CSSSHB 198(O&G): "An Act providing for a reduction of royalty on certain oil produced from Cook Inlet submerged land."
00 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 198(O&G) 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) is amended by adding a new paragraph to read: 05 (6) 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, the lessee of all or part of 09 an oil field located offshore in Cook Inlet on which an oil production platform 10 specified in (A) or (C) of this paragraph operates, or the lessee of all or part of the 11 field located offshore in Cook Inlet and described in (E) of this paragraph, 12 (A) shall pay a royalty of five percent on oil produced from the 13 platform if oil production that equaled or exceeded a volume of 1,200 barrels a 14 day declines to less than that amount for a period of at least one calendar
01 quarter, as certified by the Alaska Oil and Gas Conservation Commission, for 02 as long as the volume of oil produced from the platform remains less than 03 1,200 barrels a day; the provisions of this subparagraph apply to 04 (i) Dolly; 05 (ii) Grayling; 06 (iii) King Salmon; 07 (iv) Steelhead; and 08 (v) Monopod; 09 (B) shall pay a royalty calculated under this subparagraph if the 10 volume of oil produced from the platform that was certified by the Alaska Oil 11 and Gas Conservation Commission under (A) of this paragraph later increases 12 to 1,200 or more barrels a day and remains at 1,200 or more barrels a day for a 13 period of at least one calendar quarter; until the royalty rate determined under 14 this subparagraph applies, the royalty continues to be calculated under (A) of 15 this paragraph; on and after the day the increased production exceeds the 16 period specified in this paragraph, the royalty payable under this subparagraph 17 is 18 (i) for production of at least 1,200 barrels a day but not 19 more than 1,300 barrels a day - seven percent; 20 (ii) for production of more than 1,300 barrels a day but 21 not more than 1,400 barrels a day - 8.5 percent; 22 (iii) for production of more than 1,400 barrels a day but 23 not more than 1,500 barrels a day - 10 percent; and 24 (iv) for production of more than 1,500 barrels a day - 25 12.5 percent; 26 (C) shall pay a royalty of five percent on oil produced from the 27 platform if oil production that equaled or exceeded a volume of 750 barrels a 28 day declines to less than that amount for a period of at least one calendar 29 quarter, as certified by the Alaska Oil and Gas Conservation Commission, for 30 as long as the volume of oil produced from the platform remains less than 750 31 barrels a day; the provisions of this subparagraph apply to
01 (i) Granite Point; 02 (ii) Anna; 03 (iii) Bruce; 04 (iv) Baker; 05 (v) Dillon; 06 (vi) XTO.A; and 07 (vii) XTO.C; 08 (D) shall pay a royalty calculated under this subparagraph if the 09 volume of oil produced from the platform that was certified by the Alaska Oil 10 and Gas Conservation Commission under (C) of this paragraph later increases 11 to 750 or more barrels a day and remains at 750 or more barrels a day for a 12 period of at least one calendar quarter; until the royalty rate determined under 13 this subparagraph applies, the royalty continues to be calculated under (C) of 14 this paragraph; on and after the day the increased production exceeds the 15 period specified in this paragraph, the royalty payable under this subparagraph 16 is 17 (i) for production of at least 750 barrels a day but not 18 more than 850 barrels a day - seven percent; 19 (ii) for production of more than 850 barrels a day but 20 not more than 1,000 barrels a day - 8.5 percent; 21 (iii) for production of more than 1,000 barrels a day but 22 not more than 1,200 barrels a day - 10 percent; and 23 (iv) for production of more than 1,200 barrels a day - 24 12.5 percent; 25 (E) shall pay a royalty of five percent on oil produced from the 26 field if oil production that equaled or exceeded a volume of 750 barrels a day 27 declines to less than that amount for a period of at least one calendar quarter, 28 as certified by the Alaska Oil and Gas Conservation Commission, for as long 29 as the volume of oil produced from the field remains less than 750 barrels a 30 day; the provisions of this subparagraph apply to the West McArthur River 31 field;
01 (F) shall pay a royalty calculated under this subparagraph if the 02 volume of oil produced from the field that was certified by the Alaska Oil and 03 Gas Conservation Commission under (E) of this paragraph later increases to 04 750 or more barrels a day and remains at 750 or more barrels a day for a period 05 of at least one calendar quarter; until the royalty rate determined under this 06 subparagraph applies, the royalty continues to be calculated under (E) of this 07 paragraph; on and after the day the increased production exceeds the period 08 specified in this paragraph, the royalty payable under this subparagraph is 09 (i) for production of at least 750 barrels a day but not 10 more than 850 barrels a day - seven percent; 11 (ii) for production of more than 850 barrels a day but 12 not more than 1,000 barrels a day - 8.5 percent; 13 (iii) for production of more than 1,000 barrels a day but 14 not more than 1,200 barrels a day - 10 percent; and 15 (iv) for production of more than 1,200 barrels a day - 16 12.5 percent; and 17 (G) may obtain the benefits of the royalty adjustments set out 18 in (A) - (D) of this paragraph only if the reduction in production from the 19 platform, or as set out in (E) and (F) of this paragraph only if the reduction of 20 production from the field, is calculated 21 (i) based on the average daily production during the 22 calendar quarter based on reservoir conditions; and 23 (ii) without consideration of short-term production 24 declines due to mechanical or other choke-back factor, temporary 25 shutdowns or decreased production due to environmental or facility 26 constraints, or market conditions.