State going to public notice for shallow natural gas leasingDivision of Oil and Gas expects to accept applications for non-competitive program Feb. 29 after 30-day comment period closes Kristen Nelson PNA News Editor
The state is going to public notice with its shallow natural gas leasing program Jan. 26 and plans to accept applications Feb. 29, Jim Haynes of the state Division of Oil and Gas told PNA Jan. 13.
In the public notice, Haynes said, Commissioner of Natural Resources John Shively will advise the public that the state is opening the program, explain the program briefly and allow a 30-day comment period.
“Baring anything unforeseen at that point,” he said, “we intend to allow people to make application for the non-competitive shallow gas leases on the 29th of February.”
State statutes were amended in 1996 to provide for non-competitive leasing of shallow natural gas prospects within 3,000 feet of the surface, excluding lands that are part of the state’s five-year oil and gas leasing program, under lease, proposed for lease and Alaska Mental Health Trust lands.
Leases are issued on a first-come, first-served basis. When issued, the lease grants the lessee an exclusive right to explore for, develop and produce shallow natural gas for three years, with automatic extensions as long as gas is produced in paying quantities.
There have been expressions of interest Since the program was enacted, the state has received expressions of interest in the program from eight or nine different entities, Haynes said.
“Because it is a non-competitive lease sale, if there’s no overlap, everybody will get that they want.
“If there is an overlap, or partial overlap, we’ll have a drawing,” he said. That drawing would probably be held on Feb. 29 or March 1, depending on how many applications are received. It shouldn’t take long to sort through to see if there’s an overlap, Haynes said: “If there is, we’ll give everybody a number and draw from a hat.”
Shallow natural gas leases are exempt from the general requirement that a written finding determines that the disposal would serve the interests of the state. There is a $500 application fee, a rental fee of 50 cents per acre per year and a royalty of 12.5 percent for gas produced “in direct competition” with gas on which a similar royalty is due; otherwise the royalty is 6.25 percent.
Haynes said that similar programs have been big in the Lower 48, and he predicts a lot of interest in the shallow natural gas leasing program in Alaska.
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