2013-03-27                     House Journal                      Page 0674
HB 188                                                                                                                        
HOUSE BILL NO. 188 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
                                                                                                                                
    "An Act approving and ratifying the sale of royalty oil by the State                                                        
    of Alaska to Flint Hills Resources Alaska, LLC; and providing for                                                           
    an effective date."                                                                                                         
                                                                                                                                
was read the first time and referred to the Finance Committee.                                                                  
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Indeterminate, Dept. of Natural Resources                                                                                   
                                                                                                                                

2013-03-27                     House Journal                      Page 0675
The Governor's transmittal letter dated March 26, 2013, follows:                                                                
                                                                                                                                
"Dear Speaker Chenault:                                                                                                         
                                                                                                                                
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill approving and ratifying the sale                                                         
of royalty oil by the State of Alaska to Flint Hills Resources Alaska,                                                          
LLC.                                                                                                                            
                                                                                                                                
The bill would approve and ratify the contractual agreement for the                                                             
sale and purchase of State royalty oil between the State of Alaska and                                                          
Flint Hills Resources Alaska, LLC, attached as Exhibit 1 to the "Final                                                          
Best Interest Finding and Determination for the Sale of Alaska North                                                            
Slope Royalty Oil to Flint Hills Resources Alaska, LLC" dated March                                                             
25, 2013. The contract that is the subject of this bill provides that the                                                       
State will sell Flint Hills Resources Alaska, LLC an amount of the                                                              
State's royalty oil that is between 18,000 to 30,000 barrels per day,                                                           
subject to certain limitations and volume reduction provisions. The                                                             
royalty oil will be sold at a price calculated to equal or exceed the                                                           
value the State would obtain for the royalty oil if it was taken in-value                                                       
and sold by the producers rather than taken in-kind and sold by the                                                             
State to Flint Hills Resources Alaska. The term of the contract is five                                                         
years, with royalty oil deliveries commencing on April 1, 2014, and                                                             
terminating on March 31, 2019, with provisions to extend the contract                                                           
subject to legislative approval.                                                                                                
                                                                                                                                
The proposed sale was reviewed by the Alaska Royalty Oil and Gas                                                                
Development Advisory Board through a public hearing process held                                                                
February 26, 2013. In accordance with AS 38.06.050, the board issued                                                            
a written recommendation for legislative approval of the sale.                                                                  
                                                                                                                                
I urge your prompt and favorable action on this measure. A copy of                                                              
the contract will be provided by the Department of Natural Resources                                                            
for your review.                                                                                                                
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Sean Parnell                                                                                                                    
Governor"