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HB 198: "An Act providing for a reduction of royalty on certain oil produced from Cook Inlet submerged land."

00                             HOUSE BILL NO. 198                                                                          
01 "An Act providing for a reduction of royalty on certain oil produced from Cook Inlet                                    
02 submerged land."                                                                                                        
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1.  AS 38.05.180(f)(5) is amended to read:                                                               
05                 (5)  notwithstanding and in lieu of a requirement in the leasing method                                 
06       chosen of a minimum fixed royalty share, or the royalty provision of a lease, for leases                          
07       unitized as described in (p) of this section, leases subject to an agreement described in                         
08       (s) or (t) of this section, or interests unitized under AS 31.05,                                                 
09                      (A)  the lessee of all or part of an oil or gas field identified in                            
10            this section that has been granted approval of a written plan submitted to the                               
11            Alaska Oil and Gas Conservation Commission under AS 31.05.030(i) shall,                                      
12            subject to (dd) of this section, pay a royalty of five percent on the first                                  
13            25,000,000 barrels of oil and the first 35,000,000,000 cubic feet of gas                                     
14            produced for sale from that field that occurs in the 10 years following the date                             
01            on which the production for sale commences; the fields eligible for royalty                                  
02            reduction under this paragraph, all of which are located within the Cook Inlet                               
03            sedimentary basin, were discovered before January 1, 1988, and have been                                     
04            undeveloped or shut in from at least January 1, 1988, through December 31,                                   
05            1997, are                                                                                                    
06                           (i) [(A)]  Falls Creek;                                                                   
07                           (ii) [(B)]  Nicolai Creek;                                                                
08                           (iii) [(C)]  North Fork;                                                                  
09                           (iv) [(D)]  Point Starichkof;                                                             
10                           (v) [(E)]  Redoubt Shoal; and                                                             
11                           (vi) [(F)]  West Foreland;                                                            
12                      (B)  the lessee of all or part of an oil field located offshore                                
13            beneath the submerged lands of Cook Inlet shall pay a royalty of five                                    
14            percent on oil produced from the field or platform if oil production that                                
15            equaled or exceeded a volume of 1,200 barrels a day declines to less than                                
16            that amount, as certified by the Alaska Oil and Gas Conservation                                         
17            Commission, for as long as the volume of oil produced from the field or                                  
18            platform remains less than 1,200 barrels a day; and                                                      
19                      (C)  the lessee of all or part of an oil field located offshore                                
20            beneath the submerged lands of Cook Inlet shall pay a royalty calculated                                 
21            under this subparagraph if the volume of oil produced from a field or                                    
22            platform that was certified by the Alaska Oil and Gas Conservation                                       
23            Commission under (B) of this paragraph later increases to 1,200 or more                                  
24            barrels a day and remains at 1,200 or more barrels a day for more than 90                                
25            days; until the royalty rate determined under this subparagraph applies,                                 
26            the royalty continues to be calculated under (B) of this paragraph; on and                               
27            after the day the increased production exceeds 90 days, the royalty                                      
28            payable under this subparagraph is                                                                       
29                           (i)  for production of more than 1,200 barrels a day                                      
30                 but not more than 1,300 barrels a day - seven percent;                                              
31                           (ii)  for production of more than 1,300 barrels a day                                     
01                 but not more than 1,400 barrels a day - eight percent;                                              
02                           (iii)  for production of more than 1,400 barrels a day                                    
03                 but not more than 1,500 barrels a day - nine percent; and                                           
04                           (iv)  for production of more than 1,500 barrels a day                                     
05                 - 10 percent.