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Royalty oil, gas, or associated substances taken in-kind as provided by AS 38.05.182 must be taken under the provision of the lease, including any amendments or supplements to the lease, which reserves the royalty to the state. If no such provision is in the lease, all or any portion of the state's share will, at the option of the commissioner, be taken in-kind in accordance with the following:
(1) 90 days written notice will be given to each lessee of the state's election to take the royalty products in-kind;
(2) after taking has actually commenced, the amount to be taken in-kind will, in the commissioner's discretion, be increased or decreased from time to time by
(A) not more than 10 percent, upon 30 days written notice to each lessee of record;
(B) greater than 10 percent, upon 90 days written notice; and
(3) the products must be delivered to the state or its designated purchaser free of charge at the point specified in the lease, for determination of the value of the royalty product as if the product to be taken were to be paid in money rather than taken in-kind; the condition of the product must be the same as the non-royalty share at the point of taking; the lessee shall, if necessary, furnish safe storage for the royalty share free of charge for the same duration and in the same manner as storage is provided for the non-royalty share.
History: Eff. 7/19/86, Register 99; am 5/22/93, Register 126
Authority: AS 38.05.020
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Last modified 7/05/2006