2021-02-18                     House Journal                      Page 0143
HB 81                                                                                                                         
HOUSE BILL NO. 81 by the House Rules Committee by request of                                                                    
the Governor, entitled:                                                                                                         
                                                                                                                                
     "An Act authorizing the commissioner of natural resources to                                                               
     modify a net profit share lease."                                                                                          
                                                                                                                                
was read the first time and referred to the Resources and Finance                                                               
Committees.                                                                                                                     
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Indeterminate, Dept. of Natural Resources                                                                                   
2.  Indeterminate, Dept. of Revenue                                                                                             
                                                                                                                                
The Governor's transmittal letter dated January 28 follows:                                                                     
                                                                                                                                
"Dear Chief Clerk:                                                                                                              
                                                                                                                                

2021-02-18                     House Journal                      Page 0144
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill authorizing the renegotiation of                                                         
North Slope net profit share leases.                                                                                            
                                                                                                                                
The bill would authorize the Commissioner of the Department of                                                                  
Natural Resources to modify North Slope net profit share leases where                                                           
net profit share has hindered development of known oil and gas pools                                                            
within units because of the percentage of profits returned to the state in                                                      
addition to royalties and taxes. Modifications to net profit shares                                                             
would be consistent with the existing royalty modification process.                                                             
The bill would allow the Commissioner to modify a net profit share                                                              
lease to encourage production or prolong production or economic life                                                            
of an oil or gas field or pool. A modification, however, could not result                                                       
in a share reserved to the state of less than 10 percent of the net profit                                                      
derived from the lease.                                                                                                         
                                                                                                                                
The benefits of the bill would include incentivizing development and                                                            
production of known oil and gas resources within units in production                                                            
or in non-unitized areas with net profit share leases. An increase in                                                           
development and production on the North Slope would generate                                                                    
additional revenue for the state; that result requires modification of                                                          
leases to reflect production realities. I urge your prompt and favorable                                                        
action on this bill.                                                                                                            
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Mike Dunleavy                                                                                                                   
Governor"