1995-02-27                     House Journal                      Page 0501
HB 207                                                                       
HOUSE BILL NO. 207 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
"An Act relating to adjustments to royalty reserved to the state to           
encourage otherwise uneconomic production of oil and gas;                      
relating to the depositing of royalties and royalty sale proceeds in           
the Alaska permanent fund; and providing for an effective date."               
                                                                               
was read the first time and referred to the House Special Committee            
on Oil and Gas and the Resources and Finance Committees.                       
                                                                               
The following fiscal notes apply:                                              
                                                                               
Fiscal note, Dept. of Natural Resources, 2/27/95                               
Zero fiscal note, Dept. of Natural Resources, 2/27/95                          
Zero fiscal note, Dept. of Revenue, 2/27/95                                    
                                                                               
The Governor's transmittal letter, dated February 27, 1995, appears            
below:                                                                         

1995-02-27                     House Journal                      Page 0502
HB 207                                                                       
"Dear Speaker Phillips:                                                        
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am     
transmitting a bill relating to the reduction of royalties reserved to the     
state to encourage otherwise uneconomic production of oil and gas              
from marginal fields and to prolong the production life of declining           
fields.                                                                        
                                                                               
The bill would change existing royalty reduction provisions to grant           
the commissioner of the Department of Natural Resources greater                
discretion to provide royalty relief to lessees when necessary and             
clarify the commissioner's authority to grant such relief under various        
provisions in AS38.05.180.                                                     
                                                                               
The proposed changes will require the lessee to make a clear and               
convincing showing that a royalty reduction is necessary and is in the         
best interest of the state.  The commissioner may condition granting of        
a royalty reduction in any way necessary to protect the state's best           
interests, such as increasing the state's royalty share if the price of oil    
or gas rises.                                                                  
                                                                               
Finally, the bill maintains the royalty contributions to the permanent         
fund so that the fund would never receive a royalty less than that             
provided under existing statutes.                                              
                                                                               
I urge your favorable action on this bill.                                     
                                                                               
									Sincerely,                                                            
									/s/                                                                   
									Tony Knowles                                                          
									Governor"