A. Upon granting any oil or gas lease upon public lands in the state, and during the term of any existing lease, the commissioner of public lands may offer for sale from time to time, for such period as he may determine, by competitive bidding, upon notice and advertisement on sealed bids, a portion or all of the royalty oil accruing or reserved to the state under such leases. Such advertisement and sale shall reserve to the commissioner of public lands the right to reject all bids whenever in his judgment the interest of the state demands. In cases where no satisfactory bid is received or where the accepted bidder fails to complete the purchase or where the commissioner of public lands shall determine that it is unwise in the public interest to accept the offer of the highest bidder, the commissioner of public lands, within his discretion, may readvertise such royalty oil for sale, sell it at a private sale at not less than the market price for such period or accept the cash value thereof from the lessee.

B. The sale of state royalty oil by the commissioner of public lands in accordance with Subsection A of this section shall be subject to the following provisions:

(1) the commissioner of public lands, when a determination has been made by the oil conservation commission that sufficient supplies of refinery charge stocks are not available on the open market to refineries within the state which do not have an adequate source of supply for refinery charge stocks, shall grant preferences to such petroleum refineries in the sale of royalty oil under the provisions of this section, for processing or use in such petroleum refineries but not for resale in kind; provided, however, that agreements providing for the exchange of refinery charge stocks purchased under this act [19-10-64 to 19-10-70 NMSA 1978] for other refinery charge stocks on a volume or equivalent value basis will not be construed as constituting a resale in kind prohibited by this act. Where an exchange agreement has been entered into or is contemplated with regard to royalty oil available for sale, full information relative thereto must be furnished either at the time of filing applications to purchase royalty oil or with the submission of a bid;

(2) the commissioner of public lands may sell to petroleum refineries located in the state and not having their own source of supply of refinery charge stocks, at private sale at not less than the market price, any royalty oil accruing or reserved to the state under oil and gas leases upon public lands, provided:

(a) that in selling such royalty oil the commissioner may, at his discretion, prorate such royalty oil among refineries;

(b) that pending the making of a permanent contract for the sale of any royalty oil, as herein provided, the commissioner of public lands may sell the current product at private sale, at not less than the market price;

(c) the commissioner shall assess a fee not to exceed the actual additional cost, if any, of administering the procedures under this act, which fee shall be assessed against the purchaser of the royalty oil; and

(d) in no instance shall the additional trucking charges caused by a change in purchaser and a subsequent change in the method of oil delivery or trucking distance be allowed to decrease the value of the royalty oil or the taxes assessed against such oil.

History: 1953 Comp., § 7-11-60, enacted by Laws 1967, ch. 34, § 4.

Compiler's notes. — Pursuant to Laws 1977, ch. 255, § 9, the oil conservation commission was absorbed by the energy and minerals department. See also Laws 1977, ch. 255, § 4, compiled as 9-5-4 NMSA 1978, for establishment of the oil conservation division of the energy and minerals department, and 70-2-4 NMSA 1978 et seq. for jurisdiction and authority of the commission and of the division.