Alaska Shut-In Gas Royalty

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This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the standard lease form.

Alaska Shut-In Gas Royalty refers to a specific type of royalty payment that the State of Alaska receives from oil and gas companies for natural gas that is "shut-in" or not produced due to a variety of reasons. This detailed description will provide essential information about Alaska Shut-In Gas Royalty and its various types. In Alaska, shut-in gas royalty is an arrangement where the State, as the owner of mineral rights, earns a compensatory payment from oil and gas operators when they are unable to extract and sell natural gas from their reservoirs. This situation may arise due to market conditions, infrastructure constraints, unavailability of buyers, or other factors that make gas production economically nonviable. The purpose of Alaska Shut-In Gas Royalty is to provide the State with revenue for its natural resources, even when gas is not actively being produced. Although the State encourages gas production for economic growth and energy needs, the shut-in royalty helps offset any losses in revenue that may occur during periods of no production. There are a few different types of Alaska Shut-In Gas Royalty: 1. Seasonal Shut-In Gas Royalty: This type of royalty is levied when natural gas production is temporarily halted during certain seasons, such as winter, when demand for natural gas may be surging or when the infrastructure is not equipped to handle increased production. Operators are compensated accordingly. 2. Economic Shut-In Gas Royalty: This type of royalty is applicable when market conditions make gas production unprofitable for operators. Factors such as low gas prices, limited pipeline capacity, or lack of demand can trigger the economic shut-in scenario. Compensation is provided to cover the opportunity cost during this period. 3. Infrastructure Shut-In Gas Royalty: Infrastructure limitations, such as bottlenecks in pipelines or processing facilities, can prevent operators from producing natural gas. In these cases, the State receives shut-in royalty payments compensating for the inability to extract and sell the gas. These different types of Alaska Shut-In Gas Royalty help ensure that the State continues to receive a fair share of revenue from its natural resources, even when gas production faces obstacles. It incentivizes operators to explore alternatives, such as investing in infrastructure development or finding new markets, that could lead to increased production in the future. Keywords: Alaska, shut-in gas royalty, natural gas, compensation, State of Alaska, revenue, oil and gas, shut-in royalty, market conditions, infrastructure constraints, gas production, economically nonviable, seasonal shut-in, economic shut-in, infrastructure shut-in, opportunity cost, natural resources, pipeline capacity, processing facilities.

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The Pugh Clause ? A clause in the Oil and Gas Lease which modifies usual pooling language to provide that drilling operations on or production from a pooled unit will not preserve the whole lease.

While royalties on oil and gas produced from state territory generally hover between 12.5% and 16.67%, state law gives the commissioner of the Department of Natural Resources the authority to vary those terms if doing so is deemed in the state's best interest.

In such circumstances where a gas well has been completed but no market exists for the gas, the shut-in clause enables a lessee to keep the non-producing lease in force by the payment of the shut-in royalty.

Oil production in Alaska has dropped approximately 75 percent since hitting a peak of more than two million barrels per day (bpd) in 1988. North Slope production averaged 496,906 bpd in FY 2019. North Slope production is expected to decline to 486,400 bpd in FY 2020 and edge up to 486,500 bpd in FY 2021.

A clause in an oil & gas lease that allows a lessee to keep the lease in effect past the primary term by substituting payment of shut-in royalty for actual production.

Royalty Payment Clauses A royalty is agreed upon as a percentage of the lease, minus what was reasonably used in the lessee's production costs. This is stipulated in a Royalty Clause. The royalty is paid by the lessee to the owner of the mineral rights, the lessor in the lease.

Cost Free Royalty Provision shall refer to a provision in the royalty clause of a lease pursuant to which the lessor does not bear certain post production costs traditionally shared by the lessor, i.e., providing that the lessor's royalty interest shall not bear any charge for the cost of compressing, treating, ...

As the climate crisis warms the Arctic more than twice as fast as the rest of the world, we have a responsibility to protect this treasured region for all ages,? Biden said in a statement. His actions ?meet the urgency of the climate crisis? and will ?protect our lands and waters for generations to come,? Biden said.

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The shut-in royalty clause is a necessary and integral component of any oil/gas lease ... It must make some effort to market the gas after completing the well. Aug 14, 2015 — Essentially, the shut-in royalty provision allows a lessee to temporarily cease production (i.e., shut-in a well) and pay a shut-in royalty to ...This information is subject to revision as lease owners file reports that amend royalty value. These reports present information for the seventy two production ... Royalty is paid based on the value of the oil or gas removed from the lease, the volume removed and the lease's royalty rate. Large lease owners have ... Oil Gas and Minerals. Get access to the largest catalogue of fillable and printable forms. Subscribe to US Legal Forms to download state-specific document ... Jun 16, 2023 — You may convey overriding royalty interest on either an Assignment of Record Title Interest (Form 3000-3), a Transfer of Operating Rights (Form ... Oil companies pay annual lease rentals and royalties on oil and gas production to the Office of Natural Resource Revenue. The State of Alaska receives 90% of ... The commissioner shall establish a royalty determined to be in the public interest but not less than 12 1/2 percent. A lease must provide for payment to the ... Mar 28, 2018 — I've recently received a gas lease offer in Pennsylvania. Small plot of land, less than 10 acres. Active horizontal drilling and pad building in ... This authorization may provide for the payment of a storage fee or rental on the stored oil or gas, or, instead of the fee or rental, for a royalty other than ...

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Alaska Shut-In Gas Royalty