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Commercial Analysis

Oil and Gas models illustrate the working of Alaska's oil and gas production tax law on oil and gas projects within the state. Below is a summary of Alaska's Oil and Gas tax law showing some key provisions affecting upstream projects.

Alaska’s Oil Production Tax (Current Law as of January 1, 2018)

Alaska Statute 43.55 - Key Provisions

Provision North Slope Cook Inlet
Base Tax Rate (applied to Production Tax Value1)
43.55.011 (e)		 35% 35%
Minimum Tax Floor (applied to Gross Value at Point of Production)
43.55.011 (f)		 Up to 4% of the Gross Value at Point of Production2. 4% rate applies when the Alaska North Slope price is more than $25/barrel. Some credits can apply against minimum.
Gross Value Reduction
43.55.160 (f) (g)		 For new oil, 20% or 30% of gross value excluded from the Base tax calculation; limited to first seven years of production; benefit ends early if the average ANS price exceeds $70 for any three years.
Per-Taxable-Barrel Credit for Non-GVR Production
43.55.024 (j)		 Sliding scale $0/barrel to $8/barrel. $8 credit applies when wellhead price is less than $80/ barrel. Cannot be used to reduce tax below the minimum tax. Cannot be carried forward to subsequent year.
Per-Taxable-Barrel Credit for GVR Production
43.55.024 (i)		 $5/barrel, no sliding scale. Cannot be carried forward to subsequent year. When used alongside non-GVR eligible oil credit, cannot reduce tax below the minimum tax.
Lease Expenditures Carryforward Deduction
43.55.165 (p)		 Beginning Jan. 1, 2018, a company may carry forward lease expenditures not deducted against tax, and may apply in future year to reduce liability to minimum tax, contingent on the production from the area earned. Carryforwards reduce in value by one-tenth each year beginning in the eighth or 11th year after it is earned.
Tax Ceiling
15 AAC 55.440 (d)
43.55.011 (k)		 Average 17.7 cents/thousand cubic feet (mcf), for gas sold in State until 2022. Average 17.7 cents/thousand cubic feet (mcf), permanent tax ceiling. $1/barrel, permanent tax ceiling for Oil.
Provision Middle Earth Statewide/Other - Additional provisions
Base Tax Rate (applied to PTV) 35%
Tax Ceiling
43.55.011 (p)		 4% of gross value for the first seven years of production, if production begins before 2027. Gas used in state, other than gas that qualifies for the 4% of GVPP tax ceiling, is subject to a tax ceiling of $0.177/Mcf
Capital, Well Lease, Expenditure Credits
43.55.023 (l)1B		 10% of Qualified Capital Expenditure, 20% of Well Lease Expenditure
Lease Expenditures Carryforward
43.55.165 (p)		 Beginning Jan. 1, 2018, a company may carry forward lease expenditures not deducted against tax, and may apply in a future year to reduce liability to zero, contingent on production from the area earned. Carryforwards reduce in value beginning in the 8th or 11th year after earned.
Exploration Tax Credits
43.55.025 (b)		 30% or 40% for qualifying exploration, expires Jan. 1, 2022, does not apply to seismic after Jan. 1, 2018. Credits can be applied against a company’s own corporate tax liability or sold to another company.
Small-Producer Credits
43.55.024 (c)		 Up to $12 million per company for first nine years of production, can apply against minimum tax; must begin production before May 1, 2016. Unused credit cannot be carried forward to subsequent year.

Alaska's Royalty and Other Investment Incentives

  • Royalty modification
  • Exploration licensing
  • Area-wide lease sales and Lease term extension opportunities
  • Cook Inlet Discovery Royalty
  • Pre-application meetings with Division of Oil and Gas Staff

1 PTV: Production Tax Value is the GVPP less Lease Expenditures. Lease Expenditures include capital and operating expenditures including property tax and other cost allowances allowed by AK statute.
2 GVPP: Gross Value at the Point of Production is non-royalty share of well head value of produced oil.

The DOG commercial section has developed cash flow models that are designed as informational tools for the public, oil and gas industry, investors, and others. Each model can be used to analyze the cash flows of upstream oil and gas projects in Alaska. There are separate models for oil and gas and the different regions of Alaska.

The DOG Interactive ANWR Revenue Model presents various scenarios of potential State revenues from oil development in the 1002 Area of Arctic National Wildlife Refuge (ANWR). The model contains additional information about the revenue estimates and assumptions.


Cook Inlet Models


Middle Earth Models


North Slope Models