15 AAC 55.071. Gas flared

(a) Gas flared in excess of that needed for safety purposes, except gas used in the operation of a lease or property, is taxed at the rate provided by AS 43.55.016 .

(b) For purposes of this section and AS 43.55.020 (e), gas is needed for safety purposes if the Alaska Oil and Gas Conservation Commission authorizes gas to be flared or vented for one of the following reasons:

(1) as the result of an emergency or operational upset for a period not exceeding one hour;

(2) as pilot and purge gas to test or fuel the safety flare system; or

(3) if an emergency that threatens life or property requires flaring or venting for a period exceeding one hour.

(c) For purposes of this section and AS 43.55.020 (e), flaring or venting of gas is a use of the gas in the operation of a lease or property if the Alaska Oil and Gas Conservation Commission does not classify the flaring or venting as waste and if

(1) the gas is flared or vented as the result of a planned lease operation for a period not exceeding one hour and in a volume not exceeding 5,000 Mcf, unless the flaring or venting is part of a longer operation that is interrupted in order to evade the one hour limitation; or

(2) a part of the operation of the lease or property could not be carried out without the use of the gas or a substitute. Under this paragraph, flaring or venting for the purpose of disposal does not constitute use of gas in the operation of a lease or property.

(d) For purposes of AS 43.55.020 (e), gas is flared beyond the amount authorized for safety by the Alaska Oil and Gas Conservation Commission under AS 31.05 if the Alaska Oil and Gas Conservation Commission does not authorize the gas to be flared or vented or if it classifies the flaring as waste. Such gas is taxed at the rate provided by AS 43.55.016 and in addition is subject to a penalty under AS 43.55.020 (e) equal to the tax.

(e) For purposes of (a) and (d) of this section, the gross value at the point of production of the flared gas must be determined using the prevailing value under 15 AAC 55.173.

(f) Repealed 1/1/2000.

History: Eff. 1/1/95, Register 132; am 1/1/2000, Register 152; am 1/1/2003, Register 164

Authority: AS 43.05.080

AS 43.55.016

AS 43.55.020

AS 43.55.110

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