Under existing law, the State Oil and Gas Board may enter orders requiring owners in a proposed or existing drilling or production unit to pool or integrate their interests and to develop their interests and lands as a drilling or production unit and may under certain circumstances provide that, if a productive well is drilled on the unit, there may be deducted from any production or proceeds thereof due to a nonconsenting owner who did not pay a share of drilling costs for the well, a risk compensation fee equal to 150% of that owners share of those costs but that in all events a 3/16th share of production from such well must be treated as royalty and shall be free from any drilling costs or risk compensation fee. A risk compensation fee cannot be imposed unless all affected parties are given notice and a public hearing is held by the State Oil and Gas Board and the Board finds that all of the statutory requirements for imposing such a fee have been met.
This bill clarifies that although a risk compensation fee cannot be charged against the interest of an owner who does not receive actual notice of the hearing on the petition requesting imposition of the fee, the fee is chargeable against the interests of other nonconsenting owners in the unit who were given actual notice of the hearing in compliance with applicable laws.
Delivered to Governor at 2:56 p.m. on May 3, 2017.
Assigned Act No. 2017-297.
Clerk of the House Certification
Signature Requested
Enrolled
Passed Second House
Motion to Read a Third Time and Pass adopted Roll Call 817
Third Reading Passed
Read for the second time and placed on the calendar
Read for the first time and referred to the Senate committee on Finance and Taxation General Fund
Motion to Read a Third Time and Pass adopted Roll Call 162
Third Reading Passed
Read for the second time and placed on the calendar
Read for the first time and referred to the House of Representatives committee on Ways and Means General Fund
Source: Alabama Legislature