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HB15 • 2026

OIL/GAS ROYALTY RATES

An Act relating to royalty rates and payments for certain oil and gas; and providing for an effective date.

Energy
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
REPRESENTATIVES RAUSCHER, Costello, Prax
Last action
2025-04-16
Official status
(H) RES
Effective date
Not listed

Plain English Breakdown

The official text states the act takes effect immediately under AS 01.10.070(c), but does not list a specific calendar date for that immediate effect in this excerpt.

Oil and Gas Royalty Rate Changes for Alaska

This law sets specific royalty rates that oil and gas companies must pay to the state of Alaska based on where production occurs, whether it is new or existing, and if natural gas is liquefied for public utilities.

What This Bill Does

  • Sets a 3% royalty rate on qualified new natural gas produced from leases south of 68 degrees North latitude between July 1, 2025, and January 1, 2036.
  • Sets a 6.25% royalty rate on qualified new oil produced in the same southern area during that time period.
  • Limits these lower rates to end after 10 years or when production is shipped out of state, whichever happens first.
  • Creates a 1% royalty rate for gas from leases north of 68 degrees North latitude if it is liquefied and sold to public utilities at discounted prices.
  • Removes older sections of law that set different rules for these specific oil and gas payments.

Who It Names or Affects

  • Companies holding leases south of 68 degrees North latitude producing new oil or gas as defined by the commissioner.
  • Companies holding leases north of 68 degrees North latitude who liquefy natural gas for public utilities.
  • The Alaska Department of Natural Resources commissioner, who decides if production qualifies as 'new'.
  • Publicly owned utilities and regulated utilities that buy discounted gas.

Terms To Know

Royalty rate
The percentage of oil or gas value a company must pay to the state for using public land.
Qualified new gas or oil
Resources from fields that have not produced commercially since before January 1, 2025; fields with no production in the last six months (gas) or one year (oil); or wells built after January 1, 2026.
Liquefied natural gas
Natural gas that is cooled into a liquid form for storage and transport.

Limits and Unknowns

  • The law takes effect immediately upon passage, but the specific calendar date of enactment depends on when it was signed.
  • Whether production qualifies as 'new' depends entirely on the commissioner's determination based on past sales or well existence.

Bill History

  1. 2025-04-16 823

    (H) COSPONSOR(S): PRAX

  2. 2025-04-11 705

    (H) COSPONSOR(S): COSTELLO

  3. 2025-01-22 35

    (H) REFERRED TO RESOURCES

  4. 2025-01-22 35

    (H) RES, FIN

  5. 2025-01-22 35

    (H) READ THE FIRST TIME - REFERRALS

  6. 2025-01-22 35

    (H) PREFILE RELEASED 1/10/25

Official Summary Text

OIL/GAS ROYALTY RATES
An Act relating to royalty rates and payments for certain oil and gas; and providing for an effective date.

Current Bill Text

Read the full stored bill text 
HB0015a -1- HB 15
New Text Underlined [DELETED TEXT BRACKETED]

34-LS0214\N

HOUSE BILL NO. 15

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - FIRST SESSION

BY REPRESENTATIVES RAUSCHER, Costello, Prax

Introduced: 1/22/25
Referred: Resources, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to royalty rates and payments for certain oil and gas; and providing 1
for an effective date." 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
* Section 1. AS 38.05.180 is amended by adding new subsections to read: 4
(mm) Notwithstanding and in lieu of a requirement in the leasi ng method 5
chosen of a minimum fixed royalty share or the royalty provisio n of a lease, for leases 6
issued for land south of 68 degr ees North latitude from which c ommercial production 7
of oil or gas begins after July 1, 2025, and before January 1, 2036, the lessee shall pay 8
a royalty of three percent for qualified new gas and 6.25 perce nt for qualified new oil, 9
unless payment is lower under another subsection of this section. A royalty rate in this 10
subsection applies until the earlier of 11
(1) 10 years following the commencement of commercial producti on; 12
or 13
(2) the date on which a commercial quantity of oil or gas prod uced by 14
34-LS0214\N
HB 15 -2- HB0015a
New Text Underlined [DELETED TEXT BRACKETED]

the lessee from land south of 68 degrees North latitude is shipped out of the state. 1
(nn) In (mm) of this section, 2
(1) "qualified new gas" means gas produced from 3
(A) a field or pool that the commissioner determines has not 4
previously produced gas for commercial sale before January 1, 2025; 5
(B) a field or pool that the co mmissioner determines has not 6
produced gas during the preceding six months but that has previously produced 7
gas; or 8
(C) a well that did not exist on January 1, 2026, if the 9
commissioner determines that pr oduction of that gas from the fi eld or pool 10
from an existing well was not feasible; 11
(2) "qualified new oil" means oil produced from 12
(A) a field or pool that the commissioner determines has not 13
previously produced oil for commercial sale before January 1, 2025; 14
(B) a field or pool that the co mmissioner determines has not 15
produced oil during the preceding one year but that has previou sly produced 16
oil; or 17
(C) a well that did not exist on January 1, 2026, if the 18
commissioner determines that production of that oil from the field or pool from 19
an existing well was not feasible. 20
(oo) Notwithstanding and in lieu of a requirement in the leasi ng method 21
chosen of a minimum fixed royalty share, or the royalty provisi o n o f a l e a s e o r a n 22
existing royalty settlement agreement, for gas that is produced from leases that include 23
land north of 68 degrees North latitude and that is later lique fied or used in the 24
liquefaction or transportation process, the lessee shall pay a royalty rate of one percent 25
if the lessee agrees to sell the gas to a publicly owned utilit y or a utility regulated 26
under AS 42.05 at a rate that refl ects the discounted royalty r ate provided under this 27
subsection. The royalty rate under this subsection applies until the earlier of either 28
(1) 10 years following the first commercial use of liquefied n atural gas 29
receiving the royalty rate under this subsection; or 30
(2) the date on which a commercial quantity of liquefied natur al gas 31
34-LS0214\N
HB0015a -3- HB 15
New Text Underlined [DELETED TEXT BRACKETED]

produced from the lease receiving the royalty rate under this s ubsection is shipped out 1
of the state. 2
* Sec. 2. AS 31.05.030(i); AS 38.05.180(f)(5), and 38.05.180(dd) are repealed. 3
* Sec. 3. AS 38.05.180(mm) and 38.05.180(nn) are repealed January 1, 2046. 4
* Sec. 4. This Act takes effect immediately under AS 01.10.070(c). 5