HOUSE BILL NO. 373 "An Act approving and ratifying the sale of royalty oil by the State of Alaska to Tesoro Corporation and Tesoro Refining and Marketing Company LLC; and providing for an effective date." 3:22:51 PM Vice-Chair Micciche spoke to the fiscal note attached to the bill. Co-Chair MacKinnon noted the analysis on the second page of the fiscal note: This bill provides legislative approval of a contract negotiated between the State of Alaska and Tesoro Refining and Marketing Company, LLC for the sale of the state's royalty oil for a term of five years. There will be no fiscal impact to the operating expenditures. During the course of the contract the proposed sale will provide the State with a minimum estimate of $45.2 million in revenue in addition to what would have been obtained if the State of Alaska elected to receive its royalties in value. This estimate is based upon the March 2016 Revenue Forecast oil value. 3:24:36 PM JIM SHINE, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, detailed that the fiscal note had been revised as the result of committee comments during the initial presentation. He stated that the price of oil was difficult to project, but that the fiscal note reflected the projected benefit that the state would receive, over royalty in value, over the next 5 years of approximately $8 million to $9 million per year. He shared that the contract would be for the sale of 20 thousand to 25 thousand barrels of royalty oil to Tesoro, per day, beginning August 1, 2016. He said that the figures represented the difference between royalties in kind (RIK) and royalty in value (RIV). He relayed that the net back formula for RIV included a marine transportation reduction of approximately $3.50, a RIK situation would have a static $1.95 per barrel deduction as a location differential. He explained that the delta between the $1.95 and the $3.50 was reflected as a benefit in the fiscal note, and would increase from FY 17 to FY 22. He directed attention to page 11 of the "Best Interest Finding" (copy on file), which showed a projected increase in marine transportation costs over the next five years. 3:26:32 PM Vice-Chair Micciche MOVED to report HB 373 out of Committee with individual recommendations and the accompanying fiscal note. HB 373 was REPORTED out of committee with a "do pass" recommendation and with one new fiscal impact note from Department of Natural Resources. 3:26:59 PM AT EASE 3:28:29 PM RECONVENED