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Alaska Legislature supports incentives Exploration incentives, Arctic Power funding, AOGCC class I disposal primacy, oil spill exemptions for gas wells get approval in Juneau Kristen Nelson Petroleum News Editor-in-Chief
The 2005 running of the Alaska Legislature had one notable no-show — a fiscal contract for an Alaska natural gas project — and a number of highly touted oil and gas entries, but it was solid workhorse issues that had made it to the finish line in late May.
In a list of legislative accomplishments, Gov. Frank Murkowski included Senate Bill 110, which would give the state primacy under the National Pollution Discharge Elimination System. Under state primacy the Alaska Department of Environmental Conservation would receive and track all permits and authorizations to discharge in the state.
SB 103 allows the Alaska Oil and Gas Conservation Commission to seek primary enforcement for underground injection of waste streams associated with oil and gas development in Class 1 wells; the commission already oversees Class 2 injection wells. AOGCC Commissioner Dan Seamount said two agencies, the commission and the U.S. Environmental Protection Agency, are basically performing the same job now. EPA will have to approve the commission taking primacy.
House Bill 197, sponsored by the House Special Committee on Oil and Gas, exempts natural gas wells from oil discharge prevention and contingency plans, fixing an unintended consequence of HB 531 that defined the exemption too narrowly. Gas wells will be exempt if the AOGCC certifies that a well is likely to encounter only natural gas.
Rep. Vic Kohring, R-Wasilla, chair of House Oil & Gas, initiated and led the effort to pass this legislation.
“If a company is drilling for natural gas, and there is no possibility of oil being encountered due to the area’s geology, there should not be a C-plan requirement,” Kohring said after the bill’s passage.
Kohring also sponsored HB 32, funding for Arctic Power, which provides $1.3 million to the organization for promoting opening of the coastal plain of the Arctic National Wildlife Refuge for oil and gas exploration. University land grant HB 130 transfers 250,000 acres to the University of Alaska, created under federal authority as a land grant institution. Unlike most Lower 48 land grant universities, the University of Alaska never received its full land grant. Transfers under HB 130, the governor’s office said, provide an opportunity for investment and revenues for the university system, as well as the opportunity for academic research. The administration said the bill also has the potential to put more state land into private hands.
House Concurrent Resolution 7 urges the governor to direct the Division of Oil and Gas “to undertake a comprehensive review” of Cook Inlet oil and gas platform abandonment, using 1996 proposals by the Alaska Oil and Gas Conservation Commission as a starting point. Exploration incentives extended HB 286 picked up the exploration credits portion of HB 71, which was amended on the House floor to include provisions related to Alaska North Slope natural gas development. HB 71 was heard and held in Senate Resources; HB 286 was amended to include the original provisions of HB 71.
The bill amends the sunset date until 2010 on oil and gas exploration credits against production tax for all areas south of the Brooks Range and amends the qualifications for work done in the Cook Inlet sedimentary basin. The bill also clarifies language about where the 20 percent and 40 percent credits apply: well work more than three miles from an existing well, but not more than 25 miles from a unit, qualifies for a 20 percent credit; well work more than 25 miles from an existing unit but not more than three miles from an existing well qualifies for a 20 percent credit; well work that is both 25 miles from an existing unit and three miles from an existing well qualifies for a 40 percent credit; seismic work not associated with a well qualifies for a 40 percent credit.
For Cook Inlet, if the commissioner of the Department of Natural Resources certifies that a target is a separate exploration target, the well work qualifies for the credits as though it were three miles from another well, even though it may be closer. The total special Cook Inlet credit is limited to $20 million. Resource capital items Resource items in the capital budget include $28.3 million for gas pipeline support work; $4 million for a North Slope Foothills West environmental impact statement; $9 million for a Dalton Highway upgrade and $3.5 million for Dalton Highway maintenance; $242,000 for Alaska Peninsula, Bristol Bay and Cook Inlet petroleum basin studies; and $585,000 for seismic, well and lease data.
HB 286 extends the sunset on exploration credits.
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