Alaska Administrative Code › Title 15 - Revenue › Chapter 56 - Oil and Gas Exploration, Production and Pipeline Transportation Property Tax › 15 AAC 56.100 - Production property

Current through May 31, 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.