Alaska will realize gains from change in federal law

Petroleum News Alaska Staff

Gov. Tony Knowles said Nov. 3 that he is pleased that efforts by the Interstate Oil and Gas Compact Commission to repeal a burdensome federal law of net receipts sharing have been successful.

Under legislation signed by President Clinton this week, federal onshore royalties will be split equally between the federal government and the states, netting the state of Alaska a half million dollars in royalties from federal lands.

With the passage of H.R. 2389, the complex practice of net receipts sharing has been abolished. Net receipts sharing dictated how royalties were determined for oil, natural gas and mineral production on federal land and allowed the federal government to deduct its costs for administering the Minerals Leasing Program, thereby reducing the states’ share of royalties to less than 50 percent. This practice has cost states more than $250 million in the eight years since its implementation, the governor's office said.