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State adds online lease sales in DNR proposed regulation changes
Kristen Nelson Petroleum News
The Department of Natural Resources has published proposed changes in its regulations for, among other things, payment of oil and gas royalties, rents and bonuses and oil and gas leasing procedures.
The proposed regulation changes deal with payment methods, bidding methods, requirements for bid submission, requirements for applications, rental provisions and definitions regarding mineral leasing.
“The proposed changes will facilitate online oil and gas lease sales,” DNR said in the notice of the proposed regulations.
But that doesn’t mean the Division of Oil and Gas, which holds the state’s oil and gas lease sales, plans to switch to online sales.
Kyle Smith, petroleum land manager at the division, told Petroleum News July 17 that the regulation changes address various matters and said many of the regulations hadn’t been changed for 20 or 30 years, so were being updated to work with today’s technology.
Adding online sales makes that option possible, he said, but it doesn’t obligate the division to hold online sales. A lot of other states and the federal government are holding online sales, Smith said, and this updates Alaska’s business model. And the division would still be required to open and announce bids publicly, he said.
The federal Bureau of Land Management, which has been holding annual lease sales in the National Petroleum Reserve-Alaska on the state’s North Slope, has been livestreaming its bid openings.
The state’s fall bid opening is scheduled for Dec. 11 at 9 a.m. in the Dena’ina Center. It includes the Beaufort Sea, North Slope and North Slope Foothills areawide sales, and the Gwydyr Bay, Harrison Bay and Storms blocks within the Beaufort and North Slope sales.
Proposed changes The proposed change in the regulation for method of bidding, which currently includes just “sealed bid or at public outcry auction” is the addition of “including online bidding” to methods.
A new section on bid service charges says: “A bidder will be responsible for commission or like compensation payable to any third-party vendor hosting an online offering for submitted bids; including handling and transfer of bid deposits.”
The bid deposit requirement has been repealed and readopted and covers cash; cashier’s or certified check; money order; and “electronic funds transfer, wire transfer, or automated clearing house transaction for the use and benefit of the State of Alaska, including, if a third-party vendor approved by the department hosts an online disposal.”
Bids are amended to include online bidding with bids submitted to the commissioner, other officer “or other entity authorized by the commissioner conducting the sale.”
The bid opening is amended by adding bids received online to bids which must be opened publicly.
Amendments not related to sales include a new section which requires that for leases with rental increases during the primary term “an application for a rental reduction determination under the terms of a lease agreement must be received at least 90 days prior to the lease anniversary date where the rental rate increases above $20.00 per acre,” and must be on the form required by the department.
A section is added requiring rental payment to continue for a “lease that is expired but otherwise remains subject to a pending application or appeal.”
The comment period on the proposed regulations closes Aug. 9, after which DNR will either adopt the proposed regulation or other provisions dealing with the same subject without further notice or decide to take no action.
- KRISTEN NELSON
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