36.25.406    RENTALS AND ROYALTIES

(1) Each lease issued pursuant to these rules shall provide for the following rentals and royalties with respect to geothermal resources produced, saved, and sold from the lands included within the lease whether directly from the lease or from a pooling arrangement in which the leased land is included.

(a) (i) A royalty of not less than 10% of the gross revenue, exclusive of charges approved by the director made or incurred with respect to transmission or other services or processes, received from the sale of heat energy, steam, brines from which no minerals have been extracted, and associated gases at the point of delivery to the purchaser thereof.

(ii) If the lessee also operates an energy producing plant on the land the royalty will be computed in terms of (1) (a) and as if the product were to be sold to a third person at the then prevailing market price for geothermal resources in the same market area and under the same marketing conditions.

(b) A royalty of not less than 2% nor more than 5% of the gross revenue received from the sale of mineral products or chemical compounds recovered from geothermal fluids in the first marketable form as to each such mineral product or chemical compound.

(c) A royalty of not less than 10% of the gross revenue received from the operation of the geothermal resources for recreational and health proposes.

(d) An annual rental, payable in advance, of at least $1.00 per acre or fraction thereof for each year of the lease.

(e) If, after the discovery of geothermal resources in commercial quantities, the total royalties paid during any calendar year do not equal or exceed the sum equal to $2.00 per acre for each acre or fraction thereof then included in the lease, the person holding the lease shall, within 60 days after the end of the year, pay such sum as is necessary to equal the minimum royalty of $2.00 per acre.

(f) Rental and royalty rates will be determined by the board and will be set forth in the notice of sale and in the issued lease.

(2) Royalty payments shall be made pursuant to (1) (a) and (b) for all geothermal resources used and not sold by a person holding a lease, with the gross revenue therefrom to be determined as though the geothermal resources had been sold to a third person at the then prevailing market price for geothermal resources in the same market area and under the same marketing conditions.

(3) A royalty, to be set by the board, will be paid yearly on each shut-in well.

History: 77-4-103, MCA; IMP, 77-4-126, MCA; NEW, Eff. 12/31/72; AMD, Eff. 3/7/75; TRANS, 1996 MAR p. 2384.