Section 15.55.260. Direct charges.

	(a)  Except as limited by (d) and (e) of this section, direct charges for purposes of 15 AAC 55.250(a) and (b) are  
		(1) costs paid to real property owners to acquire surface rights in real property located in the vicinity of oil or  gas exploration, development, or production operations, and used in support of those operations;  
		(2) net profit shares required to be paid to the state under leases issued under AS 38.05.180(f)(3)(B), (D), or (E)  and paid after June 30, 2007;  
		(3) labor costs, not including work on tax, legal, purchasing, or accounting matters, or matters involving a dispute before a government agency, in the form of salaries and wages of  
			(A) employees of the operator, when those employees are directly employed in or in support of oil or gas exploration, development, or production operations, and   
				(i) on the site or in the vicinity of those operations;  
				(ii) in transit to or from the site or vicinity of those operations;  
				(iii) on a site of a system described in 15 AAC 55.250(c)(10) or (11) if assigned to and working on that system; or  
				(iv) on the site of the construction, transportation, repair, or maintenance of a facility, a system, equipment, or  infrastructure described in 15 AAC 55.250(c)(9) - (11) or (16) if assigned to and working on that construction,  transportation, repair, or maintenance; or  
			(B) any of the following employees of the operator, while those employees are assigned to a specific lease or property or unit that is the subject of oil or gas exploration, development, or production, and only as to that portion of the salaries and wages attributable to the time actually devoted to that exploration, development, or production, as supported by an approved timesheet or other time writing document:  
				(i) technical employees having special and specific engineering, geological, or other technical skills, including engineers, geologists, geophysicists, environmental specialists, and other technical personnel whose primary function with respect to that exploration, development, or production is the handling of specific problems or operating conditions involving the oil or gas exploration, development, or production operations or the support of those operations;  
				(ii) employees engaged in developing field automation systems dedicated to and specific to a unit or a lease or property and necessary for oil or gas production operations of the unit or the lease or property;  
				(iii) employees engaged in developing computer applications specific to a unit or a lease or property and necessary for oil or gas development or production operations of the unit or the lease or property;  
		(4) costs of employee training that directly relates to the job duties for the employees described in (3) of this subsection; the costs of professional memberships, dues, or periodicals, or of education or training in pursuit of an academic degree or professional credential, are not direct charges;  
		(5) expenditures or contributions made under assessments imposed by governmental authority that are applicable to the operator's labor costs described in (3) of this subsection; as to workers' compensation, if the operator self-insures, it may treat as an expenditure or contribution under this paragraph the charge that is regularly recorded as an accrual in the operator's general ledger as representing the fair and reasonable cost of the self-insurance;  
		(6) reasonable expenses incurred or reimbursed by the employer of those employees described in (3) of this subsection for travel by those employees to or from the site or vicinity of oil or gas exploration, development, or production operations, and for associated living quarters and meals; a reasonable per diem allowance, if paid by the employer in place of reimbursement of actual expenses, may be substituted for actual expenses for living quarters and meals;  
		(7) the employer's share of contributions to established plans for employee group life, disability, or medical insurance, pension, retirement, stock purchase, thrift, bonus, or other similar benefit plans, applicable to the operator's labor costs described in (3) of this subsection, if  
			(A) the plans are available on a regular basis to all employees of the operator who are directly working in oil or gas exploration, development, or production operations, other than employees excluded from a plan's coverage because of participation under a collective bargaining agreement; and  
			(B) the amount of the employer's share of contributions does not exceed the following percentage, as applicable, of the costs under (3) of this subsection incurred for employees covered by the plans:  
				(i) 32 percent for calendar year 2006;  
				(ii) 33 percent for calendar year 2007;  
				(iii) 36 percent for calendar year 2008;  
				(iv) 35 percent for calendar year 2009;  
				(v) 30 percent for a calendar year after 2009;  
		(8) the employer's share of contributions to established plans for employee group life, disability, or medical insurance, pension, retirement, stock purchase, thrift, bonus, or other similar benefit plans, applicable to the operator's labor costs described in (3) of this subsection, and available to employees under a collective bargaining agreement;  
		(9) costs to purchase or transport a facility, equipment, materials, or supplies used in oil or gas exploration, development, or production operations;  
		(10) costs to purchase or transport a facility, a system, equipment, or infrastructure described in 15 AAC 55.250(c)(10), (11), or (16), or to purchase or transport equipment, materials, or supplies used in a facility, a system, equipment, or infrastructure described in 15 AAC 55.250(c)(10), (11), or (16);  
		(11) costs paid to a third party for contract services, utilities, or use of a facility, equipment, or infrastructure provided by the third party and used in oil or gas exploration, development, or production operations, or used in support of those operations, or for use of a system described in 15 AAC 55.250(c)(10) or (11) provided by the third party; for purposes of this paragraph,  
			(A) contract services  
				(i) do not include work in tax, legal, or accounting matters, or matters involving a dispute before a government agency;  
				(ii) are limited to services the labor costs of which, under (3) of this subsection, would be allowable as direct charges if the operator's employees performed the services;  
			(B) support facilities, equipment, and infrastructure are limited to the categories described in 15 AAC 55.250(c)(16);  
		(12) costs charged to a unit or other joint operation for use in its oil or gas exploration, development, or production operations of a facility or equipment that  
			(A) is wholly or partly owned by a producer or explorer with an interest in the unit or other joint operation; and  
			(B) is not, and has not previously been, wholly or partly owned or acquired by or on behalf of the unit or other joint operation;  
		(13) a premium paid to a third-party insurer for insurance covering oil or gas exploration, development, or production operations;  
		(14) standby costs paid to a third party drilling rig contractor, and incurred  
			(A) while rig operations are deferred, suspended, or curtailed by reason of force majeure or another cause beyond the reasonable control of the operator; or  
			(B) to secure a rig for drilling if the rig is actually used for the operation for which it was secured;  
		(15) payments of property taxes, sales or use taxes, motor fuel taxes, or excise taxes if incurred with respect to the sale, acquisition, ownership, or use of a good, service, or property, the cost of which is a lease expenditure under AS 43.55.165, or would be a lease expenditure if incurred during the period for which the payment is made;  
		(16) payments in lieu of property taxes, sales or use taxes, motor fuel taxes, or excise taxes that would otherwise be incurred with respect to the sale, acquisition, ownership, or use of goods, services, or property, the cost of which is a lease expenditure under AS 43.55.165, or would be a lease expenditure if incurred during the period for which the payment is made;   
		(17) a regulatory cost charge under AS 31.05.093;   
		(18) a fee charged by a government agency for a regulatory license, permit, or similar regulatory approval required for oil or gas exploration, development, or production operations, or for a facility, equipment, or infrastructure described in 15 AAC 55.250(c)(16);   
		(19) costs to transport to the injection site, oil, gas, or other fluid recovered from a well and injected for reservoir pressure maintenance, repressuring, or enhanced recovery purposes, and costs paid to a third party producer to purchase that oil, gas, or other fluid from the producer;   
		(20) if a producer owns a refinery or crude oil topping plant that is located on or near the premises of the producer's lease or property in the state and that processes the producer's oil produced from that lease or property into a product that the producer uses in the operation of the lease or property in drilling for or producing oil or gas, the amount calculated by subtracting from the fair market value of the product used the prevailing value of the oil that is processed; for purposes of this paragraph,  
			(A) the amount of the oil that is processed equals the number of barrels of the product into which the oil is processed;  
			(B) the prevailing value of the oil that is processed in a field topping plant in the Alaska North Slope area is the gross value at the point of production of that oil as determined under 15 AAC 55.163(b);  
		(21) costs paid to a third party to acquire geological or geophysical data used in oil or gas exploration, development, or production operations.  
	(b)  For purposes of this section, an employee's salary or wages for a given period of time includes the cost in salary or wages for the employee's earned or compensatory time off attributable to the employee's work during that time period.  
	(c)  In the absence of evidence to the contrary, and for purposes of AS 43.55.165(e)(12), the department will accept a charge under (a)(12) of this section as being not more than fair market value if the charge does not exceed the cost calculated on the basis of the net book value of the equipment or facility multiplied by the number of hours, days, miles, or throughput volumes for which the equipment or facility is used in the oil or gas exploration, development, or production operations, divided by the number of hours, days, miles, or throughput volumes, as applicable, of estimated remaining useful life of the equipment or facility, or calculated using another method approved by the department. For purposes of this subsection, "net book value" means the dollar amount the owner of an asset records in its financial statements, consistent with generally accepted accounting principles, as the historical cost of the asset, excluding capitalized interest and net of accumulated depreciation or amortization, if the historical cost does not exceed the fair market value of the asset at the time it was acquired by the owner.  
	(d)  Except for a cost described in (a)(2), (13), or (19) of this section, a cost that relates to the exploration, development, or production of oil or gas deposits that are subject to a unit operating agreement or other agreement that provides for an operator to conduct the oil or gas  exploration, development, or production on behalf of itself and other producers or explorers is not a direct charge under this section if the cost is not (1) incurred in the first instance by the operator on behalf of the producers or explorers under the agreement; (2) actually billed to the producers or explorers under the agreement; and (3) paid, as to the producer's or explorer's share, by the producer or explorer to whom that share is billed. For purposes of this subsection, an agreement includes an instrument or arrangement among the parties to the agreement that modifies a party's rights or obligations under the agreement.  
	(e)  A fee or other consideration paid to, or for the benefit of, a producer in connection with the use of a facility in which that producer has an ownership interest or in connection with the producer's management of a facility is not a direct charge under this section to the extent that the fee or other consideration  
		(1) compensates that producer for the deferral or loss of that producer's oil or gas production resulting from the payer's use of the facility; or  
		(2) reimburses that producer for its additional tax liability resulting from the receipt of a fee or other consideration in connection with the payer's use of the facility or in connection with the producer's management of the facility.  
	(f)  Direct charges under this section are net of any credits, refunds, reimbursements, purchase discounts, and cost recoveries, unless the credit, refund, reimbursement, or cost recovery is accounted for as an adjustment to lease expenditures under AS 43.55.170. For purposes of this subsection, "credits" do not include tax credits.  
	(g)  For purposes of this section, "operator" means, in the case of  
		(1) a producer or explorer carrying out oil or gas exploration, development, or production on behalf of itself, that producer or explorer;   
		(2) a unit operating agreement or other agreement that provides for an operator to carry out oil or gas exploration, development, or production on behalf of itself and other producers or explorers, the producer or explorer acting as operator under that agreement.  

Authorities

43.05.080;43.55.110;43.55.160;43.55.165;43.55.170;44.62.125

Notes

Reference

15 AAC 55.250
15 AAC 55.270
15 AAC 55.271
15 AAC 55.800

Authority

AS 43.05.080 AS 43.55.110 AS 43.55.160 AS 43.55.165 AS 43.55.170 Editor's note: As of Register 201 (April 2012), the regulations attorney made a technical revision under AS 44.62.125(b)(6), to 15 AAC 55.260(a)(11).

History

Eff. 2/27/2010, Register 193; am 12/4/2010, Register 196

References

15.55.260