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Governor signs gas bills
Kristen Nelson, PNA editor-in-chief
Gov. Tony Knowles has signed a bill making changes in the state’s shallow natural gas program and a bill allowing exploration for oil and gas in the Minto Flats State Game Refuge.
Shallow gas becomes a commercial program Senate Bill 319, signed June 19, changes the state’s shallow natural gas leasing program to allow individuals to hold up to 100,000 acres and includes gas below 3,000 feet as long as a portion of a field is above 3,000 feet. It also increases the application fee for a shallow gas lease from $500 to $5,000 and the rent from 50 cents an acre to $1 an acre. The bill was effective July 1.
It was strongly endorsed by the Department of Natural Resources. In testimony before Senate Resources, Division of Oil and Gas Director Mark Myers said the proposed changes make the shallow gas leasing program an effective commercial program. The original purpose of the shallow gas program, he said, was to provide energy for villages in rural Alaska. But the pattern of leases under the program has been clusters near high population areas.
Myers said the division worked with industry on the proposed changes, which were supported by the Alaska Oil and Gas Association, Evergreen Resources Inc., Unocal and Dave Lappi, who worked with the Legislature on passage of the original program.
Minto Flats bill driven by exploration licensing House Bill 527, signed June 20, allows oil and gas exploration and development in the Minto Flats State Game Refuge unless it is demonstrated that the activities would be incompatible with refuge purposes based on sound science or local traditional knowledge.
The bill was triggered by the preliminary finding for a proposed Nenana basin oil and gas exploration license in which the Division of Oil and Gas included a licensee advisory warning that the Department of Fish and Game jointly manages the refuge with DNR.
And Fish and Game, DNR said, has advised that it “will not approve any facilities, pads, pipelines or roads within the 277,760-acre core area” of the game reserve north of the Tanana River. In other words, no production facilities north of the river, which, Myers told the Legislature in committee hearings, is the area with the most potential for gas.
A potential licensee, he said, is being asked to spend millions to shoot seismic, and being told surface access for development was problematic.
Putting himself in the shoes of an exploration geologist, Myers told the committee: “I could not sell this project to management without a reasonable chance of surface access.”
Directional drilling doesn’t cut it Sen. John Torgerson asked about a Fish and Game assertion that almost all of the area could be developed by drilling in from outside the core area using directional drilling.
Myers said that was not possible given the size of the area — a quarter of a million acres. And the Tanana River is the southern boundary, he said, and there would have to be a setback from that.
Chip Dennerlein of Fish and Game said his department didn’t have a problem with winter exploration, and as for development, “what we had meant to say was that if the core area north of the river was included then we wanted a heads up to bidders (for the exploration license) that there could be some areas off limits… (but) did not mean this as a huge blanket off limits…”
For instance, he said, there are some nesting areas where Fish and Game would not want to see a pipeline: “Biologically, to be honest, there are areas north of the (Tanana) river that are much more sensitive than the coastal plain in ANWR.”
Asked about concerns in communities in the area — Minto, Nenana and Fairbanks — Jim Hansen of the Division of Oil and Gas said all were interested in access to gas, although residents of Minto and Nenana had concerns about other people having access to lands on which they do subsistence hunting.
“They want gas, as long as it can be done with mitigation measures,” Hansen said. “And that’s how we do it elsewhere… they want their way of life preserved.”
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