03/08/1995 03:45 PM Senate RES

 SRES 3/8/95                                                                   
                SB 112 DISCOVERY ROYALTY CREDIT                               
  SENATOR LEMAN said there was not enough time to adequately notify           
 people of a hearing on these bills, so they would just be having a            
 work session.                                                                 
                                                                               
 JACK CHENOWETH, Legislative Affairs Attorney, said SB 112 was a               
 bill putting back a discovery royalty credit which existed in the             
 state's laws up until 1969 and came off the books with extensive              
 redrafting of AS 38.05.180.  He said on the bottom of page 3 he               
 basically cribbed the old language of the old discovery royalty.              
                                                                               
 SENATOR LEMAN asked if it applied only to the discovery well.  MR.            
 CHENOWETH replied that it did, then corrected himself to say that             
 it would apply to the entire lease.  He pointed out on page 1,                
 lines 8 - 10 that it says the commissioner is obligated to convert            
 based upon what the licensee represents.                                      
                                                                               
 SENATOR HALFORD said this bill doesn't have an effective date and             
 asked if it applies to a well that is already in progress if the              
 actual discovery doesn't occur until 90 days from today.  MR.                 
 CHENOWETH replied that if a well is under way, the department has             
 to try to ascertain if that area has oil or gas in commercial                 
 quantities, and after this takes affect, and the holder of the                
 lease determines that it does, yes, that lease would qualify under            
 those circumstances.                                                          
                                                                               
 SENATOR HALFORD asked how many wells there are with decisions                 
 already made.                                                                 
                                                                               
 TAPE 95-21, SIDE B                                                            
                                                                               
 MR. CHENOWETH didn't know that answer.  SENATOR LEMAN said they               
 would ask the Division of Oil and Gas.