11 AAC 83.510. Lieu royalty

In cases where the storage lessee also holds the right to produce oil or gas not previously produced in conjunction with stored oil or gas, the storage lease may, in place of the fee or rental provided for under sec. 505(5) of this chapter, provide for a royalty upon stored oil or gas when produced. The royalty rate may be the same as or different from the royalty rate or rates provided for in any oil and gas leases involved. If the rate is different from the rate or rates in the oil and gas lease or leases, the storage lease must specify whether or not that different rate applies to oil or gas not previously produced and thereafter produced in conjunction with stored oil or gas. If the different rate is to apply, the royalty rate or rates under the oil and gas lease or leases must be modified with respect to oil or gas so produced. If the different rate is not to apply, the storage lease must specify a reasonable method for determining respective portions of production to which the different royalty rates apply.

History: Eff. 9/5/74, Register 51; am 7/22/79, Register 71

Authority: AS 38.05.020

AS 38.05.145 (a)

AS 38.05.180

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