Gross value reductions

# (a)

AS 43.55.160(f) and (g) apply only to oil and gas produced from a lease or property after December 31, 2013.

# (b)

For purposes of AS 43.55.160(f)(1) and (g), a lease that includes land that was within a unit on January 1, 2003 is not considered to be a lease that was within that unit on January 1, 2003, if

# (1)

the lease was issued following the expiration of a former lease containing the land and the lease at or after the time it was issued was not within that unit; or

# (2)

the lease was segregated from an existing lease into a separate and distinct lease comprising a portion of the land that was formerly within the existing lease and the lease after segregation was not within that unit.

# (c)

If a reservoir had been in a participating area before December 31, 2011, oil or gas produced from a participating area established after December 31, 2011 that contains all or part of the reservoir does not meet the criteria in AS 43.55.160(f)(2) for a reduction in the gross value at the point of production.

# (d)

For purposes of AS 43.55.160(f), the date that

# (1)

a participating area is established is the effective date specified in the written decision of the commissioner of natural resources approving the establishment of the participating area or, if no effective date is specified, the date of the decision;

# (2)

acreage is added to an existing participating area is the effective date specified in the written decision of the commissioner of natural resources approving the expansion of the participating area to include that acreage or, if no effective date is specified, the date of the decision.

# (e)

In AS 43.55.160(f)(3) and 15 AAC 55.212 - 15 AAC 55.213,

# (1)

oil or gas produced from acreage that was added to an existing participating area is oil or gas

(A) other than oil or gas that is not considered produced within the meaning of
AS 43.55.020(e) and 15 AAC 55.151(e); and

(B) the volume of which is from acreage added to an existing participating area;

# (2)

the volume of oil or gas produced is from acreage added to an existing participating area only if the oil or gas is produced from a well with producing intervals that are all within the acreage added to the existing participating area;

# (3)

acreage added to an existing participating area is the portion of a reservoir or reservoirs that an existing participating area is expanded to include, unless the portion had previously been excluded from the participating area after having been included in the participating area.

# (f)

The provisions of AS 43.55.160(g) apply only to oil and gas that qualify for a reduction in gross value at the point of production under AS 43.55.160(f)(1) and that are produced from a unit made up solely of oil and gas leases issued by the Department of Natural Resources. For purposes of AS 43.55.160(g), a royalty share does not include a share of the net profit derived from a lease.

# (g)

Except as otherwise provided in this subsection, a 20 percent reduction in the gross value at the point of production under AS 43.55.160(f) is calculated separately for the qualifying oil and gas produced from each lease or property subject to AS 43.55.160(f)(1) but not AS 43.55.160(g), each participating area subject to AS 43.55.160(f)(2), and each addition of acreage subject to AS 43.55.160(f)(3). Oil and gas that qualify under more than one provision of AS 43.55.160(f)(1), (2), or (3), but not AS 43.55.160(g), may receive no more than a single 20 percent reduction in the gross value at the point of production. A 30 percent reduction in the gross value at the point of production is calculated separately for the qualifying oil and gas produced from each lease or property subject to both AS 43.55.160(f)(1) and (g). Oil or gas that qualifies under both AS 43.55.160(f)(1) and (g) and that also qualifies under AS 43.55.160(f)(2) or (3) may receive no more than a single 30 percent reduction in the gross value at the point of production. No reduction in the gross value at the point of production is calculated under AS 43.55.160(f) or (g) for oil or gas produced from a lease or property subject to AS 43.55.160(f)(1) or subject to both AS 43.55.160(f)(1) and (g), from a participating area subject to AS 43.55.160(f)(2), or from an addition of acreage subject to AS 43.55.160(f)(3) if the gross value at the point of production is negative.

# (h)

Except as provided under AS 43.55.160(e) and 15 AAC 55.511(c)(2), the gross value at the point of production of oil or gas is reduced under AS 43.55.160(f) or (g) only for the purpose of calculating an annual production tax value under AS 43.55.160(a)(1)(A) or (h)(1), subject to the provisions of AS 43.55.023(b)(2), as those provisions read before January 1, 2018, for oil and gas produced before January 1, 2018, or under AS 43.55.160(e) for oil and gas produced after December 31, 2017. The gross value at the point of production of oil is not reduced under AS 43.55.160(f) or (g) for the purpose of calculating an average gross value at the point of production of oil for a month under AS 43.55.024(j), or for the purpose of calculating a gross value at the point of production under AS 43.55.011(f) or AS 43.55.020(a)(1)(B)(ii), (5)(B)(ii), or (7)(A)(ii).

# (i)

Except as provided under 15 AAC 55.212(l), a reduction in the gross value at the point of production provided by AS 43.55.160(f) or (g) is not optional.
(Eff. 12/25/2013, Register 208; am 3/1/2017, Register 221; am 12/6/2018, Register 228) Statutory Authority:
Authority:
AS 43.05.080 AS 43.55.110 AS 43.55.160