In addition to the definitions contained in Section 9-17-1, which shall apply for the purpose of computing the tax as provided in Section 9-17-35, except to the extent there is a conflict with the definitions contained herein, the following definitions shall apply for the purpose of computing the tax as provided in Section 9-17-35:
(1) Gross Proceeds. The gross proceeds for a month shall be the sum of the month’s market proceeds and non-market proceeds. No adjustments or deductions may be taken from the market proceeds or the non-market proceeds in computing gross proceeds.
(2) Market Proceeds. The market proceeds for a month shall be the sum of the amounts due under all market sales transactions during the month. The amount due under each market sales transaction shall be determined by multiplying the unit sales price by the volume of severed oil or gas sold in each transaction.
(3) Market Sales Transaction. An agreement or contract for the sale of offshore production produced from depths greater than 8,000 feet below mean sea level that has been entered into by or on behalf of a producer or its related party and an unrelated party, regardless of the place of sale, regardless of any interim sales to parties that are not unrelated, and regardless of any processing, treating, or transportation done prior to the point of sale.
(4) Non-Market Proceeds. The non-market proceeds for a month shall be the cash and other consideration that would have been due if all non-market taxable volumes for the month had been sold for the same unit sales price due under the market sales transactions occurring during that month, using weighted averages if two or more market sales transactions occurred during the month; provided, however, that if less than 10% by volume of the total taxable offshore production produced during a month is sold in market sales transactions, then the non-market proceeds shall be deemed to be the cash and other consideration, as reasonably determined by the department, that would have been generated if the non-market taxable volumes had been sold in a market sale transaction, considering the unit sales price for offshore production of like quality if such data is available; otherwise, considering published data from recognized market centers for trading oil and/or gas, in both cases adjusted for location and quality to the point at which the first market sale would likely have occurred. Taxpayers seeking to use the published selling prices in calculating their monthly non-market proceeds may request a determination from the department approving the market center data and the manner of making the calculations. The calculations must be made in the same manner from month to month, except as approved by the department.
(5) Non-Market Taxable Volumes. The non-market taxable volumes for a month shall be the total volumes of offshore production not disposed of pursuant to a market sales transaction, excluding volumes taken in-kind by other producers in accordance with Section 40-20-22(g). The total volumes include all offshore production used or consumed in operations, but do not include natural gas lawfully vented or flared in connection with the production, treatment, or processing of oil or gas in the State of Alabama, or natural gas lawfully injected into the earth for the purpose of lifting oil or gas in the State of Alabama. Provided, however, that if any gas so injected into the earth is sold for such purposes or injected into underground storage facilities as defined in Section 9-17-150 et seq., then the gas so sold or injected shall be included in the total non-market taxable volumes for the month.
(6) Producer. Producer shall have the same meaning for purposes of calculating the tax under Section 9-17-35 as it has for purposes of calculating the tax under Section 9-17-25.
(7) Offshore Production. Offshore production shall have the same meaning as it has in Section 40-20-1.
(8) Transportation Charges. The actual cash amount paid to an unrelated party by a producer or seller of severed gas for transporting pipeline quality gas to the point of a market sales transaction. Transportation charges may include amounts paid to a related party if the related party is a regulated entity operating an open access natural gas pipeline. The transportation charges are limited to the lesser of the actual fees paid or the maximum allowable firm transportation tariff amount approved by the Federal Energy Regulatory Commission, or other appropriate governmental authority.
(9) Unit Sales Price. The total cash or other consideration due for each unit of offshore production, sold under the terms of a market sales transaction, including any and all premiums, bonuses, or other amounts received. If allowable actual transportation charges were paid by the producer or seller for transporting pipeline quality gas to the point of sale, the unit sales price may be adjusted to remove the transportation charge. No other adjustments or deductions may be taken from the actual amounts due in determining the unit sales price.
(10) Unrelated Party. A person or entity with opposing economic interests to the producer or seller of severed oil or gas. No producer’s parent company, subsidiary company, sister company, or other company affiliated through common ownership of greater than 5% or control will be considered an unrelated party. In addition, no producer’s principal owners, management, members of their immediate families, or companies owned or controlled by any of them will be considered unrelated parties.