HB 135: "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date."
00 HOUSE BILL NO. 135 01 "An Act relating to geothermal resources; relating to the definition of 'geothermal 02 resources'; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 31.05.030(m) is amended to read: 05 (m) The commission has jurisdiction and authority over all persons and 06 property, public and private, necessary to carry out the purposes and intent of 07 AS 41.06 [, EXCEPT FOR PROVISIONS IN AS 41.06 FOR WHICH THE 08 DEPARTMENT OF NATURAL RESOURCES HAS JURISDICTION]. 09 * Sec. 2. AS 38.05.181(a) is amended to read: 10 (a) The commissioner may, under regulations adopted by the commissioner, 11 grant prospecting licenses [PERMITS] and leases to a qualified person to explore for, 12 develop, or use geothermal resources. A prospecting license or lease is not required 13 under this section to explore for, develop, or use geothermal resources if the 14 geothermal resource is intended for domestic, noncommercial, or small-scale
01 industrial use [WHEN TITLE TO THE SURFACE PARCEL IS HELD BY A 02 PERSON OTHER THAN THE STATE, THAT PERSON SHALL HAVE A 03 PREFERENTIAL RIGHT TO A GEOTHERMAL PROSPECTING PERMIT OR 04 LEASE FOR THE AREA UNDERLYING THE SURFACE PARCEL. THE 05 SURFACE OWNER MUST EXERCISE THE PREFERENCE RIGHT WITHIN 30 06 DAYS AFTER RECEIVING NOTICE OF THE APPLICATION FOR A PERMIT, 07 OR BY AGREEING TO MEET THE TERMS OF A BID WITHIN 60 DAYS AFTER 08 RECEIVING NOTICE OF THE ACCEPTANCE OF THE BID FOR A LEASE]. 09 * Sec. 3. AS 38.05.181(c) is amended to read: 10 (c) On state land that has not been declared a competitive geothermal area or 11 withdrawn from geothermal prospecting, the commissioner may issue a prospecting 12 license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 13 exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 14 on state land included under the license [PERMIT]. The commissioner has discretion 15 to renew the license [PERMIT] for an additional one-year term. A holder of a 16 prospecting license [PERMIT] has the right, after completion of an agreed-upon 17 work commitment [UPON THE SHOWING OF A DISCOVERY OF 18 GEOTHERMAL RESOURCES IN COMMERCIAL QUANTITIES] and the 19 submission of an exploration [A DEVELOPMENT] plan acceptable to the 20 commissioner, to convert the license [PERMIT] to a noncompetitive lease at a royalty 21 rate under (g) of this section. The conversion privilege must be exercised not later than 22 30 days after the expiration of the license [PERMIT]. If the land included within the 23 license [PERMIT] is designated a competitive geothermal area during the license 24 [PERMIT] term, the licensee [PERMITTEE] must apply for a noncompetitive lease 25 within 30 days after notification of the designation or forfeit the conversion privileges 26 and the exclusive right to prospect. 27 * Sec. 4. AS 38.05.181(d) is amended to read: 28 (d) On state land that is designated a competitive geothermal area and is not 29 subject to an existing prospecting license [PERMIT], the commissioner may issue 30 geothermal leases to the highest bidder by competitive bidding procedures established 31 by regulations adopted by the commissioner. At the discretion of the commissioner,
01 competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 02 profit share, or royalty share. 03 * Sec. 5. AS 38.05.181(e) is amended to read: 04 (e) Prospecting licenses [PERMITS] and geothermal leases granted under this 05 section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 06 PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 07 acres but not more than 2,560 acres. A person may not own, or hold an interest in, 08 geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 09 leases in commercial production, individually or under a unit operation or well spacing 10 or pooling arrangement, do not count against the acreage limitation. All prospecting 11 licenses [PERMITS] and geothermal leases are subject to an annual rental fee 12 established by the department in regulation and [,] payable in advance [, OF $3 13 PER ACRE]. The rental for a year shall be credited against royalties accruing for that 14 year. 15 * Sec. 6. AS 38.05.181 is amended by adding new subsections to read: 16 (i) The commissioner may require a lessee of a geothermal resource to operate 17 under a unit agreement that prescribes the conditions under which the lessee must 18 operate. A unit agreement must adequately protect all parties in interest, including the 19 state. Except as provided in (f) and (j) of this section, the commissioner may not 20 reduce the royalty on a geothermal lease issued under this section in, or in connection 21 with, a unit agreement. 22 (j) When determined by the commissioner to be in the public interest, the 23 commissioner may authorize a lessee and the lessee's representative, together with 24 each other or jointly or severally with another lessee, to collectively adopt or operate 25 under a unit agreement. The commissioner may, with the consent of the involved 26 lessees, establish, change, or revoke the drilling, producing, and royalty requirements 27 of the leases. 28 (k) A geothermal lease and a unit agreement approved under this section must 29 specify that lease and unit agreement are subject to applicable statutes and regulations 30 in force at the time the lease or unit agreement is entered into and to future 31 amendments to those statutes and regulations.
01 * Sec. 7. AS 38.05.965(6) is repealed and reenacted to read: 02 (6) "geothermal resources" means the natural heat of the earth and 03 energy, in whatever form, below the surface of the earth present in, resulting from, 04 created by, or that may be extracted from the natural heat; and all minerals in solution 05 or other products obtained from naturally heated fluids, brines, associated gases, and 06 steam, in whatever form, found below the surface of the earth; "geothermal resources" 07 does not include oil, hydrocarbon gases, or other hydrocarbon substances; 08 * Sec. 8. AS 41.06.020(e) is amended to read: 09 (e) Nothing in this chapter limits the authority of the department 10 [(1)] over geothermal resources under AS 38.05.181, including the 11 authority [; OR 12 (2)] to approve and manage geothermal units or operations that include 13 state land. 14 * Sec. 9. AS 41.06.020 is amended by adding a new subsection to read: 15 (f) The commission may, when consistent with the purpose and intent of this 16 chapter, exempt from this chapter a domestic, noncommercial, or small-scale 17 industrial use of geothermal resources. 18 * Sec. 10. AS 41.06.060(4) is amended to read: 19 (4) "geothermal fluid" means liquids, brines, water, gases, or [AND] 20 steam [AT TEMPERATURES GREATER THAN 120 DEGREES CELSIUS OR 21 ANY COMMERCIAL USE OF LIQUIDS AND STEAM] naturally or artificially 22 present in a geothermal system; "geothermal fluid" does not include oil, 23 hydrocarbon gases, or other hydrocarbon substances [AT TEMPERATURES 24 LESS THAN 120 DEGREES CELSIUS]; 25 * Sec. 11. AS 41.06.060(5) is repealed and reenacted to read: 26 (5) "geothermal resources" means the natural heat of the earth and 27 energy, in whatever form, below the surface of the earth present in, resulting from, 28 created by, or that may be extracted from the natural heat; and all minerals in solution 29 or other products obtained from naturally heated fluids, brines, associated gases, and 30 steam, in whatever form, found below the surface of the earth; "geothermal resources" 31 does not include oil, hydrocarbon gases, or other hydrocarbon substances;
01 * Sec. 12. AS 41.06.005(b) and 41.06.030 are repealed. 02 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 APPLICABILITY. (a) Except as provided in (b) of this section, this Act applies to a 05 license or lease for a geothermal resource entered into on or after the effective date of secs. 1 - 06 12 of this Act. 07 (b) An application made under AS 38.05.181(c) that is pending with the Department 08 of Natural Resources on March 1, 2021, is considered to be an application under 09 AS 38.05.181(c), as amended by sec. 3 of this Act. 10 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 TRANSITIONAL PROVISIONS: REGULATIONS. The Department of Natural 13 Resources and the Alaska Oil and Gas Conservation Commission may adopt regulations to 14 implement the changes made by this Act. The regulations take effect under AS 44.62 15 (Administrative Procedure Act) but not before the effective date of the law implemented by 16 the regulation. 17 * Sec. 15. Section 14 of this Act takes effect immediately under AS 01.10.070(c). 18 * Sec. 16. Except as provided in sec. 15 of this Act, this Act takes effect July 1, 2021.