00                      CS FOR HOUSE BILL NO. 223(RES)                                                                    
01 "An Act relating to royalty rates and payments for certain oil and gas; and providing                                   
02 for an effective date."                                                                                                 
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 38.05.020(a) is amended to read:                                                                 
05            (a)  The commissioner shall                                                                                  
06                 (1)  supervise the administration of the division of lands;                                     
07                 (2)  make the determinations required under AS 38.05.180(mm)                                        
08       and (nn);                                                                                                     
09                 (3)  adopt regulations necessary to carry out AS 38.05.180(mm) and                                  
10       (nn), including regulations for determining how to differentiate qualified new oil                            
11       and qualified new gas production from an existing field or pool for purposes of                               
12       AS 38.05.180(nn).                                                                                             
13    * Sec. 2. AS 38.05.180 is amended by adding new subsections to read:                                               
14            (mm)  Notwithstanding a requirement in the leasing method chosen of a                                        

01 minimum fixed royalty share, for leases issued in the Cook Inlet sedimentary basin,                                     
02 the department shall accept, as complete payment for royalties due to the state, zero in                                
03 royalties for qualified new gas and 50 percent of the minimum fixed royalty share for                                   
04 qualified new oil, unless payment is lower under another subsection of this section.                                    
05       The royalty reduction in this subsection applies until the earlier of either                                      
06                 (1)  10 years following the commencement of commercial production                                       
07       that begins after July 1, 2024; or                                                                                
08                 (2)  the date on which a commercial quantity of oil or gas produced                                     
09       from the Cook Inlet sedimentary basin is shipped out of the state.                                                
10            (nn)  In (mm) of this section,                                                                               
11                 (1)  "qualified new gas" means gas produced from                                                        
12 (A)  a field or pool that the commissioner determines has not                                                           
13            previously produced gas for commercial sale before January 1, 2024;                                          
14 (B)  a field or pool that has previously produced gas, but did not                                                      
15            produce gas during calendar year 2024;                                                                       
16 (C)  a well that did not exist on January 1, 2025, if the                                                               
17 commissioner determines that production of that gas from the field or pool                                              
18            from an existing well was not economically feasible;                                                         
19                 (2)  "qualified new oil" means oil produced from                                                        
20 (A)  a field or pool that the commissioner determines has not                                                           
21            previously produced oil for commercial sale before January 1, 2024;                                          
22 (B)  a field or pool that has previously produced oil, but did not                                                      
23            produce oil during calendar year 2024;                                                                       
24 (C)  a well that did not exist on January 1, 2025, if the                                                               
25 commissioner determines that production of that oil from the field or pool from                                         
26            an existing well was not economically feasible.                                                              
27    * Sec. 3. AS 31.05.030(i); AS 38.05.180(f)(5), and 38.05.180(dd) are repealed.                                     
28    * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).