Legislature(2021 - 2022)GRUENBERG 120
04/06/2021 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB54 | |
| HB82 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 54 | TELECONFERENCED | |
| *+ | HB 82 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
April 6, 2021
MEMBERS PRESENT
Representative Geran Tarr, Chair
Representative Louise Stutes, Vice Chair
Representative Jonathan Kreiss-Tomkins
Representative Andi Story
Representative Dan Ortiz
Representative Sarah Vance
Representative Kevin McCabe
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 54
"An Act establishing the Alaska Invasive Species Council in the
Department of Fish and Game; relating to management of invasive
species; relating to invasive species management decals; and
providing for an effective date."
- MOVED CSHB 54(FSH) OUT OF COMMITTEE
HOUSE BILL NO. 82
"An Act relating to surface use restrictions for oil and gas
leases; relating to gas leases in Kachemak Bay; relating to the
renewable energy grant fund; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 54
SHORT TITLE: INVASIVE SPECIES MANAGEMENT
SPONSOR(s): FISHERIES
02/18/21 (H) PREFILE RELEASED 1/15/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) RES, FSH
02/24/21 (H) RES REFERRAL MOVED TO AFTER FSH
02/24/21 (H) BILL REPRINTED
03/11/21 (H) FSH AT 11:00 AM GRUENBERG 120
03/11/21 (H) Heard & Held
03/11/21 (H) MINUTE(FSH)
03/12/21 (H) BILL REPRINTED
03/18/21 (H) FSH AT 11:00 AM GRUENBERG 120
03/18/21 (H) Heard & Held
03/18/21 (H) MINUTE(FSH)
03/25/21 (H) FSH AT 10:30 AM GRUENBERG 120
03/25/21 (H) -- MEETING CANCELED --
03/30/21 (H) FSH AT 10:00 AM GRUENBERG 120
03/30/21 (H) <Bill Hearing Canceled>
04/01/21 (H) FSH AT 10:00 AM GRUENBERG 120
04/01/21 (H) <Bill Hearing Canceled>
04/06/21 (H) FSH AT 10:00 AM GRUENBERG 120
BILL: HB 82
SHORT TITLE: GAS LEASES; RENEWABLE ENERGY GRANT FUND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) RES, FSH
03/01/21 (H) RES REFERRAL MOVED TO AFTER FSH
03/01/21 (H) BILL REPRINTED
04/06/21 (H) FSH AT 10:00 AM GRUENBERG 120
WITNESS REGISTER
DOUG VINCENT-LANG, Commissioner
Alaska Department of Fish and Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: During the hearing of HB 54, answered
questions.
HALEY PAINE, Deputy Director
Division of Oil and Gas (DOG)
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: On behalf of the administration, introduced
HB 82 via a PowerPoint presentation, entitled "HB82 GAS LEASES,
RENEWABLE ENERGY GRANT FUND," dated 4/6/21.
SEAN CLIFTON, Program and Policy Specialist
Division of Oil and Gas (DOR)
Department of Natural Resources (DNR)
Anchorage Alaska
POSITION STATEMENT: On behalf of the administration, answered
questions related to HB 82.
JOSH WISINEWSKI
Seldovia, Alaska
POSITION STATEMENT: Testified in opposition to HB 82.
PENELOPE HAAS
Kachemak Bay Conservation Society (KBCS)
Homer, Alaska
POSITION STATEMENT: Testified in opposition to HB 82.
ACTION NARRATIVE
10:15:46 AM
CHAIR GERAN TARR called the House Special Committee on Fisheries
meeting to order at 10:15 a.m. Representatives McCabe, Story,
Kreiss-Tomkins, Ortiz, Vance, Stutes, and Tarr were present at
the call to order.
HB 54-INVASIVE SPECIES MANAGEMENT
10:17:01 AM
CHAIR TARR announced that the first order of business would be
HOUSE BILL NO. 54, "An Act establishing the Alaska Invasive
Species Council in the Department of Fish and Game; relating to
management of invasive species; relating to invasive species
management decals; and providing for an effective date."
CHAIR TARR related that the proposed funding of the Alaska
Invasive Species Council with $60,000 from the unrestricted
general fund (USG) came up as an issue. She said Amendment 1 is
an idea that would address the issue.
10:18:11 AM
REPRESENTATIVE STUTES moved to adopt Amendment 1, labeled 32-
LS0057\W.1, Bullard, 4/5/21, which read:
Page 1, following line 4:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE INTENT. It is the intent of the
legislature that the Department of Fish and Game
support the activities of the Alaska Invasive Species
Council, established by this Act, through
contributions, grants, and other forms of funding that
do not involve the use of money from the state's
general fund."
Page 1, line 5:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
10:18:23 AM
CHAIR TARR objected for discussion purposes. She explained that
Amendment 1 is legislative intent language. She recounted that
adjusting the fiscal note was suggested, but the committee was
advised that that was something for the House Finance Committee
to potentially address. She further recounted that there was
also a concern about the [Alaska Department of Fish and Game
(ADF&G)] commissioner being prevented from moving forward with
seeking grant funds. Therefore, she continued, Amendment 1
seems like a better option because, through discussion, the
committee can establish its intent that [the council] not be
funded through the UGF. She said the bill's next committee of
referral is the House Resources Standing Committee.
10:19:48 AM
REPRESENTATIVE ORTIZ inquired about the reality of other funding
truly happening should Amendment 1 pass.
CHAIR TARR replied that her sense from talking with the ADF&G
commissioner is that he feels comfortable there would be grant
opportunities. She said she is also aware of grant
opportunities and that there may be federal funding as well.
She further related that a provision in the "hatchery bill" [HB
80] would keep $2.50 from the fee as a statutorily designated
receipt for invasive species management. She cautioned,
however, that [HB 80] is still moving through the legislative
process, so the committee cannot get ahead of itself. She asked
Commissioner Vincent-Lang to further address the question.
10:21:30 AM
DOUG VINCENT-LANG, Commissioner, Alaska Department of Fish and
Game (ADF&G), responded he is convinced that there are pots of
money available which could be tapped to support the proposed
Alaska Invasive Species Council without using UGF the first two
or three years. He noted that HB 54 originally had regulatory
authorities associated with it as well as the council and his
thought was that a first positive step would be to form the
council to evaluate some of the issues associated with invasive
species and come together with some solid recommendations that
could be moved forward. He said ADF&G is looking internally at
other funding sources such as state wildlife action grants and
the fish and game fund, given the importance that invasive
species play in the state and the threats they pose to Alaska's
existing fish and game resources.
10:22:36 AM
CHAIR TARR removed her objection to Amendment 1. There being no
further objection, Amendment 1 was adopted.
10:23:02 AM
REPRESENTATIVE VANCE asked whether the [proposed] council would
be looking at invasive birds and animals in addition to looking
at invasive aquatic species.
CHAIR TARR referenced [page 2] of the bill detailing the tasks
and membership in the council. She answered that the intention
with designating the Department of Natural Resources (DNR) and
ADF&G as participants in the council is [to address] aquatic,
terrestrial, vegetative, and other living organisms. The point
will be for the council to have that comprehensive overview and
plan, she added.
10:24:16 AM
CHAIR TARR specified that as a committee bill, the committee
will be working with the next committee of referral. She
offered her appreciation to the members for working on the bill
and said it will be beneficial for all of Alaska.
10:24:46 AM
REPRESENTATIVE STUTES moved to report HB 54, as amended, out of
committee with individual recommendations and accompanying
fiscal notes. There being no objection, CSHB 54(FSH) was
reported out of the House Special Committee on Fisheries.
HB 82-GAS LEASES; RENEWABLE ENERGY GRANT FUND
10:25:20 AM
CHAIR TARR announced that the final order of business would be
HOUSE BILL NO. 82, "An Act relating to surface use restrictions
for oil and gas leases; relating to gas leases in Kachemak Bay;
relating to the renewable energy grant fund; and providing for
an effective date."
CHAIR TARR noted that HB 82 is by request of the governor. She
invited Ms. Haley Paine from the Department of Natural Resources
(DNR) to present the bill on behalf of the administration.
10:26:04 AM
HALEY PAINE, Deputy Director, Division of Oil and Gas (DOG),
Department of Natural Resources (DNR), on behalf of the
administration, introduced HB 82 via a PowerPoint presentation
entitled, "HB82 GAS LEASES, RENEWABLE ENERGY GRANT FUND," dated
4/6/21. She displayed slide 2, "MAIN PURPOSE," and explained
that the main purpose of HB 82 is to allow the Division of Oil
and Gas to lease and capture revenue from state-owned resources
that underly lands restricted to surface use. She stated that
HB 82 would not open Kachemak Bay or any other closed area to
surface development; the bill aims only to capture royalty
revenue from geology drained through adjacent development on
nearby unrestricted lands. She said modern drilling
technologies enable oil and gas to be safely developed from
adjacent lands with no impact to the surface of restricted areas
including offshore, which means that the non-surface leasing
would not threaten the fisheries of Kachemak Bay. The primary
benefit of HB 82 would be increased revenue, Ms. Paine
specified; lands with surface use restrictions would still
provide revenue in the form of lease sale bids, annual rental
payments, and royalties if made available for subsurface-only
development. She said the state would be able to protect the
lands using established regulatory methods while still
maximizing the economic recovery of its resources.
10:28:29 AM
MS. PAINE moved to slide 3, "WHAT HAPPENS IF WE CAN'T LEASE,"
and stated that the mean concern is the mechanism for collecting
royalties. She explained that if the unleased land is drained
from wells on adjacent leases, royalties may not be paid to the
state or revenue could be diminished. For instance, she said,
the wellhead may be located on private lands, and this may
prevent the state from realizing the revenue unless remedy is
sought through the Alaska Oil and Gas Conservation Commission
(AOGCC) and a correlative rights claim. She pointed out that
leasing is the standard mechanism for establishing a contractual
relationship between the state and the developer. Through the
lease, she continued, the state exercises its authority to
comply with mitigation measures and to require the sharing of
drilling and reservoir data, data which is integral to the state
for understanding the extent of its resources.
10:29:30 AM
MS. PAINE related that the maps on slide 4, "THE SUBJECT AREA,"
depict the subject area discussed in Section 2 of HB 82. She
said the bill seeks to allow gas-only leasing of the subject
area while maintaining the current surface use restrictions.
She noted that the blue hatching specifically shows the township
in question, Township 5 South, Range 15 West. She related that
the subject area is adjacent to active development on the Kenai
Peninsula, which includes the Seaview Unit approved by DOG in
October 2020. She drew attention to the Cosmopolitan Unit, an
offshore lease area currently under development from the Hansen
Pad located onshore on private lands. This is an example of
successful access of offshore resources without impacting the
surface use of the waters, she continued. She pointed out that
the hatched green line delineates the current Cook Inlet
areawide sale boundary, and the solid red line delineates the
Kachemak Bay oil and gas closure area.
10:31:15 AM
MS. PAINE reviewed the sectional analysis provided on slides 5-
7. She displayed slide 5 and said Section 1 would add a new
section, AS 38.05.176, to AS 38.05 specifying that a statute
restricting the surface use of an oil and gas, or gas-only,
lease area does not also restrict leasing and development of the
subsurface of that area from unrestricted land. She said this
is a general provision intended to broadly capture the purpose
of this bill and address future surface use restrictions that
may be imposed on the state's natural resources.
MS. PAINE moved to slide 6 and said Sections 2 and 3 would amend
AS [38.05.184] to authorize DNR to offer gas-only leases
specifically within [Township 5 South, Range 15 West], as
depicted on the map on slide 4. She specified there would be no
right to use the surface of the land, in keeping with the
original intention of the Kachemak Bay oil and gas closure area
to protect the region's fisheries. She said [AS 38.03184(b)]
would be amended to acknowledge the exemption that would be
created with the new subsection (h).
MS. PAINE displayed slide 7 and said that in recognition of the
unique nature of the area to be leased, Sections 4-6 would amend
AS 42.45.045(b) to allow the legislature to appropriate revenue
from these specific leases to the Renewable Energy Grant Fund.
The governor, she related, recognized in this bill an
opportunity to add funds to this account, and revenue would come
from the state's rentals and royalties collected through these
specific leases. Such appropriations would occur after the
constitutionally required deposits to the Alaska permanent fund,
she noted, and all appropriations would be at the discretion of
the legislature. She explained that the final sections of HB 82
would move language about the Department of Revenue being
manager of the fund and would provide for the bill to be
effective immediately. She displayed slide 8 and concluded her
presentation by inviting members to ask questions.
10:34:16 AM
REPRESENTATIVE STUTES asked whether she is correct in
understanding that this development could conceivably take place
without this [proposed] lease, it is just that the state would
not receive any revenue for it.
MS. PAINE confirmed that Representative Stutes is correct. She
explained that given the current and planned development from
onshore, the reservoir could potentially be drained by the
currently planned vertical wells due to the way the subsurface
geology works. Even without attempting to go through to the
subsurface of the lands underlying the water, she further
explained, the pressures from the permitted development of
unrestricted lands could allow the gas molecules to migrate
over. But, she said, at that point in time it would not be
considered from a state lands lease, so the state would lose
that revenue or have that revenue diminished. While there could
be a remedy through AOGCC, she continued, it would involve a
lengthier discussion and some of the more immediate revenues
from rentals and lease sale bids would not be realized.
10:36:02 AM
REPRESENTATIVE VANCE remarked that a change like this is going
to get attention in her community. She asked whether there is
an estimate for the revenue that could be had should HB 82 pass.
MS. PAINE responded that an exact figure is not had at this time
because the unit and area around it is still being delineated.
At this time, she added, there is only one well looking to come
online as soon as a pipeline is built onshore to connect the
existing onshore infrastructure.
REPRESENTATIVE VANCE surmised that the project believes it is
going to be profitable. She said it would be helpful for her to
know the figure as soon as DOG has an estimate. She related
that from the perspective of her district it is a heavy lift for
any changes because the proposed area is a critical habitat
area. She requested DOG to speak to the history of oil and gas
in Kachemak Bay and how subsurface drilling is so much safer
than an oil rig.
10:38:03 AM
SEAN CLIFTON, Program and Policy Specialist, Division of Oil and
Gas (DOR), Department of Natural Resources (DNR), recounted that
the Kachemak Bay oil and gas closure area was conceived in the
mid-1970s after the George Ferris rig became stuck in the mud,
which Representative Vance's constituents no doubt have in their
minds. He further recounted that lease buybacks were then
approved by the legislature and afterward AS 38.05.184 was
enacted to explicitly protect that habitat. He stated that
nothing in HB 82 would change that. He further stated that the
explicit desire to protect and preserve the habitat is honored
by not allowing any surface impact from the water surface to
the seafloor there would be no drilling offshore, no pipelines,
no platforms, no jack-up rigs. Mr. Clifton added that HB 82
would only open that offshore acreage so the state can lease it,
which is the state's usual contractual relationship with
developers, and the developers could then access from offshore,
and the state could receive royalty revenue from that.
10:39:55 AM
REPRESENTATIVE VANCE confirmed that the George Ferris incident
is very ripe in people's minds as they are very protective of
their bay. She asked whether a spill or leak could happen and
inquired what the response would be.
MS. PAINE answered that no well casings would be placed in this
area. She said everything would only happen from the shore so
there would be no pipelines and no infrastructure; there would
be nothing that could leak and pollute the waters. Furthermore,
she continued, there are extensive state and federal regulatory
prevention and protection laws, as well as extensive plans to
ensure safety. These measures are well documented throughout
Cook Inlet, she added, and Cook Inlet has been the home and
successful avenue of oil and gas development since the early
1960s. She noted that there are several critical habitat and
refuge areas within Cook Inlet, so the division is aware of the
protections that need to take place to honor those areas and it
is common throughout Cook Inlet development to prevent surface
use in certain areas.
REPRESENTATIVE VANCE remarked that Ms. Paine answered the other
question she was going to ask about whether there are other
critical habitat areas in Cook Inlet.
10:42:30 AM
REPRESENTATIVE ORTIZ asked why this particular bill is being
seen now. He further asked about the changes in technology that
would now allow an onshore developer to gain access to the
resources under the subsurface of Kachemak Bay.
MR. CLIFTON replied that part of what has changed is that the
southern end of this sale area has recently seen a lot of new
lease activity, almost exclusively from Hilcorp Energy Company
which is acquiring leases from [the state] and local private
resource owners. The Kenai Peninsula is unique in having a lot
of homesteaded land that was patented before or at statehood to
include the mineral estate, he noted, whereas the state retains
the mineral estate on most of the land that was acquired
afterward. Regarding newer technologies, he said there is the
ability to drill deeper or longer lateral wells and hydraulic
fracturing ("fracking") technologies have advanced. Fracking
has been around for more than a century, he continued, but the
newer fracking technology allows a single well to get access to
more gas migrating to it than may have been possible in the
1970s, and this is a newer opportunity to get access to gas from
onshore that may have been less likely a few years ago.
10:45:31 AM
REPRESENTATIVE ORTIZ recalled an earlier statement that if this
development were to happen it would not include any pipeline or
infrastructure. He asked how the natural gas elements would get
transferred to the land without any pipeline or infrastructure.
MR. CLIFTON responded that while the rock is solid there is pore
space where gas molecules can move through it, so gas will
migrate through the pore space to the well. Fracking, he
explained, opens more of that pore space, and holds it open
farther from where the well is drilled, so the gas can migrate
quite a long way to that wellbore. The differential pressure
also helps the gas move to the well and then up through the
wellhead on the surface. He said this allows development from
one to four miles offshore that doesn't involve drilling a well
or establishing a pipeline offshore in the water.
10:47:16 AM
REPRESENTATIVE MCCABE requested a description of how directional
drilling would work in this field, such as how far inshore the
drill rig would be, where the mud storage would be, and at what
depth the blocker would be set before it goes underneath the
shoreline and into [the seafloor below] the water.
MR. CLIFTON answered that he doesn't know the specific depths of
the pool that is proposed for development in the Seaview Unit.
He said he could refer to the division's published decision
establishing the participating area and get those details to the
representative's office later today. Wells can be miles deep
and miles long, he explained; for example, the wells in the
Cosmopolitan Unit are being developed from an onshore pad and
reach out as far as four miles offshore. He said [today's]
drilling technology allows for steering the well with quite a
degree of control and accuracy through the strata to reach very
specific targets.
10:49:14 AM
REPRESENTATIVE MCCABE stated that the committee's concern is the
fisheries, so it is important to know how deep it will be under
the shoreline, to know about the drilling mud, and those things
that could affect the fishery. He pointed out that in most
drill operations the drilling mud is a problem with disposal,
cleanup, and leakage. He said it would be helpful to show the
mechanics of it when explaining this to concerned citizens.
MR. CLIFTON replied that the AOGCC does extensive review of the
engineering plans for each well that it permits. He said a main
job of the AOGCC is to protect the environment, especially
drinking water aquafers and waters relied upon for fisheries.
The AOGCC, he continued, would never permit a well to be drilled
if there appeared to be any threat to a drinking water aquafer
onshore or fishery waters offshore.
MS. PAINE added that while the area in question is a specific
township, the division does not have before it a specific
project that describes how this would be developed. The
division, she offered, can provide information to the committee
about the currently approved participating area onshore at the
Seaview Unit, which would have information like the depth of the
reservoir being targeted. She said DOG could also share
information from the Cosmopolitan Unit, though that information
would be different because that unit is accessing oil and the
bill's proposal is gas only. She pointed out that the original
legislated closure was specific to oil, which is another reason
DOG is going for gas only and non-surface access for this
leasing area.
10:52:32 AM
REPRESENTATIVE STUTES stated she was alarmed to hear the term
fracking because she knows it is a very controversial process.
She surmised that [the proposal] is a fracking process and asked
whether much fracking is currently happening in Alaska.
MR. CLIFTON responded that fracking is very common and safe, and
almost all oil and gas wells are fracked because it improves a
well's performance. He reiterated that fracking has been used
for more than a century and said the only reason it has become a
new hot button topic is because the technology around fracking
has improved and allowed the development of shale oil. He
stated that the engineers at AOGCC look in detail at fracking
and everything else from the well's engineering design to
disposal of the fluids once the job is finished. He said there
is no reason to see fracking as unsafe or as any kind of a
special threat to the fishery.
10:54:52 AM
REPRESENTATIVE STUTES remarked that fracking cannot be all that
safe because she understands that at least one state has
outlawed it.
MR. CLIFTON answered he has heard that one or more state
legislatures have proposed to ban fracking in their states but
said that does not mean from a scientific or engineering
perspective there was any good reason for them to ban it. He
maintained that most of the activist information about fracking
is misinformation and not based on science. He stated that if
it were a genuine threat "the very smart folks over at AOGCC
would not be allowing it to go on," and the information is
available to the public every time AOGCC permits fracking.
MS. PAINE added that the information DOG will be providing on
the nearby developments will show that hydraulic fracturing is
already occurring very close by and is permitted in the Cook
Inlet sale area. She said the track record can be seen based on
the years of operation of nearby fields and should provide
assurance that this is a very regulated and researched avenue.
She specified that DOG would not be proposing anything here that
is not already widely used throughout the state; experimental
technology or methodology is not trying to be used in this area.
She said everything would be happening at subsurface depths of
at least 6,000 feet below the waterline underneath the surface.
10:57:10 AM
REPRESENTATIVE STORY recalled the statement that the benefits of
this proposal include revenue and access to more gas. She
surmised the division had done an assessment and that it would
be helpful to receive the information from the division's
assessment of the pros and cons of this project.
MS. PAINE replied that the cons for not moving forward with the
bill would be the lost revenue to the state and the possibility
of inefficient development of these hydrocarbon resources. She
said there could be unwitting development from the differentials
in pressures in the geology and the state would thereby lose its
potential revenue. She stated that the division does not see
any environmental or other concerns when weighing the benefits
and risks of this proposal. She related that when she emails
the information to committee members, she will reference some
documents in DOG's Cook Inlet Best Interest Finding. In the
finding for the entire sale area, she said, DOG took a hard look
at the fish, wildlife, habitat, and communities and evaluated
everything as a holistic picture for oil and gas development and
the benefits to the state. For this discrete township the
greatest con seen by DOG is the lost potential revenue that can
occur, she reiterated. The approved development area for the
Seaview Unit is currently at a 60/40 split, she specified,
meaning 60 percent is held by private mineral owners and 40
percent by the state. At this point in time, she explained, if
those offshore areas proposed in HB 82 are drained in some way
the state would not have its proper revenue share because it
would be splitting it amongst these other parties. Reservoir
data is something that only becomes available to the state
through the formal lease contract, she noted, so if the state
can formally lease, capture, and quantify what the reservoir
target is then the state can justify and reallocate those tract
factor percentages to further allow for the state to realize its
true potential. She advised that while she does not have any
specific numbers, it could sway it from 60/40 to perhaps 75/25,
just as a number to throw out in favor of the state.
REPRESENTATIVE STORY stated that DOG's assessments on the fish
wildlife, and community for this project would be helpful.
11:01:23 AM
REPRESENTATIVE MCCABE offered his understanding that Ms. Paine
said there is private land where the subsurface rights are owned
because it was pre-statehood and that people are already
considering or already drilling there, and they can possibly
suck the gas out of this field and leave the state with nothing.
He inquired whether he is correct in understanding that fracking
is hydraulic and done with millions of gallons of water, which
is why one or more states have prohibited it. Those millions of
gallons of water are pulled out of the local aquafer, he said,
and injected into the hole where the hydraulic pressure expands
the rock and creates fissures that the gas can come through. It
isn't that the fracking causes the aquafer to go away, he
continued, it is that the fracking process takes water out of
the aquafer, which affects the local wells.
MR. CLIFTON responded that he doesn't think there is anywhere in
the U.S., and certainly not in Alaska, that any drilling company
is allowed to inject waste fluids into an aquifer. He said the
development wells and the waste disposal wells are thousands of
feet deep, often miles deep, whereas drinking water aquafers are
usually 100-400 feet deep. He further stated that when
permitting a waste disposal well the AOGCC looks at where the
waste fluids would be injected and the possibility of their
migrating into a place where they could contaminate aquafers or
surface waters and the AOGCC would never permit a waste disposal
well that had any such risk. That there might be some risk to
drinking water aquafers is a concern he has heard before in the
fracking debate, he continued, but the waste disposal wells are
much deeper than are the aquafers and waste is never injected
into an aquafer that people drink from or that is used to
irrigate crops.
MR. CLIFTON continued his response. He said private landowners
themselves are not developing any of this because they typically
cannot afford the millions of dollars required to permit and
drill a well and establish the infrastructure required to
produce gas, let alone build a pipeline extension to bring it to
market. Rather, he stated, many of the private mineral owners
in this area have signed a lease agreement with Hilcorp and for
those leases within the Seaview Unit they are working interest
owners just like the state is within that unit, and they share
in the value of production for their royalties.
11:06:07 AM
REPRESENTATIVE MCCABE asked whether it is correct that in this
case the private landowner would be getting the royalties, not
the state. He further asked whether it is correct that if
landowners with subsurface mineral rights lease their land to
Hilcorp, then Hilcorp would not have to pay the state anything,
Hilcorp would just pay the private owner.
MR. CLIFTON answered that in the lease agreement [the state] has
a royalty rate, which in most cases in the Cook Inlet is 12.5
percent, and it is allocated by parcel or by lease. He said
there is also some engineering involved to figure out what
percentage of each parcel is contributing gas to the producing
well. The calculation of the percentage that is contributing
and the royalty rate, he continued, determines how much of the
value of that produced gas goes to each mineral owner. He added
that he would provide the committee with the schedule by which
that has already been figured out for the Clark Participating
Area in the Seaview Unit.
REPRESENTATIVE MCCABE asked whether it is correct that the 12.5
percent does not go to the state, it goes to the private
landowner if that private landowner has the subsurface rights.
MR. CLIFTON replied, "Yes that is correct, ... the State of
Alaska does not receive any revenue from private mineral
interest lands."
11:08:20 AM
CHAIR TARR recalled that the type of drilling would be from
vertical wells. She read from Section 1, page 1, lines 8-10,
which state, "lease or gas only lease in specified acreage does
not also restrict subsurface use for oil and gas resource
development that can be accomplished by drilling from acreage
that does not have surface use restrictions." She asked whether
this language would enable directional drilling of any kind.
MS. PAINE confirmed that the general nature of this provision
would permit any sort of well, vertical or horizontal, to access
the subsurface of a restricted land from an unrestricted land.
She stated it is correct that in the township being discussed
here it is thought through vertical, but a lateral well is also
possible. She said there are lateral wells in the Cosmopolitan
Unit that are accessing the subsurface.
11:10:03 AM
CHAIR TARR remarked that that is possibly where there could be
more concern about the overall environmental impact, including
for fisheries. She said she looks to how the local community is
responding to a proposal, but the committee packet does not
provide any information as to whether the division has held
public meetings or whether local government has taken positions.
When it is the first of something, she stressed, a concern is
whether it sets a precedent for future proposals.
MS. PAINE responded that at this time there have been no public
meetings to discuss the bill with the local communities. She
explained that the public is addressed through the broader Cook
Inlet sale area as a part of the best interest finding process.
Any time the division goes to dispose of the several million
acres in the Cook Inlet, she further explained, it engages with
members of all communities, nongovernmental organizations, and
local government organizations through public notice and a
public comment period; so, the sale area itself of the greater
Cook Inlet has had a very robust public comment period. But,
she continued, for HB 82 the division has not yet worked
directly with those same public folks. If this bill were to be
passed, the division would need to expand the Cook Inlet sale
boundary to include this area. To do that, she stated, DOG
would have to call for new information and supplemental
information from the public before it could change the sale area
boundary. There would be a public notice process and the
opportunity to comment, the division would then review those
comments and provide responses, and then decide whether
expanding the sale area is in the best interest of the state.
She specified that HB 82 lays the legislative possibility for it
but there would still be a separate public process as a part of
the sale area best interest finding that would incorporate and
alert the public and allow them of their ability to participate.
11:13:04 AM
REPRESENTATIVE VANCE stated that her job is to look after the
best interests of her people while [Ms. Paine's] job is to look
after the best interests of the state. She recalled it being
mentioned that there are private landowners benefitting from the
royalties, not the state, at this time. She inquired about the
ratio of private to public land within the proposed area.
MS. PAINE answered that that will be part of the supplemental
information which will be provided to the committee for the
Seaview Unit decision as well as the Clark Participating Area.
It will include the names of the individual parcels and royalty
percentages, she said, and will be provided in a detailed map
format after today's discussion.
11:14:13 AM
REPRESENTATIVE VANCE commented that it feels like she is being
asked to choose between providing a source of revenue for the
people of her district who homesteaded and helped build the
community versus providing a source of revenue for the state.
She said being asked to expand further south in the Kachemak Bay
area and potentially transferring revenue from the people to the
state gives her great heartburn. She advised that she will be
asking more questions about the proposal so the committee can
make a more informed decision.
MS. PAINE responded by posing a scenario in which the resources
[within the proposal] are drained and the money is going to the
private landowners instead of the state. In that case, she
explained, the state would petition the AOGCC for correlative
rights and go through the process to demonstrate that the
state's subsurface area is being drained. Instead of going
directly to landowners, the money would maybe sit in a pot at
AOGCC until litigation resolved who ultimately has those
resources. But, she continued, [the state] would also be out
the revenue that would be realized from the rentals as well as
from the bonus bids from leasing the tracts. So, while [the
state] could hope to remedy some of the royalties after a
correlative rights process, other revenues would be left on the
table and lost to the state.
11:17:00 AM
REPRESENTATIVE MCCABE stated it would be helpful to know how
many people in this area would be affected, how many leases are
had by Hilcorp on lands where the subsurface rights belong to a
private citizen, how many parcels there are, and whether pads
have been completed and drilling underway. He asked what the
difference is between vertical drilling and horizontal drilling.
MR. CLIFTON replied that all wells start vertically and have a
series of progressively narrower and narrower casings designed
to keep the well stable. Once at the target depth, he said,
they break out and steer towards the target or steer around
obstacles to be avoided such as other wells or an aquafer.
11:19:06 AM
CHAIR TARR stated that HB 82 would be held over. She observed
that there is no Department of Revenue fiscal note and requested
that one be prepared given there are questions about revenue.
She confirmed that receiving the Cook Inlet Best Interest
Finding would be helpful, as well as the number of private owner
leases requested by Representative McCabe. She also requested
an estimated timeline on the AOGCC process that was described
and examples of where the state has used that process.
MS. PAINE agreed that the division would follow up with all the
requested items. She stated that the Seaview Unit decision and
the Clark Participating Area will also answer the correlative
rights question and Representative McCabe's questions about the
depth of the potential reservoirs and the pad that has already
been built and improved in the area.
11:21:21 AM
CHAIR TARR opened public testimony on HB 82.
11:21:40 AM
JOSH WISINEWSKI, stated he is a Kachemak Bay commercial
fisherman who setnets, fishes for halibut out of his skiff, and
participates in the state and federal subsistence fisheries in
the bay. He testified that he adamantly opposes HB 82 or any
form of surface or subsurface oil and gas development in
Kachemak Bay. He said the bill is completely inconsistent and
oppositional with the purpose and spirit of designating Kachemak
Bay as a critical habitat area to protect the ecological
integrity that supports the area's commercial fisheries.
MR. WISINEWSKI referenced the [4/1/21] gas spill from a Hilcorp
underwater pipeline located 80 feet underground near Platform A
in [Cook Inlet], essential habitat to beluga whales and salmon
stocks. He said any type of spill or discharge event [in
Kachemak Bay] would immediately disrupt the region's fishing and
tourist economy that is worth $1 billion annually, as well as
cause irreparable harm to the ecology of Kachemak Bay. He
concluded by stating that oil and gas development in Kachemak
Bay is not worth the risk and not compatible with the fisheries.
11:24:27 AM
REPRESENTATIVE MCCABE inquired about the kind of boat used for
fishing by Mr. Wisinewski
MR. WISINEWSKI replied he has a 22-foot skiff he built himself
for setnetting and a slightly larger skiff for halibut. He
added that he does all his fishing in Kachemak Bay.
11:25:03 AM
PENELOPE HAAS, Kachemak Bay Conservation Society (KBCS),
testified in opposition to HB 82. She said the Kachemak Bay
area is very rich and the bill proposes a fundamental change to
the way that a critical habitat area and fisheries protections
are considered. She maintained that lateral drilling and
fracking underground into areas closed to oil and gas would
change the balance between oil and gas and fisheries protection
in Kachemak Bay as well as across the state. She related that
KBCS disagrees with DNR's statement that this poses no risk to
fisheries, and said it poses a substantial risk to fisheries in
Kachemak Bay and in the rest of the state. She stated she would
provide the committee with a list of evidence on the impacts of
horizontal drilling and fracking to underground aquafers,
drinking water, and waters that fish use and need. She urged
the committee to ask DNR about the broad implications of HB 82
and how it relates to Kachemak Bay and relates to the rest of
Alaska and said KBCS opposes this precedent setting change.
11:27:28 AM
CHAIR TARR closed public testimony on HB 82.
CHAIR TARR announced that HB 82 was held over.
11:29:22 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 11:29
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 54 Sponsor Statement - Version W 1.28.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM HRES 4/16/2021 1:00:00 PM |
HB 54 |
| HB 54 Version W 1.15.21.PDF |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM HRES 4/16/2021 1:00:00 PM |
HB 54 |
| HB 54 Fiscal Note - DEC-CO 3.5.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Fiscal Note - DFG-DSF 3.5.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - ADFG Invasive Species Presentation 3.11.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - Alaska Invasive Species Partnership Presentation 3.11.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - USFWS Alaska Invasive Species Presentation 3.11.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - Ka'aihue Presentation - 3.11.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - ADFG Newsletter - Invasive Species 4.2021.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - Cost of Managing Invasive Species in Alaska 7.2012.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - States with Invasive Species Fees or Stickers 7.24.20.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Supporting Document - WA Invasive Species Council Fact Sheet 1.2017.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB54 Sectional Analysis - Version W 3.18..21.pdf |
HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Letters of Support 3.10.21.pdf |
HFSH 3/11/2021 11:00:00 AM HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 54 Testimony Katherine Schake Homer Soil Water District 3.18.21.pdf |
HFSH 3/18/2021 11:00:00 AM HFSH 4/6/2021 10:00:00 AM |
HB 54 |
| HB 82 Sponsor Statement 1.28.21.pdf |
HFSH 4/6/2021 10:00:00 AM HFSH 5/4/2021 10:00:00 AM HFSH 2/1/2022 11:00:00 AM |
HB 82 |
| HB 82 Version A 2.18.21.PDF |
HFSH 4/6/2021 10:00:00 AM HFSH 5/4/2021 10:00:00 AM HFSH 2/1/2022 11:00:00 AM |
HB 82 |
| HB 82 Sectional Analysis - Version A 2.23.21.pdf |
HFSH 4/6/2021 10:00:00 AM HFSH 5/4/2021 10:00:00 AM HFSH 2/1/2022 11:00:00 AM |
HB 82 |
| HB 82 Fiscal Note One - DNR-DOG 1.27.21.pdf |
HFSH 4/6/2021 10:00:00 AM HFSH 5/4/2021 10:00:00 AM HFSH 2/1/2022 11:00:00 AM |
HB 82 |
| HB 82 Supporting Document - Gas Leases-Renewable Energy Grant Fund Presentation - DNR 4.6.21.pdf |
HFSH 4/6/2021 10:00:00 AM HFSH 5/4/2021 10:00:00 AM HFSH 2/1/2022 11:00:00 AM |
HB 82 |
| HB 54 Amendment One 4.5.21.pdf |
HFSH 4/6/2021 10:00:00 AM |
HB 54 |