Cook Inlet leaseholders would pay set royalties if drilling qualifies

Alaska's natural resources commissioner would set Kitchen Lights royalties, the state's share of production, at 3%. The rate covers the seven Kitchen Lights Unit leases identified in the bill. The leaseholder must demonstrate that the rate would save money for gas customers. Before December 31, 2031, a Kitchen Lights leaseholder must bring a jack-up rig to Cook Inlet and use it to drill a well to discover or extract gas from the Cook Inlet sedimentary basin. This mobile drilling platform stands on legs supported by the ocean floor. The Department of Natural Resources could audit royalty calculations at any time. The commissioner could end the rate if the royalty modification was transferred without the commissioner's approval. If enacted, the provisions would take effect the day after the commissioner confirms the drilling condition was met. The Kitchen Lights rate would apply retroactively to January 1, 2026.

Alaska's natural resources commissioner would set royalties for other covered Cook Inlet leases at 5%. The rate covers leases in the Cook Inlet sedimentary basin, except leases receiving the Kitchen Lights 3% rate. The leaseholder must demonstrate that the rate would save money for gas customers. Before December 31, 2031, a Kitchen Lights leaseholder must bring a jack-up rig to Cook Inlet and use it to drill a well to discover or extract gas from the Cook Inlet sedimentary basin. The rig must be a mobile drilling platform supported by legs on the ocean floor. The Department of Natural Resources could audit royalty calculations at any time. The commissioner could end the rate if the royalty modification was transferred without the commissioner's approval. The 5% provision specifies a January 1, 2027, start. If enacted, it would take effect the day after the commissioner confirms the drilling condition was met.

Alaska's natural resources commissioner would report to lawmakers every five years on leases receiving royalty relief. Reports would cover leases receiving royalty relief under this section, including production, investment, state revenue, future plans, and residents' energy costs. The reporting duty depends on a Kitchen Lights leaseholder bringing a jack-up rig to Cook Inlet and drilling a well to discover or extract gas from the basin before December 31, 2031. This mobile drilling platform stands on legs supported by the ocean floor. The commissioner must certify the report's accuracy and consistency with information given to other state agencies. The state could audit the report. Financial and operating information must be included unless it is confidential. The reporting schedule begins January 1, 2031, with reports due by the first day of the regular legislative session every five years. The duty would take effect the day after the commissioner confirms the drilling condition was met.