Title 15 . Revenue

Chapter 21 . (Repealed)

Section 900. Definitions

15 AAC 21.900. Definitions

In this chapter

(1) "allocate," in the sense of production allocated to a lease or property, means to attribute (pursuant to the terms of a pooling agreement, unit agreement, lease-line well agreement, drainage agreement or other similar agreement between the production-interest owner(s) of the lease or property and the production-interest owner(s) of an adjacent lease or property, or pursuant to the terms of an order or decision by an appropriate regulatory agency or by a court) to that lease or property part or all of the production from one or more wells bottomed on the adjacent lease or property;

(2) "Btu-equivalent" means a barrel of oil or six Mcf of gas; except that if the Btu-equivalents of the proved reserves of oil originally in place in the field that includes a particular lease or property do not exceed 20 percent of the Btu-equivalents of the proved reserves of gas originally in place in that field, or vice versa, then "Btu-equivalent" will be understood to refer to the unit of production (barrel of oil or Mcf of gas) of the dominant reserve of that field for purposes of this chapter; except, further, that if a taxpayer uses a similar but different unit of production for its unit-of-production amortization or depreciation for financial accounting purposes, then "Btu-equivalent" will be understood to refer to the unit of production used in that amortization and/or depreciation;

(3) "capital lease" means a lease classified as a capital lease from the standpoint of the lessee under FASB-13;

(4) "CDS vessel" means a United States flag vessel built for use in foreign trade which receives (while it is so used) a subsidy for the differential in construction costs between building it in the United States and building it elsewhere;

(5) "CDS/ODS vessel" means a United States flag vessel built for use in foreign trade which receives (while it is so used) both the subsidy for a CDS vessel and the subsidy for an ODS vessel;

(6) "commercial production" means the production of oil and gas for purposes of sale or other beneficial use not associated with the exploration and development of the field in which the lease or property lies, except when the sale or other beneficial use is incidental to the testing of an unproved well or unproved completion interval;

(7) "entitlements treatment" refers to the issuance, purchase, sale or use of whole and/or fractional entitlements associated with refining a particular run of oil pursuant to 10 C.F.R. 211 and 212, or to the treatment of that oil under any other program having a similar effect which the United States Department of Energy may adopt or administer as a replacement or continuation of the present entitlements program;

(8) "estimated value of remaining oil and gas reserves" means the excess, if any, of the present value of future cash flow from the anticipated disposition of oil and gas reserves at a future date (as that value may be required to be recognized under Reserves Recognition Accounting in the taxpayer's financial statements under Securities and Exchange Commission Release No. 33-5966 (AS-253) or modifications thereof) over the depreciated cost of such reserves;

(9) "FASB" means the Financial Accounting Standards Board;

(10) "FASB-13" means FASB's Statement of Financial Accounting Standards No. 13 "Accounting for Leases" (November 1976), as amended or interpreted by FASB's Statement of Financial Accounting Standards No. 17 "Accounting for Leases - Initial Direct Costs" (November 1977), FASB's Statement of Financial Accounting Standards No. 22 "Changes in the Provisions of Lease Agreements Resulting from Refundings of Tax-Exempt Debt" (June 1978), FASB's Statement of Financial Accounting Standards No. 23 "Inception of the Lease" (August 1978), FASB Interpretation No. 19 "Lessee Guarantee of the Residual Value of Leased Property" (October 1977) and FASB Interpretation No. 21 "Accounting for Leases in a Business Combination" (April 1978);

(11) "FERC" means the Federal Energy Regulatory Commission of the United States Department of Energy, or the agency succeeding to its regulatory functions;

(12) "FERC's Uniform System of Accounts for Class A and B natural gas companies" means the system of accounts in 18 C.F.R. 201 applicable to Class A and B natural gas companies (as defined there) which was in effect on January 1, 1978;

(13) "FERC's Uniform System of Accounts for Class C and D natural gas companies" means the system of accounts in 18 C.F.R. 204 applicable to Class C and D natural gas companies (as defined there) which was in effect on January 1, 1978;

(14) "FERC's Uniform System of Accounts for oil pipelines" means the system of accounts in 49 C.F.R. 1204 applicable to pipelines transporting crude oil which was in effect on January 1, 1978;

(15) "fiscal year" means a period of one year which begins on a date other than January 1;

(16) "fiscal-year taxpayer" is defined in 15 AAC 21.820;

(17) "gross share" means the volume of production attributable to a production interest before any deductions described in 15 AAC 21.200 - 15 AAC 21.290 which may be chargeable to that production interest;

(18) "Jones Act vessel" means a United States flag vessel built for use in domestic trade;

(19) "LNG" means a cryogenic liquid formed from normally gaseous hydrocarbons, chiefly methane;

(20) "LNG transportation facility" means any or all of the following when they are parts of an integrated system to transport LNG: the LNG liquefaction plan, gathering lines to that plant, loading and unloading facilities for LNG tankers, LNG tankers themselves and facilities to regasify the LNG;

(21) "Mcf" or "Mcf of gas" means one thousand cubic feet of gas measured at 60 degrees Fahrenheit and 14.65 pounds per square inch (absolute);

(22) "ODS vessel" means a United States flag vessel built for use in foreign trade, which receives (while it is so used) a subsidy for the differential in operating costs between being manned by United States crews and being manned by foreign crews;

(23) "oil and gas" may, if appropriate, refer to either oil or gas, as well as meaning both of them in other contexts;

(24) "point of production" means

(A) for oil, the automatic custody transfer meter or unit through which the oil enters into the facilities of a carrier pipeline or other transportation carrier; and in the absence of an automatic custody transfer meter or unit, the "point of production" for oil is the outlet flange of the tank gauge (or in the absence of a tank gauge, another mechanism or device to measure the quantity of oil that has been approved by the department for this purpose) through which the oil is tendered and accepted into the facilities of a carrier pipeline or other transportation carrier;

(B) for gas, the meter on, or nearest (measured along the course taken by the gas) to, the lease or property from which the gas is recovered, at which meter the sales stream of gas is measured with sufficient accuracy and at appropriate temperature, pressure and other condition for purposes of sale, regardless of whether the particular gas in question is actually sold at that meter;

(25) "positioning costs" is defined in 15 AAC 21.130(g) ;

(26) "production interest" means a royalty interest or a working interest;

(27) "proved developed reserves" means proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods, and includes

(A) proved reserves which are expected to be produced from existing completion interval(s) currently open for production in existing wells; and it is not necessary that production, gathering or transportation facilities be in place or operative, although it should be virtually certain that such facilities will be installed in the future;

(B) proved reserves which exist behind the casing of existing wells, or at minor depths below the present bottom of such wells, which are expected to be produced through those wells in the predictable future, provided the cost of making that oil and gas available for production is relatively small compared to the cost of a new well; and

(C) additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery, provided that testing by a pilot project or the operation of an installed program has confirmed, through production response, that increased recovery will be achieved;

(28) "proved reserves" means those estimated quantities of oil and gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs based upon prices and costs existing at the time the estimate is made;

(29) "proved undeveloped reserves" means those proved reserves which are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for completion; reserves on undrilled acreage must be limited to those drilling units that offset productive units and which are reasonably certain of production when drilled; and proved undeveloped reserves for other undrilled acreage may be claimed only where it can be demonstrated with virtual certainty that there is continuity of production from the existing productive formation, and under no circumstances should estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless those techniques have been proved effective by actual tests in the area and in the same reservoir;

(30) "royalty" or "royalty interest" means a basic royalty, overriding royalty, production payment (excluding loan repayment), net profits interest, or carried interest, in the production of oil and gas;

(31) "sales delivery point" means

(A) for a taxpayer's oil and gas sold in a bona fide arm's-length sale to a third party, other than a sale to which 15 AAC 21.122(d) applies, the point of delivery under the terms of the contract or agreement for that sale;

(B) for a taxpayer's oil not sold in a bona fide arm's-length sale to a third party, the gate of the refinery to which that oil is ultimately transported; and

(C) for a taxpayer's gas not sold in a bona fide arm's-length sale to a third party, the point of delivery under the terms of the sales contract used as the reference for the sales price of the taxpayer's gas under 15 AAC 21.122 and 15 AAC 21.125;

(32) "sales price" is defined in 15 AAC 21.122;

(33) "same market" means

(A) with respect to a taxpayer's oil refined in Alaska, the Alaskan market;

(B) with respect to a taxpayer's oil landed on the U.S. West Coast (including Hawaii), the West Coast market or, if appropriate, the submarkets on the West Coast (i.e., Puget Sound, San Francisco Bay, the Long Beach and Los Angeles area, and Hawaii);

(C) with respect to a taxpayer's oil landed on the U.S. Gulf Coast, the Gulf Coast market;

(D) with respect to a taxpayer's oil landed on the U.S. East Coast, the East Coast market;

(E) with respect to a taxpayer's oil landed in Puerto Rico or the U.S. Virgin Islands, the Puerto Rican and Virgin Island market;

(F) with respect to a taxpayer's gas marketed in Alaska, the Alaskan market or part of it served by gas from the same field or area as the taxpayer's gas;

(G) with respect to a taxpayer's gas marketed in the 48 contiguous states of the United States, the market for those states;

(H) with respect to a taxpayer's gas marketed in a foreign country, the market in that foreign country;

(34) "taxpayer" means a corporation or, collectively, two or more corporations subject to this chapter that are parts of the same consolidated business under this chapter;

(35) "tax year" means a period beginning on January 1 and ending on the following December 31; however, for a fiscal-year taxpayer "tax year" means that taxpayer's fiscal year or, for the first fiscal year in which the taxpayer reports and pays tax on a fiscal-year basis under this chapter, that part of that fiscal year beginning on and following January 1;

(36) "voyage and port costs" is defined in 15 AAC 21.130(e) ;

(37) "working interest" means any interest (including fee title), in the production of oil and gas that is not a royalty interest; and

(38) "year" means tax year unless the context indicates otherwise.

History: Eff. 2/22/79, Register 69; am 5/21/81, Register 78; am 4/14/82, Register 82

Authority: AS 43.05.080

AS 43.21.090