Juneau, Alaska – The Alaska Legislature Saturday voted to create a new state policy to help attract and keep oil and gas explorers and producers.

The Alaska Senate today passed House Bill 198, allowing the Commissioner of the AK Dept. of Natural Resources the discretion to grant lease extensions to companies of up to five years, provided the extension is in the best interest of the state. Extended leases could not total more than 10 years.

“We’re offering companies a new approach, and granting the DNR Commissioner a new tool to keep interest and work up,” House Labor & Commerce Committee Chair Kurt Olson, R-Soldotna/Kenai, said. “The hope is, the ability to receive extensions will help the smaller exploration companies, since compiling capital and doing the work to prove a lease can take more time than some of the leases allow. The goal is to get more production – House Bill 198 is a way to do that and create renewed interest in our acreage.”

The commissioner, in granting the extension, may impose minimum work commitments, which could include a detailed description of the type and amount of work to be completed, estimate of dollars to be expended, or requiring a lessee to post a performance bond. The rent on each acre covered under the lease would increase up to $250 per year for the last three years, with the commissioner having the discretion to reduce the rate based on the lease-holder’s diligence in exploring and developing.

HB 198 passed the House April 8 and now heads to the Governor for signature. It has an immediate effective date.