(a) A taxpayer that owns an interest, either directly or through a partnership or limited liability company, in an in-state processing facility whose primary function is the manufacturing and sale of urea, ammonia, or gas-to-liquid products to third parties in arm's length transactions is entitled to receive a credit under this section against the tax due under this chapter. The credit under this section is equal to the percentage of the amount of royalty paid under AS 38.05.135 on natural gas from a state lease that is delivered in the taxable year of the taxpayer for use at the in-state processing facility equal to the percentage of the ownership interest held by the taxpayer in the in-state processing facility.

(b) A tax credit or portion of a tax credit under this section may not be used to reduce a taxpayer's tax liability under this chapter below zero. An unused tax credit or portion of a tax credit received under this section may not be carried forward for use in a taxable year of the taxpayer after the taxable year in which the credit is earned.

(c) To claim a credit under this section, the taxpayer shall

(1) report to the department the name of each lessee delivering natural gas for use at the in-state processing facility, the identification and quantity of natural gas from each state lease that is the source of the natural gas, the ownership percentage of the taxpayer in the in-state processing facility, and the price for the natural gas established in a contract between the in-state processing facility and the lessee delivering the natural gas; and

(2) demonstrate to the department that the taxpayer, to the maximum extent possible,

(A) hires qualified residents from throughout the state for the management, engineering, construction, operation, and maintenance of, and other positions for, the in-state processing facility;

(B) establishes hiring facilities in the state or uses existing hiring facilities in the state; and

(C) uses, as far as practicable, the job centers and associated services operated by the Department of Labor and Workforce Development or an Internet-based labor exchange system operated by the state.

(d) In this section, “gas-to-liquid product” has the meaning given in AS 38.05.180(ll).