1. (a) A licensee's request to convert a carbon storage exploration license to a carbon storage lease under AS 38.05.715(b) must be submitted to the department at least 60 days prior to the expiration of the license. A licensee may request conversion of all or a part of the licensed area into a carbon storage lease.

2. (b) A request to convert a carbon storage exploration license to a lease must be in writing, be submitted within the time period required by (a) of this section, provide the legal description, by aliquot part, of the proposed carbon storage lease boundary, and include

   1. (1) delineation of the approved AS 41.06.120 permit boundary;
   2. (2) legal descriptions and ownership of adjoining lands, including lands not owned by the state, and the extent of the licensee's carbon storage leasehold with third parties, if any;
   3. (3) geologic data and geophysical data for any reservoir in which carbon dioxide will be injected;
   4. (4) a proposed plan of development consistent with 11 AAC 84.1065; and
   5. (5) any additional information requested by the department under 11 AAC 88.115.

3. (c) Prior to the effective date of a conversion under AS 38.05.715 and this section, a licensee may submit a request to modify the commercial terms of a lease under AS 38.05.715(c). A request to modify the commercial terms set out in a license upon conversion to a lease must include

   1. (1) a statement of reasons justifying the need for a change in annual rentals, injection charges, or other commercial terms; if confidential data is included in the statement, the licensee shall file a separate statement containing non-confidential information suitable for public release;

   2. (2) copies of all contracts or agreements regarding

      1. (A) construction, financing, insurance, operation, or development of the carbon storage facility;
      2. (B) sources or supply of carbon dioxide; or
      3. (C) ownership, partnership, or a joint working relationship between the licensee and any partners or affiliates;
   3. (3) financial statements, information, pro-forma projections, financial models, and other economic data regarding the carbon storage project;
   4. (4) engineering data, specifications, plans, schedules, and other information regarding the proposed development of the carbon storage facility, including wells, surface equipment, and subsurface equipment; and
   5. (5) any additional information requested by the department under 11 AAC 88.115.
4. (d) If the commissioner determines that the licensee has met the requirements of AS 38.05.705 and 38.05.710 and has satisfied work commitments and other obligations of the license, the commissioner will offer a carbon storage lease to the licensee. The licensee shall have 30 days after the date the lease is issued by the department to execute the lease, provide an executed copy of the lease to the department, and submit payment for the first year's rent to the department.
5. (e) A carbon storage lease approved under this section will include a provision requiring the lessee, on or before each anniversary date of the lease, to submit to the department all geologic data and geophysical data obtained under the lease.
6. (f) Upon the licensee's compliance with (d) of this section, the commissioner will execute the lease on behalf of the state and provide an executed copy to the lessee, including the written decision required by AS 38.05.715(c).
7. (g) The effective date of a carbon storage lease is the first day of the month after the date the lease is executed by the commissioner, or upon prior written request, on the first day of the month in which it was signed on behalf of the state.

(Eff. 2/16/2025, Register 253)

Authority: AS 38.05.035, AS 38.05.705, AS 38.05.715, AS 38.05.700, AS 38.05.710