US Alaska Upstream Fiscal and Regulatory Report - Budget Problems May Force Fiscal Regime Changes
Summary
The reduction in tax credits, the large long-term state budget liabilities, and the inability to repay the investment credits, may force Alaska to modify its petroleum fiscal framework just a few years after the modification introduced by MAPA in 2013. The reduction in tax credits coupled with the difficulties in legally establishing the Alaska Tax Credit Certificate Bond Corporation and its bond repurchase program may dampen investment sentiment across Alaska despite the reduction at the federal level of corporate income tax to 21%. As a result of budget problems there may be an increase in conflicts between Alaska and the oil and gas producing municipalities. Moreover, the Trump administration wants to proceed with oil and gas activities within a 1.5 million-acre coastal plain in the Arctic National Wildlife Refuge, a federal area, but this project will face a strong environmental opposition slowing investment.
“US Alaska Upstream Fiscal and Regulatory Report - Budget Problems May Force Fiscal Regime Changes”, presents the essential information relating to the terms which govern investment into United States’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for United States’s upstream oil and gas investment climate.
Scope
Reasons to Buy
Summary
The reduction in tax credits, the large long-term state budget liabilities, and the inability to repay the investment credits, may force Alaska to modify its petroleum fiscal framework just a few years after the modification introduced by MAPA in 2013. The reduction in tax credits coupled with the difficulties in legally establishing the Alaska Tax Credit Certificate Bond Corporation and its bond repurchase program may dampen investment sentiment across Alaska despite the reduction at the federal level of corporate income tax to 21%. As a result of budget problems there may be an increase in conflicts between Alaska and the oil and gas producing municipalities. Moreover, the Trump administration wants to proceed with oil and gas activities within a 1.5 million-acre coastal plain in the Arctic National Wildlife Refuge, a federal area, but this project will face a strong environmental opposition slowing investment.
“US Alaska Upstream Fiscal and Regulatory Report - Budget Problems May Force Fiscal Regime Changes”, presents the essential information relating to the terms which govern investment into United States’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for United States’s upstream oil and gas investment climate.
Scope
- Overview of current fiscal terms governing upstream oil and gas operations in United States
- Assessment of the current fiscal regime’s state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in United States.
Reasons to Buy
- Understand the complex regulations and contractual requirements applicable to United States’s upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the country’s upstream sector
- Utilize considered insight on future trends to inform decision-making.
Table of Contents
1 Table of Contents1.1. List of Tables
1.2. List of Figures
2. Regime Overview
3. State Take Assessment
4. Key Fiscal Terms
4.1. Cash Bonus Bid (Lease)
4.2. Rental Fees
4.3. Royalty
4.3.1. Royalty Modifications
4.3.2. Unconventional Gas Royalty Modification
4.3.3. Uneconomic Field Royalty Modification
4.3.4. Cook Inlet Royalty Modifications
4.3.5. Cook Inlet Specific Field Production Threshold Royalty Modification
4.4. Net Profit Sharing Lease
4.5. More Alaska Production Act Production Tax (2014 Onward)
4.5.1. Taxation Caps
4.5.2. Taxation of Non-Governmental Royalties
4.5.3. Determination of Gross Value at the Point of Production (GVPP)
4.5.4. Gross Value Reduction for Production North of 68N Latitude
4.5.5. MAPA Production Tax in Relation to Other Taxes
4.6. Historical Production Taxes
4.6.1. Alaska’s Clear and Equitable Share (ACES) Production Tax (July 2007-December 31, 2013)
4.6.2. Petroleum Profits Tax (2006-2007)
4.6.3. Economic Limit Factor (ELF) Production Tax I and II (1977-2006)
4.7. Property Tax (Municipalities)
4.8. Corporate Income Tax
4.8.1. State Corporate Income Tax
4.8.2. State Corporate Income Tax Deductions and Depreciation
4.8.3. Federal Corporate Income Tax
4.8.4. Federal Corporate Income Tax Deductions and Depreciation
4.8.5. Withholding Tax
4.9. Branch Profits Tax
4.10. State Tax Credits
4.10.1. Per-Barrel Tax Credit
4.10.2. Alternative Credit for Exploration
4.10.3. Qualified Capital Expenditure Credit & Well Lease Expenditure Credit
4.10.4. Cook Inlet Jack-Up Rig Credit (Expired on June 30, 2016)
4.10.5. Frontier Basin Credit (Expired in June 2016)
4.10.6. Exploration Incentive Credit (Expired on December 31, 2016)
4.10.7. Carried-Forward Annual Loss Credit (Expired on December 31, 2017)
4.10.8. Small Producers Credit
4.10.9. New Area Development Credit (Unusable Because No Licensee Was in the Position to Claim It)
4.10.10. Gas Exploration and Development Tax Credit (Expired on January 1, 2016)
4.10.11. Internal Revenue Code Credits Adopted by Reference
4.10.12. LNG Storage Facility Tax Credit
4.10.13. Oil and Gas Industry Service Expenditure Credit
4.10.14. Education Credit (Until December 31, 2024)
4.10.15. Transitional Investment Expenditure Credit (Expired December 31, 2013)
5. Regulation and Licensing
5.1. Legal Framework
5.1.1. Governing Laws
5.1.2. Contract Type
5.1.3. Title to Hydrocarbons
5.2. Institutional Framework
5.2.1. Licensing Authority
5.2.2. Regulatory Agency
5.3. Licensing Process
5.3.1. Lease Licensing Process (State Lands)
5.3.2. Exploratory License Process (State Lands)
5.3.3. Federal Lease Sales in the National Petroleum Reserve in Alaska (NPR-A)
5.4. License Terms
5.4.1. Duration
5.4.2. Area
5.4.3. Obligations for Exploration Licenses
5.4.4. Obligation for Leases
6. Outlook
7. Appendix
7.1. References
7.2. Contact Us
7.3. Disclaimer
List of Tables
- Table 1: Regime Overview
- Table 2: Alaska, Average and Minimum Bonus Bids (US$) Per Acre by Area, 2012-2019
- Table 3: Alaska, Annual Rental Fees
- Table 4: Alaska, Royalty Rate (%), Cook Inlet Specific Field Production Threshold Royalty Modification
- Table 5: Alaska, NPS Rates (%), Selected Leases, Lease Sale 30, Beaufort Sea, 1979
- Table 6: Alaska, Fixed NPS Rates (%), Lease Sale Rounds
- Table 7: Alaska, Minimum Production Tax, Leases/Properties North or Partially North of 68 Degrees North Latitude
- Table 8: Alaska, State Corporate Income Tax Rates
- Table 9: United States, Historical Marginal Federal Corporate Income Tax Rates to 2017 (%)
- Table 10: US - Alaska, 7-Year & 5-Year GDS Depreciation Rates (Half-Year Convention) (%)
- Table 11: United States, Depreciation of assets
- Table 12: United States, Bonus Depreciation Rates
- Table 13: Alaska, Per-Taxable-Barrel Credit
- Table 14: Alaska, Alternative Credit for Exploration
- Table 15: References
List of Figures
- Figure 1: Regime Flow Chart
- Figure 2: Alaska, Indicative NPV10/boe, IRR and State Take Comparison, Regional
- Figure 3: Legal Framework
- Figure 4: Institutional Framework
