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Shallow gas bills moving slowly House Resources has three bills to change Alaska’s coalbed methane laws Larry Persily Petroleum News Government Affairs Editor
Legislative attempts to answer public complaints about Alaska’s shallow gas leasing laws have moved to the House Resources Committee, which has three bills to consider — all of which were amended in the Oil and Gas Committee and likely will change again in Resources.
The measures, all of which still would need to move through the Finance Committee before getting to the full House for a vote, would end the state’s over-the-counter shallow gas leasing program in urban regions of the state, take steps to protect water quality and possibly block renewals of existing leases unless work is under way to produce natural gas.
If any of the bills make it through the two House committees and are approved by the full chamber, they also would need to work their way through the Senate before the Legislature’s adjournment deadline of May 12.
The three bills sat in the Oil and Gas Committee for a collective total of 27 weeks before moving on to Resources.
Critics of Alaska’s shallow gas leasing program for coalbed methane have pushed hard since the session opened in January for changes in several laws, especially dealing with public notice of leases, protection for drinking water wells and property rights. About 300,000 acres are under lease in the Matanuska-Susitna Borough and near Homer on the Kenai Peninsula. Some exploration is under way but no gas is being produced. Kohring supportive of industry Countering public criticism of the program is industry and legislative support for developing Alaska’s gas resources. Scrapping the entire shallow gas program would be “an overreaction,” said House Oil and Gas Chair Vic Kohring. It’s important that the industry look upon any legislation “as a reasonable law,” the Wasilla Republican said at a committee meeting last month.
Changes were pushed through on two of the bills in House Oil and Gas on April 1, much to the displeasure of Rep. Paul Seaton, who represents the Homer area. The freshman Republican said the changes in House Bills 364 and 531 weakened the measures’ protections for surface property owners, while confirming for him a committee chair’s power to control legislation.
The two amended bills were not released to the public until at the hearing, and Kohring announced just an hour before the meeting that he would take up the bills that day.
Seaton, the prime sponsor of House Bill 364, said he would try in the Resources Committee to undo Kohring’s changes to the bill.
House Bill 395, which was scheduled for a hearing in Resources on April 7, would not abolish the over-the-counter leasing program for shallow gas exploration and production but would impose stronger public notice requirements on future leases and block new leases if the gas would come from the same aquifer that supplies drinking or farm water. One bill would protect Homer from any new leases House Bill 364, which could come up in Resources on April 14, would block any further shallow gas leasing in the area around Homer, where many residents are strongly critical of state leasing of 22,000 acres two years ago.
The legislation also would set out requirements for the Division of Oil and Gas to follow before it could extend any of the existing three-year shallow gas leases statewide. Those conditions include judging the likelihood of eventual production from the leases.
Without an extension, the leases would revert back to the state.
House Bill 531 also could come up for its first hearing in Resources on April 14. The original version would have ended the state’s over-the-counter shallow gas leasing program in favor of directing future activity into Alaska’s exploration licensing program, which includes competitive bidding and best-interest findings for leases.
The House Oil and Gas Committee, however, narrowed the bill’s effect. The non-competitive shallow gas leases would continue in all areas of the state except Anchorage, the Matanuska-Susitna Borough and Kenai Peninsula Borough. Masek wants end to non-competitive gas leases It’s expected that the bill’s main sponsor, Resources Chair Beverly Masek, R-Willow, will work in her own committee to change several of the Oil and Gas Committee’s sections in the bill. She testified last month in Oil and Gas that the non-competitive shallow gas leasing program “has been used for large-scale commercial operations” in rural areas, contrary to the original intent of the legislation, and should be stopped.
The administration had testified in favor of Masek’s original bill to end over-the-counter shallow gas leases in favor of the competitive exploration licensing program statewide.
It is a more effective way to get unique areas under lease, said Mark Myers, director of the state’s Oil and Gas Division. Exploration licensing allows the division to eliminate “hot spots” from lease areas, he said, such as controversial and environmentally sensitive lands or areas with a low probability of gas.
“I do think licensing is a better deal,” Myers said last month at the House Oil and Gas Committee. It’s better for explorers because it allows the state to lease out larger areas with exclusive rights for longer terms, and without the 3,000-foot limit on well depth.
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