Knowles signs AOGCC fee bill

Petroleum News Alaska Staff

Gov. Tony Knowles signed into law June 1 a bill to change the funding mechanism of the Alaska Oil and Gas Conservation Commission to a user fee structure.

Senate Bill 134 revamps the funding mechanism for the commission to provide for more adequate and stable support and to tie the burden of funding more closely to demands for regulation and oversight. The bill repeals the current oil and gas conservation tax of 4 mills per barrel of oil and requires well operators to pay an annual regulatory cost charge to the commission proportional to volume of oil and gas produced from each well and the volume of fluids injected into wells.

During hearings on the bill, commission Chairman Bob Christenson told legislators that the oil and gas conservation tax was inadequate to fund the commission and getting worse because it is based on the amount of oil and gas produced. He said that while production is dropping, the number of wells and the amount of work which the commission is required to do are both increasing.

The legislation also authorizes the commission to allocate costs of a hearing or investigation among the parties involved and provides for the hiring of four additional professional staff: a petroleum engineer, reservoir engineer, petroleum geologist and inspector.

Sponsored by Sen. Drue Pearce, R-Anchorage, SB 134 passed with near unanimous bipartisan support.