1993-03-05                     House Journal                      Page 0549
HB 199                                                                       
HOUSE BILL NO. 199 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
"An Act providing for oil and gas exploration licenses, and oil and           
gas leases, in certain areas of the state; and providing for an                
effective date."                                                               
                                                                               
was read the first time and referred to the House Special Committee            
on Oil and Gas, Resources and Finance Committees.                              
                                                                               
The following fiscal note applies to HB 199:                                   
                                                                               
Zero fiscal note, Dept. of Revenue, 3/5/93                                     
                                                                               
The Governor's transmittal letter, dated March 5, 1993, appears below:         
                                                                               
"Dear Speaker Barnes:                                                          
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am     
transmitting a bill authorizing oil and gas exploration licenses for tracts    
of state land up to 500,000 acres in size and providing for subsequent         
leasing of some or all of the acreage subject to the license.                  
                                                                               
The bill is designed to encourage the exploration and development of           
areas within the state with undetermined oil and gas potential.  In            
contrast to the provisions of the state's existing competitive oil and gas     
leasing program, the bill would allow the state to issue licenses              
covering relatively large tracts to licensees based upon their                 
commitment to perform certain exploration programs, the monetary               
value of which has been predetermined.  The bill is not intended to            
replace the states competitive leasing program; rather, it is intended to      
provide an effective alternative to encourage exploration in those areas       
that traditionally have not attracted the interest of explorationists under    
the states current leasing regime.                                             

1993-03-05                     House Journal                      Page 0550
HB 199                                                                       
Under the bill, either the state or a prospective licensee could nominate      
an area of unidentified oil and gas potential, consisting of reasonably        
compact and contiguous acreage that should be subject to a license.            
The commissioner of natural resources would be authorized to impose            
reasonable work commitments on the licensee with respect to the                
license area.  Subsequent to the successful completion of the                  
predetermined work commitment, the licensee could convert portions             
or all of the acreage to one or more leases, each not to exceed 30,000         
acres in size.  The imposition of the required work commitment and             
the requirement to pay an annual rental on acreage subject to lease are        
together intended to discourage warehousing of acreage that the                
licensee does not intend to explore or develop.  The commissioner is           
authorized to include reasonable conditions and obligations in the             
leases arising from conversion of licenses.                                    
                                                                               
A license proposal would require public notice and the opportunity for         
competing proposals by other prospective licensees as well as the              
opportunity for public comment.  The commissioner of natural                   
resources would be required to make a finding that issuing a license is        
in the best interest of the state.                                             
                                                                               
The exploration and potential development of Alaskas remote and                
underexplored basins will be further encouraged by the adoption of the         
licensing and leasing methodology contained in this bill.                      
                                                                               
I urge your prompt and favorable consideration of this bill.                   
                                                                               
										Sincerely,                                                           
										/s/                                                                  
										Walter J. Hickel                                                     
										Governor"