Geothermal royalty reduced, new regs out

Alaska Gov. Sean Parnell signed Senate Bill 243 June 2, reducing geothermal royal rates.

The bill, proposed by Sen. Lesil McGuire, R-Anchorage, made state royalty rates for geothermal the same as federal rates.

In the Senate Finance Committee the bill was expanded to move authority over geothermal drilling and waste prevention from the Alaska Department of Natural Resources to the Alaska Oil and Gas Conservation Commission, which has that authority for oil and gas drilling in the state.

“This legislation makes geothermal power projects economically viable and therefore more likely to produce more affordable and reliable electric power for homes and businesses,” Parnell said in a statement after the bill signing. “This bill assists companies seeking to build a commercial grade geothermal plant in Alaska by reducing the royalty payment.”

After the bill passed the Legislature in April, McGuire said since geothermal power cannot be exported, “Alaska’s previously prohibitive royalty regime would simply have been collected from ratepayers and geothermal development would have been driven to private lands.”

The AOGCC published proposed regulations for geothermal wells May 28.

The regulations include geothermal wells in the commission’s regulatory jurisdiction; extend existing oil and gas well regulations, where applicable, to geothermal wells; allow the commission to grant regulatory variances and waivers where appropriate; establish the calculation method for geothermal resource regulatory cost charge; and add geothermal wells to the commission’s definition of well. The regulations are available on the commission’s website at www.aogcc.alaska.gov.

The commission will accept comments on the regulations, including the cost to private parties to comply with the regulations, through June 28.

Comments may also be submitted at a hearing on the regulations scheduled for June 29 at the commission’s Anchorage office.

—Kristen Nelson