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Bill proposes CBM tax for Alaska
Petroleum News
The sponsor of last year’s coalbed methane development bill has proposed legislation intended to help ease Southcentral Alaska residents’ concerns over shallow gas drilling’s potential impact on water quality.
Wasilla Rep. Vic Kohring’s bill would set up a new state fund so that if any water wells were damaged by shallow gas drilling – an unlikely event according to experienced coalbed methane developer Evergreen Resources Corp. — the owners of those wells could apply for money to drill new wells. The Water Well Restoration Fund would get its money from a new tax on coalbed methane production.
Kohring, Republican chairman of the House Special Committee on Oil and Gas, proposed a “shallow natural gas exaction” tax of one cent per 20 thousand cubic feet of production from each lease.
Evergreen Resources (Alaska) Corp., a subsidiary of Denver coalbed methane producer Evergreen Resources Corp., has started exploration work in Southcentral’s Matanuska-Susitna Borough, but no commercial coalbed methane production is under way in the state. Limit on tax collections The production tax, as proposed in House Bill 420, would shut off when the proposed Water Well Restoration Fund reaches $250,000, and then turn on again when the fund falls below the cap.
The bill was scheduled for its first hearing in Kohring’s committee Feb. 5.
“HB 420 encourages responsible development by ensuring private water wells are protected. In the unlikely event a well goes dry, this fund would pay for a quick replacement, without the property owner having to hassle with a long legal or governmental process,” Kohring said in a prepared statement.
The representative’s staff said Kohring worked with industry and the state Department of Natural Resources on the legislation. Thirty day public notice required Kohring’s bill also addresses complaints that state law does not provide adequate notice of exploration activity by the subsurface owners. HB 420 would require exploration companies to provide written notice to surface owners of any activity on their land at least 30 days before starting work.
Other bills introduced this session go further than Kohring’s measure to protect the rights of the surface owner. The proposed Water Well Restoration Fund could be used — subject to legislative appropriation each year — to pay a surface owner’s costs of cleaning up water well contamination within 1,500 feet of a shallow gas drill site or, if needed, drilling a new well. Surface owners would have to test their well for purity and flow after receiving notice of coalbed methane exploration in the area, show DNR that any damage occurred after work started, and show that the contamination was the “probable hydrologic consequence” of the drilling.
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