The commissioner shall adopt regulations necessary to implement this chapter.
Nothing in this chapter affects the exploration incentive credit system provided for in AS 38.05.180 (i).
In this chapter,
(1) 'eligible costs' means those direct costs incurred for activities in support of an exploration program, based upon the footage drilled or miles surveyed, that are reasonable in amount for the area of the state in which a well is drilled or geophysical activity is conducted;
(2) 'exploratory well' means a well drilled for the purpose of oil and gas exploration that is
(A) located three or more miles from another well drilled for oil and gas, with all distances measured as the horizontal distance between exploration targets, also known as bottom hole distance; or
(B) within three miles of a well drilled for oil and gas, but tests potential hydrocarbon traps that the commissioner, after analyzing evidence submitted by the qualified applicant and any other information, determines constitute a distinctly separate exploration target;
(3) 'geophysical work'
(A) means all geophysical data gathering methods used in hydrocarbon exploration;
(B) includes seismic, gravity, magnetic, and electromagnetic measurements;
(4) 'qualified applicant' means
(A) a natural person who is at least 18 years of age;
(B) a corporation qualified to do business in the state;
(C) a legal guardian or trustee of a qualified natural person described in (A) of this paragraph;
(D) any association of persons listed in (A) - (C) of this paragraph;
(5) 'stratigraphic test well' means a well that is not intended to encounter an oil or gas accumulation and that is drilled to a sufficient depth to measure the geological, geophysical, and engineering parameters used for determining an area's oil and gas potential.
(a) Under an incentive program distinct from the exploration incentive credit authorized by AS 38.05.180 (i), the commissioner may extend to a qualified applicant an exploration incentive credit for each of the following activities performed on land in the state, regardless of whether the land is state-owned land:
(1) geophysical work on land that is not subject to a credit under AS 38.05.180(i);
(2) drilling a stratigraphic test well; and
(3) drilling an exploratory well.
(b) An exploration incentive credit extended under (a) of this section may be applied against
(1) a payment or obligation against which a credit authorized by AS 38.05.180(i) may be claimed;
(2) taxes payable under AS 43.20; and
(3) oil and gas bonus payments due the state under AS 38.05.180 (f).
(c) An exploration incentive credit may be extended under (a) of this section to a qualified applicant if
(1) application for the exploration incentive credit is made by the qualified applicant to the commissioner and is approved before drilling or geophysical work commences;
(2) all geophysical work is performed, and all stratigraphic test wells or exploratory wells are drilled, after August 7, 1994, and before July 1, 2007; and
(3) copies of all raw and processed data derived from drilling a stratigraphic test well or exploratory well or performing geophysical work are provided by the qualified applicant to the commissioner within 30 days after the completion, abandonment, or suspension of the well or completion of the geophysical work.
(d) Data derived from drilling a stratigraphic test well or exploratory well that is provided to the commissioner under (c)(3) of this section shall be kept confidential for 24 months after receipt by the commissioner unless the owner of the well gives written permission to the state to release the well data at an earlier date, and, notwithstanding AS 31.05.035 (c), confidentiality may not be extended beyond 24 months. The provisions of AS 38.05.035 (a)(9)(C) apply to other data provided to the commissioner under (c)(3) of this section, except that the commissioner, under appropriate confidentiality provisions and without preference or discrimination, may display to all interested third parties, but may not distribute or transfer in hard copy or electronic form, those data with respect to all land if the commissioner determines that the limited disclosure is necessary to further the interest of the state in evaluating or developing its land.
(e) The amount of an exploration incentive credit extended under (a) of this section is determined by the commissioner and shall be based on eligible costs, approved by the commissioner, of performing geophysical work, drilling a stratigraphic test well, and drilling an exploratory well. The amount of an exploration incentive credit may not exceed 50 percent of eligible costs relating to activities performed on state-owned land and 25 percent of eligible costs relating to activities performed on land in the state not owned by the state.
(f) The amount of an exploration incentive credit extended under (a) of this section may not exceed $5,000,000 per eligible project, as defined by the commissioner by regulation. The total of all credits extended by the commissioner under (a) of this section may not exceed $30,000,000.
(g) An exploration incentive credit must be used within five years after it is extended under (a) of this section, and may be assigned by the qualified applicant to another person for the purposes described in (b) of this section.
(h) Amounts due the permanent fund under AS 37.13.010 shall be calculated before the application of a credit extended under (a) of this section.
(i) The commissioner may not allow to a qualified applicant the claim of an exploration incentive credit under this chapter for an activity of the qualified applicant that occurs in any year in which the qualified applicant owes a liquidated debt to a state agency or to a public corporation of the state. The applicant's failure to obtain the claim of the exploration incentive credit under this subsection waives the credit for those activities in any subsequent year. In this subsection, 'liquidated debt' means a debt that is immediately and unconditionally due, either by agreement of the state and the qualified applicant or by law, and that involves an obligation or payment against which the exploration incentive credit may be claimed under (b) of this section.