Alaska Administrative Code
Title 15 - Revenue
Chapter 56 - Oil and Gas Exploration, Production and Pipeline Transportation Property Tax
15 AAC 56.100 - Production property
Universal Citation: 15 AK Admin Code 15 AAC 56.100
Current through February 27, 2024
(a) Property used or committed by agreement for use in the production of gas or unrefined oil, or in the operation or maintenance of facilities for the production of gas or unrefined oil will be valued on a use value standard Value will be determined on a replacement cost less depreciation basis using the following methods:
(1) before the commencement of regular
production full and true value is the actual cost incurred or accrued as of the
assessment date;
(2) after the
commencement of regular production replacement cost will be calculated on
January 1 of each calender by the use of accepted appraisal techniques or other
acceptable methods and will reflect the full current cost of modern replacement
for production property physically present and installed as of the assessment
date;
(3) depreciation will be
determined on January 1 of each calendar year based on the economic life of
proven reserves using the following methods:
(A) for production property serving one or
more reservoirs that combined are in production ramp-up or plateau, deprecation
will be determined by application of a one-percent per year deduction to the
replacement cost;
(B) for
production property serving one or more reservoirs that combined are in
production decline, depreciation will be determined through application of a
percent good factor to the replacement cost; the percent good factor is the
result of factor is the result of applying an exponent to a quotient; the
quotient will be determined by dividing the total calendar Year production from
each reservoir the property serves for the year immediately preceding the
assessment date by the calendar year historic peak production for each
reservoirs the property serves; the exponent must scale the quotient to ensure
the correct amount of depreciation is applied to the replacement cost for the
property as of the assessment date:
(4) depreciation of the replacement cost may
not exceed 80 percent in any assessment year while a production property is in
operation; if a production property is permanently no longer in operation as of
the assessment date but has not yet been dismantled and removed, depreciation
of the replacement cost may not exceed 90 percent in any assessment year; if
new proven reserves reverse a production decline and increase annual production
above 90 percent of the historic peak production, or results in a new peak of
production, depreciation reverts back to where it left off on the original
one-percent per year schedule for the property as described in (3)(A) of this
subsection, until production decline;
(5) the department will use the methodology
set out in this section to assess production property unless the department
determines deviation from the methodology necessary when either
(A) a new reservoir immediately and
significantly underperforms relative to documented expectations and directly
results in the abnormal and excessive super-adequacy of a property;
or
(B) a non-reservoir related
circumstance occurs that significantly alters production relative to what would
otherwise be typical reservoir production; a taxpayer or municipality may also
request deviation from the methodology set out in this section hut only under
the same two circumstances; when requesting deviation from the methodology set
out in this section the burden is on the taxpayer or municipality to establish
that deviation is necessary and that the assessment would be unequal excessive
or improper without deviation; the mere presence of a circumstance described in
(A) or (B) of this paragraph dose not require the department to deviate from
the methodology set out in this section if the department determines the
assessment is not unequal excessive or improper without deviating; when
deviating from the methodology set out in this section the department may rely
on other acceptable methods to assess the property.
(b) Production properties include but are not limited to wells, gathering lines, tank batteries, separators, treators, pumping equipment, compressors, platforms, camps, buildings, rolling stock, and all related support and service facilities and equipment.
(c) In this section,
(1) "production" means the sum of all regular
production produced and sold from reservoirs served by the production property
plus the amount of all other oil or gas produced that is used in the operation
of those leases or other leases in drilling for or producing oil or gas,
including fuel and reservoir recovery uses;
(2) "production decline" means when
production for the calendar year preceding the assessment date is 90 percent or
less of the historic peak production for the reservoirs served by the
property;
(3) "regular production"
with respect to oil or gas has the meaning given in
AS
31.05.170.
Authority:AS 43.05.080
AS 43.56.060
AS 43.56.200
Disclaimer: These regulations may not be the most recent version. Alaska may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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