04/18/2005 03:30 PM Senate RESOURCES

        CSHB 197(RLS)-OIL SPILL EXEMPTIONS FOR GAS WELLS                                                                    
                                                                                                                              
CHAIR   WAGONER   announced   CSHB   197(RLS)  to   be   up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  KOHRING, sponsor  of HB  197, explained  that its                                                               
sole  purpose  is  to clarify  for  Department  of  Environmental                                                               
Conservation  (DEC) that  discharge  contingency plans  (C-plans)                                                               
and  financial responsibility  are not  required for  natural gas                                                               
wells.  Legislation was  passed last  year, HB  531, which  dealt                                                               
with  coalbed  methane  that  inadvertently  placed  language  in                                                               
statute  that  required  C-plans  for any  kind  of  drilling  or                                                               
exploration activity. That was not  the intent. "There should not                                                               
be an oil spill  plan if there is no oil  involved in drilling or                                                               
exploring for natural gas."                                                                                                     
                                                                                                                                
He  said   the  AOGCC   is  the  entity   that  would   make  the                                                               
determination  as to  whether  or not  oil  could be  encountered                                                               
before an exemption is given.                                                                                                   
                                                                                                                                
5:09:59 PM                                                                                                                    
DAN  SEAMOUNT,   Alaska  Oil  and  Gas   Conservation  Commission                                                               
(AOGCC), supported HB 197. "It  allows for better use of geologic                                                               
information and  understanding in determining the  needs for such                                                               
plans...."                                                                                                                      
                                                                                                                                
He  explained  that  the  current   scope  of  C-plan  exemptions                                                               
mismatched with the  facts of Alaska's geology.  Drilling for gas                                                               
in many areas  has no risk of  an oil spill at  all, because they                                                               
have no  oil-bearing zones.  HB 197  provides for  a case-by-case                                                               
geologic evaluation  of wells  drilled to  explore for  gas. This                                                               
would reasonably  include shallow  and deep  non-conventional and                                                               
conventional gas plays and prospects.  It adds no additional cost                                                               
to  the commission's  budget since  it has  basically been  doing                                                               
this for years, and simply  corrects the problem with last year's                                                               
bill.                                                                                                                           
                                                                                                                                
5:12:40 PM                                                                                                                    
SENATOR GUESS  asked what would  happen if someone  were drilling                                                               
for gas and encountered oil.                                                                                                    
                                                                                                                                
MR.  SEAMOUNT  replied  that  the   AOGCC  would  order  them  to                                                               
immediately stop  drilling and would then  evaluate the potential                                                               
for flow.                                                                                                                       
                                                                                                                                
5:13:11 PM                                                                                                                    
SENATOR GUESS asked  if natural gas is liquid at  any time and do                                                               
they have  worry about temperatures  when it would  become liquid                                                               
and, therefore, be possible to spill.                                                                                           
                                                                                                                                
MR.  SEAMOUNT  replied  that  that  could  happen  in  retrograde                                                               
condensate reservoirs and those would not get the exemption.                                                                    
                                                                                                                                
5:13:54 PM                                                                                                                    
LARRY  DIETRICH,  Director,  Division  of  Spill  Prevention  and                                                               
Response,   Department   of  Environmental   Conservation   (DEC)                                                               
supported HB 197.                                                                                                               
                                                                                                                                
5:15:07 PM                                                                                                                    
SENATOR SEEKINS moved  to pass CSHB 197(RLS)  from committee with                                                               
individual recommendations and attached  fiscal notes. There were                                                               
no objections and it was so ordered.