Bill would make shallow gas program commercial

Kristen Nelson

Senate Bill 319, changing the state’s shallow natural gas leasing program to allow individuals to hold up to 100,000 acres and including gas below 3,000 feet as long as a portion of a field is above 3,000 feet, received support from large and small oil and gas companies and was strongly endorsed by the Department of Natural Resources’ Division of Oil and Gas.

The bill, sponsored by Sen. John Torgerson, R-Kasilof, chairman of the Senate Resources Committee, was heard and passed out of Senate Resources Feb. 27.

Division of Oil and Gas Director Mark Myers told the committee the proposed changes make the shallow gas leasing program an effective commercial program.

The original intent of the program, Myers said, was to provide energy for villages in rural Alaska. But the pattern of leases under the program has been in clusters near high population areas. Myers said the division worked with industry on the proposed changes. The Alaska Oil and Gas Association, the Red Dog mine (Teck Cominco, operator Red Dog, holds shallow gas leases), Evergreen Resources Inc., Unocal, Dave Lappi and Ken Boyd (director when the program was enacted) all testified in support of the bill.

The bill 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 time requirements for the division to public notice lease applications is removed. Myers said the division has to do title work because private parties can’t get title insurance for subsurface title work. The title work is also one reason for the $5,000 application fee: title work is costing the division $2,000 a lease.

The bill also requires a bond against “damages that may be caused … related to a shallow natural gas lease.” Myers said the bonding is because private surface owners are concerned about damage to land and the bond, required when a person applies for a lease, would assure surface owner protection.