Dunleavy proposes $60M in FY22 to retire some cashable tax credits

Steve Sutherlin

Petroleum News

Alaska Gov. Mike Dunleavy has entered a $60 million appropriation in his proposed fiscal year 2022 budget towards oil and gas tax credits that are eligible for repurchase by the state through the Oil and Gas Tax Credit Fund.

The funds, if appropriated, will make a small dent in the $732.5 million outstanding balance of credits as of Jan. 1.

The earliest possible payout would occur in July, or the start of the 2022 fiscal year, a spokesperson for the governor’s office told Petroleum News in an email.

There were no oil and gas tax credit certificates purchased by the Department of Revenue in calendar year 2020.

The state is still paying on balances of credits applied for during calendar year 2016, the source said. By statute, the credits are isolated by application year into a pool.

Distribution is made on a pro rata basis to all credit holders in the oldest application year pool until that application year pool is fully paid, before moving on to the next application year pool.

Currently the state is unable to estimate what percentage would be paid against the 2016 application pool, as the status of tax credits can change over time if taxpayers elect to use their credits against their tax liability or transfer them. If disbursement is made in this calendar year, DOR will be able to report that information next year under current statutes.

According to DOR, the last calendar year in which it purchased oil and gas tax credit certificates was 2019, in the total amount of $101,001,391.

Payments went out to 30 recipients in 2019. Top recipients were Repsol E&P USA Inc. at $23,594,885, Cornucopia Oil and Gas Co. LLC at $21,544,235, Caelus Natural Resources Alaska LLC at $16,899,138, BlueCrest Energy Inc. at $8,418,882, Great Bear Petroleum Operating LLC at $6,691,494, Mustang Operations Center 1 LLC at $4,159,365, Caelus Energy Alaska Smith Bay LLC at $3,503,691, Caracol Petroleum LLC at $2,572,830, TP North Slope Development LLC at $2,152,632, Caelus Alaska Exploration Co. LLC at $2,057,471, Borealis Alaska Oil Inc.(formerly Nordaq) at $1,888,640, Accumulate Energy Alaska Inc. at $1,575,296, PetroCanada Alaska Inc. at $1,404,179, Arctic Slope Regional Corp. at $1,202,525 and Cook Inlet Region Inc. at $1,064,002.

The outstanding tax credit certificates for which purchase has been requested were applied for in the years 2016 through 2019.

As of Jan. 1, 2020, the 2016 application pool balance stood at $290,177,516; the 2017 pool balance stood at $338,113,182 - not including conditional 2017 certificates in the amount of $39,265,103; the 2018 pool balance stood at $52,906,166; and the 2019 pool stood at $5,806,043.

- STEVE SUTHERLIN