Legislature(2003 - 2004)
05/04/2004 03:55 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CSHB 531(FIN)am-CONVENTIONAL & NONCONVENTIONAL GAS LEASES CHAIR OGAN announced CSHB 531(FIN) am, version 23-LS1818/KA.2, to be up for consideration. CHAIR OGAN announced that he has no conflict with this bill because he is not employed by anyone that it affects. However, some people have a perceived conflict and he asked Vice Chair Wagoner to conduct the meeting. SENATOR SEEKINS said in case anyone perceives Chair Ogan has a conflict he objects so that he could vote. CHAIR OGAN noted that according to the Ethics Committee, he has no conflict to declare. SENATOR WAGONER said he was instructed that a person had to declare financial conflicts when a bill was voted on, not when it was under discussion. 5:00 - 5:03 - at ease TAPE 04-48, SIDE B MR. MARK MYERS, Director, Division of Oil and Gas, Department of Natural Resources (DNR), said the current version of the bill is 23-LS1818/KA.2. He explained that Amendment 1 is clean up language; the substantive part starts on line 13. 23-LS1818\XA.2 A M E N D M E N T 1 OFFERED IN THE SENATE TO: CSHB 531(FIN) am Page 6, line 25: Delete "finds" Insert "determines" Page 7, line 4, following "or the": Insert "United States" Page 7, line 5: Delete "and" Page 7, line 11, following "required": Insert "; and (D) as a condition of approval of a permit to drill a well for production or production testing of coal bed methane, require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity; the commission shall make the results of the water well testing program available to the public" He explained that a new standard requires the applicant to develop baseline water data and testing prior to approval by AOGCC of a permit to drill. This data would be available to the public. SENATOR DYSON moved to adopt Amendment 1. There were no objections and Amendment 1 was adopted. VICE CHAIR WAGONER announced that Amendment 2 was up for consideration. 23-LS1818\XA.5 A M E N D M E N T 2 OFFERED IN THE SENATE TO: CSHB 531(FIN) page 19, line 10: Delete "(A)" Page 19, line 23: Delete "and" Page 19, lines 24 - 29: Delete all material. Page 23, line 7: Delete "AS 38.05.180(n)(2)" Insert "AS 38.05.180(n)(2)(A)" Page 26, lines 26 through 30: Delete all material. Page 38, line 28, following "gas,": Insert "(A)" Page 38, line 30, following "lease": Insert "; and (B) if the nonconventional gas produced will not be in direct competition with gas on which a royalty at a rate of at least 12.5 percent is payable, then the royalty share payable to the state on all production of gas from the pool attributable to that lease shall be 6.25 percent based upon production delivered in pipeline quality and free of all lease expenses, including separation, cleaning, dehydration, gathering, salt water disposal, and preparation for transportation off the lease" MR. MYERS explained that Amendment 2 is basically another clean up amendment. The Shallow Gas Program has a $1 per acre leasing fee. Currently, if gas doesn't compete with other gas in the market, it possibly can get a 6.25 percent royalty. This bill contains that same right under certain conditions. This language is put in the correct place where it can deal with the royalty issue. SENATOR DYSON moved to adopt Amendment 2. There were no objections and it was so ordered. VICE CHAIR WAGONER announced Amendment 3 to be up for consideration. 23-LS1818\XA.6 A M E N D M E N T 3 OFFERED IN THE SENATE TO: CSHB 531(FIN) am Page 20, line 13, following "AS 38.05.180(ff)(4)": Insert "or 38.05.180(gg)" Page 20, line 26, following "AS 38.05.180(ff)": Insert ", 38.05.180(gg)," Page 39, line 18: Delete "a new subsection" Insert "new subsections" Page 40, following line 17: Insert new subsections to read: "(gg) Before approving operations for the development of coal bed methane under AS 38.05.134, 38.05.177, or this section, the director shall ensure that the approval is conditioned upon (1) reasonable and appropriate setbacks governing the placement by the operator of compressor stations; setbacks approved under this paragraph must be determined with reference to the population density and general character of the parcels surrounding the proposed compressor station site; and (2) reasonable and appropriate measures to mitigate the noise of compressors, engines, and other noise generating equipment operated by the operator on the lease or license; measures approved under this paragraph must be determined with reference to the population density and general character of the parcels surrounding the proposed compressor, engine, or other noise generating equipment." MR. MYERS explained that Amendment 3 adds new protections that aren't in the current bill that apply to all coalbed methane operations on state lands. It allows for the commissioner to require reasonable and appropriate setbacks for the placement of compressor stations with reference to population density and the general character of the parcel surrounding the site. It also requires noise mitigation. This amendment seeks to address some of the conflicts between surface and subsurface owners. Secondly, it places shallow gas leasing under the same bonding requirements that exist on the conventional program and adds an additional protection for the surface owner. SENATOR BEN STEVENS arrived at 5:12. 5:14 - 5:15 - at ease SENATOR STEVENS moved to adopt Amendment 3. There were no objections and it was so ordered. VICE CHAIR WAGONER announced Amendment 4 to be up for consideration. 23-LS1818\XA.7 Chenoweth A M E N D M E N T 4 OFFERED IN THE SENATE TO: CSHB 531(FIN) am Page 40, lines 6 - 12: Delete all material and insert: "(3) the provisions of AS 38.05.130 apply to the extraction of coal bed methane, except that the provisions of that section shall be implemented as follows: (A) for an activity or operation for which the department, by regulation, requires submission and approval of a plan of operations before activities or operations may be undertaken, the director shall, as a condition for issuing the bond, after notice and an opportunity to be heard, review the plan of operations to determine if use of the surface is reasonably necessary to extract coal bed methane; and (B) the director may not require a bond posted under this paragraph from a lessee or agent of a lessee if the lessee or agent has already posted a bond covering the lessee's statewide oil and gas leasing activities;" MR. MYERS explained that Amendment 4 is a duplication of the second part of Amendment 3 on bonding and he recommended that the committee not consider it. The committee agreed not to consider it. VICE CHAIR WAGONER renumbered Amendment 5 to be Amendment 4. MR. MYERS explained that [renamed] Amendment 4 is technical and on page 41, lines 27 and 28, it deletes "shales containing gas" and inserts "gas contained in shales". SENATOR STEVENS moved to adopt Amendment 4. There were no objections and it was so ordered. MR. MATT DAVIDSON, Alaska Conservation Voters, said he hoped the public would have time to review the amended version of HB 531 before it came up in the Finance Committee. VICE CHAIR WAGONER explained that the committee rolled the best part of what it thought was HB 395 into HB 531 and the public would get a chance to review it. SENATOR SEEKINS moved to pass SCS CSHB 531(RES) from committee with individual recommendations and attached fiscal notes. Senators Stevens, Dyson, Seekins and Vice Chair Wagoner voted yea; and SCS CSHB 531(RES) moved from committee.