New shallow gas regulations increase state’s application fee

Petroleum News Alaska Staff

The Department of Natural Resources is amending regulations for the state’s shallow natural gas leasing program based on Senate Bill 319 passed in the last session which authorized an increase in the application fee for shallow gas leases from $500 to $5,000.

The Legislature also authorized the conversion of current shallow gas leases to the new program; the conversion verification fee is $4,000.

SB 319 also changed the shallow gas statute to allow production of gas from a field part of which is within 3,000 feet of the surface — the requirement had been that all of the field be within 3,000 feet of the surface — and increased the amount of shallow gas acreage that one lessee could hold from 46,080 acres to 138,240 acres. No changes were made in rent, royalties or term of lease: The annual rental payments remain $1 an acre for the life of the lease; the royalty is 6.25 percent unless the gas is produced “in direct competition” with conventional gas, in which case the royalty is 12.5 percent; and leases are for three years and can be extended as long as there is production.

Comments on the proposed regulations are due Sept. 13.

Details of the regulation changes are available on the Division of Oil and Gas web page at http://www.dog.dnr.state.ak.us/oil/.