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Legislature fixing ‘glitch’ in gas drilling code Bill would remove oil spill contingency plan requirement for gas wells in Alaska, inadvertently added as part of HB 531 last year Kristen Nelson Petroleum News Editor-in-Chief
The Alaska House Special Committee on Oil and Gas heard and moved a bill March 15 to fix a glitch created by legislation last year which narrowed — to coalbed methane wells only — an existing law exempting natural gas wells from oil spill discharge and contingency plans.
House Bill 197, by House Oil and Gas, “corrects un unintended consequence of HB 531 passed in May 2004 which, in part, narrowed the scope of that exemption” the Department of Environmental Conservation said in a fiscal note. No fiscal impact is expected.
Committee Chairman Vic Kohring, R-Wasilla, said the administration had been working on similar legislation, and supports this bill.
The bill exempts natural gas exploration and production facilities from oil discharge and prevention and contingency plans, known as C-plans, as long as the Alaska Oil and Gas Conservation Commission certifies that a well is a natural gas project and will not penetrate a formation capable of flowing oil to the surface.
The AOGCC “will determine if the formations will potentially have oil” and would not allow the exemption if oil could be present, Kohring said. The way the law is now it is harder for small companies to operate in the state, “and we could actually see less gas drilling and exploration” because they would have to bear the added cost of a C-plan for natural gas only operations, he said.
Not the Legislature’s intent Commissioner Dan Seamount of the AOGCC said the commissioner submitted a letter of support for the bill. Oil spill contingency and prevention plans, and proof of financial responsibility, he said, are required for “wells to explore for or produce oil,” but were not required in the past for wells drilled to produce only gas. HB 531, however, specified that only coalbed methane wells were exempted from the requirements. The commission, Seamount said, does not believe “that was the Legislature’s intent last year and it resulted in a mismatch between the current scope of the C-plan exemption and the facts of Alaska’s geology. … Drilling for gas in many areas, whether it’s non-conventional or not, carries virtually no risk of an oil spill,” he said. “There are thick geologic sections containing both conventional and non-conventional gas reservoirs, but they have very little potential for the existence of zones capable of flowing liquid hydrocarbons. The C-plan requirement only adds cost and delay to gas exploration, with no increased protection to the environment.”
HB 197, Seamount said, provides for “a case-by-case geologic evaluation of wells drilled to explore for gas.” The C-plan exemption, he said, would be available for gas wells “only if the AOGCC determines that evidence demonstrates with reasonable certainty that the well will not penetrate any formations capable of flowing any kinds of liquid hydrocarbons to the ground surface.”
Larry Dietrick, director of the Department of Environmental Conservation’s Division of Spill Prevention and Response, told the committee the department supports the legislation. “This hopefully will get us back to where we should be,” he said, “and we rely on the AOGCC’s determination and we’ve relied on their expertise for a lot of the North Slope wells historically, so this will correct that glitch and allow this determination to be made and avoid issuing the C-plans when we really and truly don’t need them.”
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