HB 197: "An Act exempting certain natural gas exploration and production facilities from oil discharge prevention and contingency plans and proof of financial responsibility, and amending the powers and duties of the Alaska Oil and Gas Conservation Commission with respect to those plans; and providing for an effective date."
00 HOUSE BILL NO. 197 01 "An Act exempting certain natural gas exploration and production facilities from oil 02 discharge prevention and contingency plans and proof of financial responsibility, and 03 amending the powers and duties of the Alaska Oil and Gas Conservation Commission 04 with respect to those plans; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 31.05.030 is amended by adding a new subsection to read: 07 (l) For purposes of AS 46.04.050(c) and upon application by the operator, the 08 commission shall evaluate the likelihood that a well at a natural gas exploration 09 facility may penetrate a formation capable of flowing oil to the ground surface and 10 issue a determination based on results of the evaluation. If the commission determines 11 that evidence obtained through the evaluation demonstrates with reasonable certainty 12 that a well will not penetrate a formation capable of flowing oil to the ground surface, 13 it shall report its determination to the Department of Environmental Conservation. In 14 this subsection,
01 (1) "natural gas exploration facility" has the meaning given in 02 AS 46.04.050(c); 03 (2) "oil" has the meaning given in AS 46.04.050(c). 04 * Sec. 2. AS 46.04.030(b) is amended to read: 05 (b) A person may not cause or permit the operation of a pipeline or an 06 exploration or production facility in the state unless an oil discharge prevention and 07 contingency plan for the pipeline or facility has been approved by the department and 08 the person is in compliance with the plan. [THIS SUBSECTION DOES NOT APPLY 09 TO AN EXPLORATION OR PRODUCTION FACILITY USED SOLELY TO 10 EXPLORE FOR OR TO DEVELOP OR PRODUCE NONCONVENTIONAL GAS 11 RESOURCES, EXCEPT THAT THIS EXEMPTION DOES NOT APPLY IF THE 12 ALASKA OIL AND GAS CONSERVATION COMMISSION DETERMINES 13 UNDER AS 31.05.030(j) THAT 14 (1) A WELL DRILLED FOR NONCONVENTIONAL GAS MAY 15 PENETRATE A FORMATION CAPABLE OF FLOWING OIL; AND 16 (2) THE VOLUME OF OIL ENCOUNTERED WILL BE OF SUCH 17 QUANTITIES THAT A CONTINGENCY PLAN WILL BE REQUIRED.] 18 * Sec. 3. AS 46.04.040(b) is amended to read: 19 (b) A person may not cause or permit the operation of a pipeline or an 20 exploration or production facility in the state unless the person has furnished to the 21 department, and the department has approved, proof of financial ability to respond in 22 damages. Proof of financial responsibility required for 23 (1) a pipeline or an offshore exploration or production facility is 24 $50,000,000 per incident; 25 (2) an onshore production facility is 26 (A) $20,000,000 per incident if the facility produces over 27 10,000 barrels per day of oil; 28 (B) $10,000,000 per incident if the facility produces over 5,000 29 barrels per day but not more than 10,000 barrels per day of oil; 30 (C) $5,000,000 per incident if the facility produces over 2,500 31 barrels per day but not more than 5,000 barrels per day of oil;
01 (D) $1,000,000 per incident if the facility produces 2,500 02 barrels per day or less of oil; 03 (3) an onshore exploration facility is 04 [(A) $25,000 PER INCIDENT FOR A FACILITY USED 05 SOLELY TO EXPLORE FOR NONCONVENTIONAL GAS BY MEANS 06 OF DRILLING A WELL TO EXPLORE FOR THE GAS; AND 07 (B) EXCEPT AS PROVIDED BY (A) OF THIS 08 PARAGRAPH,] $1,000,000 per incident. 09 * Sec. 4. AS 46.04.050(b) is amended to read: 10 (b) The provisions of AS 46.04.030 and 46.04.040 do not apply to a natural 11 gas production facility and a natural gas terminal facility; for purposes of this 12 subsection 13 (1) "crude oil" does not include natural gas or refined petroleum 14 products; 15 (2) [THE TERMS] "natural gas production facility" and "natural gas 16 terminal facility" 17 (A) [(1)] mean a platform, facility, or structure that is used 18 solely for the production, compression, storage, or transport of natural gas; 19 (B) [(2)] do not include a platform, facility, or structure that 20 (i) produces, stores, or transports natural gas in 21 combination with crude oil; or 22 (ii) is an oil terminal facility regulated under 23 AS 46.04.030 and 46.04.040 by storing oil in quantities exceeding 24 those exempted by (a) of this section; 25 (3) "oil" has the meaning given in AS 46.04.900, except that "oil" 26 does not include natural gas. 27 * Sec. 5. AS 46.04.050 is amended by adding a new subsection to read: 28 (c) The provisions of AS 46.04.030 and 46.04.040 do not apply to a natural 29 gas exploration facility if the Alaska Oil and Gas Conservation Commission has 30 determined under AS 31.05.030(l) that evidence obtained through evaluation 31 demonstrates with reasonable certainty that all of the wells at a natural gas exploration
01 facility will not penetrate a formation capable of flowing oil the ground surface. If the 02 drilling of a well at an exploration facility exempted under this subsection does 03 penetrate a formation capable of flowing oil to the surface, the owner or operator shall 04 submit an oil discharge prevention and contingency plan and proof of financial 05 responsibility to the department to meet the requirements of AS 46.04.030 and 06 46.04.040. For purposes of this subsection, 07 (1) "crude oil" does not include natural gas or refined petroleum 08 products; 09 (2) "natural gas exploration facility" 10 (A) means a platform, facility, or structure that is used solely 11 for the exploration for natural gas; 12 (B) does not include a platform, facility, or structure that 13 (i) explores for, produces, stores, or transports natural 14 gas in combination with crude oil; or 15 (ii) is an oil terminal facility regulated under 16 AS 46.04.030 and 46.04.040 by storing oil in quantities exceeding 17 those exempted by (a) of this section; 18 (3) "oil" has the meaning given in AS 46.04.900, except that "oil" does 19 not include natural gas. 20 * Sec. 6. AS 31.05.030(j)(2)(C) and AS 46.04.900(10) are repealed. 21 * Sec. 7. This Act takes effect immediately under AS 01.10.070(c).