SB 208: "An Act requiring the Department of Natural Resources to evaluate current incentives and recommend additional incentives that would increase gas exploration, development, and production in the Cook Inlet sedimentary basin; and requiring the Department of Natural Resources to evaluate the means by which the department may explore for, purchase, and sell natural gas from newly proved gas reserves in the Cook Inlet sedimentary basin."
00 SENATE BILL NO. 208 01 "An Act requiring the Department of Natural Resources to evaluate current incentives 02 and recommend additional incentives that would increase gas exploration, development, 03 and production in the Cook Inlet sedimentary basin; and requiring the Department of 04 Natural Resources to evaluate the means by which the department may explore for, 05 purchase, and sell natural gas from newly proved gas reserves in the Cook Inlet 06 sedimentary basin." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 09 to read: 10 LEGISLATIVE FINDINGS. The legislature finds that 11 (1) natural gas produced in the Cook Inlet sedimentary basin is used to 12 generate nearly 90 percent of the electricity used in Southcentral Alaska and to heat 13 approximately 130,000 homes and businesses; natural gas production in the Cook Inlet
01 sedimentary basin is vital to the economic well-being of Southcentral Alaska and has been the 02 least expensive energy source available to more than half of the state's population for over 03 three decades; 04 (2) for many years, there was far more gas in the Cook Inlet sedimentary basin 05 than could be consumed by Alaskans, providing plentiful low-priced gas; however, in recent 06 years, prices have risen dramatically as reserves in the Cook Inlet sedimentary basin are being 07 depleted; 08 (3) as of December, 2009, 7,750,000,000,000 cubic feet of natural gas have 09 been produced from the Cook Inlet sedimentary basin; original reserves of more than 10 8,000,000,000,000 cubic feet have been reduced by production to just over 1,000,000,000,000 11 cubic feet, with relatively few new proved reserves to replace the natural gas that has been 12 produced in the past; 13 (4) the division of oil and gas in the Department of Natural Resources 14 estimates that new field exploration will be required to augment remaining reserves and 15 replace historic production; without successful discoveries of new natural gas reserves, 16 natural gas reserves in the Cook Inlet sedimentary basin may be depleted within two decades, 17 and yearly in-state demand may exceed supply within one decade; 18 (5) federal geologists estimate there might be between 7,000,000,000,000 and 19 17,000,000,000,000 cubic feet of undiscovered and technically recoverable gas in the Cook 20 Inlet sedimentary basin; 21 (6) additional investment in developing natural gas reserves in existing fields 22 in combination with exploration for new natural gas reserves will be necessary to ensure an 23 adequate future supply of natural gas for Southcentral Alaska; 24 (7) aggressive investment in exploration and development has been 25 constrained by historic oversupply of natural gas and the small size of the in-state market; the 26 oversupply and relatively small size of the market have prevented natural gas producers in the 27 Cook Inlet sedimentary basin from selling the natural gas they have discovered within a 28 reasonable period of time; and 29 (8) the purchase of gas from newly discovered proved reserves for later resale 30 could provide producers with the incentive to invest additional dollars in exploring for and 31 developing new natural gas reserves.
01 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 STUDY AND REPORT RELATING TO INCENTIVES FOR INCREASING GAS 04 PRODUCTION AND THE EXPLORATION FOR AND MARKETING OF GAS BY THE 05 DEPARTMENT OF NATURAL RESOURCES IN THE COOK INLET SEDIMENTARY 06 BASIN. (a) The Department of Natural Resources shall 07 (1) identify and evaluate incentives the state may offer under current law to 08 increase the exploration for, development of, and production of gas in the Cook Inlet 09 sedimentary basin; 10 (2) identify and evaluate additional incentives that may be enacted by the 11 legislature to increase the exploration for, development of, and production of gas in the Cook 12 Inlet sedimentary basin; 13 (3) determine the cost, feasibility, and a proposed organizational structure for 14 the Department of Natural Resources to 15 (A) explore for gas in the Cook Inlet sedimentary basin and other areas 16 in the state that the commissioner of natural resources finds to have the greatest 17 priority for development; and 18 (B) buy and sell gas produced from leases or properties in the Cook 19 Inlet sedimentary basin that did not produce gas or have proved gas reserves before 20 January 1, 2010. 21 (b) The Department of Natural Resources shall report its findings, conclusions, and 22 recommendations on the subjects described in (a) of this section to the legislature before 23 November 1, 2010. 24 (c) In this section, 25 (1) "Cook Inlet sedimentary basin" has the meaning given in regulations 26 adopted to implement AS 38.05.180(f)(4); 27 (2) "proved gas reserves" means gas reserves within the definition of "proved 28 oil and gas reserves" in 17 C.F.R. 210.4-10(a)(22) as that paragraph read on January 1, 2010.