1993-03-05                     Senate Journal                      Page 0616
SB 150                                                                       
SENATE BILL NO. 150 by the Senate Rules Committee by request                   
of the Governor, entitled:                                                     

1993-03-05                     Senate Journal                      Page 0617
SB 150                                                                       
"An Act providing for oil and gas exploration                                 
licenses, and oil and gas leases, in certain areas of                          
the state; and providing for an effective date."                               
                                                                               
was read the first time and referred to the Senate Special Committee           
on Oil and Gas, Judiciary and Finance Committees.                              
                                                                               
Zero fiscal notes published today from Department of Revenue and               
Department of Natural Resources.                                               
                                                                               
Governor's transmittal letter dated March 5:                                   
                                                                               
Dear Mr. President:                                                            
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution,          
I am transmitting a bill authorizing oil and gas exploration licenses          
for tracts of state land up to 500,000 acres in size and providing for         
subsequent leasing of some or all of the acreage subject to the                
license.                                                                       
                                                                               
The bill is designed to encourage the exploration and development              
of areas within the state with undetermined oil and gas potential.  In         
contrast to the provisions of the state's existing competitive oil and         
gas leasing program, the bill would allow the state to issue licenses          
covering relatively large tracts to licensees based upon their                 
commitment to perform certain exploration programs, the monetary               
value of which has been predetermined.  The bill is not intended to            
replace the states competitive leasing program; rather, it is intended         
to provide an effective alternative to encourage exploration in those          
areas that traditionally have not attracted the interest of                    
explorationists under the states current leasing regime.                       
                                                                               
Under the bill, either the state or a prospective licensee could               
nominate an area of unidentified oil and gas potential, consisting of          
reasonably compact and contiguous acreage that should be subject to            
a license.  The commissioner of natural resources would be                     
authorized to impose reasonable work commitments on the licensee               
with respect to the license area.  Subsequent to the successful                
completion of the predetermined work commitment, the licensee                  
could convert portions or all of the acreage to one or more leases,            
each  not to  exceed 30,000 acres  in size.  The  imposition  of the           

1993-03-05                     Senate Journal                      Page 0618
SB 150                                                                       
required work commitment and the requirement to pay an annual                  
rental on acreage subject to lease are together intended to discourage         
warehousing of acreage that the licensee does not intend to explore            
or develop.  The commissioner is authorized to include reasonable              
conditions and obligations in the leases arising from conversion of            
licenses.                                                                      
                                                                               
A license proposal would require public notice and the opportunity             
for competing proposals by other prospective licensees as well as the          
opportunity for public comment.  The commissioner of natural                   
resources would be required to make a finding that issuing a license           
is in the best interest of the state.                                          
                                                                               
The exploration and potential development of Alaskas remote and                
underexplored basins will be further encouraged by the adoption of             
the licensing and leasing methodology contained in this bill.                  
                                                                               
I urge your prompt and favorable consideration of this bill.                   
                                                                               
      Sincerely,                                                               
      /s/                                                                      
      Walter J. Hickel                                                         
      Governor