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House committee passes first shallow gas bill Compromise measure requires more public notice for new leases, offers some protection for residents Larry Persily Petroleum News Government Affairs Editor
Alaska’s House Oil and Gas Committee has passed out its first shallow gas leasing bill of the year, halfway through the legislative session. The compromise measure requires more public notice for new leases and offers some protection for residents worried about damage to their water wells.
The almost 300,000 acres the state has under shallow gas, or coalbed methane, leases allows explorers to look for gas beneath the lots of Alaska homeowners who didn’t realize until after the public notice process that the state held the subsurface rights to their property. The realization provoked a strong emotional response from many homeowners last year.
House Bill 395, as amended by the Oil and Gas Committee, does not abolish the state’s over-the-counter, non-competitive shallow gas leasing program, as proposed in a Senate bill under consideration, but instead requires much more public notice of the leases.
The bill also requires the Alaska Oil and Gas Conservation Commission to set up a public forum process for resolving complaints about shallow gas activities.
The committee version of the bill combined provisions from the original HB 395, sponsored by four House members whose districts include shallow gas leases, with HB 420, sponsored by Oil and Gas Chair Vic Kohring, R-Wasilla, a strong supporter of resource development in Alaska. Committee passes bill with little discussion Committee members moved the bill in about five minutes March 9, with little discussion and no objections to the latest version that was passed out at the start of the meeting.
But with the session half over, the bill still has to make its way through three more committees in the House and a vote by the full chamber before moving to the Senate for action there.
Included in the Oil and Gas version of the bill — but not in either of the two original measures — is a provision that would block state permits for shallow gas exploration if the gas would come from the same aquifer that supplies drinking or farm water. The provision also would allow the state to regulate hydraulic fracturing in shallow gas wells to protect drinking water sources.
And, if the state requires reinjection of water produced in the drilling operation, the bill says the reinjection would have to occur at depths below any known sources of drinking or farm water.
“There are some strong protections in here,” Mark Myers, director of the Oil and Gas Division at the Department of Natural Resources, told the committee.
The measure also would require setbacks from the property line for compressor stations and “reasonable and appropriate measures” to lessen noise from gas compressors and other drilling or production equipment. Measure does not include several items from original bills Several provisions of the original two bills were not included in the Oil and Gas Committee bill:
• The original version of HB 395 would have repealed last year’s legislation that gave the Department of Natural Resources — in cases of coalbed methane development — the authority to override municipal land-use laws. The committee dropped the repeal provision, as Kohring had promised at the bill’s first hearing.
• The original HB 395 also would have set the rental payment to property owners at $300 per month for each wellhead and $600 a month for each compressor station on their land. Existing statute does not specify how much rent, if any, developers must pay property owners for installing equipment on their property.
• And the original HB 420 would have imposed a tax on shallow natural gas production to fill a new state water well restoration fund for residents to draw from if shallow gas drilling damaged their well. Payments would have been limited to property owners within 1,500 feet of a shallow gas drill site.
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