Tuesday, April 9, 2013

Short Takes| One-Time Lease Extension Bill Approved by State House of Reps

Rep. Olson's HB 198 is an effort to change the tools available for extending state leases.  For various reasons, including the fact that Alaska is a challenging environment in which to operate quickly due to permit and other requirements, investors sometimes are not positioned to be in production by the end of their initial lease term despite making reasonable efforts.  To some degree that inhibits investment and activity on the front end, as investors consider the potential that they later may lose the value of their efforts by the expiration of the lease term despite their reasonable efforts.

In the past the state has addressed these issues through various means, such as the formation of units, that have longer term implications and potentially lead to friction between investors and the state at later points.  While the approach reflected in this bill carries its own potential for friction, if fairly administered over the long term by the Department of Natural Resources, as it likely will be, this approach should provide a less adversarial and more routine means for addressing the issue.

A radio report on the HB 198 is here:  One-Time Lease Extension Bill Approved by State House of Reps | Radio Kenai.  Materials related to the bill are here.  The bill now goes to the Senate for consideration in the final week of the session.