Legislature(2023 - 2024)BUTROVICH 205
04/17/2023 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB92 | |
| SB69 | |
| HJR11 | |
| SB82 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 69 | TELECONFERENCED | |
| += | HJR 11 | TELECONFERENCED | |
| *+ | SB 82 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
April 17, 2023
1:56 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 92
"An Act relating to state ownership of submerged land underlying
navigable water within the boundaries of and adjacent to federal
areas; and providing for an effective date."
- MOVED CSSB 92(RES) OUT OF COMMITTEE
SENATE BILL NO. 69
"An Act relating to geothermal resources; relating to the
definition of 'geothermal resources'; and providing for an
effective date."
- HEARD & HELD
HOUSE JOINT RESOLUTION NO. 11
Urging the United States Environmental Protection Agency to
develop a woodstove certification program that addresses the
threat to clean and healthy winter air in Fairbanks; and urging
the state Department of Environmental Conservation to develop an
economically and legally defensible state implementation plan
for the Fairbanks North Star Borough nonattainment area.
- HEARD & HELD
SENATE BILL NO. 82
"An Act relating to the powers of the Alaska Commercial
Fisheries Entry Commission; relating to administrative areas for
regulation of certain commercial set net entry permits;
establishing a buy-back program for certain set net entry
permits; providing for the termination of state set net tract
leases under the buy-back program; closing certain water to
commercial fishing; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 92
SHORT TITLE: STATE OWNERSHIP OF SUBMERGED LAND
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
03/08/23 (S) READ THE FIRST TIME - REFERRALS
03/08/23 (S) RES
03/29/23 (S) RES AT 3:30 PM BUTROVICH 205
03/29/23 (S) Heard & Held
03/29/23 (S) MINUTE(RES)
04/12/23 (S) RES AT 3:30 PM BUTROVICH 205
04/12/23 (S) Heard & Held
04/12/23 (S) MINUTE(RES)
04/14/23 (S) RES AT 3:30 PM BUTROVICH 205
04/14/23 (S) <Bill Hearing Canceled>
04/17/23 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 69
SHORT TITLE: GEOTHERMAL RESOURCES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/15/23 (S) READ THE FIRST TIME - REFERRALS
02/15/23 (S) RES, FIN
04/12/23 (S) RES AT 3:30 PM BUTROVICH 205
04/12/23 (S) Heard & Held
04/12/23 (S) MINUTE(RES)
04/17/23 (S) RES AT 3:30 PM BUTROVICH 205
BILL: HJR 11
SHORT TITLE: ADDRESS AIR POLLUTION IN FAIRBANKS
SPONSOR(s): REPRESENTATIVE(s) STAPP
03/08/23 (H) READ THE FIRST TIME - REFERRALS
03/08/23 (H) RES
03/20/23 (H) RES AT 1:00 PM BARNES 124
03/20/23 (H) Moved HJR 11 Out of Committee
03/20/23 (H) MINUTE(RES)
03/22/23 (H) RES RPT 7DP
03/22/23 (H) DP: MEARS, DIBERT, MCCABE, SADDLER,
WRIGHT, RAUSCHER, MCKAY
03/27/23 (S) RES AT 3:30 PM BUTROVICH 205
03/27/23 (S) <Pending Referral>
03/29/23 (H) TRANSMITTED TO (S)
03/29/23 (H) VERSION: HJR 11
03/29/23 (S) RES AT 3:30 PM BUTROVICH 205
03/29/23 (S) <Pending Referral>
03/31/23 (S) READ THE FIRST TIME - REFERRALS
03/31/23 (S) RES
04/17/23 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 82
SHORT TITLE: COOK INLET: NEW ADMIN AREA;PERMIT BUYBACK
SPONSOR(s): SENATOR(s) BJORKMAN
02/24/23 (S) READ THE FIRST TIME - REFERRALS
02/24/23 (S) RES, FIN
04/17/23 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
JOHN CROWTHER, Deputy Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided information relating to SB 69.
SEAN CLIFTON, Policy and Program Specialist
Division of Oil and Gas
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided an overview of SB 69 and presented
the sectional analysis.
DAVE ROBY, Senior Reservoir Engineer
Alaska Oil and Gas Conservation Commission (AOGCC)
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Responded to questions relating to SB 69.
DR. DAVID LEPAIN, State Geologist and Director
Division of Geological and Geophysical Surveys
Department of Natural Resources (DNR)
Fairbanks, Alaska
POSITION STATEMENT: Responded to questions and presented the
fiscal note for SB 69.
PAUL CRAIG, Founder and CEO
GeoAlaska LLC.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 69.
GEOFFREY SIMPSON, Land Manager
Cyrq Energy
Boulder, Colorado
POSITION STATEMENT: Testified in support of SB 69.
REPRESENTATIVE WILL STAPP, District 32
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HJR 11.
JASON OLDS, Acting Director
Division of Air Quality
Department of Environmental Conservation
Juneau, Alaska
POSITION STATEMENT: Answered questions relating to HJR 11.
SENATOR JESSE BJORKMAN, District D
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 82
KONRAD JACKSON, Staff
Senator Jesse Bjorkman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 82.
ACTION NARRATIVE
3:30:26 PM
CO-CHAIR CLICK BISHOP called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Dunbar, Claman, Kawasaki, Kaufman, Co-Chair
Giessel, and Co-Chair Bishop. Senator Wielechowski arrived
during the course of the meeting.
SB 92-STATE OWNERSHIP OF SUBMERGED LAND
3:31:32 PM
CHAIR BISHOP announced the consideration of SENATE BILL NO. 92
"An Act relating to state ownership of submerged land underlying
navigable water within the boundaries of and adjacent to federal
areas; and providing for an effective date."
He noted that there was an amendment for the committee to
consider.
3:31:42 PM
CO-CHAIR GIESSEL moved to adopt Amendment 1, work order 33-
LS0536/B.2, for SB 92.
33-LS0536\B.2
Bullard
4/15/23
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR WIELECHOWSKI
TO: CSSB 92( ), Draft Version "B"
Page 69, line 27:
Delete all material.
CO-CHAIR BISHOP objected for purposes of an explanation.
3:31:52 PM
CO-CHAIR GIESSEL explained that Amendment 1 removes the
reference to the Mendenhall Lake and Mendenhall River because
title in these areas is in dispute. The State of Alaska has
filed a quiet title action against the federal government and
the case is currently being heard in district court. Once the
federal court has made a decision on the quiet title litigation,
the Mendenhall Lake and Mendenhall River will be added back to
the list of navigable rivers and lakes in federal areas that
will be reported annually to the legislature.
3:33:14 PM
SENATOR KAUFMAN wondered how removing these areas from the bill
would affect the ["SWFA"] numbers running down the right side of
the list of areas DNR had identified as navigable.
CO-CHAIR GIESSEL answered that there would be simple
renumbering.
SENATOR KAUFMAN asked whether the amendment should cover that
point.
CO-CHAIR GIESSEL responded that the amendment certainly could be
amended to make that clear.
CO-CHAIR BISHOP suggested a statement to clarify that the
department would make such technical and conforming changes.
CO-CHAIR GIESSEL agreed.
3:34:13 PM
SENATOR KAWASAKI said that caught his eye as well, and he
wondered about the potential for dispute over other areas.
3:34:34 PM
CO-CHAIR BISHOP removed his objection; finding no further
objection Amendment 1 was adopted. He solicited a motion.
3:34:42 PM
CO-CHAIR GIESSEL moved to report the CS for SB 92, work order
33-LS0536\B as amended, from committee with individual
recommendations and attached fiscal note(s).
3:35:03 PM
CO-CHAIR BISHOP found no objection and CSSB 92(RES) was reported
from the Senate Resources Standing Committee.
3:35:11 PM
At ease
SB 69-GEOTHERMAL RESOURCES
3:37:05 PM
CO-CHAIR BISHOP reconvened the meeting and announced the
consideration of SENATE BILL NO. 69 "An Act relating to
geothermal resources; relating to the definition of 'geothermal
resources'; and providing for an effective date."
He noted that this was the second hearing and the intent was to
go through the sectional analysis and hear public testimony.
3:37:53 PM
JOHN CROWTHER, Deputy Commissioner, Department of Natural
Resources (DNR), Anchorage, Alaska, introduced himself.
3:38:05 PM
SEAN CLIFTON, Policy and Program Specialist, Division of Oil and
Gas, Department of Natural Resources (DNR), Anchorage, Alaska
provided an overview of SB 69 and presented the sectional
analysis. He began by reviewing the purpose of the legislation.
Modernize Alaska's geothermal exploration program
• Greater potential for providing affordable,
renewable energy to rural communities and remote
natural resource extraction projects
• 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
• More time for a company to identify and prove
resource to convert to leases
• Conversion to leases based on completion of work
commitment and submission of exploration plan
instead of proving discovery of commercial
resource
• Doubles maximum acreage allowed for exploration
• Repeals rental/royalty modification after 20
years of production, providing stability and
predictability for investors in geothermal energy
projects
Reform definitions for geothermal resources to focus
on Commercial Use
• Explicitly excludes domestic, noncommercial, or
small-scale industrial use from the need for a
geothermal license or lease
3:40:48 PM
MR. CLIFTON advanced to slide 11, "DNR Geothermal
Leasing/Permitting History," and spoke to the following:
Present Mount Spurr Two prospecting permits in the
Mount Spurr area, issued in 2021 (expire in
2023).
Augustine Island One prospecting permit in
the southern part of the volcanic island,
issued in 2022 (expires in 2024).
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 were leased to Ormat
and one private individual. Ormat purchased
15 leases in the 2008 sale and drilled on
the southern flank of volcano. They didn't
find adequate temperatures in wells to
pursue the project. The State has the data
available on the Division of Oil & Gas
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.
MR. CLIFTON noted that without this legislation, the permitting
would have to be completely restarted for the two Mount Spurr
permits that are due to expire in 2023.
3:42:47 PM
CO-CHAIR BISHOP asked how much it would extend a prospect lease,
if the bill were to pass.
MR. CLIFTON replied that it would give a company about three
additional years.
3:43:24 PM
SENATOR CLAMAN asked where Augustine Island is located.
MR. CLIFTON replied that it's due west of Anchor Point in the
southern Cook Inlet.
SENATOR CLAMAN asked where the Unalaska project that Bernie Karl
talked about would fall in DNR's regulatory permitting process.
MR. CLIFTON replied that Bernie Karl is associated with the
development of the Makushin project, which is a private
resource. DNR is not involved, but the Alaska Oil and Gas
Commission and the Department of Environmental Conservation
(DEC) are involved in that project. He reiterated that the
purpose of SB 69 is to update DNR's program for permitting,
licensing, and leasing projects involving State of Alaska
resources.
CO-CHAIR BISHOP recalled that Mr. Karl said he had all his
permits.
SENATOR KAWASAKI asked about the permitting process when the
geothermal resource transitions through multiple layers of state
and private land.
MR. CLIFTON responded that unitization provides a framework for
different resource owners to come to agreement on how they're
going to develop the resource. This will be addressed further
along in the presentation, but Pilgrim Hot Springs near Nome is
a good example of multiple resource owners.
MR. CLIFTON advanced to slide 12, "Leasing and Permitting
Process," and discussed the following:
Application and call for competing proposals
• If competing proposals ? competitive lease sale
• If no competing interest ? issue prospecting
permit with two-year time limit
o This bill replaces two-year permits with five-
year licenses modelled after our modern oil and
gas exploration licensing program.
o Conversion to lease
• Permit (current): "showing of a discovery
of geothermal resources in commercial
quantities"
• License (bill): after work commitment is
met Both processes require Best Interest
Finding prior to award of permit, license,
or lease
3:48:40 PM
CO-CHAIR BISHOP asked whether DNR was hard and fast on five
years.
MR. CROWTHER replied that DNR's belief is that five years
maintains the competitive balance and allows the time for a
company to do several field-seasons of work and prove a
potential resource. He added that the department would be happy
to provide its perspective on other timeframes if the committee
suggested alternatives.
CO-CHAIR BISHOP said he was thinking about the logistics
required to get to some remote locations.
MR. CLIFTON conveyed that the sectional summary on slide 13 was
for reference as members review the legislation.
3:49:55 PM
MR. CLIFTON advanced to the detailed sectional summary starting
on slide 15. He spoke to the following:
SECTION 1: CLASS V WELLS PRIMACY
• Grants AOGCC authority to pursue primacy for
permitting Class V injection wells for geothermal
developments
• State agencies are quicker and have more expertise
with permitting within their jurisdiction than US
EPA
• Reduces project costs and permitting timelines
• AOGCC already has primacy for Class II injection
wells used for enhanced oil recovery injection
programs
MR. CLIFTON deferred further explanation of Class V primacy to
the representative from AOGCC.
CO-CHAIR BISHOP asked Commissioner Wilson if he had anything to
add.
GREG WILSON, Commissioner, Alaska Oil and Gas Conservation
Commission (AOGCC), Department of Commerce, Community and
Economic Development (DCCED), Anchorage, Alaska, stated that he
had nothing to add at this time.
3:51:34 PM
SENATOR CLAMAN asked for the timeline when DNR might apply for
Class V primacy.
MR. CROWTHER deferred the question to the AOGCC representative.
He added that DNR's thinking was that it was prudent to put all
the geothermal updates in one bill, even though Class V
authority may not be needed immediately.
COMMISSIONER WILSON deferred the question to Dave Roby.
3:52:20 PM
DAVE ROBY, Senior Reservoir Engineer, Alaska Oil and Gas
Conservation Commission (AOGCC), Department of Commerce,
Community and Economic Development (DCCED), Anchorage, Alaska,
stated that the purpose of including Class V is to provide
authority to regulate the injection activities instead of just
the permitting of the well. It would be similar to what's done
currently for water and gas injection for enhanced oil recovery.
He noted that the Environmental Protection Agency (EPA)
currently was the permitting authority and he wasn't sure the
agency would authorize the state to assume Class V primacy.
SENATOR CLAMAN asked for DNR's timeline for pursuing Class V
primacy and what it might cost.
MR. ROBY said he believes DNR would start pursuing primacy right
away if the bill were to pass, although preliminary discussions
with the EPA indicate that it would be unlikely that the agency
would grant primacy on just geothermal. He said it may be a dead
end but it costs nothing to pursue. Beyond that, he didn't know
how long the process might take.
CO-CHAIR BISHOP advised that the DCCED fiscal note says that
AOGCC does not anticipate any fiscal impact from the
legislation.
3:54:20 PM
MR. CROWTHER suggested that the committee may be thinking about
and referencing the Class VI program that does have a fiscal
note impact. That primacy is more complex to pursue and the EPA
has signaled it wants applicants to go through the entire
process, which will take time. The cost of that primacy is
distinct from this pursuit.
CO-CHAIR BISHOP asked Mr. Clifton to continue.
3:55:01 PM
MR. CLIFTON advanced to slide 16 and discussed the following:
SECTIONS 2, 10, & 15: DNR MANAGES GEOTHERMAL UNITS ON
STATE LAND
DNR manages Alaska's geothermal resources under
unitization and operations provisions in AS 38.05.181
Section 2: Removes redundant reference to AS 41.06
from AS 31.05.030(m)
Section 10: Related amendment to AS 41.06.020(e)
Section 15: Repeals AS 41.06.005(b) and AS 41.06.030
since geothermal units are managed by DNR
3:55:52 PM
MR. CLIFTON advanced to slide 17 and discussed the following:
SECTIONS 36: PERMITS TO LICENSES
• Provisions in these sections replace "permit" with
"license."
• Within DOG, "permits" are for surface use
authorizations. For subsurface, "licenses" and
"leases" are issued.
• Adopting the exploration licensing program for
geothermal resource management conforms with
existing processes for oil and gas.
• Section 17 allows for conversion of existing
permits to licenses.
3:57:00 PM
SENATOR WIELECHOWSKI joined the committee.
MR. CLIFTON advanced to slide 18 and discussed the following:
SECTION 3: PRIVATE USE EXEMPTION
• 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.
He noted that later in the presentation he'd talk about changing
the definition of "geothermal resources" by removing the very
high-temperature requirement.
CO-CHAIR BISHOP asked if it would exclude somebody who
circulates naturally occurring hot water throughout their home.
MR. CLIFTON said slide 19 addresses the question. The graphic on
the bottom right provides examples of a typical home or small
business use of different types of ground source heat pumps.
They use heat exchange to pull heat from the earth to heat
water. This is not a model for producing power. The graphic on
the left illustrates a commercial development of geothermal
resources to produce power. He noted that Bernie Karl is
producing power with geothermal resources, but he is not selling
that power so DNR does not view it as commercial use of the
resource. He acknowledged that the language was open so a future
commissioner could take a different approach.
CO-CHAIR BISHOP asked Dr. LePain if the boreholes for non-
commercial systems illustrated on slide 19 would use the same
drill and case as a conventional well.
DR. DAVID LEPAIN, State Geologist and Director, Division of
Geological and Geophysical Surveys, Department of Natural
Resources (DNR), Fairbanks, Alaska, said that's correct; ground
source heat pump technology would be used in such non-commercial
systems.
CO-CHAIR BISHOP observed that it might be beneficial to identify
the depth or length of the boreholes as a range in feet.
4:01:44 PM
SENATOR WIELECHOWSKI agreed and asked whether there was a
definition for domestic or small-scale industrial use.
MR. CLIFTON replied that the bill does not propose adding
specific definitions under Title 38 for domestic, small-scale
industrial use. He opined that those would be interpreted
according to the common meanings.
SENATOR WIELECHOWSKI asked how he would define domestic and
small-scale industrial use.
4:02:42 PM
MR. CROWTHER responded that the core intent is commerciality.
Power somebody generates from a geothermal resource for their
home or a business operation on their property would not be
subject to this lease requirement if the power isn't sold.
Somebody who develops a large-scale project that requires
central power generation and has commodity sales of manufactured
products would start to be a non-small-scale industrial use.
SENATOR WIELECHOWSKI asked if geothermal is considered part of
the subsurface resource the state continues to own.
MR. CROWTHER said yes; DNR views it as a mineral resource of the
state.
SENATOR WIELECHOWSKI asked if it runs afoul of the constitution
if no royalty is collected.
MR. CROWTHER replied that DNR understands commercial projects to
be those seeking resources from significant depths of hundreds
or thousands of feet, which is clearly a character of the
mineral estate. He acknowledged that the court had not settled
whether the migration of the heat to the surface at the level
that's functionally useful for purposes of home or small
business use is a sufficiently mineral and whether the state
could assert authority at the surface level if the state is not
the surface owner. The legislature carves out the private right,
but it does not attempt to draw a distinct line.
4:05:45 PM
SENATOR WIELECHOWSKI asked whether Section 3 should have a
provision that limits depth to no more than 300 feet.
MR. CLIFTON said it's different than selling a barrel of oil;
it's based on a percentage of gross revenue under AS
38.05.181(g). Subsection (g) sets the royalty rate at 1.75
percent of gross revenue for the first 10 years of production
and 3.5 percent of production in subsequent years. SB 69 does
not propose to change that statute.
4:06:56 PM
SENATOR WIELECHOWSKI asked if somebody could drill a 100-foot-
deep oil well and pump 25 gallons per day for personal use.
MR. CROWTHER said he didn't know how Alaska law treats surface
expressions of hydrocarbons or other mineral resource. He
offered to do some research and follow up with the information.
4:07:50 PM
SENATOR CLAMAN asked if Bernie Karl had to apply for any permits
initially and whether there was any regulatory oversight of his
geothermal operation at Chena Hot Springs outside of Fairbanks.
MR. CROWTHER offered his understanding that, similar to the
Makushin project, the resource is private, so Mr. Karl didn't
have to get a permit from DNR to access and use that resource.
He didn't know what permits or authorizations from other uses
that Mr. Karl may hold.
SENATOR CLAMAN summarized that DNR's understanding is that Mr.
Karl's operation uses surface geothermal because using the
subsurface estate requires authorization from DNR.
MR. CROWTHER said he'd follow up with a definitive response but
his understanding in that case is that the mineral and
subsurface estate is private.
SENATOR CLAMAN continued that the state sold the subsurface
estate to some depth.
MR. CROWTHER said the state typically cannot alienate its
mineral estate in transactions, but Alaska has instances where
there is a private mineral estate that passed to private owners
pre-statehood or in other situations.
4:10:03 PM
SENATOR CLAMAN said he wasn't questioning what Mr. Karl was
doing but it seemed relevant to the questions that were arising.
CO-CHAIR BISHOP commented that from a safety standpoint it makes
sense to set a range for private use.
4:10:44 PM
SENATOR KAUFMAN noted the reference to "small-scale industrial"
and asked whether there was intent to differentiate between
commercial and industrial.
MR. CLIFTON said small-scale industrial envisions something like
a seafood processing plant that is adjacent to a resource that
can be used to power the plant instead of using diesel
generation. DNR doesn't need to get involved in the permitting
or licensing or leasing processes for the mineral estate. The
bill does provide flexibility for situations where the facility
changes and is exporting power.
SENATOR KAUFMAN said he'd follow up offline.
MR. CLIFTON responded to Senator Claman's question. He conveyed
that the area around Chena Hot Springs is a private mineral
estate that was granted prior to statehood. It is not a unique
situation. He agreed with Mr. Crowther that if the mineral
estate had been given to the state, it would not have been
ceded.
4:14:07 PM
MR. CLIFTON advanced to slide 20 and discussed the following:
SECTION 3: PREFERENTIAL RIGHTS
• Current statute grants preferential rights to a
surface owner to apply for a geothermal prospecting
permit once notice is received of an existing
application
• Inappropriate for a surface owner to have a
preferential right to the State's mineral
estate
• Potentially discouraging to commercial
development
• Private landowners usually don't have financial
resources to develop a commercially-viable
geothermal resource
• Surface owners may still pursue domestic geothermal
developments for their own uses
• Need well permits from AOGCC
• Need environmental review or permits from other
agencies such as Department of Environmental
Conservation, Department of Fish & Game, DNR
Division of Mining Land & Water, possibly
federal agencies
• Examples of permitting requirements are
detailed in a supplemental slide
• Rights to access the mineral estate are reserved
under AS 38.05.125, while surface owner rights are
protected under AS 38.05.130
• Surface owners must provide reasonable access
to resource developers
• The same condition exists for oil & gas or
mining
• If conflict arises, DNR ensures private
landowners would not be left without heat or
power, or otherwise damaged by commercial
development
• 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, a developer posts
a bond to compensate landowner for any impacts
and work progresses
• Geothermal licenses and leases are not surface use
authorizations
• They only provide the exclusive right to
explore for and develop the subsurface
resources
• Public notice is a part of the license issuance
process and surface owners can participate
• Surface use authorizations require public
notice and direct notice to any affected
surface owners
4:15:53 PM
MR. CLIFTON advanced to slide 21 and discussed the following:
SECTIONS 4 & 7: TERMS AND WORK COMMITMENT
• 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
• Amends AS 38.05.181(f) for geothermal leases
• Geothermal leases last for 10 years, with
opportunity for a five-year extension, and
standard indefinite extension by production
• Repeals opportunity for DNR commissioner to
renegotiate rental and royalty rates for
geothermal leases after 20 years of production
MR. CLIFTON continued to slide 22 and discussed the following:
SECTION 6: ACREAGE LIMIT & RENT
• Maximum acreage a lessee may hold increases from
51,200 to 100,000 acres
• Geothermal systems can underlie very large
areas
• Enables explorers to more effectively delineate
resource
• Rental fees to be set by regulation instead of
statute
• Enables DOG to be nimbler in response to market
changes
4:18:38 PM
MR. CLIFTON advanced to slide 23 and discussed the following:
SECTION 8: UNITIZATION
• Adds three new subsections AS 38.05.181(ik) to
modernize unitization statute for geothermal leases
to match the model used for oil & gas
(i)DNR commissioner may compel unitization
(j)Commissioner may establish, change, or revoke
drilling, producing, and royalty requirements of
leases as part of the unit agreement
(k)Leases and unit agreement are subject to current
and future statutes and regulations
4:20:36 PM
MR. CLIFTON advanced to slide 24 and discussed the following:
SECTIONS 9 & 14: GEOTHERMAL RESOURCES DEFINITION
"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
CO-CHAIR BISHOP commented that it might fall under a different
safety jurisdiction.
4:22:22 PM
MR. CLIFTON advanced to slide 25 and discussed the following:
SECTION 13: GEOTHERMAL FLUIDS
AS 41.06.060(4) is amended to read:
(4) "geothermal fluid" means liquids, brines, water,
gases, or steam naturally or artificially present
in a geothermal system; "geothermal fluid" does
not include oil, hydrocarbon gases, or other
hydrocarbon substances;"
• 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. CLIFTON advanced to slide 26 and discussed the following:
SECTION 12: PENALTIES
• Conforming language to AOGCC authority over gas and
oil operations (AS 31.05.150)
• Without this provision, AOGCC may not have
authority to assess penalties for violations related
to operation of geothermal wells
4:23:26 PM
SENATOR WIELECHOWSKI noted that the temperature requirement was
removed from Section 13. He asked if that would allow a company
to pump large quantities of drinking water from the ground.
MR. CLIFTON responded that geothermal fluids typically are not
potable.
SENATOR WIELECHOWSKI pointed out that the definition includes
water and the temperature requirement is removed. He restated
his question and asked for a yes or no answer.
4:24:17 PM
MR. CROWTHER said they'd follow up with a definitive response,
but he believes that the beneficial use of water may have to be
approved by DNR through the water authorization.
CO-CHAIR BISHOP commented that geothermal typically runs in a
loop.
MR. CROWTHER said that's correct, but if somebody wanted to
extract and make beneficial use of the water instead of
reinjecting, they may need an additional authorization.
MR. CLIFTON deferred to Dr. LePain to review the DGGS fiscal
note.
4:25:27 PM
DR. DAVID LEPAIN, Director, Division of Geological and
Geophysical Surveys, advanced to slide 27 and spoke to the DGGS
fiscal note:
FISCAL NOTE: NEW DGGS GEOLOGIST 4
• Enables DGGS to restart its geothermal program. The
new geologist would:
• Coordinate with agencies and industry to
publish new geologic data to further
development of Alaska's geothermal energy
resources
• Maintain and update geologic data on Alaska's
geothermal systems in a geothermal database
• Attract federal funds to characterize Alaska's
geothermal systems and resources
• Monitor developments in geothermal systems
technology
• Conduct geologic investigations of Alaska's
geothermal systems
• Publish geologic maps, reports and data on
Alaska geothermal systems
• Advise DNR and other state agencies on the
state's geothermal resources
• Support DNR's geothermal leasing program
• Support and supply information to explorers and
developers of Alaska's geothermal resources
• Support and advise DNR Commissioner's Office
and Governor's Office on geothermal policy
4:26:32 PM
CO-CHAIR BISHOP opened public testimony on SB 69.
4:26:50 PM
PAUL CRAIG, Founder and CEO, GeoAlaska LLC., Anchorage, Alaska,
stated that his company has geothermal exploration permits for
Mount Spur and Augustine Island and they fully support SB 69 as
currently written. This bill is critical for the corporation to
survive. He stressed that two years is not enough time to make a
discovery and obtain a lease; five years is a more realistic
timeframe. He said companies are ready and willing to spend
millions of dollars in Alaska that will help secure energy
security for the Railbelt and diversify the economy but the
legislation is needed for that to happen.
4:29:18 PM
GEOFFREY SIMPSON, Land Manager, Cyrq Energy LLC, Boulder
Colorado, testified in support of SB 69. He stated that Cyrq has
six operating plants in the western US; they produce energy for
up to 100,000 homes. Cyrq is also working on a project on Mount
Spurr. He echoed Mr. Craig in support of DNR's new licensing
proposal; they look forward to it going into effect this year.
They have plans to move their exploration activity for Mount
Spurr onto the ground next year.
4:30:26 PM
CO-CHAIR BISHOP held SB 69 in committee with public testimony
open.
HJR 11-ADDRESS AIR POLLUTION IN FAIRBANKS
4:30:42 PM
CO-CHAIR BISHOP announced the consideration of HOUSE JOINT
RESOLUTION NO. 11 Urging the United States Environmental
Protection Agency to develop a woodstove certification program
that addresses the threat to clean and healthy winter air in
Fairbanks; and urging the state Department of Environmental
Conservation to develop an economically and legally defensible
state implementation plan for the Fairbanks North Star Borough
nonattainment area.
He invited the sponsor to introduce the resolution.
4:31:12 PM
REPRESENTATIVE WILL STAPP, District 32, Alaska State
Legislature, Juneau, Alaska, sponsor of HJR 11, introduced
himself.
4:31:29 PM
CLIFTON COGHILL, Staff, Representative Will Stapp, Alaska State
Legislature, Juneau, Alaska, introduced himself.
REPRESENTATIVE STAPP presented HJR 11 speaking to the following
sponsor statement:
In May 2017, the United States Environmental
Protection Agency reclassified the Fairbanks North
Star Borough nonattainment area from moderate to
serious for particulate matter 2.5 (PM2.5). The
Environmental Protection Agency seems intent on
turning attentions toward so-called greener sources of
heat, including electric heat pumps that will not work
as solutions in the Fairbanks North Star Borough.
HJR 11 urges the United States Environmental
Protection Agency to develop a woodstove certification
program that the state Department of Environmental
Conservation and residents of the Fairbanks North Star
Borough nonattainment area can rely on and
acknowledges the unique challenges Alaskans face in
economically and technically feasible and is legally
defensible.
4:32:56 PM
REPRESENTATIVE STAPP stated that the resolution asks the EPA to
take another look at the woodstove certification program and
develop one similar to a previous program.
He provided history on what the community has done so far to
address the program.
In 2006, the PM 2.5 standard was changed from 65 micrograms per
cubic meter to 35 micrograms per cubic meter. That put the
Fairbanks North Star Borough outside the air quality attainment
standards.
In 2010, the North Star Borough Assembly implemented a woodstove
buyback and change out program. Existing woodstoves were
replaced with EPA compliant woodstoves.
By 2016, the borough had spent about $2.5 million to further the
objective to improve air quality.
By fiscal year 2018 about $8 million had been spent in
gasification and changing out woodstoves with cleaner sources of
fuel.
Between 2010 and 2017, the borough looked at EPA recommendations
that ranged from banning coal burning and outdoor hydronic
heaters to kiln drying firewood.
In 2019 the borough proved it had improved air quality by over
50 percent since starting the process.
In September 2020, the EPA issued a determination that the
Fairbanks PM 2.5 nonattainment area failed to fulfill the
requirements and an extension was denied. The standard had
effectively been reduced once again.
In 2023, the EPA moved to disapprove the borough's fine air
quality particulate state implementation plan and threatened
revocation of federal highway dollars.
REPRESENTATIVE STAPP summarized that HJR 11 asks the EPA to help
Fairbanks North Star Borough residents attain better air quality
in an economically viable way.
4:36:37 PM
CO-CHAIR BISHOP asked if there were questions.
4:36:57 PM
SENATOR KAWASAKI asked why DEC's first and second state
implementation plans failed EPA review.
REPRESENTATIVE STAPP deferred the question to DEC.
CO-CHAIR BISHOP asked Jason Olds to respond to the question.
4:37:57 PM
JASON OLDS, Acting Director, Division of Air Quality, Department
of Environmental Conservation, Juneau, Alaska, replied that the
EPA primarily pointed to more stringent control measures for
point sources and power plants as well as home heating oil.
4:38:26 PM
SENATOR CLAMAN asked whether Fairbanks air quality had improved
with the work that was done, and if he had any insight as to why
that didn't satisfy the EPA.
MR. OLDS agreed with the sponsor that air quality had improved
more than 50 percent since the efforts started. He opined that
it wasn't satisfactory because air quality still does not meet
current EPA standards.
SENATOR CLAMAN asked how much wood stoves contribute to the air
quality problem.
MR. OLDS said woodstoves account for about 80 percent of the
poor air quality.
CO-CHAIR BISHOP clarified that the woodstoves that are primarily
contributing to the problem are concentrated in the North Pole
area.
4:40:01 PM
SENATOR DUNBAR asked if the Department of Defense (DoD) had
indicated that poor air quality would jeopardize military
personnel remaining in Fairbanks.
REPRESENTATIVE STAPP said he hopes that's not the case and that
the matter can be resolved equitably.
4:40:37 PM
CO-CHAIR BISHOP found no further questions and announced he
would hold HJR 11 in committee
SB 82-COOK INLET: NEW ADMIN AREA;PERMIT BUYBACK
4:40:45 PM
CO-CHAIR BISHOP announced the consideration of SENATE BILL NO.
82 "An Act relating to the powers of the Alaska Commercial
Fisheries Entry Commission; relating to administrative areas for
regulation of certain commercial set net entry permits;
establishing a buy-back program for certain set net entry
permits; providing for the termination of state set net tract
leases under the buy-back program; closing certain water to
commercial fishing; and providing for an effective date."
4:41:05 PM
SENATOR JESSE BJORKMAN, District D, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 82, introduced the legislation
speaking to the following sponsor statement:
Senate Bill 82 is the result of sport and commercial
fishermen in Cook Inlet working together toward a
viable solution to conserve King Salmon. Alaskans
aware of the struggles between user groups when it
comes to Cook Inlet fisheries know that it is a rare
occurrence for agreement on a major policy call that
effects all of them. For decades there has been an
unhealthy tension between commercial set net fishermen
who fish on the east side of Cook Inlet and other user
groups on the Kenai and Kasilof Rivers. This
legislation will help alleviate a significant
proportion of that tension.
SB 82 supports all user groups; commercial, sport,
personal use and subsistence, providing relief by
reducing the number of set netters in the east side
set net fishery by nearly half. Thru reducing the
number of set net operations on the east side of Cook
Inlet we will see a more viable commercial fishery for
those remaining and adequate production for the
processing industry. We will also see more fish
available for in-river users. The bill offers set net
fishermen, some of whom have fished in the area for
generations, a way to fairly exit the fishery or to
reinvest in remaining operations once the 200 permit
and site reductions take place.
In the 1980s there was a migration of set net
fishermen to the east side of Cook Inlet. Returns were
large, fishing in the area was lucrative and access to
processors was easy. The appeal to commercial
fishermen was irresistible. As pressure on stocks
increased and commercial fishing profitability began
to wane, processors began leaving the area. Over time,
set net fishermen saw fewer and fewer opportunities to
fish. In recent years there have been very few
openings during the entire season. This year, the
fishery has been closed by ADF&G order.
This voluntary program established by SB 82 would
become effective only after an election held amongst
the permit holders. Once established, permit holders
would apply for the program and 200 permits would be
drawn in lottery-fashion to determine the order of
permit retirement. When a permit is retired, the
waters where the permit was fished would be closed to
future commercial fishing.
Improved King Salmon conservation and a more viable
set net fishing industry make this concept a win-win
for all user groups.
I respectfully ask for your support of this
legislation for the benefit of all the salmon user
groups on the Kenai Peninsula.
SENATOR BJORKMAN stated that the only difference between this
and the previous iteration of the bill is that the current bill
does not change the powers of the Commercial Fisheries Entry
Commission.
4:45:01 PM
KONRAD JACKSON, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 82.
Section 1: Amends the uncodified law of the State of
Alaska by adding a new section which establishes that
this legislation may be known as the East Side of Cook
Inlet Set Net Fleet Reduction Act.
Section 2: Amends the uncodified law of the State of
Alaska by adding new Legislative findings and intent
relating to the bill.
Section 3: Amends AS 16.43.200 by adding 2 new
subsections: (c) Establishes an area of the Upper
Subdistrict of the Cook Inlet Central District as a
distinct administrative area separate from the Cook
Inlet Central District on December 31, 2023. This area
is made up of the statistical areas identified on
January 1, 2023 as 244-21, 244- 22, 244-31, 244-32,
244-41 and 244-42. (d) Provides that an individual who
has a set net permit for the Cook Inlet Central
District on December 31, 2023 is not entitled to set
net in the administrative area created under this
section as of January 1, 2023 unless the permit has
been reassigned to that new administrative area.
Section 4: Amends the uncodified law of the State of
Alaska by adding a new section which provides how the
commission will determine whether an individual who
holds a set net entry permit in the Cook Inlet Central
District on January 1, 2024 is reassigned an entry
permit for the administrative area established under
AS 16.43.200(c) (added by sec. 3 of the bill) or the
portion of the Cook Inlet Central District that was
not assigned into the administrative area established
under AS 16.43.200(c).
Section 5: Amends the uncodified law of the State of
Alaska by adding a new section which defines the
appeals process in the new administrative area. This
section provides that a provisional license will be
issued pending resolution of an appeal and the
provisional permit holder may cast a provisional
ballot in the election established under section 6.
Section 6: Amends the uncodified law of the State of
Alaska by adding a new section which requires on April
1, 2024 an election be conducted by the commission
among persons holding permits in the new
administrative area, to affirm support or opposition
to a buy-back program. Requires the commission provide
public notice of the election, hold public meetings
concerning the election, and clarify the details of
the buy-back program to those participating in the
election.
Section 7: Amends the uncodified law of the State of
Alaska by adding a new section which establishes the
set net entry permit buy-back program for certain
permits fished in the administrative area established
under AS 16.43.200(c) (added by sec. 3 of the bill).
This section will only take effect if approved in an
election by the set net entry permit holders in the
administrative area established under AS 16.43.200(c).
If it is approved, the buyback program will become law
30 days following notification of the Lt. Governor
(see secs. 9 and 11). Sets qualifications for
participation in the program, provides the buy-back
price for permits, requires that the purchased permits
be cancelled and not re-issued, provides that certain
waters that were fished with permits purchased under
the program will be closed to future commercial salmon
fishing, and specifies other details of the buy-back
program.
Section 8: Amends the uncodified law of the State of
Alaska by adding a new section which requires the
commission to provide a written report to the
Legislature on the status of the program not later
than January 15, 2030.
Section 9: Amends the uncodified law of the State of
Alaska by adding a new section which requires the
chair of the commission to notify the Lieutenant
Governor and the Revisor of Statutes of the outcome of
the election held under section 6.
Section 10: Repeals sections 1, 2, 7 and 8 on June 30,
2030.
Section 11: Amends the uncodified law of the State of
Alaska by adding a new section which provides that
secs. 1, 2, 7, and 8 take effect only if notice is
provided under section 9 that the buy-back program
established under section 7 was approved.
Section 12: Effective Date Clause. Section 4 of the
bill takes effect January 1, 2024.
Section 13: Effective Date Clause. Provides if
sections 1, 2, 7 and, 8, take effect under section 11,
they take effect 30 days following the date of the
notice provided in section 9 that the buyback program
was approved.
Section 14: Effective Date Clause. Except as provided
in sections 12 and 13, the bill takes effect July 1,
2023.
4:49:48 PM
SENATOR BJORKMAN directed attention to page 2, line 4, and
highlighted that the bill would have no adverse effect on the
state treasury. The funding to support the optional buyback
program is designed to come from non-governmental organizations
or grants.
CO-CHAIR BISHOP noted that Section 3 identifies the areas from
which the 200 permits might come. He asked if permit holders who
decide not to participate could continue to fish in the same
area.
SENATOR BJORKMAN answered that the statistical area remains open
to the set netters who decided not to participate in the
buyback. The statistical area is closed to commercial fishing
for the retired permit.
4:51:45 PM
SENATOR DUNBAR said he assumes that each permit holder has the
option to participate in the buyback program. It's not binding
on every member who votes, even if they vote "no."
SENATOR BJORKMAN confirmed that was correct.
SENATOR DUNBAR observed that this was not a quota fishery so the
remaining permits would gain in value as they are able to catch
more fish.
SENATOR BJORKMAN said a goal of the program is to develop a more
economically viable east-side set net fishery, and a reduction
of gear theoretically would leave more fish for the remaining
set netters.
4:53:00 PM
SENATOR DUNBAR asked if it would be accurate to say that the
goal is to create a more economically sustainable fishery rather
than reduce the total catch because the remaining sites
presumably would catch more fish.
SENATOR BJORKMAN replied that the nets can only catch so much
and the fishing time is limited based on where the nets are
placed on the beach and within the tide cycle. Less gear in the
water translates to fewer fish caught.
4:54:34 PM
CO-CHAIR GIESSEL asked whether reducing the Chinook salmon catch
was still an aspect of the legislation.
SENATOR BJORKMAN said yes.
CO-CHAIR GIESSEL asked how $260,000 for the buyback was
determined.
MR. JACKSON explained that $260,000 is an aggregate of 10 years
historical fishing revenue for each permit. A small portion was
included for administrative costs for the CFEC to administer the
program and for some level of tax protection.
4:55:41 PM
SENATOR CLAMAN offered his perspective that the buybacks would
create a patchwork area.
SENATOR BJORKMAN directed attention to the map in the packets;
the red outline reflects the location of gear currently in the
water and the boxes reflect set net sites. When a set net permit
is sold, three nets would be removed from the fleet and that
water would be closed to commercial fishing. The statistical
area would exist but the area where those three nets used to
fish would be closed.
SENATOR CLAMAN observed that the map would have 200 fewer boxes.
SENATOR BJORKMAN agreed.
4:57:40 PM
CO-CHAIR BISHOP discerned there were no further questions and
announced he would hold SB 82 in committee.
4:58:27 PM
There being no further business to come before the committee,
Co-Chair Bishop adjourned the Senate Resources Standing
Committee meeting at 4:58 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 82 Sponsor Statement.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 ver A.pdf |
SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Sectional Analysis ver A.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Fiscal Note ADFG - Central Region Fisheries Management.pdf |
SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-DNR Shore Fishery Leasing Fact Sheet 10.1.2010.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-DNR Shore Lease Fishery Sites Map 01.18.18.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-Eastside Setnet Area Map.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-News Article ADN 8.12.21.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-News Article KDLL Radio 03.02.23.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-News Article Peninsula Clarion 03.24.23.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 82 Supporting Documents-Upper Cook Inlet Management Area Statistical Areas.pdf |
SFIN 2/19/2024 1:30:00 PM SRES 4/17/2023 3:30:00 PM |
SB 82 |
| HJR 11 Sponsor Statement.pdf |
SRES 4/17/2023 3:30:00 PM |
HJR 11 |
| HJR011 Ver. A.PDF |
SRES 4/17/2023 3:30:00 PM |
HJR 11 |
| HJR 11 Fiscal Note HRES.pdf |
SRES 4/17/2023 3:30:00 PM |
HJR 11 |
| HJR 11 Letters of Support through 04.15.23.pdf |
SRES 4/17/2023 3:30:00 PM |
HJR 11 |
| SB 82 Fiscal Note DNR.pdf |
SRES 4/17/2023 3:30:00 PM |
SB 82 |
| SB 92 Amendment #1.pdf |
SRES 4/17/2023 3:30:00 PM |
SB 92 |
| SB 69 SRES DNR Answers to Committee Questions 04.17.23.pdf |
SRES 4/17/2023 3:30:00 PM |
SB 69 |