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--- version:HB 194
+++ version:(document, no version)
@@ -1,39 +1,45 @@
-HB0194a -1- HB 194
- New Text Underlined [DELETED TEXT BRACKETED]
+April 15, 2025
+House Bill 194 – Approve Marathon Petro Royalty Oil Sale
+Department of Natural Resources
+Division of Oil and Gas
 
-34-GH1086\A
+DNR is seeking legislative approval, as required by AS 38.06, to execute a three-year contract with
+seven options for one-year extensions, to sell between 10,000 and 15,000 barrels of royalty in-kind
+(RIK) oil to Marathon Petroleum to support in-state refining at its Kenai refinery.
 
- HOUSE BILL NO. 194
+Alaska’s Royalty Oil
+The State reserves a percentage of oil produced from its leases for itself – the “royalty” share. The
+State can take this royalty in-value by receiving revenue from a producer selling the oil on behalf
+of the State, or in-kind, where the State sells its oil directly to buyers. The State has exercised both
+options for decades. RIK oil sales to in-state refi neries have enabled the State to earn revenue
+premiums while supporting the benefits associated with in-state refineries.
 
-IN THE LEGISLATURE OF THE STATE OF ALASKA
+HB 194
+HB194 approves a multi-year contract to sell a portion of the State’s royalty oil to Marathon
+Petroleum Corporation, the operator of the Kenai oil refinery. The contract is for three years, with
+seven one-year extensions possible.  The State has sold a portion of  its North Slope royalty oil to
+Marathon’s Kenai refinery for years, and the ex isting three-year contra ct expires mid-2025. The
+Kenai refinery produces all of the gasoline manufactur ed in Alaska and nearly half of the jet fuel
+used at Ted Stevens Anchorage International Airport.
 
-THIRTY-FOURTH LEGISLATURE - FIRST SESSION
+Oversight and Public Process
+Alaska Statute AS 38.05.183 provides a preference for royalty oil sales to support the in-state
+refining industry. RIK contracts must be supported by a best interest findi ng to ensure the sale
+aligns with the Alaska Constitution; reviewed and recommended by the Alaska Royalty Oil and
+Gas Development Advisory Board; and then, under AS 38.06, approved by the Legislature. This
+contract has met the first two steps and now requires legislative approval to be executed this year.
 
-BY THE HOUSE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
+Maximizing the Value of State Resources
+Under Article VIII, DNR has a constitutional mandate to maximize the value of State resources.
+DNR has negotiated a term that prices RIK oil sold under this contract at a level above the indexed
+average sales price for Alaska crude oil. As a re sult, DNR expects to receive an additional $4 to
+$18 million for these RIK oil sales as compared to  the same volume of oi l sold at the indexed
+average royalty in-value price over the life of the contract.
 
-Introduced:  4/15/25
-Referred:   Resources, Finance
-
-A BILL
-
-FOR AN ACT ENTITLED
-
-"An Act approving and ratifying the sale of royalty oil by the State of Alaska to 1
-Marathon Petroleum Supply and Trading Company LLC; and providing for an 2
-effective date." 3
-BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
-   * Section 1.  The uncodified law of the State of Alaska is amended by adding a new section 5
-to read: 6
-ROYALTY OIL SALE CONTRACT WITH MARATHON PETROLEUM SUPPLY 7
-AND TRADING COMPANY LLC APPROVED AND RATIFIED. In accordance with 8
-AS 38.06.055, the legislature approves and ratifies the Agreement for the Sale of Royalty Oil 9
-between and among the State of Alaska, Marathon Petroleum Supply and Trading Company 10
-LLC, a Delaware Limited Liability Company, and Marathon Petroleum Corporation, a 11
-Delaware Corporation, attached as Exhibit 1 to the "Final Best Interest Finding and 12
-Determination for the Sale of Alaska North Slope Royalty Oil to Marathon Petroleum Supply 13
-and Trading Company LLC" dated April 14, 2025. 14
-   34-GH1086\A
-HB 194 -2- HB0194a
- New Text Underlined [DELETED TEXT BRACKETED]
-
-   * Sec. 2.  This Act takes effect immediately under AS 01.10.070(c). 1
+Additional State Benefits
+While this contract is expected to generate more revenue for the State, the benefits are far-reaching.
+The sale of RIK oil to the Kenai refinery provides a secure supply of feedstock to maintain the
+flow of refined products – including gasoline, diesel and jet fuel, and asphalt – to Alaskans, which
+increases energy security. The pr oducts support highway constr uction and maintenance, local
+transportation, trucking and air freight, and avia tion. The royalty sale also supports hundreds of
+direct jobs in the local refining industry, and many more throughout Alaska.