04/15/2002 01:26 PM House RES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

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ALASKA STATE LEGISLATURE HOUSE RESOURCES STANDING COMMITTEE April 15, 2002 1:26 p.m. MEMBERS PRESENT Representative Beverly Masek, Co-Chair Representative Drew Scalzi, Co-Chair Representative Hugh Fate, Vice Chair Representative Joe Green Representative Mike Chenault Representative Lesil McGuire Representative Gary Stevens Representative Mary Kapsner Representative Beth Kerttula MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 302 "An Act establishing the Alaska Gas Corporation, a public corporation, and providing for its structure, management, responsibilities, and operation, and requiring the development of a project plan to evaluate whether construction and operation of a natural gas transmission pipeline project by the corporation is feasible." - MOVED HB 302 OUT OF COMMITTEE SENATE BILL NO. 328 "An Act requiring that a nonresident big game hunter be accompanied by a big game guide who is providing big game hunting services to the nonresident under a contract with the nonresident or who is employed by a big game guide who has a contract to provide big game hunting services to the nonresident." - MOVED SB 328 OUT OF COMMITTEE CS FOR SENATE BILL NO. 308(FIN) "An Act relating to the Alaska coastal management program and the responsibilities of the Alaska Coastal Policy Council; and providing for an effective date." - MOVED CSSB 308(FIN) OUT OF COMMITTEE CS FOR SENATE BILL NO. 319(FIN) "An Act relating to shallow natural gas; and providing for an effective date." - MOVED HCS CSSB 319(RES) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 302 SHORT TITLE:ALASKA GAS CORPORATION SPONSOR(S): REPRESENTATIVE(S)WHITAKER Jrn-Date Jrn-Page Action 01/14/02 1953 (H) PREFILE RELEASED 1/4/02

01/14/02 1953 (H) READ THE FIRST TIME - REFERRALS

01/14/02 1953 (H) BILL: SB SHORT TITLE:BIG GAME HUNTERS ACCOMPANIED BY GUIDE SPONSOR(S): SENATOR(S) HALFORD BY REQUEST Jrn-Date Jrn-Page Action REFERRALS DAVIS, LEMAN UNAN CONSENT 203 REFERRALS BILL: SB SHORT TITLE:COASTAL ZONE MGMT POLICIES/ REGS/GAS LINE SPONSOR(S): SENATOR(S) THERRIAULT Jrn-Date Jrn-Page Action REFERRALS Committee CH HALFORD, STEVENS 532 Committee CH LEMAN; UNAN CONSENT PASSAGE RECONSIDERATION 203 REFERRALS GUESS; BILL: SB SHORT TITLE:SHALLOW NATURAL GAS: LEASING & DISCHARGES SPONSOR(S): SENATOR(S) TORGERSON Jrn-Date Jrn-Page Action REFERRALS Committee STEVENS, WILKEN, 532 Committee AUSTERMAN, DONLEY UNAN CONSENT PASSAGE REFERRALS FATE; WITNESS REGISTER REPRESENTATIVE JIM WHITAKER Alaska State Legislature Capitol Building, Room 411 Juneau, Alaska 99801 POSITION STATEMENT: Sponsor of HB CO-CHAIR MASEK announced the first order of business, HOUSE BILL NO. 302, "An Act establishing the Alaska Gas Corporation, a public corporation, and providing for its structure, management, responsibilities, and operation, and requiring the development of a project plan to evaluate whether construction and operation of a natural gas transmission pipeline project by the corporation is feasible." Number 0100 REPRESENTATIVE JIM WHITAKER, Alaska State Legislature, sponsor, came forward to present 302 does that. REPRESENTATIVE WHITAKER brought attention to a legal opinion in committee packets from Jack Chenoweth [of Legislative Legal and Research Services], which he said indicates Mr. Chenoweth "sees no reason that House Bill 302 is not significantly similar to the initiative, as to make the initiative moot." Generally, in addition to being a better idea than the initiative, he 302 will significant revenue advantages to the state relating to ownership. Mentioning competition with regard to pipeline access, as well as in-state usage issues, he suggested that it is appropriate, if not imperative, that the state have an ownership position with regard to a natural gas pipeline. CO-CHAIR MASEK requested Representative Fate's comments, since he is a member of the House Special Committee on Oil and Gas, which had heard the bill previously. Number 0431 REPRESENTATIVE FATE said he thought Mr. Chenoweth's memorandum speaks well for it, and that [the bill] is a little broader in scope [than the initiative]. He offered his own opinion that it is a very good bill. CO-CHAIR MASEK asked whether anyone wished to testify; there was no response. The committee took an at-ease from 1:28 p.m. to 1:29 p.m. Number 0514 REPRESENTATIVE FATE moved to report SB CO-CHAIR MASEK announced the next order of business, SENATE BILL NO. 328, "An Act requiring that a nonresident big game hunter be accompanied by a big game guide who is providing big game hunting services to the nonresident under a contract with the nonresident or who is employed by a big game guide who has a contract to provide big game hunting services to the nonresident." Number 0648 D.W. (BILL) STOLTZE, Staff to Senator Rick Halford, Alaska State Legislature, presented SB that someone be accompanied by a licensed guide under some circumstances. Number 1652 REPRESENTATIVE FATE offered his understanding that a guide with a license from Montana who has a contract to take other Montana residents on a bear hunt [in Alaska] would have to be accompanied if that guide didn't have an Alaskan guide license. If that Montana guide then contracted with a guide from Alaska, he asked, what happens to those people who contracted with the original Montana guide to go on a bear hunt? Must they individually contract with the Alaska-licensed guide? Or do they come under the qualifications as being contracted by the Montana guide, who then has to conform to Alaska law with a resident licensed guide? MS. REARDON answered that they would have to contract with an Alaskan guide. She explained: The way the guide law works, it says that in order to offer guiding services in Alaska, you must be [an] Alaska-licensed guide. A Montana-licensed guide who doesn't hold a license here is just like any other member of the public from Montana. The fact you have a guide license in Montana is irrelevant: you're like any other non-Alaska resident who wants to come up here ... and hunt or work. Number 1739 REPRESENTATIVE FATE said this is good for the guide, but that there would be several people from Montana who would have a contract with that guide. He asked whether that makes their contract with the original Montana guide null and void, so that they also must contract with the licensed guide from Alaska to hunt. MS. REARDON replied: A Montana guide should not be contracting with Montanans ... to conduct a hunt in Alaska. To conduct a hunt in Alaska, you have to be an Alaska guide. So there shouldn't be anyone out there who is saying, "I can take you on a guided hunt in Alaska," unless that person has an Alaska license. ... When he entered the state and started doing any activity, he would be breaking ... the law. Number 1793 REPRESENTATIVE CHENAULT read from the written sponsor statement. After reading from the third paragraph [text provided previously], he offered his interpretation that SB [Contains discussion relating to 439, the Senate, and the individual-project petition language was removed. Remaining were two things: a prohibition on adopting state regulations and statutes [by reference] in local coastal district plans, and a provision to allow phased permitting of a North Slope natural gas pipeline that follows the Trans-Alaska Pipeline System (TAPS) route to Canada or to Alaska tidewater. He said the importance of that provision cannot be[overstated]; a project of this size, number of permits, and complexity is so great that in order for a consistency determination to be rendered, everything must be submitted at once for the agencies to look at in its entirety. This bill therefore allows an agency to proceed in whatever fashion is deemed best. Number 2246 REPRESENTATIVE GREEN offered his observation, having done some permitting, that quite often in this process there are many nuances. Certain decisions cannot be made successfully way in advance; hence there is a need for the flexibility to move as necessary. Number 2296 REPRESENTATIVE STEVENS asked whether the oil pipeline was phased or was built before all these requirements were in place. MR. BALASH answered that TAPS was permitted and constructed in the early 1970s, whereas the Coastal Zone Management (CZM) program didn't come into play until 1977, to his understanding. It therefore didn't need to be phased. He said the array of statutes enacted at the federal and state levels is unbelievably complex, and it is hard to say how TAPS would have been permitted under today's regime. Number 2398 REPRESENTATIVE KERTTULA asked what must be known up front before the project will be allowed to go forward. MR. BALASH answered that he thinks the language leaves the discretion in the hands of the agency responsible for rendering the consistency determination. The statutes are unchanged in that regard, so the Division of Governmental Coordination (DGC) ultimately makes the decision in concert with the various agencies. He offered his understanding that this has been run by the Department of Natural Resources (DNR) and the Department of Environmental Conservation (DEC), which agree. As far as what sort of information must be provided, he said the language doesn't stipulate any of that. REPRESENTATIVE KERTTULA asked Mr. Balash what will happen if an agency starts out and, all of a sudden, in one of the phases, it doesn't need the consistency determination. For example, what if part of the pipe is already laid and then a snag is encountered that precludes making the second phase work? MR. BALASH said he was trying to separate out the different versions of the different bills before the legislature. He then offered his belief that the phasing can be based on construction sequences and on distinct areas of the state that the pipe is running through; for the most part, as he understands it, there is a local coastal plan for the North Slope Borough and a couple of rivers coming down from the Beaufort Sea, but only a very limited area will require the consistency determination. For the rest of the 1,800 or so miles, the pipe won't be running through a coastal district; the processing facilities, conditioning plants, and so forth will be in a discrete area that should be able to be dealt with prior to any real "hiccups" in the process. Where it becomes most complex is that, to his understanding, the project applicant would have to know exactly which route the pipe was going to take, including which rivers it would go over or under, what time of year it would be, and so forth. And to have an idea when those things would happen is virtually impossible to know, Mr. Balash said. Therefore, this will allow concentrating on the portion of pipe that will be affecting a coastal district. Number 2588 REPRESENTATIVE KERTTULA asked whether it will be left completely up to the agency to decide how to allow phasing and what to look at in making that decision. She asked whether the statute completely delegates that to the division. MR. BALASH answered in the affirmative. Number 2610 CO-CHAIR SCALZI requested a brief explanation of Section 3, subsection (b). MR. BALASH responded that Section 1 puts into place the prohibition on the adoption [by reference] of regulations and statutes [adopted by state agencies]. He offered his understanding that the [Alaska] Coastal Policy Council (ACPC) has already "kind of ordered that" administratively with regard to local plans. Section 3, subsection (a), gives the local coastal districts one year to comply with this statutory change; subsection (b) allows the ACPC to issue an order, once that year is up, deleting those specific references in the local plan if the local district hasn't taken the step to do so. He suggested Mr. Galvin [from DGC] could speak to the arrangements made [by DGC] regarding the local districts and their ability to make those changes. Number 2715 JOHN T. SHIVELY, Lobbyist for Foothills Pipe Lines Ltd., testified via teleconference in support of the bill. He agreed with [Mr. Balash] that trying to get a determination on the entire gas line project up front doesn't make sense because of the complicated nature of the project. He added: We've worked with the administration, both the Division of Governmental Coordination and the other agencies, and, I think, have all come to the same conclusion, in that that project should be phased, and that how it's phased is something that will be worked out between the agencies and the applicant. To be frank, although there are some advantages to the applicant in the phasing situation, there are also some risks because we will have to have more than one consistency determination. But the kind of thing we're thinking about - to partially answer Representative Kerttula - is, right now we're trying to finalize a decision on the right-of-way, state lands; we already have the right-of-way across federal lands in Alaska. And under the current law, that right-of-way could not be issued until there was [a] consistency determination, and the consistency determination couldn't be issued until every permit was basically set to go: every stream crossing, every DEC permit. This ... allows decisions like the right- of-way to be made without ... having to approve the whole project. I would be very surprised that any applicant would proceed, ... although that's technically allowed ... under this language, ... with actual construction of any part of the gas line until the whole thing was (indisc.). So I think it would be very unlikely [there] would be pipe in the ground one place that then would be stopped because of another consistency determination. Number 2842 PATRICK GALVIN, Director, Division of Governmental Coordination, Office of the Governor, testified that DGC is responsible for implementing the coastal management program. Noting that he would reiterate a couple of points made that day, he said: We did participate in some discussions with some of the other agencies that would be involved in permitting a pipeline project, and came to the conclusions that were indicated earlier: that a project of the magnitude that we would anticipate here would be so large that even under our current phasing law, which allows phasing in certain circumstances, it probably technically would not meet those requirements, but from a practical standpoint would almost be too large for us to tackle all at once, given any amount of resources that we may want to throw at it. And, also, looking at it from the point of view of the public that may want to participate in a review of the project, if we try to do it all at once, then, again, the magnitude would be so large, and while the applicant may be able to throw the resources at it and the state may even ... be able to come up with resources that may be able to tackle it, the public would not be able to comprehend such a vast scale all coming down at the same time. And so while we recognize that there was a need to allow for phasing of a project along these lines, what we recognize is that, as I indicated, the current phasing law - which was drafted primarily looking at the sequencing of oil and gas development going from lease sales to exploration to development - was limited in its application to this type of a project, and that rather than coming up with [an] exemption or trying to change the language of the ... phasing law in order to allow for a project of this type to fit under it, it might have some unexpected consequences of allowing other projects - that would not be nearly this scale - of fitting that same justification. And so we felt that structurally the proper approach was the one taken by this bill, which was to say that the natural gas pipeline is so unique that it needs to have a separate provision of our phasing law to allow for phasing in a manner that would be decided at that time. MR. GALVIN referred to Section 1 and what he called the tie-in in Section 3. TAPE 02-30, SIDE B Number 2965 MR. GALVIN said it had become a practice for those [local] plans to just periodically incorporate state law when they didn't feel the need to add to it. Hence there would be a statement incorporating the "rules of the Department of Fish and Game" or "the rules with regard to the DGC spill-response requirements," for example, into the plan. However, those incorporations by reference legally "froze in time" the requirements of the state law at the time the plan was adopted; as those state laws were refined and updated, local plans kept the old rules in place. Therefore, a number of times, there were conflicting rules for an individual project, even though the intent was to merely take the state law into the local plan. MR. GALVIN reported that as this problem has been recognized over the last four or five years, [DGC] has encouraged local districts to update their plans and try to remove these provisions; however, they haven't done so because of lack of time, interest, motivation, or money to do so. Thus what [DGC] sees as an advantageous portion of this law is that it allows the ACPC, as the body that oversees the program, to take that step on its own, whereas under current process the district has to initiate that attempt, which they haven't been willing to do. This therefore offers the opportunity to rectify the situation in a way that doesn't require districts to take that initial step. Number 2865 REPRESENTATIVE KERTTULA asked whether SB CO-CHAIR MASEK announced the next order of business, CS FOR SENATE BILL NO. 319(FIN), "An Act relating to shallow natural gas; and providing for an effective date." Number 1523 SENATOR JOHN TORGERSON, Alaska State Legislature, sponsor, came forward to present SB Natural Resources (DNR)] Oil and Gas Leasing Program was started more for the rural areas of the state and has now become a commercial program rather than a program targeted to supply gas to rural areas. Senator Torgerson said [DNR] had issued more than one hundred leases and had two hundred more leases pending. He explained the points of the bill: increase state revenue by increasing the [application fees for shallow gas] leases from $500 to $5,000, which would more closely reflect the costs of DNR to process the leases; increase the annual rental fee from annually notify a [lessee] by certified mail of rental due. Senator Torgerson indicated rent would be automatically due on the date determined by the lease. He explained that the deadlines have proven to be unworkable and do not recognize the work required by DNR [to prepare leases in areas that are populated and may have complex land ownership patterns.] Senator Torgerson explained that for [the purpose] of better reservoir management, the limitation of the depth of 3,000 feet [would be amended] to require that some portion of the field has to be at the 3,000-foot level. He said the total amount of acreage would be [amended] and increased from 46,080 acres to applicant to conduct the title search. SENATOR TORGERSON explained that DNR routinely conducts a title search for land before the leases are issued. Additionally, he said, there are no title companies in the state that will give a "subsurface estate warranty title." Senator Torgerson said the lessee must secure a bond as a precondition of the lease; if damages occur and the lessee and the landowner cannot reach an agreement on the amount of damages, then either party can seek relief in the courts. He explained that the proposed new bonding would help protect surface owners by ensuring that the substantial bonds are in place prior to exploration development. Senator Torgerson addressed an additional point that he said "is actually just a conversion, a timeline for people, ... a transition period for them to get the leases under this current leasing program." Number 1365 REPRESENTATIVE FATE questioned increasing the total acreage to previously suggested "squaring that up into six townships," and asked whether that would be problematic. Number 1285 SENATOR TORGERSON indicated the area could not be squared and said he'd spoken with Mark Myers [Director, Division of Oil and Gas, Department of Natural Resources] about the possibility of an amendment "to increase this." He said, "I'm to go on their recommendation; ... they think it might be all right; nobody has 100,000 acres now, so I think we're jumping the gun a little bit." He reiterated that he would go with [DNR's] recommendation and said that [DNR was considering] adding another township. Senator Torgerson said [Mark Myers] believed that might particularly help Evergreen [Resources] "out for some of the stuff in the valley." SENATOR TORGERSON remarked: One of the concerns I had ... is that people are tying up our acreage in the state, waiting for stuff to happen, and the old thing of $500 and 50 cents an acre costs you nothing to tie up thousands of acres of oil and gas land and call it a shallow gas leasing. SENATOR TORGERSON indicated he would not object to an amendment. He said he was acting on recommendations of people in the business who had indicated [an amendment] would be workable. Number 1218 REPRESENTATIVE GREEN stated: I have a bit of the same concern. I can understand why an exploratory outfit might want to go in, somewhat like a concession. I know in other countries, in order to try and prove up an area, they'll grant concessions and they might fiddle around and find something here that, if they had tried to find littler blocks like we generally lease in, it might not really be of an interest to them because they have to focus so much of their corporate work to go in there. But I share the Senator's concern that right now if we ... have $500 for so many acres, we go up to $5,000 but we're increasing the acreage significantly. And if we were to say something more like 10 cents an acre or something so that as the acreage increases, so, too, does the rent -- because I share your concern that pretty soon you're going to have enough of these things that any reasonable area that you might want to poke a hole in has already been leased up for almost nothing, and I am really concerned about that. I don't think increase in rent would be a deterrent. I think what it would do is make people [say], ... "If two's good, four outta be better, maybe we only need three and we're willing to pay a little extra to get that three." But to increase this by almost 50 percent at the same rattle seems to be a little bit of a jump. So, I don't have an objection to the amount of acreage, but I think the rent ought to go up [proportionately]. So, if we make that increase in acreage, I'd like to maybe bring up a second amendment. SENATOR TORGERSON pointed out that [the cost] would increase to $1 per acre and asked Representative Green if he wanted [the cost to be increased] above $1 per acre. REPRESENTATIVE GREEN replied, "No, that's fine; I was just looking at the number on Section 2 there." SENATOR TORGERSON reiterated that the cost was being increased from 50 cents to $1. REPRESENTATIVE GREEN said, "That's fine, I think if that doesn't impact this because 138,000 acres at $5,000 seems like that's not quite a dollar an acre." SENATOR TORGERSON suggested the current program had become commercialized compared to the past program. He said a more user-friendly program would be [beneficial] for communities in rural areas of the state that use [the program] for the consumption of power, gas, and electricity. He remarked, "Again, this program didn't necessarily work well for that, but then it got too commercialized in the NANA [region], and the Kenai Peninsula, and Mat-Su areas ...." He suggested that most of the [oil and gas] industry was in support of the bill. Number 1006 REPRESENTATIVE McGUIRE called attention to Section 3, page 2, line 31, which read: The director shall execute the lease [WITHIN 90 DAYS] after completion of a title search, the close of the public comment period, and [OR], if review is required under AS 46.40, [WITHIN 30 DAYS] after the final consistency determination is made under SB Number 0521 MARK MYERS, Director, Division of Oil & Gas, Department of Natural Resources (DNR), testified. Mr. Myers told the committee that [SB commercialization of shallow gas, strictly coal bed and fractured shale. He explained that [DNR] worked with Senator [Torgerson] and the parties to try to craft something that works as a package. Mr. Myers commented, "I think the elements you've heard do that rather nicely together." He explained that the increase in acreage to 100,000 acres was a recognition that the production of a coal bed would have to be produced on a large scale for commercial operations where they depressurize a large area over time. MR. MYERS remarked: With that recognition, it's different than a conventional oil and gas play, and may in fact require more acreage to do on a commercial scale. We have no objections to the six townships or ... approximately 138,000 acres versus 100,000 acres. What we've seen in the program, being over-the-counter filing, is that it's pretty easy to file and meet the basic qualifications anyway, and we've seen family members stack on each other to create aggregates, such are in fact at that same scale. Number 0433 MR. MYERS suggested that there were no protections [in place] to prevent an individual or consortium from acquiring a large group of acreage. He noted that he had seen this happen in the conventional program. He commented: So again, the ... 46,000 acres hasn't been an impediment or affiliated organizations or affiliated people to bid in aggregate together. So, in fact, I'd personally rather see the primary party, who's interested in exploring, be able to acquire the significant amount of acreage needed to unitize, and the 138,000 give you enough for two substantial units for solid, unitized production. One of the other concerns, again, was the worry about lock-up. I think a three-year term has the converse effect, that ... what Mr. Booth had testified, that it does require the leases turn over. Number 0357 MR. MYERS explained that the commissioner can, with discretion, renew [the lease] for three additional years. He remarked: So, in fact, if you're making progress toward exploration development, you, in fact, probably have a six-year lease, at which point you would assume that you go into some kind of unitized production, ... to maintain the acreage over an area. Number 0283 MR. MYERS said, "We think it works; we think the three-year term's an aspect of this not holding the acreage forever." He suggested the higher fees are necessary for the program to pay for itself and to discourage rampant speculation. Mr. Myers offered his belief that a flat fee over a graduated fee would be better because it would not penalize someone who wanted to produce a large aggregate of acreage efficiently together in a unitized form. He commented: On the comments about the 90 days, we found that impractical; we simply can't do it for a number of reasons: one is, again, we had to go through the title work; ... we found because the lack of title insurance we couldn't guarantee the title work had been [done] adequately, so we ended up doing it ourselves. We figured, "Why burden the applicant if we are, in fact, doing it ourselves?" Also, I think it helps justify the higher fee. The other thing is that we have to go through stipulations and mitigation measures for environmental protection, and those are unique area by area. I don't know if any of you have been involved with that process, but we're not the only agency involved with that, so the inner-agency effect is elevations, commonly, with other agencies like [Alaska Department of] Fish and Game that may disagree with the environmental protections. We also, generally, in many of the areas, have to go through the ACMP [Alaska Coastal Management Program] process. So again, to do all of that in 90 days is totally unrealistic, no matter our best intent. MR. MYERS said the [department] has to balance the use of staff on title work for conventional lease sales, exploration licenses, and shallow gas leasing. He indicated [the use of staff] is balanced on a need-to-need basis, but the programs bringing in the most revenue for the state [are viewed] as the most important and work is often [prioritized on that basis]. Mr. Myers said not having a deadline gives the [department] flexibility. He remarked, "We work hard to get these leases out, and every chance we get, we do work on them, including, in fact, hiring contractors to do some of the title work." Mr. Myers said the [department] is motivated and wants to see the program work. Number 0133 MR. MYERS remarked, "We think it's an important resource, strictly in the Mat-Valley, the Big Delta, and the lower Kenai, where we think it could work commercially, as well as a very appropriate use there ... in the Red Dog Mine area." He said the fees are justifiable and supportable by the industry; the program will have net positive benefits, and [SB out of committee. He suggested that the amendments identified provide for better administration, flexibility, and clarification of the Shallow Gas Leasing Program. Mr. Tabler asked [John Tanigawa] from Evergreen [Resources Alaska Corporation] to address the how the acreage limitation issue is applicable to shallow gas, coal bed, and methane development. Number 0299 JOHN TANIGAWA, Special Projects Manager, Evergreen Resources Alaska Corporation, testified via teleconference in support of SB 319, noting Evergreen Resources, Inc. He told members: Last December, I moved to Wasilla to oversee our operations. Currently, we have 46,080 acres of shallow gas lease applications located near Willow, and today I testify in support of Senate Bill 319. SB and to develop shallow natural gas. Evergreen Resources Alaska's specialties extend to Alaska the main focus of Evergreen Resources, which is coal bed methane development, unconventional gas, and shallow natural gas. These activities require at least 100,000 acres, or roughly four townships, to establish the necessary economies of scale for initial development. Due to the challenges of operating in an arctic environment, however, increasing that acreage limitation to 138,240 acres, or six townships, increases the economic viability of shallow natural gas in Alaska. We strongly support increasing the depth limitation to one that relies on science and geology for the specific play. And we are certain that we can drill, complete, and produce natural gas [wells] below 3,000 feet in an environmentally safe and responsible manner, using already existing technologies that we employ. Finally, Madam Chairman, the shallow gas program is the reason why Evergreen is in Alaska. We are grateful that the legislature is making this program possible and for improving it. Changes proposed in this bill provide us the necessary latitude to operate in an economically sound and environmentally safe manner. We acknowledge the Division of Oil & Gas for collaborating with us, with other [stakeholders], and this is an excellent example of how the state agencies and industry can work together to ... benefit not only industry and government, but particularly the public. Thank you for allowing me to testify. I will be pleased to answer any questions that you might have. Number 0509 DANA OLSON testified via teleconference on her own behalf, noting that [she'd faxed her comments to the committee that morning]; she asked that they be included in the legislative history. She suggested that the social and economic impacts [to] the acreage were rather significant, and [the bill] could potentially impact community developments. Ms. Olson said she felt that DNR had a responsibility to the people who live in Alaska to adequately consider the risk assessments and the economic [impacts], and to apply the policies and law equally (indisc.) a person similarly situated. She said she didn't feel that the risk assessment was adequate [or] that $5,000 would [be enough money] to adequately consider the effects. Ms. Olson remarked, "And I ask you specifically to keep this in committee until that a complete and thorough review, whether the risk assessment would be adequate." Number 0650 CO-CHAIR MASEK closed public testimony. Number 0720 REPRESENTATIVE FATE offered the following amendment [Amendment 1]: Page 2, line 19, following, "an aggregate Delete "100,000" Insert "138,240" Number 0722 CO-CHAIR MASEK indicated she would like an explanation of the proposed amendment [Amendment 1]. Number 0723 REPRESENTATIVE FATE explained: It's already been established, both in the committee and the Oil and Gas Committee, and this committee testifying, specifically, to the amount of acreage, that it's beneficial to the ... people who are ... doing the exploration, ... that it's beneficial to them in unitizing, basically, the cost effectiveness, and ... it's also been testified to by ... Mark Myers, the Director of the Division of Oil and Gas, that ... it's not going to be deleterious to any efforts to ... explore those lands, and in fact will increase the income of the state, too, given that there is an increase from $500 to $5,000 per acre. So, it looks to me like the testimony that we've had, relevant to the increase of acreage, has all been positive. Number 0792 DARWIN PETERSON, Staff to Senator John Torgerson, Alaska State Legislature commented, "As Senator Torgerson testified earlier, he will agree with the department and defer to their opinion, and I understand they're okay with this amendment." Number 0810 REPRESENTATIVE CHENAULT asked, "Just for clarity, it's not $5,000 an acre, correct?" REPRESENTATIVE FATE responded, "Correct." Number 0834 CO-CHAIR MASEK returning to the proposed amendment, asked if there was objection to Amendment [1]. There being none, [Amendment 1] was adopted. Number 0864 REPRESENTATIVE GREEN moved to report [319(RES) was Committee. ADJOURNMENT There being no further business before the committee, the House Resources Standing Committee meeting was adjourned at approximately 3:24 p.m.

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