Section 38.05.177. Nonconventional gas leases.

   (a) The provisions of this section apply to nonconventional gas.
   (b)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (c)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (d) A lease
        (1) shall be automatically extended if and for so long thereafter as gas is produced in paying quantities from the lease and the lessee continues to meet all requirements of the lease; a lease issued under this section covering land on which there is a well capable of producing gas in paying quantities does not expire because the lessee fails to produce gas unless the lessee is allowed reasonable time to place the well on a producing status; if drilling has commenced on the expiration date of the primary term of the lease and is continued with reasonable diligence, including such operations as redrilling, sidetracking, or other means necessary to reach the originally proposed bottom hole location, the lease is extended for one year and for so long thereafter as gas is produced in paying quantities; a gas lease issued under this section that is subject to termination by reason of cessation of production does not terminate if, within 90 days after production ceases or a longer period determined at the discretion of the director, reworking or drilling operations are commenced on the land under lease and are thereafter conducted with reasonable diligence during the period of nonproduction; on application by the lessee, the director may extend the lease issued under this section for a period of not more than 10 years if the gas produced from the lease is to be used by the lessee solely for its mining operations;
        (2) issued under former (c) of this section before January 1, 2004, may be extended at the discretion of the director; a lease may be extended under this paragraph upon application by the lessee; the director may once extend the lease for a period of not more than three years; in exercising discretion to extend a lease under this paragraph, the director may not extend the lease unless the director considers
             (A) the extent of the shallow natural gas exploration activity already conducted on the lease and on adjacent areas;
             (B) the probability that further shallow natural gas exploration activity will occur on the lease and will lead to shallow natural gas development and production; and
             (C) whether extension of the lease's primary term will accelerate the eventual production of shallow natural gas from the lease.
   (e)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (f)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (g)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (h)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (i)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (j)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (k)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (l) A lessee holding a lease modified under AS 38.05.180(n)(2)(A) may exercise the rights authorized by this section and the lease. The rights granted by the lease must be exercised in a manner that does not unreasonably interfere with eventual development of other mineral deposits on the land leased. However, in a lease entered into under AS 38.05.150 for land that is already subject to a lease covered under this section, coal may not be mined or extracted by the coal lessee from the coal lease without prior agreement with the lessee holding the lease covered under this section.
   (m)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (n)   [Repealed, Sec. 58 ch 49 SLA 2004]. 
   (o)   [Repealed, Sec. 58 ch 49 SLA 2004]. 

Notes

Implemented As

11 AAC 05.010
11 AAC 82.500
11 AAC 83.100
11 AAC 85.105
11 AAC 85.106
11 AAC 85.110
11 AAC 88.185

References

11 AAC 82.500
11 AAC 85.105
11 AAC 85.106

History

(Sec. 5 ch 140 SLA 1996; am Sec. 1 - 6, 9 ch 49 SLA 2002; am Sec. 6 ch 45 SLA 2003; am Sec. 26 - 28, 58 ch 49 SLA 2004)