Legislature(2021 - 2022)

2021-02-18 House Journal

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2021-02-18                     House Journal                      Page 0144
HB 82                                                                                                                         
HOUSE BILL NO. 82 by the House Rules Committee by request of                                                                    
the Governor, entitled:                                                                                                         
     "An Act relating to surface use restrictions for oil and gas leases;                                                       
     relating to gas leases in Kachemak Bay; relating to the renewable                                                          
     energy grant fund; and providing for an effective date."                                                                   
was read the first time and referred to the Resources Committee and                                                             
the House Special Committee on Fisheries.                                                                                       

2021-02-18                     House Journal                      Page 0145
The following fiscal note(s) apply:                                                                                             
1.  Zero, Dept. of Natural Resources                                                                                            
The Governor's transmittal letter dated January 28 follows:                                                                     
"Dear Chief Clerk:                                                                                                              
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to non-surface oil and                                                          
gas leases in areas with surface use restrictions.                                                                              
Protections set out in AS 38.05.184 preclude Alaska from leasing                                                                
various tracts of state land for gas development. The gas reservoirs in                                                         
Cook Inlet do not abide by lines demarcated by AS 38.05.184. Indeed,                                                            
certain surface leases on both state and private onshore land in the                                                            
Cook Inlet area have the potential to produce gas from adjacent                                                                 
deposits lying beneath the seabed. Without this legislation, the state                                                          
may be left without a clear mechanism to collect royalties from gas                                                             
being produced from such undersea areas by adjacent leaseholders.                                                               
The proposed bill would open a small portion of land in the southern                                                            
Kenai Peninsula to non-surface leasing. Specifically, the bill would                                                            
allow the Department of Natural Resources to offer non-surface, gas-                                                            
only leases within Township 5 South, Range 15 West, Seward                                                                      
Meridian. The sale of the leases would follow the process provided by                                                           
AS 38.05.180. Lessees would be prohibited from using the surface of                                                             
the leased area to drill for or extract gas, allowing the State of Alaska                                                       
to collect royalties on gas that might otherwise be produced by                                                                 
adjacent leaseholders. By prohibiting surface use, the bill adequately                                                          
protects the habitat while ensuring the state obtains its fair share of gas                                                     
produced from state land.                                                                                                       
The bill would also add a new section to the Alaska Land Act to                                                                 
clarify that, when a statute restricts the surface use of an oil and gas                                                        
lease area, it does not also restrict subsurface uses unless specifically                                                       
provided. Adding this section would pave the way to allow subsurface                                                            
oil and gas leasing in additional areas in the future.                                                                          

2021-02-18                     House Journal                      Page 0146
The bill would also authorize appropriations from the proceeds of the                                                           
gas-only lease sales to the renewable energy grant fund, after                                                                  
constitutional deposits are made to the Alaska Permanent Fund.                                                                  
I urge your prompt and favorable action on this measure.                                                                        
Mike Dunleavy