Resource Development Council

RDC Comment Letter:
Support of New Flint Hills Royalty Oil Contract

February 25, 2013

Mr. Kevin Banks
Alaska Division of Oil and Gas
550 West Seventh Avenue, Suite 1100
Anchorage, AK 99501-3560

Dear Mr. Banks:

The Resource Development Council (RDC) is writing to support the proposed new royalty oil contract between the State of Alaska and Flint Hills Resources Alaska (FHR).

RDC is an Alaskan business association comprised of individuals and companies from Alaska's oil and gas, mining, forest products, tourism, and fisheries industries. Our membership includes all of the Alaska Native Regional Corporations, local communities, organized labor, and industry support firms. RDC's purpose is to expand the state's economic base through the responsible development of our natural resources.

The proposed contract fully meets the criteria set out for the sale of royalty oil under Alaska Statute 38.05 and 38.06. RDC requests that approval of the negotiated contract occur in an expeditious manner before the State Royalty Advisory Board and the Alaska Legislature.

The proposed sale of royalty oil to FHR is needed to meet in-state need for crude and facilitate continued operations of the North Pole refinery with significant benefits to Alaskans and the Interior Alaska economy. RDC agrees with the Commissioner of Natural Resources that the proposed contract for the sale of the State’s royalty oil to FHR is in the public’s best interest.

The proposed contract commits the State to deliver a maximum of 30,000 barrels per day to FHR between April 1, 2014 and March 31, 2019.

For decades, the refinery at North Pole has been a major component of the Interior Alaska economy, providing good-paying jobs and tax revenues to the Fairbanks North Star Borough. The refinery has provided reasonably-priced fuels, and shipments from the refinery have benefited Alaskan entities, including the Alaska Railroad Corporation. Moreover, FHR has been an excellent corporate citizen, supporting many organizations statewide.

RDC encourages the State Royalty Advisory Board and the Alaska Legislature to expeditiously approve the negotiated contract. It will serve Alaskans well.

Resource Development Council for Alaska, Inc.