Discovery of natural gas in Mobile Bay in 1978 led to active drilling and development of the large gas reserves below Alabama’s coastal waters. The State received bids totaling $449 million in 1981 for the rights to develop offshore tracts. In 1982, voters approved the creation of the Alabama Heritage Trust Fund (AHTF) with the revenues from this first sale of drilling rights. The AHTF income was used to finance a $520 million bond issue for capital outlay projects. On August 14, 1984, the state received more than $347 million from leases awarded on offshore tracts.
In 1985, the voters of the state approved Amendment 450 creating the Alabama Trust Fund (ATF) as an irrevocable, permanent trust fund. The ATF was established to capture future revenues from sales of offshore drilling rights and from royalties on the resulting gas production. This amendment also terminated the Heritage Trust Fund in 2001 with all trust capital transferred to the ATF. The initial corpus of the ATF was $333,583,680. In December 2001, the Heritage Trust Fund transferred $467,002,694 in trust capital to the ATF.
The trust fund initially received as principal 99 percent of all oil and gas capital payments paid to the State, with the remaining one percent to the Department of Conservation-Lands Division. Several subsequent amendments have modified this.