Legislature(2023 - 2024)

2023-02-15 House Journal

Full Journal pdf

2023-02-15                     House Journal                      Page 0210
HB 74                                                                                                                         
HOUSE BILL NO. 74 by the House Rules Committee by request of                                                                    
the Governor, entitled:                                                                                                         
                                                                                                                                
    "An Act relating to geothermal resources; relating to the definition                                                        
    of 'geothermal resources'; and providing for an effective date."                                                           
                                                                                                                                
was read the first time and referred to the House Special Committee on                                                          
Energy and the Resources Committee.                                                                                             
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Zero, Dept. of Commerce, Community, & Economic Development                                                                  
2.  Fiscal, Dept. of Natural Resources                                                                                          
                                                                                                                                
The Governor's transmittal letter dated February 14 follows:                                                                    
                                                                                                                                

2023-02-15                     House Journal                      Page 0211
"Dear Speaker Tilton:                                                                                                           
                                                                                                                                
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to the state's geothermal                                                       
resources.                                                                                                                      
                                                                                                                                
This bill removes obstacles for exploration and development of                                                                  
Alaska's geothermal resources. First, the bill updates the definition of                                                        
"geothermal resources." Currently, the term "geothermal resources" is                                                           
defined with reference to energy hotter than 120 degrees Celsius and                                                            
excludes subterranean heat sources that might be commercially useful                                                            
at lower temperatures. The arbitrarily high temperature threshold in                                                            
current law ignores technological advances that make lower-                                                                     
temperature geothermal energy commercially viable. It also ignores                                                              
growing non-commercial uses of heat energy, such as heat pumps                                                                  
relying on shallow subsurface pipes to heat or cool residential                                                                 
structures.                                                                                                                     
                                                                                                                                
Current law provides companies only two to three years to prove a                                                               
commercial discovery, which then allows the company to apply for a                                                              
more long-term lease. This bill increases the time available for                                                                
exploration to five years to better account for the time needed to                                                              
complete an exploration program. The bill changes the current permit                                                            
system to an exploration license system similar to oil and gas                                                                  
exploration. The proposed five-year exploration license term in the bill                                                        
allows explorers more time to conduct background research, acquire                                                              
any related permits, and perform the field work necessary to locate a                                                           
resource and produce the data necessary to convert a license to a lease.                                                        
                                                                                                                                
This bill also nearly doubles the acreage limit for geothermal projects                                                         
from 51,200 acres to 100,000 acres. This change is particularly                                                                 
beneficial because geothermal resources tend to spread over larger                                                              
acreages. The proposed acreage increase in the bill may attract greater                                                         
interest in geothermal resources because developers will have a greater                                                         
opportunity to explore the correct amount of acreage.                                                                           
                                                                                                                                
The bill would allow the Alaska Oil and Gas Conservation                                                                        
Commission (AOGCC) the option to pursue state permitting primacy                                                                
over Class V geothermal wells from the U.S. Environmental                                                                       
Protection Agency. Primacy may allow for more expeditious                                                                       

2023-02-15                     House Journal                      Page 0212
responses to local concerns and projects. The bill also clarifies                                                               
AOGCC's authority over geothermal resources and implements                                                                      
penalty provisions similar to AOGCC's existing penalty provisions for                                                           
oil and gas.                                                                                                                    
                                                                                                                                
With the enactment of this measure, our state will continue to                                                                  
responsibly manage its natural resources in a manner that provides                                                              
maximum benefits to the citizens through development of needed                                                                  
energy sources.                                                                                                                 
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Mike Dunleavy                                                                                                                   
Governor"