SB 254 Summary

• Allows the commissioner of natural resources to reduce royalty rates to zero for qualified new oil or gas (from pools not previously producing commercially before July 1, 2024) sold to in-state electric or heating utilities under firm contracts, effective July 1, 2024 through July 1, 2030.

• Permits royalty rate reductions up to 10.5 percent for oil and gas not meeting the "qualified new" definition but still supplied to regulated in-state utilities under firm contracts.

• Allows zero royalty rates for lessees recovering development costs for qualified new oil or gas supplied to in-state utilities, applying only to new drilling, well sidetracks, and workovers.

• Grants the Department of Natural Resources authority to condemn private overriding royalty interests in oil and gas production south of 68 degrees North latitude if promoting resource development, with compensation equal to five years of average annual income multiplied by two.

• Limits combined state royalty and approved overriding royalty interests to a maximum of 20 percent total on any unit.

• Requires the commissioner to negotiate lease modifications with existing leaseholders to comply with the new maximum royalty share requirements.

• Bill takes effect immediately upon passage.