ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS NOTICE OF PRELIMINARY BEST INTEREST FINDINGS & DETERMINATION FOR A PROPOSED SALE OF NORTH SLOPE ROYALTY OIL TO PETRO STAR INC.
The Division of Oil and Gas is seeking comments regarding the Commissioner’s “Preliminary Best Interest Finding and Determination for the Sale of Alaska North Slope Royalty Oil to Petro Star Inc.” The Department of Natural Resources proposes to sell a portion of the State’s North Slope royalty in-kind oil to Petro Star Inc. for processing at its North Pole and Valdez refineries. The deadline for comments on this Preliminary Best Interest Finding and Determination is 4:30 PM AST, August 29, 2016.
The Commissioner of the Department of Natural Resources proposes to sell royalty oil from the State oil and gas leases on the North Slope under two separate contracts for a combined period of five years. Deliveries of royalty oil under the first contract will range from 18,800 to 23,500 barrels per day (bpd) and have a duration of one year, with an estimated starting date of December 1, 2016 and continue until November 30, 2017. Subsequently, the second contract will have a term of four years, beginning on December 1, 2017 and ending on November 30, 2021. In this four-year contract, deliveries of royalty oil will range from 16,400 to 20,500 bpd in the first year; from 13,200 to 16,500 bpd in the second year; from 10,800 to 13,500 bpd in the third year; and from 8,400 to 10,500 bpd in the fourth year. The price provision in these proposed contracts is based on a formula that relies on accepted industry price reporting services and resembles the formulas used to calculate the value of royalty paid to the State by the North Slope producers. The Commissioner’s Preliminary Best Interest Finding and Determination includes a draft of the sales contracts, provides an analysis of their specific provisions, and how they will serve the best interests of the state under the criteria set out in AS 38.05.183 and AS 38.06.070.
These findings are preliminary; and final conclusions have not yet been reached. Comments received from the public and from the Royalty Board will be used to determine whether the proposed sales contracts are in the state’s best interest, and if so, whether changes are needed. If the Commissioner determines that the proposed sale is in the state’s best interest and if the Royalty Board recommends that the sale go forward, a bill will be introduced in the legislature to approve the four-year contract.
FOR INFORMATION CONCERNING THIS PROPOSED ROYALTY OIL SALE OR TO RECEIVE COPIES OF THE COMMISSIONER’S PRELIMINARY BEST INTEREST FINDING AND DETERMINATION AND THE DRAFT OF THE PROPOSED CONTRACTS, PLEASE SEE CONTACT INFORMATION BELOW.
Comments should be mailed or emailed to:
Alex Nouvakhov
Division of Oil and Gas
550 W. 7th Avenue, Suite 1100
Anchorage, Alaska 99501-3563
Phone: (907) 269-8530
Email: alex.nouvakhov@alaska.govor see the Division of Oil and Gas website at http://dog.dnr.alaska.gov/