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CS FOR SENATE BILL NO. 69(RES)
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - SECOND SESSION
BY THE SENATE RESOURCES COMMITTEE
Offered: 5/3/24
Referred: Finance
Sponsor(s): SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
A BILL
FOR AN ACT ENTITLED
"An Act relating to geothermal resources; and providing for an effective date." 1
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 2
* Section 1. AS 38.05.181(a) is amended to read: 3
(a) The commissioner may, under regulations adopted by the commissioner, 4
grant prospecting licenses [PERMITS] and leases to a qualified person to explore for,
5
develop, or use geothermal resources. When title to the surface parcel is held by a 6
person other than the state, that person shall have a preferential right to a geothermal 7
prospecting license [PERMIT] or lease for the area underlying the surface parcel. The 8
surface owner must exercise the preference right within 30 days after receiving notice 9
of the application for a license [PERMIT], or by agreeing to meet the terms of a bid 10
within 60 days after receiving notice of the acceptance of the bid for a lease. 11
* Sec. 2. AS 38.05.181(c) is amended to read: 12
(c) On state land that has not been declared a competitive geothermal area or 13
withdrawn from geothermal prospecting, the commissioner may issue a prospecting 14 33-GS1618\R
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license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 1
exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 2
on state land included under the license [PERMIT]. The commissioner has discretion 3
to renew the license [PERMIT] for an additional one-year term. A holder of a 4
prospecting license [PERMIT] has the right, after completion of an agreed-on work 5
commitment [UPON THE SHOWING OF A DISCOVERY OF GEOTHERMAL 6
RESOURCES IN COMMERCIAL QUANTITIES] and the submission of an 7
exploration [A DEVELOPMENT] plan acceptable to the commissioner, to convert 8
the license [PERMIT] to a noncompetitive lease at a royalty rate under (g) of this 9
section. The conversion privilege must be exercised not later than 30 days after the 10
expiration of the license [PERMIT]. If the land included within the license [PERMIT] 11
is designated a competitive geothermal area during the license [PERMIT] term, the 12
licensee [PERMITTEE] must apply for a noncompetitive lease within 30 days after 13
notification of the designation or forfeit the conversion privileges and the exclusive 14
right to prospect. 15
* Sec. 3. AS 38.05.181(d) is amended to read: 16
(d) On state land that is designated a competitive geothermal area and is not 17
subject to an existing prospecting license [PERMIT], the commissioner may issue 18
geothermal leases to the highest bidder by competitive bidding procedures established 19
by regulations adopted by the commissioner. At the discretion of the commissioner, 20
competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 21
profit share, or royalty share. 22
* Sec. 4. AS 38.05.181(e) is amended to read: 23
(e) Prospecting licenses [PERMITS] and geothermal leases granted under this 24
section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 25
PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 26
acres but not more than 2,560 acres. A person may not own, or hold an interest in, 27
geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 28
leases in commercial production, individually or under a unit operation or well spacing 29
or pooling arrangement, do not count against the acreage limitation. All prospecting 30
licenses [PERMITS] and geothermal leases are subject to an annual rental fee 31 33-GS1618\R
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established by the department in regulation and [,] payable in advance [, OF $3 1
PER ACRE]. The rental for a year shall be credited against royalties accruing for that 2
year. 3
* Sec. 5. AS 38.05.181(f) is amended to read: 4
(f) A geothermal lease shall be issued for a primary term of 10 years and may 5
be renewed for an additional term of five years if the lessee is actively engaged in 6
drilling operations. A geothermal lease is valid for the duration of commercial 7
production. [BEGINNING 20 YEARS AFTER THE INITIATION OF 8
COMMERCIAL PRODUCTION AND AT 10-YEAR INTERVALS THEREAFTER, 9
THE COMMISSIONER MAY RENEGOTIATE THE RENTALS AND 10
ROYALTIES DUE ON A GEOTHERMAL LEASE.] 11
* Sec. 6. AS 38.05.965(6) is amended to read: 12
(6) "geothermal resources" means the natural heat of the earth at 13
temperatures greater than 80 [120] degrees Celsius, measured at the point where the 14
highest-temperature resources encountered enter or contact a well or other resource 15
extraction device, and includes 16
(A) the energy, including pressure, in whatever form present in, 17
resulting from, created by, or that may be extracted from that natural heat; 18
(B) the material medium, including the geothermal fluid 19
naturally present, as well as substances artificially introduced to serve as a heat 20
transfer medium; and 21
(C) all dissolved or entrained minerals and gases that may be 22
obtained from the material medium, but excluding hydrocarbon substances and 23
helium; 24
* Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 25
read: 26
TRANSITION: CONVERSION OF EXISTING PROSPECTING PERMIT 27
APPLICATIONS AND PROSPECTING PERMITS. (a) The commissioner of n atural 28
resources shall convert an application for a prospecting permit made under AS 38.05.181(c), 29
as that subsection read on the day before the effective date of sec. 2 of this Act, that is 30
pending with the Department of Natural Resources on the effective date of sec. 2 of this Act, 31 33-GS1618\R
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to an application for a prospecting license under AS 38.05.181(c), as amended by sec. 2 of 1
this Act. 2
(b) A person with a valid permit issued under AS 38.05.181(c), as that subsection 3
read on the day before the effective date of sec. 2 of this Act, may request in writing that the 4
commissioner of natural resources convert the prospecting permit into a prospecting license 5
under AS 38.05.181, as amended by secs. 1 - 5 of this Act. The Department of Natural 6
Resources shall provide public notice of a request for the conversion of a prospecting permit 7
into a prospecting license under this section. 8
(c) Upon request of a person qualified under (b) of this section, the commissioner of 9
natural resources shall convert a prospecting permit issued under AS 38.05.181(c), as that 10
section read on the day before the effective date of sec. 2 of this Act, into a prospecting 11
license under AS 38.05.181, as amended by secs. 1 - 5 of this Act. Notwithstanding 12
AS 38.05.035(e), the director of the division of lands is not required to make a written finding 13
and the commissioner of natural resources is not required to expressly approve the conversion 14
of a prospecting permit into a prospecting license under this section. Notwithstanding 15
AS 38.05.181(c), as amended by sec. 2 of this Act, a prospecting permit converted into a 16
prospecting license under this section may not expire later than five years from the date the 17
permit was issued under AS 38.05.181(c), as that subsection read on the day before the 18
effective date of sec. 2 of this Act. 19
* Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 20
read: 21
TRANSITION: REGULATIONS. The Department of Natural Resources may adopt 22
regulations to implement the changes made by this Act. The regulations take effect under 23
AS 44.62 (Administrative Procedure Act) but not before the effective date of the law 24
implemented by the regulation. 25
* Sec. 9. Section 8 of this Act takes effect immediately under AS 01.10.070(c). 26
* Sec. 10. Except as provided in sec. 9 of this Act, this Act takes effect July 1, 2024. 27