"...It's important to any manufacturer that they need to know what their costs are when they produce their product, and without knowing those costs, then it's pretty tough to determine what you are going to sell your product for profit."
(JUNEAU) - The Alaska House of Representatives approved House Bill 57 by a vote of 30 to six on Wednesday. Sponsored by Rep. Mike Chenault (R-Nikiski/Ninilchik/Sterling), HB 57 gives the Commissioner of Natural Resources authority to negotiate royalty contracts on natural gas and includes manufacturers in the negotiating process.
"The state has always negotiated with natural gas producers, but not with the manufacturers," Chenault said. "The manufacturers also incur costs for state royalties; therefore, they should participate in royalty negotiations."
HB 57 allows the Commissioner of Natural Resources to negotiate natural gas royalties based on a range of factors, such as the best interests of the state, employment opportunities, or other tangible benefits. Manufacturers and producers receive more certainty on royalty contracts with the state, which grants price stability to help them compete on the global market.
"This bill ensures that the rate the industry agree on with the state will be the rate that they pay for the entire contract," Chenault said. "Producers and manufacturers can rest assured the state will not surprise them with a higher rate only a year or two into an agreement, and the commissioner has more discretion on what will best serve the state."