txt

SSHB 364: "An Act establishing a moratorium on the issuance of state shallow natural gas leases in the vicinity of Kachemak Bay, and precluding the commissioner of natural resources from reissuing or otherwise extending leases within the moratorium area if the leases fail to produce gas in paying quantities within the terms of the lease or if there is a breach of a term or condition of the lease; and providing for an effective date."

00                  SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 364                                                              
01 "An Act establishing a moratorium on the issuance of state shallow natural gas leases in                                
02 the vicinity of Kachemak Bay, and precluding the commissioner of natural resources                                      
03 from reissuing or otherwise extending leases within the moratorium area if the leases fail                              
04 to produce gas in paying quantities within the terms of the lease or if there is a breach of                            
05 a term or condition of the lease; and providing for an effective date."                                                 
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1.  LEGISLATIVE FINDINGS.  The legislature finds that                                                    
08            (1)  the land and water within the Kenai Peninsula Borough east of Cook Inlet                                
09 and south of the north boundary of Township 5 North, Seward Meridian,                                                   
10                 (A)  is immediately adjacent to the Cook Inlet Areawide Lease Sale and                                  
11       the associated conventional gas projects;                                                                         
12                 (B)  follows the same geologic trend supporting conventional gas                                        
13       projects within the Cook Inlet Areawide Lease Sale;                                                               
01                 (C)  demonstrates geology, geography, economics, and demographics                                       
02       consistent with the area and communities found in the Cook Inlet Areawide Lease                                   
03       Sale; and                                                                                                         
04                 (D)  is inconsistent with the rural and isolated communities described in                               
05       the intent of the shallow natural gas program;                                                                    
06            (2)  it is in the best interest of the state to lease mineral rights  through  a public                      
07 process, with administrative oversight and management, preparation of a best interest finding,                          
08 and a competitive bid process; and                                                                                      
09            (3)  issuance of shallow natural gas leases with specific limitations on depths in                           
10 areas where conventional natural gas reserves may be present creates management problems                                
11 that may preclude the full unitization and conservation of the resources.                                               
12    * Sec. 2.  AS 38.05.177(a) is amended to read:                                                                     
13            (a)  The provisions of this section                                                                          
14                 (1)  apply to gas, whether methane associated with and derived from                                     
15       coal deposits or otherwise, from a field if a part of the field is within 3,000 feet of the                       
16       surface; and                                                                                                      
17                 (2)  do not apply to authorize lease of                                                                 
18                      (A)  land                                                                                          
19                           (i)  that is subject to an oil and gas exploration license or                                 
20                 lease issued under AS 38.05.131 - 38.05.134; or                                                         
21                           (ii)  that is leased under AS 38.05.180;                                                      
22                      (B)  the land (i) that is proposed to be subject to an oil and gas                                 
23            exploration license or lease issued under AS 38.05.131 - 38.05.134; or (ii) that                             
24            is described in and part of a proposed oil and gas leasing program prepared                                  
25            under AS 38.05.180(b); however, the commissioner may waive the limitations                                   
26            of this subparagraph;                                                                                        
27                      (C)  the land that is held under a coal lease entered into under                                   
28            AS 38.05.150, unless the applicant for a shallow natural gas lease is also the                               
29            lessee under AS 38.05.150 of that land; [OR]                                                                 
30                      (D)  the valid existing selections of the Alaska Mental Health                                     
31            Trust Authority made for the purpose of reconstituting the mental health trust                               
01            established under the Alaska Mental Health Enabling Act, P.L. 84-830, 70                                     
02            Stat. 709 (1956), that become subject to management under AS 38.05.801, or                                   
03            of land that has been designated by law for or is subject to designation for                                 
04            conveyance to the Alaska Mental Health Trust Authority; however, after                                       
05            consultation with the Alaska Mental Health Trust Authority, the commissioner                                 
06            may waive the limitations of this subparagraph; or                                                       
07                      (E)  land and water within the Kenai Peninsula Borough                                         
08            east of Cook Inlet and south of the north boundary of Township 5 South,                                  
09            Seward Meridian.                                                                                         
10    * Sec. 3.  The uncodified law of the State of Alaska is amended by adding a new section to                         
11 read:                                                                                                                   
12       APPLICATION OF SECTION 2 TO LAND CURRENTLY LEASED IN THE                                                          
13 VICINITY OF KACHEMAK BAY FOR SHALLOW NATURAL GAS EXPLORATION                                                            
14 AND DEVELOPMENT.  The provisions of AS 38.05.177(a)(2)(E), added by sec. 2 of this                                      
15 Act, apply to prohibit the issuance or reissuance of a lease under AS 38.05.177 entered into                            
16 before the effective date of this Act if the lease terminates because of the failure to extend the                      
17 lease under AS 38.05.177(d) or if the lease terminates by the operation of AS 38.05.177(h).                             
18    * Sec. 4.  This Act takes effect immediately under AS 01.10.070(c).