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House shallow gas bill expanded AOGCC, DNR, DEC all affected by Senate substitute Kristen Nelson Petroleum News Editor-in-Chief
House Bill 69, titled “An Act relating to regulation of shallow natural gas leasing and closely related energy projects,” has grown from two pages to five pages in the Senate.
The original bill, which passed the Alaska House of Representatives Feb. 12, amended Alaska Oil and Gas Conservation Commission statutes to allow approvals by the commission or a member of its professional staff, without public notice, for variances from regulations for shallow natural gas or coalbed exploration and development.
Bill sponsor Rep. Vic Kohring, R-Wasilla, chairman of the House Special Committee on Oil and Gas, said the bill would speed up permitting for shallow gas projects.
In discussions in House Oil and Gas and later in House Resources, the variances at issue were described as technical in nature. The commission regulates down-hole activity, including exceptions to required well distance from property lines for non-unitized acreage, approves well designs and issues drilling permits.
The bill passed 37 to zero in the House, but only after the House defeated, in a party-line floor vote, an amendment by Rep. Eric Croft, D-Anchorage, which would have required the commission to adopt regulations to oversee shallow natural gas exploration and development activities.
Substitute covers more issues The committee substitute for HB 69 that came out of the Senate Resources Committee March 28 is five pages and in addition to the commission, the bill now includes the departments of Natural Resources and Environmental Conservation.
Findings in the Senate version include that development of shallow gas is in the best interests of the state and that regulatory requirements for traditional oil and gas projects are “ill-suited and unduly onerous when applied to shallow natural gas projects, threatening the economic viability of otherwise desirable exploration and development projects.”
References to approvals by commission professional staff have been dropped in favor of commission approval.
A definition of shallow gas has been added: coalbed methane, natural gas drilled for on a state shallow gas lease or natural gas drilled for in a well with a true vertical depth of 4,000 feet or less.
And more than technical variances are addressed.
The DNR commissioner “may approve a waiver of local planning authority approval and requirements relating to compliance with local ordinances and regulations” if DNR “clearly demonstrates an overriding state interest.”
And DEC requirements for oil discharge prevention and contingency plans do not apply unless the commission determines that a well drilled for shallow natural gas “may penetrate a formation capable of flowing oil” and that the volume of oil encountered will be great enough to require a contingency plan.
The bill says the Legislature is acting “to provide the proper state agencies with clear authority and discretion to adopt regulatory practices appropriate to shallow natural gas exploration and development projects, in recognition of the lower risks posed by such projects to human health and safety and the natural environment.”
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