§ 43. Enhanced oil recovery credit
(a)
General rule
For purposes of section
38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs for such taxable year.
(b)
Phase-out of credit as crude oil prices increase
(1)
In general
The amount of the credit determined under subsection (a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as—
(3)
Inflation adjustment
(A)
In general
In the case of any taxable year beginning in a calendar year after 1991, there shall be substituted for the $28 amount under paragraph (1)(A) an amount equal to the product of—
(B)
Inflation adjustment factor
The term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of the preceding sentence, the term “GNP implicit price deflator” means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of any calendar year, the Secretary shall publish the inflation adjustment factor for the preceding calendar year.
(c)
Qualified enhanced oil recovery costs
For purposes of this section—
(1)
In general
The term “qualified enhanced oil recovery costs” means any of the following:
(C)
Any qualified tertiary injectant expenses (as defined in section
193
(b)) which are paid or incurred in connection with a qualified enhanced oil recovery project and for which a deduction is allowable for the taxable year.
(D)
Any amount which is paid or incurred during the taxable year to construct a gas treatment plant which—
(i)
is located in the area of the United States (within the meaning of section
638
(1)) lying north of 64 degrees North latitude,
(2)
Qualified enhanced oil recovery project
For purposes of this subsection—
(A)
In general
The term “qualified enhanced oil recovery project” means any project—
(i)
which involves the application (in accordance with sound engineering principles) of 1 or more tertiary recovery methods (as defined in section
193
(b)(3)) which can reasonably be expected to result in more than an insignificant increase in the amount of crude oil which will ultimately be recovered,
(B)
Certification
A project shall not be treated as a qualified enhanced oil recovery project unless the operator submits to the Secretary (at such times and in such manner as the Secretary provides) a certification from a petroleum engineer that the project meets (and continues to meet) the requirements of subparagraph (A).
(5)
Alaska natural gas
For purposes of paragraph (1)(D)—
(A)
In general
The term “Alaska natural gas” means natural gas entering the Alaska natural gas pipeline (as defined in section
168
(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well—
(d)
Other rules
(1)
Disallowance of deduction
Any deduction allowable under this chapter for any costs taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such costs.
(2)
Basis adjustments
For purposes of this subtitle, if a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
(e)
Election to have credit not apply