DNR notices proposed regulation revisions

Petroleum News

The Alaska Department of Natural Resources said in Feb. 24 public notices that it is considering regulation changes and asking for public input.

One revision of regulations would be a result of House Bill 50, which authorizes DNR "to amend existing regulations regarding geothermal projects on state lands to issue geothermal exploration licenses that replace geothermal prospecting permits."

DNR said it is also considering revising regulations in 11 AAC 82 Mineral Leasing Procedure and 11 AAC 83 Oil and Gas Leasing.

The department is asking for ideas and suggestions from the public before it begins drafting regulations for public review.

Comments must be written and submitted by email or mail and received no later than 5 p.m. March 28, with submissions to either: [email protected] or by mail to Sean Clifton, Department of Natural Resources, 550 West 7th Avenue, Suite 1100, Anchorage AK 99510.

A second notice asking for ideas and suggestions for the public before regulations are drafted for public review is for possible amending or promulgating regulations for general oil and gas lease provisions in Title 11 of the Alaska Administrative Code.

"These revisions would potentially specify how royalties will be calculated for North Slope oil (ANS) royalties using the Minimum Value (MV) lease clause," DNR said.

The department said it "is undertaking this review to evaluate appropriate assessment of royalty value, and to promote the administrative efficiency of our processes in the interest in making the best use of State resources."

DNR said the MV cause has been in oil and gas leases since 1979 "but has not been exercised via applicable regulations to-date. Potential regulations could include provisions addressing the monthly MV calculation methodologies and steps to administer the collection of royalties owed due to MV."

The department provided a link to the MV in the current form leases:

"(d) The state may establish minimum values for the purposes of computing royalties on oil, gas, or associated substances obtained from this lease, with consideration being given to the price actually received by the lessee, to the price or prices paid in the same field or area for production of like quality, to posted prices, to prices received by the lessee and/or other producers from sales occurring away from the leased area, and/or to other relevant matters. In establishing minimum values, the state may use, but is not limited to, the methodology for determining 'prevailing value' as defined in 11 AAC 83.227. Each minimum value determination will be made only after the lessee has been given notice and a reasonable opportunity to be heard. Under this provision, it is expressly agreed that the minimum value of royalty oil, gas, or associated substances under this lease may not necessarily equal, and may exceed, the price of the oil, gas, or associated substances."

Written comments by email or mail are due by 5 p.m. April 25 to: [email protected] or by mail to: Tim Bisson, Department of Natural Resources, 550 West 7th Avenue, Suite 1100, Anchorage, AK 99501.