SB 181: "An Act amending the authorized methods for competitive leasing of oil and gas leases on state land to eliminate the option of a cash bonus bid variable and to limit bids with a bid variable other than the cash bonus to require only the payment of a nominal fixed cash bonus."
00SENATE BILL NO. 181 01 "An Act amending the authorized methods for competitive leasing of oil and gas 02 leases on state land to eliminate the option of a cash bonus bid variable and to 03 limit bids with a bid variable other than the cash bonus to require only the 04 payment of a nominal fixed cash bonus." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 38.05.180(f) is amended to read: 07 (f) Except as provided by AS 38.05.131 - 38.05.134 and 38.05.177, the 08 commissioner may issue oil and gas leases on state land to the highest responsible 09 qualified bidder as follows: 10 (1) the commissioner shall issue an oil and gas lease to the successful 11 bidder determined by competitive bidding under regulations adopted by the 12 commissioner; bidding may be by sealed bid or according to any other bidding 13 procedure the commissioner determines is in the best interests of the state; 14 (2) whenever, under any of the leasing methods listed in this
01 subsection, a royalty share is reserved to the state, it shall be delivered in pipeline 02 quality and free of all lease or unit expenses, including but not limited to separation, 03 cleaning, dehydration, gathering, salt water disposal, and preparation for transportation 04 off the lease or unit area; 05 (3) following a pre-sale analysis, the commissioner may choose at least 06 one of the following leasing methods: 07 (A) [A CASH BONUS BID WITH A FIXED ROYALTY 08 SHARE RESERVED TO THE STATE OF NOT LESS THAN 12.5 PERCENT 09 IN AMOUNT OR VALUE OF THE PRODUCTION REMOVED OR SOLD 10 FROM THE LEASE; 11 (B) A CASH BONUS BID WITH A FIXED ROYALTY 12 SHARE RESERVED TO THE STATE OF NOT LESS THAN 12.5 PERCENT 13 IN AMOUNT OR VALUE OF THE PRODUCTION REMOVED OR SOLD 14 FROM THE LEASE AND A FIXED SHARE OF THE NET PROFIT 15 DERIVED FROM THE LEASE OF NOT LESS THAN 30 PERCENT 16 RESERVED TO THE STATE; 17 (C)] a nominal fixed cash bonus with a royalty share reserved 18 to the state as the bid variable but no less than 12.5 percent in amount or value 19 of the production removed or sold from the lease; 20 (B) [(D)] a nominal fixed cash bonus with the share of the net 21 profit derived from the lease reserved to the state as the bid variable; 22 (C) [(E)] a nominal fixed cash bonus with a fixed royalty share 23 reserved to the state of not less than 12.5 percent in amount or value of the 24 production removed or sold from the lease with the share of the net profit 25 derived from the lease reserved to the state as the bid variable; 26 (D) [(F) A CASH BONUS BID WITH A FIXED ROYALTY 27 SHARE RESERVED TO THE STATE BASED ON A SLIDING SCALE 28 ACCORDING TO THE VOLUME OF PRODUCTION OR OTHER FACTOR 29 BUT IN NO EVENT LESS THAN 12.5 PERCENT IN AMOUNT OR VALUE 30 OF THE PRODUCTION REMOVED OR SOLD FROM THE LEASE; 31 (G)] a nominal fixed cash bonus with a royalty share reserved
01 to the state based on a sliding scale according to the volume of production or 02 other factor as the bid variable but not less than 12.5 percent in amount or 03 value of the production removed or sold from the lease; 04 (4) notwithstanding a requirement in the leasing method chosen of a 05 minimum fixed royalty share, on and after March 3, 1997, the lessee under a lease 06 issued in the Cook Inlet sedimentary basin who is the first to file with the 07 commissioner a nonconfidential sworn statement claiming to be the first to have drilled 08 a well discovering oil or gas in a previously undiscovered oil or gas pool and who is 09 certified by the commissioner within one year of completion of that discovery well to 10 have drilled a well in that pool that is capable of producing in paying quantities shall 11 pay a royalty of five percent on all production of oil or gas from that pool attributable 12 to that lease for a period of 10 years following the date of discovery of that pool, and 13 thereafter the royalty payable on all production of oil or gas from the pool attributable 14 to that lease shall be determined and payable as specified in the lease; for purposes of 15 this paragraph, the reduced royalty authorized by this paragraph is subject to the 16 following: 17 (A) only one reduction of royalty authorized by this paragraph 18 may be allowed on each lease that qualifies for reduction of royalty under this 19 paragraph; 20 (B) if, under this paragraph, application is made for a royalty 21 reduction for a lease that was entered into before March 3, 1997, the 22 commissioner may approve the application only if, on that date, the lease was 23 a nonproducing lease that was not committed to a unit approved by the 24 commissioner under (m) of this section, that is not part of a unit under (p) or 25 (q) of this section, and that has not been made part of a unit under AS 31.05; 26 (C) if application for a royalty reduction is made under this 27 paragraph for a lease on which a discovery royalty was claimed or may be 28 claimed under the discovery royalty provisions of former AS 38.05.180(a) in 29 effect before May 6, 1969, the commissioner shall disallow the application 30 under this paragraph unless the applicant waives the right to claim the right to 31 a reduced royalty under the discovery royalty provisions of former AS
01 38.05.180(a) in effect before May 6, 1969; and 02 (D) the commissioner shall adopt regulations setting out the 03 standards, criteria, and definitions of terms that apply to implement the filing 04 of applications for, and the review and certification of, discovery oil and gas 05 royalty certifications under this paragraph; 06 (5) notwithstanding and in lieu of a requirement in the leasing method 07 chosen of a minimum fixed royalty share, or the royalty provision of a lease, for leases 08 unitized as described in (p) of this section, leases subject to an agreement described 09 in (s) or (t) of this section, or interests unitized under AS 31.05, the lessee of all or 10 part of an oil or gas field identified in this section that has been granted approval of 11 a written plan submitted to the Alaska Oil and Gas Conservation Commission under 12 AS 31.05.030(i) shall, subject to (dd) of this section, pay a royalty of five percent on 13 the first 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 on 15 which the production for sale commences; the fields eligible for royalty reduction 16 under this paragraph, all of which are located within the Cook Inlet sedimentary basin, 17 were discovered before January 1, 1988, and have been undeveloped or shut in from 18 at least January 1, 1988, through December 31, 1997, are 19 (A) Falls Creek; 20 (B) Nicolai Creek; 21 (C) North Fork; 22 (D) Point Starichkof; 23 (E) Redoubt Shoal; and 24 (F) West Foreland.