance with the data submission requirements in (f)(2) of this section. Notwithstanding (f)(2)(C)(ii) of this section, to qualify for a credit under this subsection, a person shall submit the written consent of the owner of the oil and gas interest for the release of data if applicable, and all data required under (f)(2) of this section to the Department of Natural Resources and shall agree in writing that all seismic data requirements submitted under the requirements of (f)(2) of this section may be made public two years after receiving a credit under this subsection. A person intending to qualify for the tax credit under this subsection shall obtain approval from the commissioner of natural resources before the commencement of the seismic exploration activities. The commissioner of natural resources shall make a written determination approving or rejecting a seismic project within 60 days after receiving the request for approval or as soon as is practicable thereafter. Before approving a seismic exploration project, the commissioner shall consider the following: the location of the project; the projected cost schedule; the data acquisition and data processing plan; the reasons for choosing the particular area for seismic exploration; and the experience and safety record of the person in conducting seismic exploration operations in remote or roadless areas. Whether the seismic exploration project for which a credit is requested under this subsection is located in a basin described in (o) of this section shall be determined by the commissioner of natural resources and reported to the commissioner. A taxpayer that obtains a credit under this subsection may not claim a tax credit under AS 43.55.023 or another provision in this section for the same exploration expenditure. (o) The activity that is the basis for a credit claimed under (a)(6) and (m) of this section or (a)(7) and (n) of this section must be for the exploration of a basin and within the following areas whose central points are determined using the World Geographic System of 1984 datum, (1) 100 miles from 66.896128 degrees North, -162.598187 degrees West; (2) 150 miles from 64.839474 degrees North, -147.72094 degrees West; (3) 50 miles from 62.776428 degrees North, -164.495201 degrees West; (4) 50 miles from 62.110357 degrees North, -145.530551 degrees West; (5) 100 miles from 58.189868 degrees North, -157.371104 degrees West; (6) 100 miles from 56.005988 degrees North, -160.56083 degrees West. (p) In this section, (1) “Cook Inlet prospect” means a location within the Cook Inlet sedimentary basin, as that term is defined by regulation adopted to implement AS 38.05.180 (f)(4); (2) “preexisting well” means a well that was spudded more than 540 days but less than 35 years before the date on which the exploration well to which it is compared is spudded. (q) On the day on which an application for a tax credit certificate is submitted under (f) of this section, the department shall issue to the explorer a conditional tax credit certificate. For the purposes of AS 43.55.028 (e), the department may, at the time of an application under AS 43.55.028 (e), accept from an explorer a conditional tax credit certificate issued under this subsection; however, the department may not purchase a conditional tax credit certificate. A conditional tax credit certificate under this subsection (1) may be used to apply for the purchase of a tax credit certificate under AS 43.55.028 (e) if the conditional tax credit certificate is for exploration expenditures incurred before July 1, 2017; (2) may not be sold, transferred, or conveyed; (3) has no value; and (4) expires on the day on which the department issues a transferable tax credit certificate under (f) of this section. Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of tax credit certificates. (a) The oil and gas tax credit fund is established as a separate fund of the state. The purpose of the fund is to purchase transferable tax credit certificates issued under AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to pay refunds and payments claimed under AS 43.20.046 , 43.20.047, or 43.20.053. The oil and gas tax credit fund established under this subsection may not be used to purchase a tax credit certificate for a credit earned under this chapter for activity occurring on or after July 1, 2017. (b) The oil and gas tax credit fund consists of (1) money appropriated to the fund, including any appropriation of the percentage provided under (c) of this section of all revenue from taxes levied by AS 43.55.011 that is not required to be deposited in the constitutional budget reserve fund established in art. IX, sec. 17(a), Constitution of the State of Alaska, less the amount described in (r) of this section; and (2) earnings on the fund. (c) The applicable percentage for a fiscal year under (b)(1) of this section is determined with reference to the average price or value forecast by the department for Alaska North Slope oil sold or otherwise disposed of on the United States West Coast during the fiscal year for which the appropriation of revenue from taxes levied by AS 43.55.011 is made. If that forecast is (1) $60 a barrel or higher, the applicable percentage is 10 percent; (2) less than $60 a barrel, the applicable percentage is 15 percent. (d) The department shall manage the fund. (e) The department, on the written application of a person to whom a transferable tax credit certificate has been issued under AS 43.55.023 (d) or former AS 43.55.023 (m) for an expenditure incurred before July 1, 2017, or to whom a production tax credit certificate has been issued under AS 43.55.025 (f) for an expenditure incurred before July 1, 2017, may use either available money in the oil and gas tax credit fund or, subject to appropriation by the legislature, money disbursed to the commissioner, or both, to purchase, in whole or in part, the certificate. The department may not purchase with money from the oil and gas tax credit fund a total of more than $70,000,000 in tax credit certificates from a person in a calendar year. The total amount of purchases made by the department with money from the oil and gas tax credit fund from a person in a year may not exceed the assumed payment amount for each year, as calculated under (l) of this section without the discount provided in (m) of this section. Before purchasing a certificate or part of a certificate, the department shall find that (1) the calendar year of the purchase is not earlier than the first calendar year for which the credit shown on the certificate would otherwise be allowed to be applied against a tax; (2) the application is not the result of the division of a single entity into multiple entities that would reasonably be expected to apply as a single entity if the $70,000,000 limitation in this subsection did not exist; (3) the applicant's total tax liability under AS 43.55.011 (e), after application of all available tax credits, for the calendar year in which the application is made is zero; (4) the applicant's average daily production of oil and gas taxable under AS 43.55.011 (e) during the calendar year preceding the calendar year in which the application is made was not more than 50,000 BTU equivalent barrels; and (5) the purchase is consistent with this section and regulations adopted under this section. (f) Money in the fund remaining at the end of a fiscal year does not lapse and remains available for expenditure in successive fiscal years. (g) The department shall adopt regulations to carry out the purposes of this section, including standards and procedures to allocate available money among applications for purchases under this chapter and claims for refunds and payments under AS 43.20.046 , 43.20.047, or 43.20.053 when the total amount of the applications for purchase and claims for refund exceed the amount of available money in the fund. The regulations adopted by the department (1) may not, when allocating available money in the fund under this section, distinguish an application for the purchase of a credit certificate issued under former AS 43.55.023 (m) or a claim for a refund or payment under AS 43.20.046 , 43.20.047, or 43.20.053; (2) must, when allocating available money in the fund under this section, grant a preference, between two applicants, to the applicant with a higher percentage of resident workers in the applicant's workforce, including workers employed by the applicant's direct contractors, in the state in the previous calendar year; in this paragraph, “resident worker” has the meaning given in AS 43.40.092 (b); (3) must, for a purchase from money in the fund, provide for the purchase of the amount equal to the first 50 percent of the credit repurchase limit for each person under (e) of this section at a rate of 100 percent of the value of the certificate or portion of the certificate requested to be purchased and the amount equal to the next 50 percent of the credit repurchase limit for each person under (e) of this section at a rate of 75 percent of the value of the certificate or portion of the certificate requested to be purchased. (h) Nothing in this section creates a dedicated fund.

(i) In this section, (1) “money disbursed to the commissioner” means money disbursed to the commissioner from the Alaska Tax Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 ; (2) “qualified capital expenditure” has the meaning given in AS 43.55.023 ; (3) “true interest cost” means the true interest cost of the bonds anticipated to be issued under AS 37.18 . (j) If an applicant or claimant has an outstanding liability to the state directly related to the applicant's or claimant's oil or gas exploration, development, or production and the department has not previously reduced the amount paid to that applicant or claimant for a certificate or refund because of that outstanding liability, the department may purchase only that portion of a certificate or pay only that portion of a refund that exceeds the outstanding liability, regardless of whether the purchase is made with money from the fund or money disbursed to the commissioner. After notifying the applicant or claimant, the department may apply the amount by which the department reduced its purchase of a certificate or payment for a refund because of an outstanding liability to satisfy the outstanding liability. Satisfaction of an outstanding liability under this subsection does not affect the applicant's ability to contest that liability. The department may enter into contracts or agreements with another department to which the outstanding liability is owed. In this subsection, “outstanding liability” means an amount of tax, interest, penalty, fee, rental, royalty, or other charge for which the state has issued a demand for payment that has not been paid when due and, if contested, has not been finally resolved against the state. (k) The department may negotiate a purchase, refund, or payment under this section to be made from money disbursed to the commissioner. Before making a purchase, refund, or payment, the department shall calculate the maximum amount for a purchase, refund, or payment under ( l) of this section. An applicant or claimant that has requested a purchase, refund, or payment by the department from the fund shall provide a notice of interest to the department by the date determined by the commissioner if the applicant or claimant is interested in a purchase, refund, or payment from money disbursed to the commissioner instead. An applicant or claimant that requests a purchase, refund, or payment from the fund on or after July 1, 2018, shall include any notice of interest in a purchase, refund, or payment from money disbursed to the commissioner at the same time that the applicant or claimant requests a purchase, refund, or payment by the department from the fund. The department may not use money disbursed to the commissioner for a purchase, refund, or payment under this section if the applicant or claimant fails to provide the department with a notice of interest in a purchase, refund, or payment from money disbursed to the commissioner. A notice of interest for a purchase, refund, or payment from money disbursed to the commissioner must include all of the requests for purchases, refunds, or payments made by the applicant or claimant and, if applicable, a statement indicating whether the applicant intends to meet a condition in (m)(1), (2), or (3) of this section. An applicant or claimant may not include in a notice of interest a request for purchase, refund, or payment from the fund if the request could have been included in a previous notice of interest under this subsection. The department shall make an offer of purchase, refund, or payment with money disbursed to the commissioner to an applicant or claimant that provides the department with a timely notice of interest. The department shall make an offer of purchase, refund, or payment from money disbursed to the commissioner at a time based on the anticipated schedule for disbursement of money to the commissioner. The applicant or claimant shall notify the department of acceptance of the offer of purchase, refund, or payment within 10 days after the offer is made. An offer of purchase, refund, or payment must be conditioned on the disbursement of money to the commissioner. A transferable tax credit certificate issued under AS 43.55.023 , production tax credit certificate issued under AS 43.55.025 , or claim for a refund or payment under AS 43.20.046 , 43.20.047, or 43.20.053 is not eligible for purchase by the department with money disbursed to the commissioner if the applicant or claimant (1) fails to provide the department with a notice of interest of an offer of purchase, refund, or payment from money disbursed to the commissioner by the date determined by the commissioner under this subsection; or (2) declines an offer of purchase, refund, or payment by the department with money disbursed to the commissioner for that transferable tax credit certificate, production tax credit certificate, or refund or claim for payment. (l) The department shall calculate the maximum amount for a purchase, refund, or payment with money disbursed to the commissioner. The maximum amount for a purchase, refund, or payment is the sum of the assumed payment amounts for purchases, refunds, and payments for each year discounted as provided in (m) of this section. The assumed payment amount for each year is the assumed appropriations to the fund multiplied by the assumed proration amount calculated in this subsection. The assumed appropriation to the fund each year is an amount equal to the percentage provided under (c) of this section of the total taxes levied by AS 43.55.011 as forecast by the department before the application of tax credits. The assumed proration amount is that proportion of payments the department would have allocated from the fund, if money had not been disbursed to the commissioner, based on the date of the request for purchase, refund, or payment from the fund. When determining the assumed proration amount under this subsection, the department shall (1) allocate requests received in the same year together; (2) prioritize requests for payments from the earliest to the latest year; and (3) assume that no purchases are made with money disbursed to the commissioner. (m) For purposes of the calculation in ( l) of this section, the department shall discount the assumed payment amount each year after the first year by a discount rate. Unless another discount rate in this subsection applies, a discount rate of 10 percent applies to the assumed payment amount for a request for purchase of a transferable tax credit certificate issued under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025 . An applicant's agreement to a discount rate under (1), (2), or (3) of this subsection is only consideration for the amount that the purchase exceeds the amount that would have been purchased in the absence of the agreement. For a refund or claim for payment under AS 43.20.046 , 43.20.047, or 43.20.053, the discount rate is the true interest cost plus 1.5 percent, but may not exceed 10 percent. For a purchase of a transferable tax credit certificate issued under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025 , the discount rate is the true interest cost plus 1.5 percent, but may not exceed 10 percent, in total, (1) for either a transferable tax credit certificate issued under AS 43.55.023 for which the applicant submitted data required under AS 43.55.025 (f)(2) or a production tax credit certificate issued under AS 43.55.025 , if the applicant agrees as a condition of the purchase that the 10-year confidentiality period under AS 43.55.025 (f)(2)(C)(ii) that would otherwise apply to the seismic data or other geophysical data is waived by the applicant; (2) if the applicant, or an entity related to the applicant with the applicant's consent, and the Department of Natural Resources agree to an overriding royalty interest agreement under AS 44.37.230 ; or (3) if the applicant commits to incur, not later than 24 months after the purchase of the certificate, qualified capital expenditures in an amount greater than or equal to the purchase amount, and (A) the applicant provides to the department evidence of the commitment and a plan to (i) use the qualified capital expenditures for the purpose of increasing production of oil or gas from leases or properties in the state; and (ii) maximize the hiring of state residents and use of state businesses related to qualified capital expenditures; (B) the applicant agrees in writing that, if the applicant does not incur qualified capital expenditures in an amount greater than or equal to the purchase amount within 24 months after the purchase of the certificate, the applicant shall pay the department the lesser of the difference between the purchase amount and the (i) amount the applicant would have been paid had this subsection not applied; or (ii) actual amount of qualified capital expenditures incurred by the applicant in the 24-month period; and (C) after reviewing documents submitted under (A) and (B) of this paragraph, the commissioner approves the reduced discount rate for the purchase. (n) An agreement under (m)(3)(B) of this section may require the applicant to pay the department interest on the amount due under (m)(3)(B) of this section. The interest rate must be consistent with the interest rate provided for a delinquent tax under AS 43.05.225 . Payment under (m)(3)(B) of this section and interest under this subsection is waived if the department determines that the applicant could not incur the qualified capital expenditures because of a natural disaster, injunction or other court order, or administrative order. (o) An applicant or claimant may not use a transferable tax credit certificate issued under AS 43.55.023 , production tax credit certificate issued under AS 43.55.025 , or refund or claim for payment under AS 43.20.046 , 43.20.047, or 43.20.053 purchased by the department with money disbursed to the commissioner against tax liability, even if the purchase, refund, or payment amount was less than the total amount requested for purchase, refund, or payment. (p) The department shall provide to the Department of Natural Resources the information necessary to evaluate an overriding royalty interest for the purposes of AS 44.37.230 . (q) After bonds are first issued by the Alaska Tax Credit Certificate Bond Corporation established under AS 37.18.010 , the legislature may determine the amount of an appropriation under (b)(1) of this section by multiplying the percentage under (c) of this section by the net revenue from taxes levied by AS 43.55.011 . (r) The legislature may reduce an appropriation made under (b)(1) of this section by an amount equal to the amount appropriated to the Alaska Tax Credit Certificate Bond Corporation for maintenance of the required debt service reserve in the Alaska Tax Credit Certificate Bond Corporation reserve fund, as calculated under AS 37.18.040 (g). (s) The legislature may, for purposes of making purchases, refunds, and payments under this section, appropriate an amount equal to the amount disbursed to the commissioner by the Alaska Tax Credit Certificate Bond Corporation for purchases, refunds, and payments under this section. Sec. 43.55.029. Assignment of tax credit certificate. (a) An explorer or producer that has applied for a production tax credit under AS 43.55.023 (a) or (l) or 43.55.025(a) may make a present assignment of the production tax credit certificate expected to be issued by the department to a third-party assignee. The assignment may be made either at the time the application is filed with the department or not later than 30 days after the date of filing with the department. Once a notice of assignment in compliance with this section is filed with the department, the assignment is irrevocable and cannot be modified by the explorer or producer without the written consent of the assignee named in the assignment. If a production tax credit certificate is issued to the explorer or producer, the notice of assignment remains effective and shall be filed with the department by the explorer or producer together with any application for the department to purchase the certificate under AS 43.55.028 (e). (b) To be effective, the assignment does not require the approval or consent of the department. The assignment must, at a minimum, (1) be made in writing and signed by an officer or legally qualified agent of the explorer or producer making the assignment and the assignee, respectively; (2) identify the explorer or producer making the assignment, the assignee in whose favor the assignment is being made, and the production tax credit application that is the subject of the assignment; (3) define the interest in the production tax credit being assigned, expressed as either an amount in dollars, which may not exceed 90 percent of the credit applied for, or a percentage of the credit to be issued by the department; (4) specify an account with a bank located in the state, with sufficient information for the electronic transfer of funds, to receive any future proceeds from the purchase of the tax credit certificate under AS 43.55.028 (e); (5) cite this section and acknowledge that, once filed with the department, the assignment is irrevocable and cannot be modified without the written consent of the assignee. (c) An assignment complying with this section creates a property interest owned by the assignee in the application and any production tax credit certificates issued by the department to the explorer or producer and any future proceeds resulting from the application, in the amount or to the extent set out in the assignment. An assignee may create a valid and enforceable security interest in that property as otherwise provided by law. (d) Notwithstanding any other provision of law, and to the maximum extent permitted under federal laws, an assignment complying with this section shall give the assignee a first priority claim, not dischargeable in bankruptcy, against the proceeds received by the explorer or producer, including its estate, trustee, or other representative, resulting from the production tax credit application that is the subject of the assignment under this section, if the assignee has taken the steps necessary under state and federal law to perfect a security interest in the assignment. (e) Nothing in this section affects the terms and conditions otherwise required for an explorer or producer to qualify for a production tax credit or the determination by the department of the amount of credit the explorer or producer is qualified to receive. (f) Neither the state nor the department, or any other agency, officer, or employee of the state, shall be subject to suit or any claim arising out of or in connection with an assignment made under this section, whether by act or omission. (g) The department may adopt regulations to carry out the purposes of this section. Sec. 43.55.030. Filing of statements. (a) A producer that produces oil or gas from a lease or property in the state during a calendar year, whether or not any tax payment is due under AS 43.55.020 (a) for that oil or gas, shall file with the department on March 31 of the following year a statement, under oath, in a form prescribed by the department, giving, with other information required, the following: (1) a description of each lease or property from which oil or gas was produced, by name, legal description, lease number, or accounting codes assigned by the department; (2) the names of the producer and, if different, the person paying the tax, if any; (3) the gross amount of oil and the gross amount of gas produced from each lease or property, separately identifying the gross amount of gas produced from each oil and gas lease to which an effective election under AS 43.55.014 (a) applies, the amount of gas delivered to the state under AS 43.55.014 (b), and the percentage of the gross amount of oil and gas owned by the producer; (4) the gross value at the point of production of the oil and of the gas produced from each lease or property owned by the producer and the costs of transportation of the oil and gas; (5) the name of the first purchaser and the price received for the oil and for the gas, unless relieved from this requirement in whole or in part by the department; (6) the producer's qualified capital expenditures, as defined in AS 43.55.023 , other lease expenditures under AS 43.55.165 , and adjustments or other payments or credits under AS 43.55.170 ; (7) the production tax values of the oil and gas under AS 43.55.160 (a) or of the oil under AS 43.55.160 (h), as applicable; (8) any claims for tax credits to be applied; and (9) calculations showing the amounts, if any, that were or are due under AS 43.55.020 (a) and interest on any underpayment or overpayment. (b) [Repealed, § 11 ch 101 SLA 1972.] (c) [Repealed, § 11 ch 101 SLA 1972.] (d) Reports required under this section are delinquent the first day following the day the report is due. The person required to file the report is liable for a penalty, as determined by the department under standards adopted in regulation by the department, of not more than $1,000 for each day the person fails to file the report at the time required. The penalty is in addition to the penalties in AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the same manner as a tax deficiency under this title. In this subsection, “report” includes a statement. (e) An explorer or producer that incurs a lease expenditure under AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar year but does not produce oil or gas from a lease or property in the state during the calendar year shall file with the department, on March 31 of the following year, a statement, under oath, in a form prescribed by the department, giving, with other information required, the following: (1) the explorer's or producer's qualified capital expenditures, as defined in AS 43.55.023 , other lease expenditures under AS 43.55.165 , and adjustments or other payments or credits under AS 43.55.170 ; and (2) if the explorer or producer receives a payment or credit under AS 43.55.170 , calculations showing whether the explorer or producer is liable for a tax under AS 43.55.160 (d) or 43.55.170(b) and, if so, the amount. (f) The department may require a producer, an explorer, or an operator of a lease or property to file monthly reports, as applicable, of (1) the amounts and gross value at the point of production of oil and gas produced; (2) transportation costs of the oil and gas; (3) any unscheduled interruption of, or reduction in the rate of, oil or gas production; (4) lease expenditures and adjustments under AS 43.55.165 and 43.55.170; (5) joint interest billings; (6) contracts for the sale or transportation of oil or gas; (7) information and calculations used in determining monthly installment payments of estimated tax under AS 43.55.020 (a); and (8) other records and information the department considers necessary for the administration of this chapter. Sec. 43.55.040. Powers of Department of Revenue. Except as provided in AS 43.05.405 — 43.05.499, the department may (1) require a person engaged in production and the agent or employee of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil or gas to furnish, whether by the filing of regular statements or reports or otherwise, additional information that is considered by the department as necessary to compute the amount of the tax; notwithstanding any contrary provision of law, the disclosure of additional information under this paragraph to the producer obligated to pay the tax does not violate AS 40.25.100 (a) or AS 43.05.230 (a); before disclosing information under this paragraph that is otherwise required to be held confidential under AS 40.25.100 (a) or AS 43.05.230 (a), the department shall (A) provide the person that furnished the information a reasonable opportunity to be heard regarding the proposed disclosure and the conditions to be imposed under (B) of this paragraph; and (B) impose appropriate conditions limiting (i) access to the information to those legal counsel, consultants, employees, officers, and agents of the producer who have a need to know that information for the purpose of determining or contesting the producer's tax obligation; and (ii) the use of the information to use for that purpose; (2) examine the books, records, and files of the person; (3) conduct hearings and compel the attendance of witnesses and the production of books, records, and papers of any person; (4) make an investigation or hold an inquiry that is considered necessary to a disclosure of the facts as to (A) the amount of production from any oil or gas location, or of a company or other producer of oil or gas; and (B) the rendition of the oil and gas for taxing purposes; (5) require a producer, an explorer, or an operator of a lease or property to file reports and copies of records that the department considers necessary to forecast state revenue under this chapter; in the case of reports and copies of records relating to proposed, expected, or approved unit expenditures for a unit for which one or more working interest owners other than the operator have authority to approve unit expenditures, the required reports and copies of records are limited to those reports or copies of records that constitute or disclose communications between the operator and the working interest owners relating to unit budget matters; (6) require a producer that has an average total production in the state of more than 100,000 barrels a day for a calendar year to report the gross value at the point of production of the producer's taxable oil and gas in the state for a calendar year and the total amount of lease expenditures in the state for that calendar year; and (7) assess against a person required under this section to file a report, statement, or other document a penalty, as determined by the department under standards adopted in regulation by the department, of not more than $1,000 for each day the person fails to file the report, statement, or other document after notice by the department; the penalty is in addition to any penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the same manner as a tax deficiency under this title; the penalty shall bear interest at the rate specified under AS 43.05.225 (1). Sec. 43.55.050. Incorrect returns. The department may determine whether or not a return required by this chapter to be filed with it is correct. If a person makes an untrue or incorrect return of the gross production or the value of it, or fails or refuses to make a return, the department shall, under regulations adopted by it, determine the correct amount of gross production or the value of it, and compute the tax. Sec. 43.55.060. Delinquency. When the tax provided for in this chapter becomes delinquent, it bears interest as provided in AS 43.05.225 (1). If any person fails to make a report required by this chapter, within the time prescribed by law for the report, the department shall examine the books, records and files of the person to determine the amount and value of the production to compute the tax, and the department shall add to the tax the cost of the examination, together with any penalties accrued. Sec. 43.55.070. Lien for tax. [Repealed, § 4 ch 94 SLA 1976. For current law, see AS 43.10.035 .] Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except as provided in AS 43.05.260 (c), the amount of a tax imposed by this chapter must be assessed within six years after the return was filed. (b) A decision of a regulatory agency, court, or other body with authority to resolve disputes that results in a retroactive change to a lease expenditure, to an adjustment to a lease expenditure, to costs of transportation, to sale price, to prevailing value, or to consideration of quality differentials relating to the commingling of oils has a corresponding effect, either an increase or decrease, as applicable, on the production tax value of oil or gas or the amount or availability of a tax credit as determined under this chapter. For purposes of this section, a change to a lease expenditure includes a change in the categorization of a lease expenditure as a qualified capital expenditure or as not a qualified capital expenditure. The producer shall (1) within 60 days after the change, notify the department in writing; and (2) within 120 days after the change, file amended returns covering all periods affected by the change, unless the department agrees otherwise or a stay is in place that affects the filing or payment, regardless of the pendency of appeals of the decision. (c) If an alteration in or modification of a producer's federal income tax return or a recomputation of the producer's federal income tax or determination of deficiency occurs that affects the amount of a tax imposed on the producer under this chapter, the producer shall (1) within 60 days after the final determination of the alteration, modification, recomputation, or deficiency, notify the department in writing; and (2) within 120 days after the final determination of the alteration, modification, recomputation, or deficiency, file amended returns covering all affected periods. (d) In this section, (1) “qualified capital expenditure” has the meaning given in AS 43.55.023 ; (2) “return” includes a report, a statement, and an amended return, report, or statement. Sec. 43.55.080. Collection and deposit of revenue. Except as otherwise provided under art. IX, sec. 17, Constitution of the State of Alaska, the department shall deposit in the general fund the money collected by it under AS 43.55.011 — 43.55.180. Sec. 43.55.090. Refunds. In case of overpayment, duplicate payment or payment made in error, the department may refund the amount of the overpayment under AS 43.10.210 . Sec. 43.55.100. Acceptance of deductions. [Repealed, § 15 ch 101 SLA 1972.] Sec. 43.55.110. Administration. (a) The department may adopt regulations for the purpose of making and filing reports required by this chapter and otherwise necessary to the enforcement of this chapter. (b) The department may require a sufficient bond from every person charged with the making and filing of reports and the payment of the tax. The bond shall run to the state and shall be conditioned upon the making and filing of reports as required by law, upon compliance with the regulations of the department, and for the prompt payment, by the principal on the bond, of all taxes due the state by virtue of this chapter. (c) If reports required have not been filed, or are insufficient to furnish the information required by the department, the department shall institute, in the name of the state upon relation of the department, the necessary action or proceedings to enjoin the person from continuing operations until the reports are filed. (d) Upon showing that the state is in danger of losing its claims or the property is being mismanaged, dissipated or concealed, a receiver shall be appointed at the suit of the state. (e) The department may require that returns, statements, reports, notifications, and applications filed under this chapter be filed electronically in a form and manner approved or prescribed by the department. (f) The department may require that payments required under this chapter be made electronically in a form and manner approved or prescribed by the department. (g) Notwithstanding AS 44.62 , the department may issue, for the information and guidance of producers, explorers, and other interested persons, advisory bulletins stating the department's interpretation of provisions of this chapter and of regulations adopted under this chapter. Unless otherwise provided by the department by regulation, interpretations stated in the advisory bulletins are not binding on the department or others. (h) Subject to legislative appropriation, the department may compensate a person who provides information to the department about noncompliance with the provisions of this chapter by an explorer or a producer of oil or gas if that information leads to the collection of additional taxes, penalties, or interest from the producer. The amount of compensation under this subsection may not exceed the lesser of $500,000 or 10 percent of the additional tax, penalty, or interest collected as a result of the information. A state employee or an agent of the state is not eligible for compensation under this subsection. (i) A person who, under (h) of this section, provides, in bad faith, to the department erroneous information about noncompliance with the provisions of this chapter by an explorer or producer of oil or gas shall pay to the (1) department all expenses related to the department's investigation of the alleged noncompliance; and (2) explorer or producer about whom the noncompliance was alleged all expenses that are incurred by the explorer or producer relating to the department's investigation of the alleged noncompliance. Secs. 43.55.120 — 43.55.130. Noncompliance and false reports. [Repealed, § 46 ch 113 SLA 1980. For criminal penalties, see AS 43.05.290 .] Sec. 43.55.135. Measurement. For the purposes of AS 43.55.011 — 43.55.180, except as otherwise provided, oil is measured in terms of a “barrel of oil” and gas is measured in terms of a “cubic foot of gas.” Sec. 43.55.140. [Renumbered as AS 43.55.900 .] Sec. 43.55.150. Determination of gross value at the point of production. (a) For the purposes of AS 43.55.011 — 43.55.180, the gross value at the point of production is calculated using the actual costs of transportation of the oil or gas, except when the (1) shipper of oil or gas is affiliated with the transportation carrier or with a person that owns an interest in the transportation facility; (2) contract for the transportation of oil or gas is not an arm's length transaction; or (3) method or terms of transportation of oil or gas are not reasonable in view of existing alternative transportation options. (b) If the department finds that a condition in (a)(1), (2), or (3) of this section is present, the gross value at the point of production is calculated using the actual costs of transportation, or the reasonable costs of transportation as determined under this subsection, whichever is lower. The department shall determine the reasonable costs of transportation, using the fair market value of like transportation, the fair market value of equally efficient and available alternative modes of transportation, or other reasonable methods. Transportation costs fixed by tariff rates that have been adjudicated as just and reasonable by the Regulatory Commission of Alaska or another regulatory agency and transportation costs in an arm's length transaction paid by parties not affiliated with an owner of the method of transportation shall be considered prima facie reasonable. (c) In determining the gross value of oil under this section, the department may not allow as reasonable costs of transportation (1) the amount of loss of or damage to, or of expense incurred due to the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense is incurred in connection with a catastrophic oil discharge from the vessel into the marine or inland waters of the state; (2) the incremental costs of transportation of the oil that are attributable to temporary use of or chartered or substituted service provided by another vessel due to the loss of or damage to a vessel regularly used to transport oil and that are incurred in connection with a catastrophic oil discharge into the marine or inland waters of the state; and (3) the costs incurred to charter, contract, or hire vessels and equipment used to contain or clean up a catastrophic oil discharge. Sec. 43.55.160. Determination of production tax value of oil and gas. (a) For oil and gas produced before January 1, 2022, except as provided in (b), (f), and (g) of this section, for the purposes of (1) AS 43.55.011 (e)(1) and (2), the annual production tax value of taxable oil, gas, or oil and gas produced during a calendar year in a category for which a separate annual production tax value is required to be calculated under this paragraph is the gross value at the point of production of that oil, gas, or oil and gas taxable under AS 43.55.011 (e), less the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil, gas, or oil and gas in that category produced by the producer during the calendar year, as adjusted under AS 43.55.170 ; a separate annual production tax value shall be calculated for (A) oil and gas produced from leases or properties in the state that include land north of 68 degrees North latitude, other than gas produced before 2022 and used in the state; (B) oil and gas produced from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude and that qualifies for a tax credit under AS 43.55.024 (a) and (b); this subparagraph does not apply to (i) gas produced before 2022 and used in the state; or (ii) oil and gas subject to AS 43.55.011 (p); (C) oil produced before 2022 from each lease or property in the Cook Inlet sedimentary basin; (D) gas produced before 2022 from each lease or property in the Cook Inlet sedimentary basin; (E) gas produced before 2022 from each lease or property in the state outside the Cook Inlet sedimentary basin and used in the state, other than gas subject to AS 43.55.011 (p); (F) oil and gas subject to AS 43.55.011 (p) produced from leases or properties in the state; (G) oil and gas produced from leases or properties in the state no part of which is north of 68 degrees North latitude, other than oil or gas described in (B), (C), (D), (E), or (F) of this paragraph; (2) AS 43.55.011 (g), for oil and gas produced before January 1, 2014, the monthly production tax value of the taxable (A) oil and gas produced during a month from leases or properties in the state that include land north of 68 degrees North latitude is the gross value at the point of production of the oil and gas taxable under AS 43.55.011 (e) and produced by the producer from those leases or properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas produced by the producer from those leases or properties, as adjusted under AS 43.55.170 ; this subparagraph does not apply to gas subject to AS 43.55.011 (o); (B) oil and gas produced during a month from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, is the gross value at the point of production of the oil and gas taxable under AS 43.55.011 (e) and produced by the producer from those leases or properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas produced by the producer from those leases or properties, as adjusted under AS 43.55.170 ; this subparagraph does not apply to gas subject to AS 43.55.011 (o); (C) oil produced during a month from a lease or property in the Cook Inlet sedimentary basin is the gross value at the point of production of the oil taxable under AS 43.55.011 (e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the oil produced by the producer from that lease or property, as adjusted under AS 43.55.170 ; (D) gas produced during a month from a lease or property in the Cook Inlet sedimentary basin is the gross value at the point of production of the gas taxable under AS 43.55.011 (e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to the gas produced by the producer from that lease or property, as adjusted under AS 43.55.170 ; (E) gas produced during a month from a lease or property outside the Cook Inlet sedimentary basin and used in the state is the gross value at the point of production of that gas taxable under AS 43.55.011 (e) and produced by the producer from that lease or property, less 1/12 of the producer's lease expenditures under AS 43.55.165 for the calendar year applicable to that gas produced by the producer from that lease or property, as adjusted under AS 43.55.170 . (b) A production tax value calculated under this section may not be less than zero. (c) Notwithstanding any contrary provision of AS 43.55.150 , for purposes of calculating a monthly production tax value under (a)(2) of this section, the gross value at the point of production of the oil and gas is calculated under regulations adopted by the department that provide for using an appropriate monthly share of the producer's costs of transportation for the calendar year. (d) Irrespective of whether a producer produces taxable oil or gas during a calendar year or month, the producer is considered to have generated a positive production tax value if a calculation described in (a) of this section yields a positive number because the producer's adjusted lease expenditures for a calendar year under AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a payment or credit under AS 43.55.170 . An explorer that has obtained a transferable tax credit certificate under AS 43.55.023 (d) for the amount of a tax credit under former AS 43.55.023 (b) is considered a producer, subject to the tax levied by AS 43.55.011 (e), to the extent that the explorer generates a positive production tax value as the result of the explorer's receiving a payment or credit under AS 43.55.170 . (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 incurred to explore for, develop, or produce oil or gas from a lease or property outside the Cook Inlet sedimentary basin that would otherwise be deductible by a producer in a calendar year but whose deduction would cause an annual production tax value calculated under (a)(1) or (h) of this section of taxable oil or gas produced during the calendar year to be less than zero may be used to establish a carried- forward annual loss under AS 43.55.165 (a)(3). A reduction under (f) or (g) of this section must be added back to the calculation of production tax values for that calendar year before the determination of a carried-forward annual loss under this subsection. However, the department shall provide by regulation a method to ensure that, for a period for which a producer's tax liability is limited by AS 43.55.011 (o) or (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer for that period but whose deduction would cause a production tax value calculated under (a)(1)(E) or (F) or (h)(3) of this section to be less than zero are accounted for as though the adjusted lease expenditures had first been used as deductions in calculating the production tax values of oil or gas subject to any of the limitations under AS 43.55.011 (o) or (p) that have positive production tax values so as to reduce the tax liability calculated without regard to the limitation to the maximum amount provided for under the applicable provision of AS 43.55.011 (o) or (p). Only the amount of those adjusted lease expenditures remaining after the accounting provided for under this subsection may be used to establish a carried-forward annual loss under AS 43.55.165 (a)(3). In this subsection, “producer” includes “explorer.” (f) On and after January 1, 2014, in the calculation of an annual production tax value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or gas produced from a lease or property north of 68 degrees North latitude meeting one or more of the following criteria is reduced by 20 percent: (1) the oil or gas is produced from a lease or property that does not contain a lease that was within a unit on January 1, 2003; (2) the oil or gas is produced from a participating area established after December 31, 2011, that is within a unit formed under AS 38.05.180 (p) before January 1, 2003, if the participating area does not contain a reservoir that had previously been in a participating area established before December 31, 2011; (3) the oil or gas is produced from acreage that was added to an existing participating area by the Department of Natural Resources on and after January 1, 2014, and the producer demonstrates to the department that the volume of oil or gas produced is from acreage added to an existing participating area. This subsection does not apply to gas produced before 2022 that is used in the state or to gas produced on and after January 1, 2022. For oil and gas first produced from a lease or property after December 31, 2016, a reduction allowed under this subsection applies from the date of commencement of regular production of oil and gas from that lease or property and expires after three years, consecutive or nonconsecutive, in which the average annual price per barrel for Alaska North Slope crude oil for sale on the United States West Coast is more than $70 or after seven years, whichever occurs first. For oil and gas first produced from a lease or property before January 1, 2017, a reduction allowed under this subsection expires on the earlier of January 1, 2023, or January 1 following three years, consecutive or nonconsecutive, in which the average annual price per barrel for Alaska North Slope crude oil for sale on the United States West Coast is more than $70. The Alaska Oil and Gas Conservation Commission shall determine the commencement of regular production of oil and gas for purposes of this subsection. A reduction under this subsection may not reduce the gross value at the point of production below zero. In this subsection, “participating area” means a reservoir or portion of a reservoir producing or contributing to production as approved by the Department of Natural Resources. (g) On and after January 1, 2014, in addition to the reduction under (f) of this section, in the calculation of an annual production tax value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or gas produced from a lease or property north of 68 degrees North latitude that does not contain a lease that was within a unit on January 1, 2003, is reduced by 10 percent if the oil or gas is produced from a unit made up solely of leases that have a royalty share of more than 12.5 percent in amount or value of the production removed or sold from the lease as determined under AS 38.05.180 (f). This subsection does not apply if the royalty obligation for one or more of the leases in the unit has been reduced to 12.5 percent or less under AS 38.05.180 (j) for all or part of the calendar year for which the annual production tax value is calculated. This subsection does not apply to gas produced before 2022 that is used in the state or to gas produced on and after January 1, 2022. For oil and gas first produced from a lease or property after December 31, 2016, a reduction allowed under this subsection applies from the date of commencement of regular production of oil and gas from that lease or property and expires after three years, consecutive or nonconsecutive, in which the average annual price per barrel for Alaska North Slope crude oil for sale on the United States West Coast is more than $70 or after seven years, whichever occurs first. For oil and gas first produced from a lease or property before January 1, 2017, a reduction allowed under this subsection expires on the earlier of January 1, 2023, or January 1 following three years, consecutive or nonconsecutive, in which the average annual price per barrel for Alaska North Slope crude oil for sale on the United States West Coast is more than $70. The Alaska Oil and Gas Conservation Commission shall determine the commencement of regular production for purposes of this subsection. A reduction under this subsection may not reduce the gross value at the point of production below zero. (h) For oil produced on and after January 1, 2022, except as provided in (b), (f), and (g) of this section, for the purposes of AS 43.55.011 (e)(3), the annual production tax value of oil taxable under AS 43.55.011 (e) produced by a producer during a calendar year (1) from leases or properties in the state that include land north of 68 degrees North latitude is the gross value at the point of production of that oil, less the producer's lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and gas deposits located in the state north of 68 degrees North latitude or located in leases or properties in the state that include land north of 68 degrees North latitude, as adjusted under AS 43.55.170 ; (2) before or during the last calendar year under AS 43.55.024 (b) for which the producer could take a tax credit under AS 43.55.024 (a), from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, other than leases or properties subject to AS 43.55.011 (p), is the gross value at the point of production of that oil, less the producer's lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and gas deposits located in the state outside the Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil and gas deposits located in a lease or property that includes land north of 68 degrees North latitude or that is subject to AS 43.55.011 (p) or, before January 1, 2027, from which commercial production has not begun, as adjusted under AS 43.55.170 ; (3) from leases or properties subject to AS 43.55.011 (p) is the gross value at the point of production of that oil, less the producer's lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and gas deposits located in leases or properties subject to AS 43.55.011 (p) or, before January 1, 2027, located in leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude from which commercial production has not begun, as adjusted under AS 43.55.170 ; (4) from leases or properties in the state no part of which is north of 68 degrees North latitude, other than leases or properties subject to (2) or (3) of this subsection, is the gross value at the point of production of that oil less the producer's lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and gas deposits located in the state south of 68 degrees North latitude, other than oil and gas deposits located in a lease or property in the state that includes land north of 68 degrees North latitude, and excluding lease expenditures that are deductible under (2) or (3) of this subsection or would be deductible under (2) or (3) of this subsection if not prohibited by (b) of this section, as adjusted under AS 43.55.170 ; a separate annual production tax value shall be calculated for (A) oil produced from each lease or property in the Cook Inlet sedimentary basin; (B) oil produced from each lease or property outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, other than leases or properties subject to (3) of this subsection. Sec. 43.55.165. Lease expenditures.

(a) For purposes of this chapter, a producer's lease expenditures for a calendar year are (1) costs, other than items listed in (e) of this section, that are (A) incurred by the producer during the calendar year after March 31, 2006, to explore for, develop, or produce oil or gas deposits located within the producer's leases or properties in the state or, in the case of land in which the producer does not own an operating right, operating interest, or working interest, to explore for oil or gas deposits within other land in the state; and (B) allowed by the department by regulation, based on the department's determination that the costs satisfy the following three requirements: (i) the costs must be incurred upstream of the point of production of oil and gas; (ii) the costs must be ordinary and necessary costs of exploring for, developing, or producing, as applicable, oil or gas deposits; and (iii) the costs must be direct costs of exploring for, developing, or producing, as applicable, oil or gas deposits; (2) a reasonable allowance for that calendar year, as determined under regulations adopted by the department, for overhead expenses that are directly related to exploring for, developing, or producing, as applicable, the oil or gas deposits; and (3) lease expenditures incurred in a previous calendar year, subject to (l) — (r) of this section, that (A) met the requirements of AS 43.55.160 (e) in the year in which the lease expenditures were incurred; (B) have not been deducted in the determination of the production tax value of oil and gas under AS 43.55.160 (a) or (h) in a previous calendar year; (C) were not the basis of a credit under this title; and (D) were incurred to explore for, develop, or produce an oil or gas deposit located in the state outside the Cook Inlet sedimentary basin. (b) For purposes of (a) of this section, (1) direct costs include (A) an expenditure, when incurred, to acquire an item if the acquisition cost is otherwise a direct cost, notwithstanding that the expenditure may be required to be capitalized rather than treated as an expense for financial accounting or federal income tax purposes; (B) payments of or in lieu of property taxes, sales and use taxes, motor fuel taxes, and excise taxes; (2) an activity does not need to be physically located on, near, or within the premises of the lease or property within which an oil or gas deposit being explored for, developed, or produced is located in order for the cost of the activity to be a cost upstream of the point of production of the oil or gas; (3) in determining whether costs are lease expenditures, the department may consider, among other factors, the (A) typical industry practices and standards in the state that determine the costs, other than items listed in (e) of this section, that an operator is allowed to bill a producer that is not the operator, under unit operating agreements or similar operating agreements that were in effect before December 2, 2005, and were subject to negotiation with at least one producer with substantial bargaining power, other than the operator; and (B) standards adopted by the Department of Natural Resources that determine the costs, other than items listed in (e) of this section, that a lessee is allowed to deduct from revenue in calculating net profits under a lease issued under AS 38.05.180 (f)(3)(B), (D), or (E). (c) [Repealed, § 66 ch 1 SSSLA 2007.] (d) [Repealed, § 66 ch 1 SSSLA 2007.] (e) For purposes of this section, lease expenditures do not include (1) depreciation, depletion, or amortization; (2) oil or gas royalty payments, production payments, lease profit shares, or other payments or distributions of a share of oil or gas production, profit, or revenue, except that a producer's lease expenditures applicable to oil and gas produced from a lease issued under AS 38.05.180 (f)(3)(B), (D), or (E) include the share of net profit paid to the state under that lease; (3) taxes based on or measured by net income; (4) interest or other financing charges or costs of raising equity or debt capital; (5) acquisition costs for a lease or property or exploration license; (6) costs arising from fraud, wilful misconduct, gross negligence, violation of law, or failure to comply with an obligation under a lease, permit, or license issued by the state or federal government; (7) fines or penalties imposed by law; (8) costs of arbitration, litigation, or other dispute resolution activities that involve the state or concern the rights or obligations among owners of interests in, or rights to production from, one or more leases or properties or a unit; (9) costs incurred in organizing a partnership, joint venture, or other business entity or arrangement; (10) amounts paid to indemnify the state; the exclusion provided by this paragraph does not apply to the costs of obtaining insurance or a surety bond from a third-party insurer or surety; (11) surcharges levied under AS 43.55.201 or 43.55.300; (12) an expenditure otherwise deductible under (b) of this section that is a result of an internal transfer, a transaction with an affiliate, or a transaction between related parties, or is otherwise not an arm's length transaction, unless the producer establishes to the satisfaction of the department that the amount of the expenditure does not exceed the fair market value of the expenditure; (13) an expenditure incurred to purchase an interest in any corporation, partnership, limited liability company, business trust, or any other business entity, whether or not the transaction is treated as an asset sale for federal income tax purposes; (14) a tax levied under AS 43.55.011 or 43.55.014; (15) costs incurred for dismantlement, removal, surrender, or abandonment of a facility, pipeline, well pad, platform, or other structure, or for the restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in conjunction with dismantlement, removal, surrender, or abandonment; a cost is not excluded under this paragraph if the dismantlement, removal, surrender, or abandonment for which the cost is incurred is undertaken for the purpose of replacing, renovating, or improving the facility, pipeline, well pad, platform, or other structure; (16) costs incurred for containment, control, cleanup, or removal in connection with any unpermitted release of oil or a hazardous substance and any liability for damages imposed on the producer or explorer for that unpermitted release; this paragraph does not apply to the cost of developing and maintaining an oil discharge prevention and contingency plan under AS 46.04.030 ; (17) costs incurred to satisfy a work commitment under an exploration license under AS 38.05.132 ; (18) that portion of expenditures, that would otherwise be qualified capital expenditures, as defined in AS 43.55.023 , incurred during a calendar year that are less than the product of $0.30 multiplied by the total taxable production from each lease or property, in BTU equivalent barrels, during that calendar year, except that, when a portion of a calendar year is subject to this provision, the expenditures and volumes shall be prorated within that calendar year; (19) costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment, other than a well, that results in or is undertaken in response to a failure, problem, or event that results in an unscheduled interruption of, or reduction in the rate of, oil or gas production; or costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment, other than a well, that is undertaken in response to, or is otherwise associated with, an unpermitted release of a hazardous substance or of gas; however, costs under this paragraph that would otherwise constitute lease expenditures under (a) and (b) of this section may be treated as lease expenditures if the department determines that the repair or replacement is solely necessitated by an act of war, by an unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character, the effects of which could not have been prevented or avoided by the exercise of due care or foresight, or by an intentional or negligent act or omission of a third party, other than a party or its agents in privity of contract with, or employed by, the producer or an operator acting for the producer, but only if the producer or operator, as applicable, exercised due care in operating and maintaining the facility, pipeline, structure, or equipment, and took reasonable precautions against the act or omission of the third party and against the consequences of the act or omission; in this paragraph, (A) “costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment” includes costs to dismantle and remove the facility, pipeline, structure, or equipment that is being replaced; (B) “hazardous substance” has the meaning given in AS 46.03.826 ; (C) “replacement” includes renovation or improvement; (20) costs incurred to construct, acquire, or operate a refinery or crude oil topping plant, regardless of whether the products of the refinery or topping plant are used in oil or gas exploration, development, or production operations; however, if a producer owns a refinery or crude oil topping plant that is located on or near the premises of the producer's lease or property in the state and that processes the producer's oil produced from that lease or property into a product that the producer uses in the operation of the lease or property in drilling for or producing oil or gas, the producer's lease expenditures include the amount calculated by subtracting from the fair market value of the product used the prevailing value, as determined under AS 43.55.020 (f), of the oil that is processed; (21) costs of lobbying, public relations, public relations advertising, or policy advocacy; (22) costs incurred as part of a capital expenditure or other action taken for a carbon management purpose under AS 38.05.081 or a carbon offset project under AS 38.95.400 — 38.95.499; (23) costs incurred for carbon capture or carbon storage, including fees incurred under AS 41.06.160 , surcharges incurred under AS 41.06.175 , or costs associated with obtaining, operating, or maintaining a license or lease under AS 38.05.700 — 38.05.795; in this paragraph, (A) “carbon capture” means the process of capturing carbon dioxide from a chemical, mechanical, or industrial process, or directly from the ambient atmosphere, and reducing the carbon dioxide to a concentrated form, including a supercritical fluid; “carbon capture” does not include gas processing or gas treatment; (B) “carbon storage” means the long-term geologic storage of carbon dioxide in a carbon storage facility permitted under AS 41.06.120 or a Class VI injection well, as defined in 40 C.F.R. 146.5(f). (f) For purposes of AS 43.55.023 (a) and only as to expenditures incurred to explore for an oil or gas deposit located within land in which an explorer does not own a working interest, the term “producer” in this section includes “explorer.” (g) The department shall specify or approve a reasonable allocation method for determining the portion of a cost that is appropriately treated as a lease expenditure under this section if a cost that would otherwise constitute a lease expenditure under this section is incurred to explore for, develop, or produce (1) both an oil or gas deposit located within land outside the state and an oil or gas deposit located within a lease or property, or other land, in the state; or (2) an oil or gas deposit located partly within land outside the state and partly within a lease or property, or other land, in the state. (h) The department shall adopt regulations that provide for reasonable methods of allocating costs between oil and gas, between gas subject to AS 43.55.011 (o) and other gas, and between leases or properties in those circumstances where an allocation of costs is required to determine lease expenditures that are costs of exploring for, developing, or producing oil deposits or costs of exploring for, developing, or producing gas deposits, or that are costs of exploring for, developing, or producing oil or gas deposits located within different leases or properties. (i) The department may adopt regulations that establish additional standards necessary to carrying out the purposes of this section and AS 43.55.170 , including the incorporation of the concepts of 26 U.S.C. 482 (Internal Revenue Code), as amended, the related or accompanying regulations of that provision, and any ruling or guidance issued by the United States Internal Revenue Service that relates to that provision. (j) [Repealed, § 34 ch 4 4SSLA 2016.] (k) [Repealed, § 34 ch 4 4SSLA 2016.] (l) In a calendar year, after application of a producer's lease expenditures that are incurred in that calendar year, the producer may choose to apply all or a portion of a carried-forward annual loss or carry any unused portion forward. The department may not require a producer to apply all or a portion of a carried-forward annual loss in a calendar year. (m) During a calendar year in which a taxpayer's liability under AS 43.55.011 (e) is determined under AS 43.55.011 (f), the maximum amount of carried-forward annual loss that a taxpayer may apply in that year is equal to the amount, when combined with the lease expenditures of the current year and any credits under this chapter, necessary to reduce the amount calculated under AS 43.55.011 (e) to the equivalent amount of tax due under AS 43.55.011 (f) before the application of any credits under this chapter. An amount of carried-forward annual loss not applied under this subsection may continue to be carried forward. (n) A carried-forward annual loss may only be applied (1) to determine the production tax value of oil or gas for a category for which a separate annual production tax value is required to be calculated under AS 43.55.160 (a) or (h) if the lease expenditure resulting in the carried-forward annual loss was incurred in the same category; (2) beginning in the calendar year in which regular production of oil or gas from the lease or property where the lease expenditure resulting in the carried-forward annual loss was incurred commences. (o) A carried-forward annual loss for a lease expenditure incurred on a lease or property that (1) did not commence regular production of oil or gas before or during the year the lease expenditure was incurred decreases in value each year by one-tenth of the value of the carried-forward annual loss in the preceding year, beginning January 1 of the 11th calendar year after the lease expenditure is carried forward under (a)(3) of this section; a decrease in value under this paragraph does not apply for a year in which the department determines that regular production of oil or gas did not commence because of a natural disaster, an injunction or other court order, or an administrative order; (2) commenced regular production of oil or gas before or during the year the lease expenditure was incurred decreases in value each year by one-tenth of the value of the carried-forward annual loss in the preceding year, beginning January 1 of the eighth calendar year after the lease expenditure is carried forward under (a)(3) of this section. (p) A carried-forward annual loss under (o) of this section may not decrease in value for a partial calendar year. (q) For purposes of (n)(2) and (o) of this section, the Alaska Oil and Gas Conservation Commission shall determine the commencement of regular production. (r) In adopting a regulation that defines the lease or property where a lease expenditure resulting in a carried-forward annual loss is incurred for purposes of (n) and (o) of this section, the department shall include an exploration lease expenditure that is reasonably related to the lease or property. (s) For purposes of this section, (1) “carried-forward annual loss” means a loss established under (a)(3) of this section; (2) “explore” includes conducting geological or geophysical exploration, including drilling a stratigraphic test well; (3) “ordinary and necessary” has the meaning given in 26 U.S.C. 162 (Internal Revenue Code), as amended, and regulations adopted under that section; (4) “stratigraphic test well” means a well drilled for the sole purpose of obtaining geological information to aid in exploring for an oil or gas deposit and the target zones of which are located in the state. Sec. 43.55.170. Adjustments to lease expenditures. (a) A producer's lease expenditures under AS 43.55.165 must be adjusted by subtracting payments or credits, other than tax credits, received by the producer or by an operator acting for the producer for (1) the use by another person of a production facility in which the producer has an ownership interest or the management by the producer of a production facility under a management agreement providing for the producer to receive a management fee; (2) a reimbursement or similar payment that offsets the producer's lease expenditures, including an insurance recovery from a third-party insurer and a payment from the state or federal government for reimbursement of the producer's upstream costs, including costs for gathering, separating, cleaning, dehydration, compressing, or other field handling associated with the production of oil or gas upstream of the point of production; (3) the sale or other transfer of (A) an asset, including geological, geophysical, or well data or interpretations, acquired by the producer as a result of a lease expenditure or an expenditure that would be a lease expenditure if it were incurred after March 31, 2006; for purposes of this subparagraph, (i) if a producer removes from the state, for use outside the state, an asset described in this subparagraph, the value of the asset at the time it is removed is considered a payment received by the producer for sale or transfer of the asset; (ii) for a transaction that is an internal transfer or is otherwise not an arm's length transaction, if the sale or transfer of the asset is made for less than fair market value, the amount subtracted must be the fair market value; and (B) oil or gas (i) that is not considered produced from a lease or property under AS 43.55.020 (e); and (ii) the cost of acquiring which is a lease expenditure incurred by the person that acquires the oil or gas. (b) Except as otherwise provided under this subsection, if one or more payments or credits subject to this section are received by a producer or by an operator acting for the producer during a calendar year and if either the total amount of the payments or credits exceeds the amount of the producer's applicable lease expenditures for that calendar year or the producer has no lease expenditures for that calendar year, the producer shall nevertheless subtract those payments or credits from the lease expenditures or from zero, respectively, and the producer's applicable adjusted lease expenditures for that calendar year are a negative number and shall be applied to the pertinent calculation under AS 43.55.160 (a) as a negative number. (c) For purposes of AS 43.55.023 (a) and only as to expenditures incurred to explore for an oil or gas deposit located within land in which an explorer does not own a working interest, the term “producer” in this section includes “explorer.” Sec. 43.55.180. Required report. (a) The department shall study (1) the effects of the provisions of this chapter on oil and gas exploration, development, and production in the state, on investment expenditures for oil and gas exploration, development, and production in the state, on the entry of new producers into the oil and gas industry in the state, on state revenue, and on tax administration and compliance, giving particular attention to the tax rates provided under AS 43.55.011 , the tax credits provided under AS 43.55.023 — 43.55.025, and the deductions for and adjustments to lease expenditures provided under AS 43.55.160 — 43.55.170; and (2) the effects of the tax rates under AS 43.55.011 (i) on state revenue and on oil and gas exploration, development, and production on private land, and the fairness of those tax rates for private landowners. (b) The department shall prepare a report on or before the first day of the 2011 regular session of the legislature on the results of the study made under (a) of this section, including recommendations as to whether any changes should be made to this chapter. The department shall notify the legislature that the report prepared under this subsection is available. Article 2. Conservation Surcharge on Oil. Sec. 43.55.200. Surcharge levied. [Repealed, § 43 ch 128 SLA 1994.] Sec. 43.55.201. Surcharge levied. (a) Every producer of oil shall pay a surcharge of $.01 per barrel of oil produced from each lease or property in the state, less any oil the ownership or right to which is exempt from taxation. (b) The surcharge imposed by (a) of this section is in addition to the tax imposed by AS 43.55.011 and is due on the last day of the month on oil produced from each lease or property during the preceding month. The surcharge is in addition to the surcharge imposed by AS 43.55.300 — 43.55.310. (c) A producer of oil shall make a report of production on March 31 of the year following the calendar year of production and in the same manner and under the same penalties as required under AS 43.55.011 — 43.55.180. (d) Oil not considered under AS 43.55.020 (e) to be produced from a lease or property is not considered to be produced from a lease or property for purposes of this section. Sec. 43.55.210. Disposition of proceeds of surcharge. [Repealed, § 43 ch 128 SLA 1994.] Sec. 43.55.211. Use of revenue derived from surcharge. The legislature may appropriate the annual estimated balance of the account maintained under AS 37.05.142 for deposits into the general fund of the proceeds of the surcharge levied under AS 43.55.201 to the response account in the oil and hazardous substance release prevention and response fund established by AS 46.08.010 . Sec. 43.55.220. Use of revenue derived from surcharge. [Repealed, § 43 ch 128 SLA 1994.] Sec. 43.55.221. Suspension and reimposition of the surcharge. (a) Not later than 30 days after the end of each calendar quarter, the commissioner of administration shall determine, as of the end of that quarter, the fiscal year's (1) unreserved and unobligated balance in the response account of the oil and hazardous substance release prevention and response fund established in AS 46.08.010 ; for purposes of this paragraph, the “unreserved and unobligated balance in the response account” means the cash balance of the account less the sum of (A) reserves for outstanding appropriations from the account; (B) encumbrances of money in the account; and (C) other liabilities of the account; (2) balance of the account maintained under AS 37.05.142 that accounts for the proceeds of the surcharge that are deposited in the general fund; (3) the balance of the response mitigation account established by AS 46.08.025 (b) that originated from the sources described in AS 46.08.025 (a)(3) and that is available for appropriation to the response account of the fund established in AS 46.08.010 . (b) Within 15 days after making the determinations required by (a) of this section, the commissioner of administration shall (1) add the amounts determined under (a)(1) — (3) of this section; and (2) report the sum calculated under (1) of this subsection to the commissioner of revenue. (c) In making the determination required by (a) of this section, the commissioner of administration may not consider money described in (a) of this section that is subject to a dedication imposed by law that restricts the use of the money to a specific purpose for which the response account of the oil and hazardous substance release prevention and response fund established in AS 46.08.010 may not be lawfully expended. (d) If the commissioner of administration reports that the sum reported under (b) of this section equals or exceeds $50,000,000, the commissioner of revenue shall suspend imposition and collection of the surcharge levied and collected under AS 43.55.201 . Suspension of the imposition and collection of the surcharge begins on the first day of the calendar quarter next following the commissioner's receipt of the commissioner of administration's report under (b) of this section. Before the first day of a suspension authorized by this subsection, the commissioner shall make a reasonable effort to notify all persons who are known to the department to be paying the surcharge under AS 43.55.201 that the surcharge will be suspended. (e) Except as provided in AS 43.55.231 , if the commissioner of administration reports that the sum reported under (b) of this section is less than $50,000,000, the commissioner of revenue shall require imposition and collection of the surcharge authorized under AS 43.55.201 . If the surcharge is not in effect, reimposition of the surcharge begins on the first day of the calendar quarter next following the commissioner's receipt of the commissioner of administration's report under (b) of this section. Before the first day of reimposition of the surcharge authorized by this subsection, the commissioner shall make a reasonable effort to notify all persons who are known to the department to be required to pay the surcharge under AS 43.55.201 that the surcharge will be reimposed. Sec. 43.55.230. Suspension and reimposition of the surcharge. [Repealed, § 43 ch 128 SLA 1994.] Sec. 43.55.231. Surcharge not imposed. (a) The surcharge authorized by AS 43.55.201 is not levied during any fiscal year for which (1) the legislature does not, during the regular or a special legislative session preceding the first day of the fiscal year, appropriate at least an amount equal to the amount determined under (b) of this section from the general fund to the response account in the oil and hazardous substance release prevention and response fund; or (2) the legislature, during the regular or a special legislative session preceding the first day of the fiscal year, appropriates at least the amount of money equal to the amount determined under (b) of this section from the general fund to the response account in the oil and hazardous substance release prevention and response fund and that appropriation is vetoed or reduced by the governor. (b) The amount of money required to be appropriated from the general fund to the response account in the oil and hazardous substance release prevention and response fund by (a) of this section is the amount, determined for the last day of the preceding fiscal year, that is the sum of the actual or estimated balance of (1) the account maintained under AS 37.05.142 to account for all proceeds of the surcharge that are deposited into the general fund; and (2) the portion of the balance of the response mitigation account established by AS 46.08.025 (b) that originated from the recovery of money described in AS 46.08.025 (a)(3). Sec. 43.55.240. Surcharge not imposed. [Repealed, § 43 ch 128 SLA 1994.] Sec. 43.55.299. Definitions. In AS 43.55.201 — 43.55.299, (1) “response account” means the oil and hazardous substance release response account established in AS 46.08.010 (a)(2); (2) “response mitigation account” means the oil and hazardous substance release response mitigation account established in AS 46.08.025 (b). Article 3. Additional Conservation Surcharge on Oil. Sec. 43.55.300. Surcharge levied. (a) Every producer of oil shall pay a surcharge of $.04 per barrel of oil produced from each lease or property in the state, less any oil the ownership or right to which is exempt from taxation. (b) The surcharge imposed by (a) of this section is in addition to the tax imposed by AS 43.55.011 and is due on the last day of the month on oil produced from each lease or property during the preceding month. The surcharge is in addition to the surcharge imposed by AS 43.55.201 — 43.55.231. (c) A producer of oil shall make a report of production on March 31 of the year following the calendar year of production and in the same manner and under the same penalties as required under AS 43.55.011 — 43.55.180. (d) Oil not considered under AS 43.55.020 (e) to be produced from a lease or property is not considered to be produced from a lease or property for purposes of this section. Sec. 43.55.310. Use of revenue derived from surcharge. The legislature may appropriate the annual estimated balance of the account maintained under AS 37.05.142 for deposits into the general fund of the proceeds of the surcharge levied under AS 43.55.300 to the oil and hazardous substance release prevention account in the oil and hazardous substance release prevention and response fund established by AS 46.08.010 . Article 4. General Provisions. Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary provision of AS 40.25.100 , and regardless of whether the information is considered under AS 43.05.230 (e) to constitute statistics classified to prevent the identification of particular returns or reports, the department may publish the following information under this chapter, if aggregated among three or more producers or explorers, showing by month or calendar year and by lease or property, unit, or area of the state: (1) the amount of oil or gas production; (2) the amount of taxes levied under this chapter or paid under this chapter; (3) the effective tax rates under this chapter; (4) the gross value of oil or gas at the point of production; (5) the transportation costs for oil or gas; (6) qualified capital expenditures, as defined in AS 43.55.023 ; (7) exploration expenditures under AS 43.55.025 ; (8) production tax values of oil or gas under AS 43.55.160 ; (9) lease expenditures under AS 43.55.165 ; (10) adjustments to lease expenditures under AS 43.55.170 ; (11) tax credits applicable or potentially applicable against taxes levied by this chapter. Sec. 43.55.895. Applicability to municipal entities. (a) Notwithstanding AS 29.35.670 (a) or other provision of law, a producer that is a municipal entity is subject to taxation and payment of surcharges under this chapter for oil and gas that it sells to another party. (b) A municipal entity subject to taxation because of this section (1) is eligible for tax credits proportionate to its production taxable under AS 43.55.011 (e); and (2) shall allocate its lease expenditures in proportion to its production taxable under AS 43.55.011 (e). (c) In this section, “municipal entity” means a municipality, municipally owned utility, public corporation of a municipality, or entity established by more than one municipality. Sec. 43.55.900. Definitions. In this chapter, (1) “barrel of oil” means 42 United States gallons of oil of 231 cubic inches a gallon computed at a temperature of 60 degrees Fahrenheit; (2) “British thermal unit” means the quantity of heat required to raise the temperature of one pound of water from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of one atmosphere; (3) “BTU equivalent barrel” means (A) in the case of oil, one barrel; (B) in the case of gas, the amount of gas that has a heating value of 6,000,000 British thermal units; (4) “catastrophic oil discharge” has the meaning given in AS 46.04.900 ; (5) “Cook Inlet sedimentary basin” has the meaning given in regulations adopted to implement AS 38.05.180 (f)(4); (6) “cubic foot of gas” means the volume of gas contained in one cubic foot of space measured at a pressure base of 14.65 pounds per square inch absolute and a temperature base of 60 degrees Fahrenheit; (7) “explorer” means a person who, in exploring for new oil or gas reserves, incurs expenditures; (8) “gas” means (A) all natural, associated, or casinghead gas; (B) all hydrocarbons that (i) are recovered by mechanical separation of well fluids or by gas processing in a gas processing plant; and (ii) exist in a gaseous phase at the completion of mechanical separation and any gas processing in a gas processing plant; and (C) all other hydrocarbons produced from a well not defined as oil; (9) “gas processing” (A) means processing a gaseous mixture of hydrocarbons (i) by means of absorption, adsorption, externally applied refrigeration, artificial compression followed by adiabatic expansion using the Joule-Thomson effect, or another physical process that is not mechanical separation; and (ii) for the purpose of extracting and recovering liquid hydrocarbons; (B) does not include gas treatment; (10) “gas processing plant” means a facility that (A) extracts and recovers liquid hydrocarbons from a gaseous mixture of hydrocarbons by gas processing; and (B) is located upstream of the inlet of any pipeline transporting gas to a gas treatment plant and upstream of the inlet of any gas pipeline system transporting gas to a market; (11) “gas treatment” (A) means conditioning gas and removing from gas nonhydrocarbon substances for the purpose of rendering the gas acceptable for tender and acceptance into a gas pipeline system; (B) includes incidentally removing liquid hydrocarbons from the gas; (C) does not include (i) dehydration required to facilitate the movement of gas from the well to the point where gas processing takes place; (ii) the scrubbing of liquids from gas to facilitate gas processing; (12) “gas treatment plant” means a facility that performs gas treatment, regardless of whether the facility also performs gas processing; (13) “gross value at the point of production” means (A) for oil, the value of the oil at its point of production without deduction of any costs upstream of that point of production; (B) for gas, the value of the gas at its point of production without deduction of any costs upstream of that point of production; (14) “heating value” means the gross number of BTUs released by complete combustion of an amount of gas; (15) “landowner's royalty interest” means (A) a lessor's royalty interest under an oil and gas lease; or (B) a royalty interest that is (i) held by a surface owner of land from which oil or gas is produced; and (ii) granted in exchange for the right to use the surface of that land or as compensation for damage to the surface of that land; (16) “lease or property” means any right, title, or interest in or the right to produce or recover oil or gas including: (A) a mineral interest; (B) a leasehold interest; (C) a working interest, royalty interest, overriding royalty interest, production payment, net profit interest, or any other interest in a lease, concession, joint venture, or other agreement for exploration, development, or production of oil and gas or of gas only; (D) a working interest, royalty interest, overriding royalty interest, production payment, net profit interest or any other interest in an agreement for unitization or pooling under the provisions of 26 U.S.C. 614(b)(3) (Internal Revenue Code) as defined on January 1, 1974; (17) “oil” means (A) crude petroleum oil; and (B) all liquid hydrocarbons that are recovered by mechanical separation of well fluids or by gas processing in a gas processing plant; (18) “oil and gas lease” includes an oil and gas lease, a gas only lease, and an oil only lease; (19) “ownership or right to which is exempt from taxation” means any ownership interest of the federal government or the state; (20) “pipeline quality” means good and merchantable condition; (21) “point of production” means (A) for oil, the automatic custody transfer meter or device through which the oil enters into the facilities of a carrier pipeline or other transportation carrier in a condition of pipeline quality; in the absence of an automatic custody transfer meter or device, “point of production” means the mechanism or device to measure the quantity of oil that has been approved by the department for that purpose, through which the oil is tendered and accepted in a condition of pipeline quality into the facilities of a carrier pipeline or other transportation carrier or into a field topping plant; (B) for gas that is (i) not subjected to or recovered by mechanical separation or run through a gas processing plant, the farthest upstream of the following locations: the first point where the gas is accurately metered, the inlet of any pipeline transporting the gas to a gas treatment plant, or the inlet of any gas pipeline system transporting the gas to a market; (ii) subjected to or recovered by mechanical separation but not run through a gas processing plant, the farthest upstream of the following locations: the first point where the gas is accurately metered after completion of mechanical separation, the inlet of any pipeline transporting the gas after completion of mechanical separation to a gas treatment plant, or the inlet of any gas pipeline system transporting the gas after completion of mechanical separation to a market; (iii) run through a gas processing plant, the farthest upstream of the following locations: the first point where the gas is accurately metered downstream of the gas processing plant, the inlet of any pipeline downstream of the gas processing plant transporting the gas to a gas treatment plant, or the inlet of any gas pipeline system downstream of the gas processing plant transporting the gas to a market; (22) “producer” means an owner of an operating right, operating interest, or working interest in a mineral interest in oil or gas; (23) “regular production” has the meaning given in AS 31.05.170 ; (24) “surcharge” means (A) when used in AS 43.55.201 — 43.55.299, the surcharge levied by AS 43.55.201 ; (B) when used in AS 43.55.300 — 43.55.310, the surcharge levied by AS 43.55.300 ; (25) “unit” means a group of tracts of land that is (A) subject to a cooperative or a unit plan of development or operation that has been certified by the commissioner of natural resources under AS 38.05.180 (p); (B) subject to a cooperative or a unit plan of development or operation that has been certified by the United States Secretary of the Interior under 30 U.S.C. 226(m); (C) subject to an agreement of the owners of interests in the tracts of land to validly integrate their interests to provide for the unitized management, development, and operation of the tracts of land as a unit, within the meaning of AS 31.05.110 (a); or (D) within the unit area of a unit created by order of the Alaska Oil and Gas Conservation Commission under AS 31.05.110 (b); (26) “used in the state” means delivered for consumption as fuel in the state, including as fuel consumed to generate electricity.