Legislature(2021 - 2022)BARNES 124
01/21/2022 01:00 PM House RESOURCES
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| Audio | Topic |
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| Start | |
| HB135 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
| += | HB 135 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
January 21, 2022
1:04 p.m.
MEMBERS PRESENT
Representative Josiah Patkotak, Chair
Representative Grier Hopkins, Vice Chair
Representative Zack Fields
Representative Calvin Schrage
Representative Sara Hannan
Representative George Rauscher
Representative Mike Cronk
Representative Ronald Gillham
Representative Tom McKay
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 135
"An Act relating to geothermal resources; relating to the
definition of 'geothermal resources'; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 135
SHORT TITLE: GEOTHERMAL RESOURCES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/10/21 (H) READ THE FIRST TIME - REFERRALS
03/10/21 (H) RES, FIN
04/22/21 (H) RES WAIVED PUBLIC HEARING NOTICE, RULE
23(A) UC
04/23/21 (H) RES AT 10:30 AM BARNES 124
04/23/21 (H) Heard & Held
04/23/21 (H) MINUTE(RES)
04/23/21 (H) RES AT 1:00 PM BARNES 124
04/23/21 (H) -- MEETING CANCELED --
04/26/21 (H) RES AT 1:00 PM BARNES 124
04/26/21 (H) Heard & Held
04/26/21 (H) MINUTE(RES)
04/30/21 (H) RES AT 1:00 PM BARNES 124
04/30/21 (H) Heard & Held
04/30/21 (H) MINUTE(RES)
01/21/22 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
HALEY PAINE, Deputy Director
Central Office
Division of Oil and Gas (DO&G)
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: On behalf of the administration, co-
provided a PowerPoint presentation titled, "HB 135 GEOTHERMAL
RESOURCES," dated 1/21/22.
STEVE MASTERMAN, Director
Division of Geological & Geophysical Surveys (DGGS)
Department of Natural Resources (DNR)
Fairbanks, Alaska
POSITION STATEMENT: On behalf of the administration, co-
provided a PowerPoint presentation titled, "HB 135 GEOTHERMAL
RESOURCES," dated 1/21/22.
SEAN CLIFTON, Policy and Program Specialist
Central Office
Division of Oil and Gas (DO&G)
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 135, answered a
question.
ACTION NARRATIVE
1:04:16 PM
CHAIR JOSIAH PATKOTAK called the House Resources Standing
Committee meeting to order at 1:04 p.m. Representatives
Schrage, Gillham, Hannan, Rauscher, Hopkins, Cronk, McKay, and
Patkotak were present at the call to order. Representative
Fields arrived as the meeting was in progress.
1:06:05 PM
HB 135-GEOTHERMAL RESOURCES
CHAIR PATKOTAK announced that the first order of business would
be HOUSE BILL NO. 135, "An Act relating to geothermal resources;
relating to the definition of 'geothermal resources'; and
providing for an effective date."
CHAIR PATKOTAK reminded committee members that HB 135 is by the
[House Rules Committee by request of the governor].
1:07:21 PM
HALEY PAINE, Deputy Director, Central Office, Division of Oil
and Gas (DO&G), Department of Natural Resources (DNR), on behalf
of the administration, co-provided a PowerPoint presentation
titled, "HB 135 GEOTHERMAL RESOURCES," dated 1/21/22. She began
with slide 2, "AGENDA," and said she would review the purpose of
HB 135, review DNR's geothermal leasing history, and provide a
sectional analysis and summary of the bill.
MS. PAINE proceeded to slide 4, "PURPOSE OF HB 135," which read
as follows [original punctuation provided with some formatting
changes]:
• Modernize Alaska's geothermal exploration program
o Greater potential for providing affordable,
renewable energy to rural communities and remote
natural resource extraction projects
o Promote clean energy industry job creation
• Align geothermal licensing with the oil and gas
exploration license program, thereby increasing
feasibility for companies to develop resources
o More time for a company to identify and prove
resource to convert to leases
o Conversion to leases based on completion of work
commitment and submission of exploration plan
instead of proving discovery of commercial
resource
o Doubles maximum acreage allowed for exploration
• Reforms definitions for geothermal resources to focus
on Commercial Use
o Explicitly excludes domestic, noncommercial, or
small-scale industrial use from the need for a
geothermal license or lease
MS. PAINE stated that the purpose of HB 135 is to modernize
Alaska's geothermal exploration license program given there are
opportunities to develop the state's resources. The bill would
increase the feasibility for companies to develop those
resources and benefits would include providing affordable,
renewable energy and creating jobs. The bill would also ensure
the consideration of geothermal resources in line with
commercial use.
1:11:24 PM
REPRESENTATIVE HANNAN asked whether it is currently required
that domestic non-commercial, small-scale industrial use have a
lease or permit from the state. She further asked whether that
would be continued. She said she understands that HB 135 would
move and modernize the commercial aspect.
MS. PAINE replied that current state statute does not require a
permit or lease for a small-scale or home industrial system.
However, she pointed out, that is implicit, not explicit, so
[DNR] wants to explicitly state that homeowners or individuals
would not be impacted. This explicit statement allows for some
of these other changes to be made in the bill.
REPRESENTATIVE HANNAN noted that the underlying premise under
the state's oil and gas leasing is about subsurface rights. She
inquired about the amount of subsurface use of geothermal that
is not commercial. She further inquired whether currently a
property owner would need a permit to enjoy hot springs located
on their property.
MS. PAINE responded that a homeowner is not going to require a
permit from DNR to access the geothermal under their property,
the use of a heat pump being an example. She deferred to her
DNR colleagues to answer in terms of the quantity or number or
known locations of the duration of use of those sorts of
products within the state.
REPRESENTATIVE HANNAN said she is okay with having the question
answered later since it doesn't directly pertain to the bill.
However, she related, she is now thinking about subsurface
rights that are [currently] closely monitored and permitted in
the backyards of homeowners.
1:14:37 PM
REPRESENTATIVE HOPKINS drew attention to the bullet point on
slide 4 that states, "Doubles maximum acreage allowed for
exploration." He surmised it is a doubling from 50,000 to
100,000 acres for what an individual can get for a lease.
MS. PAINE confirmed that that is correct.
REPRESENTATIVE HOPKINS asked whether that was a concern for
current lessees or others trying to get leases for geothermal
production.
MS. PAINE answered that it hasn't been found to be a problem per
se, but that any time the acreage can be increased it will
maximize the potential. For example, it can sometimes be a
challenge to find the location of the actual resource for a hot
spring found at the surface because it isn't typically directly
underneath; this would expand the field for being able to
search. She noted that in the agency's exploration licensing
program, an individual may seek 500,000 acres, and therefore
this [proposed] change from 50,000 acres to 100,000 acres would
not be anything out of par with the mineral leasing program.
REPRESENTATIVE HOPKINS remarked that that is a lot of land. He
asked the 100,000 acres would be roped off from any other type
of development, exploration, or sale during the five-year lease
for proving the source and completing the work commitment.
MS. PAINE replied that it is not. She said the state would not
be granting exclusive rights to access the property or any other
mineral, but it would be exclusive to the geothermal. These are
not mineral closing orders; this just allows someone to enter an
area and begin to explore for those resources. All access
provisions are guided through a plan of exploration and lease
plan of operations and are vetted accordingly through there.
1:17:23 PM
REPRESENTATIVE SCHRAGE asked whether the development of
geothermal energy could make the acreage unviable for other
exploration.
MS. PAINE responded that when evaluating specific plans for
operations, the agency takes into mind the beneficial uses of
the region more generally speaking. Without a specific plan and
an understanding of the resource size it would be speculative to
say whether something may hurt or progress into a plan. For
example, if there is an oil and gas facility, certain competing
uses would have to be considered, but allowing the opportunity
to explore for geothermal would not necessarily preclude the
agency from advancing the other resources in the area.
REPRESENTATIVE SCHRAGE asked whether a process exists for
evaluating the different opportunities within an area.
MS. PAINE replied that multiple processes exist, with the first
and foremost being the best interest finding (BIF) process. An
applicant would apply for a permit on a set area and then the
state would conduct a BIF under which all potential uses of the
area are evaluated, including potential cumulative impacts to
resources and uses as a result of said permit activities being
permitted in that area. After balancing the potential positive
and net negative effects the director makes a final
determination. AS a public process it is noticed, and the
comments incorporated. Following that, the applicant goes
through a permitting process to indicate actual activities. The
first phase in BIF disposal allows the applicant to enter the
land. The second phase of public process and notice is when the
applicant has a specific plan for specific metrics and sizes
that [DO&G] can take into account and let the public know about
and then provide comment on.
1:20:32 PM
REPRESENTATIVE GILLHAM said his concern is not so much another
company coming in but whether someone with a permit could lock
up the 500,000 acres so there would be no access to Alaska
residents who have used that land for centuries to hunt.
MS. PAINE responded that the 500,000 acres was in result to the
agency's oil and gas exploration licensing program, whereas this
bill is seeking to change from 50,000 acres to approximately
100,000 acres. She said HB 135 would not do anything to change,
impact, or impede the ability of folks to access the area for
uses such as subsistence, all of which is taken into accord.
Licensing is simply to the mineral estate. The aforementioned
issues have not been encountered under the agency's current
geothermal program.
1:22:12 PM
STEVE MASTERMAN, Director, Division of Geological & Geophysical
Surveys (DGGS), Department of Natural Resources (DNR), stated
that he doesn't have anything more to add to Ms. Paine's
response to Representative Gillham.
1:22:33 PM
REPRESENTATIVE FIELDS inquired about the expanded area and the
size of a facility.
MS. PAINE answered that that would not necessarily indicate a
change in size of the facility. The sizing for the facilities
would be based on the what the resource requires. This merely
allows [the applicant] to look in a greater space to see what
resource may be there. The type of facility that would be
placed on an area would be at the size and scale that makes
sense for the resource itself.
1:23:39 PM
MS. PAINE resumed her presentation. She turned to slide 5, "DNR
GEOTHERMAL LEASING/PERMITTING HISTORY," which read as follows
[original punctuation provided with some formatting changes]:
Present
Mount Spurr Currently there are two geothermal
exploration prospecting permits in the Mount Spurr
area, both issued during 2021.
Augustine Island An application for a prospecting
permit is under review for Augustine Island.
2013
Augustine Island 26 tracts were offered. Only one
tract was leased to a private individual and no
exploration work was conducted as a result of that
lease sale.
2008
Mount Spurr 16 tracts leased to Ormat and one private
individual. Ormat purchased 15 leases in the 2008 sale
and drilled on southern flank of volcano. They didn't
find adequate temperatures in wells to pursue the
project. The state has the data available on DO&G's
website.
1986
Mount Spurr On June 24, 1986, DNR offered 2,640 acres
in two tracts. Both tracts received bids. The lease
for Tract 1 expired in 1996, and the lease for Tract 2
was terminated in 1990.
1983
Mount Spurr DNR held its first geothermal lease sale
in the Mount Spurr area on May 17, 1983. 10,240 acres
in 16 tracts were offered in Competitive Geothermal
Lease Sale 1. One tract received a bid. The lease for
that tract was terminated in 1992.
MS. PAINE noted that since its start in 1983 the geothermal
program has not been a significantly large program, and the
tracts in which interest was shown were in the Mount Spurr area.
All the activities from 1983-2013 were done through a
competitive leasing program, which would not be changed or
affected by HB 135. The competitive leasing program is designed
for when multiple parties show an interest, and competitively
making the resources available ensures the maximizing of value
to the state. She explained that HB 135 seeks to address those
times when there is only a single interested party and there is
not competitive process. It is currently called a prospecting
permit, but it can be better characterized as an exploration
license. Two parties presently have prospecting permits located
in the Mount Spurr area and are in their two-year prospecting
permit stage. Should HB 135 pass, these two existing permittees
would benefit from the ability to extend from a two-year to a
five-year. An application is in place for Augustine Island,
with the preliminary BIF forthcoming in the next few months.
1:26:23 PM
MS. PAINE spoke to slide 6, "SECTIONAL SUMMARY," which
highlights everything that is being sought and that would be
changed through HB 135. The slide read as follows [original
punctuation provided with some formatting changes]:
1 (AOGCC) Removes unnecessary reference to AS 41.06
from AS 31.05.030(m) because of changes made by
Section 9.
2 (DNR) Changes permits to licenses. Explicit
exemption for geothermal resources intended for
domestic, noncommercial, or small-scale industrial use
(See also Section 9). Removes preferential rights
clause. This provision is not appropriate for
commercial development of State resources.
3 (DNR) Changes permit to license. Extends term of
licenses (formerly permits) from two to five years.
Replaces lease conversion requirement of commercial
discovery and development plan with work commitment
and exploration plan.
4 (DNR) Changes permit to license.
5 (DNR) Changes permits to licenses. Increases maximum
acreage from 51,200 to 100,000. Adds provision for
rental fees to be defined in regulation, rather than
statute (easier to update).
6 (DNR) Adds new subsections to AS 38.05.181 to
modernize unitization statute for geothermal leases to
match the model we use for oil & gas under AS
38.05.180.
7 (DNR) Replaces AS 38.05.965(6) definition of
geothermal resources (Same as Section 11).
8 (AOGCC) Amends AS 41.06.020(e), clarifies that AS
41.06 does not limit DNR's authority over geothermal
resource management on state land.
9 (AOGCC) Amends AS 41.06.020(f) to add explicit
exemption for geothermal resources intended for
domestic, noncommercial, or small-scale industrial use
(See also Section 2).
10 (AOGCC) Amends AS 41.06.060(4) definition of
geothermal fluid to remove temperature references and
better conform with other changes in this bill.
11 (AOGCC) Replaces AS 41.06.060(5) definition of
geothermal resources (Same as Section 7).
12 (AOGCC) Repeals AS 41.06.005(b) and AS 41.06.030,
since geothermal units are managed by DNR.
1316 General provisions for applicability and
effective dates. Includes applicability provision for
prospecting permits currently being processed.
1:27:26 PM
MS. PAINE discussed slide 8, "SECTION 2: PRIVATE USE EXEMPTION,"
which read as follows [original punctuation provided with some
formatting changes]:
? New language added:
A prospecting license or lease is not required under
this section to explore for, develop, or use
geothermal resources if the geothermal resource is
intended for domestic, noncommercial, or small-scale
industrial use.
? This explicitly excludes private geothermal users
from a requirement to apply for a license or lease.
MS. PAINE stated that Section 2 would provide private landowners
the certainty that their ability to access geothermal for
something like a ground source heat pump is protected in law.
1:28:20 PM
REPRESENTATIVE SCHRAGE asked what the largest project would be
that someone could put in place under this provision for
domestic, noncommercial, or small-scale industrial use.
MS. PAINE replied that it is intentionally not limited to a
specific size so that it can be considered based on the use.
She said [the department] did not want to set a cap for a
certain number of kilowatts given it was found that the caps put
on the definition of geothermal and temperature may have
restricted folks unnecessarily. "So," she continued, "when we
are thinking about this, we're really focused on some resource
that's going to be produced and then sold, distributed to
multiple clients, so that is why we didn't really set a specific
kilowatt or megawatt exemption on there."
REPRESENTATIVE SCHRAGE asked whether there is any risk that
someone who is using this for a non-commercial use or someone
who developed geothermal infrastructure for non-commercial use
could impact other uses unintentionally.
MS. PAINE responded that despite the type of project that would
go in, if someone is immaterially using state land or creating a
large project, that project may not require a specific
geothermal prospecting permit. However, it would no doubt
require other sorts of permits and authorization that may come
out of DNR, or the Department of Environmental Conservation
(DEC), or another agency. Therefore, that sort of risk would be
vetted through the public processes that are in place through
those other permits that might be required.
1:30:41 PM
MS. PAINE addressed slide 9, "SECTION 2: PREFERENTIAL RIGHTS,"
which read as follows [original punctuation provided with some
formatting changes]:
? The preferential rights provision is being deleted
because it is inappropriate to the situation (it's
more relevant to water rights or other surface use
cases not associated with the mineral estate).
? Surface owner rights are protected under AS
38.05.130.
? If conflict arises, DNR ensures private
landowners would not be left without heat or
power, or otherwise damaged by commercial
development.
? Scenario is unlikely because private landowners
usually don't have financial resources to develop
a commercially-viable geothermal resource.
? Rights to access the mineral estate are reserved
under AS 38.05.125.
? Surface owners must provide reasonable access
to resource developers.
? The same condition exists for oil & gas or
mining.
? If a surface use agreement can't be reached,
resolution process is in 11 AAC 86.145.
? DNR holds a hearing wherein the developer must
prove there is no other alternative location for
the well or data acquisition.
? If the Commissioner concurs, developer posts a
bond to compensate landowner for any impacts and
work progresses.
? Public notice is a part of the license issuance
process, and surface owners would be included.
MS. PAINE said the preferential rights clause currently allows
that a surface owner may exercise the preferential right within
30 days after receiving notice of the application for a permit,
or by agreeing to meet the terms of a bid within 60 days after
receiving notice of the acceptance of the bid for a lease.
Under current statute, the department makes it known through the
public notice process when someone applies for a prospecting
permit. The surface owner could then put a permit over the top
of that and say, "I would like to use that."
1:31:50 PM
MS. PAINE specified that this is where it gets to DNR's point
about the explicit exemption. She said the department wants to
ensure that anything in the realm of non-commercial and small-
scale would not be impacted. These types of projects would only
be of the size and magnitude that an individual would not most
likely be able to fund and continue with the exploration of a
large-scale program. This provides the certainty that someone
who has spent money on surveys and exploration for geothermal
doesn't have to run the risk of someone placing a permit
application on top of them and then thereby selling that permit
back to them at a fee; that is essentially what the removal of
the preferential rights clause is seeking to prevent.
MS. PAINE said another reason DNR wants to explicitly state that
this does not apply is so surface landowners are not concerned
that their domestic use would in any way be infringed upon.
Several different provisions and processes are in place in which
the surface owner's rights are protected. If a concern arises
between a surface owner and someone entering their property to
explore for a mineral resource that has been granted through
geothermal, oil and gas, or another sort of lease, DNR will
intervene under AS 38.05.130 and a robust public process will
take place to ensure that the landowner is not harmed
financially and that everything is bonded sufficiently. She
reminded the committee that this is where members had questions
during a previous hearing.
1:34:23 PM
REPRESENTATIVE HOPKINS observed the statement on slide 9 that
under AS 38.05.130 private landowners would be protected from
being left without heat or power. He further observed the
statement that this scenario is unlikely because private
landowners usually don't have financial resources to develop a
commercially viable geothermal resource. He posed a scenario in
which an individual has a heat pump for private home use, but
somebody develops the resource on 100,000 acres surrounding the
home and it drains the geothermal potential for that private
home. He asked whether HB 135 would protect a homeowner that
loses access to a geothermal resource due to the commercial
development of a larger one.
MS. PAINE replied that that scenario may be highly unlikely, but
DNR believes these provisions would absolutely protect that
landowner. The sort of resource used to power a home heat pump
may not actually be connected to something on the scale that
would be large enough to warrant some sort of commercial
development. She deferred to Mr. Masterman to answer further.
MR. MASTERMAN responded that in such a scenario it would be a
scale issue as well as a depth issue. A home heat pump system,
he explained, is at very shallow depths, generally tens of feet,
whereas a commercial scale and commercial temperature geothermal
system is at depths of a thousand feet or more. The depth
separation between these two systems is going to be substantial
and very likely tapping into different sources of either fluids
or heat. They are going to be very distinct geologically and
thermally, and therefore the scenario described by
Representative Hopkins would be very unlikely.
1:37:13 PM
REPRESENTATIVE HOPKINS recalled Ms. Paine's statement about a
robust public notice process. He inquired as to whether a
private landowner who would be impacted by a lease submission
would be mailed a notice or whether it would just be posted on a
state website or public domain.
MS. PAINE answered that the first step in the general disposal
process is done by posting, and under statute posting is through
the newspaper, the agency's website, and so forth. When it
moves into specific sorts of operations there is a more
specified notification process. To receive a plan of operations
the agency requires the applicant to identify the surface
landowners that may be impacted. At the scale addressed in HB
135, which is the disposal phase, it is more of a general
posting; then, as there is a known project and a known plan, it
becomes more specific.
1:38:41 PM
REPRESENTATIVE HANNAN observed the statement on slide 9 that
preferential rights would be deleted under HB 135. However, she
observed, the presentation later states that hydrothermal
systems are the most common form of energy extraction from the
geothermal heat. She inquired about where in the permitting
water rights come in once there is a finding that the geothermal
is substantial enough for commercial development.
MS. PAINE replied that the water rights would take place under a
separate permitting process through DEC. She said she could
follow up with more details if the committee so wanted.
MR. MASTERMAN responded that most people obtaining water rights
are doing so for either agriculture or domestic use, so they
typically want high quality water that is not full of minerals,
chemicals, or dissolved constituents. Geothermal systems are
often very brine rich and may have chemical attributes that make
them unsuitable for drinking or agricultural use. So, he
advised, while there is potential for overlap of water rights or
competitive needs for water, the chemical attributes of the
water for geothermal use and for agricultural and domestic use
are quite distinct.
1:42:19 PM
REPRESENTATIVE HANNAN requested that the committee hear formally
from DEC on water rights. She noted that while it may not be in
DNR's purview, in many parts of Alaska the water use rights and
preferential water use rights about salmon spawning streams are
frequently close to where there is geothermal evidence, with
Bristol Bay being one such area. She said she wants to ensure
that a water conflict is not created by geothermal being siloed
from water rights when it is known that they are integrated.
CHAIR PATKOTAK agreed to invite DEC to come before the committee
regarding where in the permitting process water rights are
interjected.
1:43:46 PM
REPRESENTATIVE SCHRAGE stated he understands that most of the
water rights issues are currently over non-brine rich waters.
However, he said, as more exploration for geothermal occurs he
is concerned about an industrial project impacting the heat
potential of other non-commercial private users. He asked
whether, at the point of putting in a development, assessments
and tracking would be done to see if there is a loss of
efficiency or loss of heat potential due to the development.
MS. PAINE reiterated that a process is in place to identify
whether anyone's heat, power, or other beneficial use of their
property would be impacted; so DNR would be able to evaluate,
intervene, and make sure compensation is in place. She deferred
to Mr. Masterman to address any competitions that could arise
but recalled his earlier description of the differences in
locations and depths.
1:45:27 PM
SEAN CLIFTON, Policy and Program Specialist, Central Office,
Division of Oil and Gas (DO&G), Department of Natural Resources
(DNR), clarified slide 9 is not saying that this has anything to
do with water rights, but rather that the concept is similar or
more relevant to water rights. He said none of the cases being
discussed here have anything to do with water rights, which are
managed by the Water Section in [DNR's] Division of Mining, Land
and Water. Those seeking to secure water rights or to have a
water rights dispute handled would do that through the Division
of Mining, Land and Water. As pointed out by Mr. Masterson, he
continued, the typical water rights issues are with clean water
to drink or water a crop, not the type of fluids that might be
used for geothermal resources. He confirmed that DEC handles
matters where contamination of surface water might be an issue
and said permits would have to be applied for in the case of a
development scenario.
CHAIR PATKOTAK stated the committee would still look for a more
in-depth understanding of the different types of water rights
and how they could be affected by HB 135.
1:47:38 PM
MS. PAINE spoke to slide 10, "SECTION 3: WORK COMMITMENT," which
read as follows [original punctuation provided with some
formatting changes]:
? Changes prospecting permit to license and increases
term from 2 to 5 years
? Creates greater opportunity for success of
noncompetitive geothermal program
? Conversion to noncompetitive lease through
completion of agreed upon work commitment
? Current process for oil and gas exploration
license
? Commitment expressed in dollar figure
? Annual reporting and performance
objectives
MS. PAINE explained that the term prospecting "permit" would be
changed to "license," and the time would be increased from two
years to five years. To provide context, she noted that a lease
is granted for 10 years. She said the bar to prove a commercial
resource is a high bar that can take a significant amount of
time, whether for oil and gas or for geothermal. This is a more
robust and more consistent way of moving forward for a party
that has completed a specified work commitment. The bill seeks
to align the geothermal program with the oil and gas program in
terms of the requirements.
1:49:28 PM
REPRESENTATIVE HOPKINS offered his understanding that "permit"
would be changed to "license," and that expanding from two years
to five years would be a five-year extension of the work
commitment. He asked whether the lease for up to 100,000 acres
is for ten years.
MS. PAINE replied that as a part of the competitive leasing
program, [leases] are issued for a primary term of 10 years and
can be for parcel sizes smaller than 100,000 acres. Under the
competitive geothermal program, which HB 135 does not impact, 10
years are being granted in which to explore the area. Because
this is noncompetitive it is a slightly shorter duration of time
because [the department] wants to encourage as many folks as
possible to get out there and compete to explore Alaska's
resources.
REPRESENTATIVE HOPKINS offered his understanding that the lease
is for 10 years on sizes up to 100,000 acres and the work
commitment is for five years. He posed a scenario in which the
work commitment is not completed in five years and asked whether
the individual would still have that same lease for another five
years.
MS. PAINE responded that [DNR's] competitive leasing program
does not include a work commitment for decision. To maintain a
lease beyond the 10 years the individual would have to either
move to unitization or achieve production. This work permit
commitment component is separate, unique, and specific to what
[DNR] is calling an exploration license program, she explained.
The five-year work commitment aligns with the five-year term of
the exploration license itself. In the case of an exploration
license, if an individual has not been able to successfully
complete their work commitment, there are provisions where an
extension of time can be applied for to complete the work
commitment, but that would go through the commissioner's or
director's office and there could be some further requirements
in terms of performance guarantees along with that.
1:52:23 PM
MR. MASTERMAN resumed the PowerPoint presentation with slide 11,
"SECTION 10: GEOTHERMAL FLUIDS," which read as follows [original
punctuation provided with some formatting changes]:
AS 41.06.060(4) is amended to read:
(4) "geothermal fluid" means liquids, brines, water,
gases, or and steam at temperatures greater than 120
degrees celcius or any commercial use of liquids and
steam naturally or artificially present in a
geothermal system; "geothermal fluid" does not include
oil, hydrocarbon gases, or other hydrocarbon
substances at temperatures less than 120 degrees
celsius;"
? Aligns with modernized definition for geothermal
resources.
? Not limited by temperature because current
technology enables development of cooler geothermal
systems.
? Distinguishes geothermal fluids from hydrocarbon
resources.
MR. MASTERMAN explained that HB 135 would update the definitions
for a geothermal fluid and a geothermal resource. He noted that
in addition to modernizing the definition of geothermal fluids,
it is distinguished that hydrocarbon resources cannot be
considered a geothermal fluid. Further, the updated definition
would allow for situations where an explorer might encounter hot
and dry rocks, inject a fluid into those rocks, and then extract
the heat by recovering that "artificially present fluid" from
the geothermal system. He said the biggest change is removal of
the temperature criteria for geothermal fluid. Technology for
geothermal systems is advancing to allow exploitation of lower
temperature systems, so having a temperature limit constrains
the definition of geothermal fluid.
1:54:30 PM
MR. MASTERMAN moved to slide 12, "SECTIONS 7 & 11: NEW
DEFINITION," which read as follows [original punctuation
provided with some formatting changes]:
"Geothermal resources" means the natural heat of the
earth; the energy, in whatever form, below the surface
of the earth present in, resulting from, or created
by, or which may be extracted from, such natural heat;
and all minerals in solution or other products
obtained from naturally heated fluids, brines,
associated gases, and steam, in whatever form, found
below the surface of the earth; but excluding oil,
hydrocarbon gases, or other hydrocarbon substances.
? Modern definition for geothermal resources.
? Not limited by temperature because current
technology enables development of cooler geothermal
systems.
? Ensures all the State's mineral estate resources are
captured in definition.
? Same definition being applied to both DNR & AOGCC
statutes.
MR. MASTERMAN specified that this [proposed] new definition of
geothermal resource comports with the [proposed] definition of a
geothermal fluid: it does not have a temperature limitation, it
allows for artificial fluids to be used to extract the heat, and
it separates clearly that oil, natural gas, or other hydrocarbon
fluids are not considered a geothermal resource.
1:55:54 PM
REPRESENTATIVE HOPKINS asked whether geothermal potential is
included in the "Alaska Mapper" system which allows the public
to look at mineral mapping and exploration opportunities.
MR. MASTERMAN answered that he does not know if geothermal is
included in the Alaska Map app. However, he said, a page on the
DGGS web site has the locations of all known thermal springs,
and each one has a live link to access the information that is
available.
1:57:11 PM
REPRESENTATIVE HANNAN inquired about the department's insights
on large volcanic eruptions.
MR. MASTERMAN replied that when the bell is rung anywhere on the
planet, there will be repercussions elsewhere. He related that
in a recent conversation with someone at the Alaska Volcano
Observatory about putting out a notice on what the possibilities
are in Alaska for a large eruption, he was told that the
possibilities are not that high for now.
2:00:49 PM
The committee took an at-ease from 2:00 p.m. to 2:01 p.m.
2:01:22 PM
CHAIR PATKOTAK opened public testimony on HB 135. After
ascertaining that no one wished to testify, he closed public
testimony.
2:02:40 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:03 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 135 Sponsor Statement 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 Sectional Analysis Version A 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 Example Geothermal Facilities 4.27.2021.pdf |
HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 Support University of Michigan Center for Sustainable Systems 4.27.2021.pdf |
HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 DNR Presentation 1.21.2022.pdf |
HRES 1/21/2022 1:00:00 PM |
HB 135 |