Legislature(2021 - 2022)BARNES 124
04/12/2022 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB167 | |
| HB349 | |
| HB402 | |
| HB411 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 167 | TELECONFERENCED | |
| *+ | HB 349 | TELECONFERENCED | |
| *+ | HB 402 | TELECONFERENCED | |
| *+ | HB 411 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 349-HEARING ESTABLISH DRILLING UNITS/SPACING
8:35:21 AM
CO-CHAIR HANNAN announced that the next order of business would
be HOUSE BILL NO. 349, "An Act relating to the establishment of
oil and gas drilling units and patterns."
8:35:48 AM
REPRESENTATIVE GEORGE RAUSCHER, Alaska State Legislature, as
prime sponsor of HB 349, paraphrased the sponsor statement,
which read as follows [original punctuation provided]:
HB 349 was written because the way we search for and
produce oil in the 21st century, has changed since the
1950's. During that time, policymakers were worried
that oil companies might drill too many vertical wells
that were spaced too tightly together, resulting in
oil left in the ground that could no longer be
recovered. Try googling Spindletop images.
Today, no one is spending millions of dollars to drill
unnecessary wells in Alaska. In the decades since the
early days of the industry, advancements in drilling
technology allows wells to be directionally drilled
underground, sometimes with multiple lateral wells
from a single motherbore or parent well. Holes can be
a few thousand feet deep, yet tens of thousands of
feet long to recover greater amounts of oil and gas.
Unfortunately, our outdated statutes have not kept up
with the advancements in the oil and gas industry. The
statutes being amended by this legislation were
originally designed to provide oversight by involving
another step, to provide assurance that perforations
into the ground were not going to be too close,
jeopardizing substructure integrity of the field or
zone. This extra oversight is no longer necessary,
slows down development and costs the state time and
money. HB 349 eliminates needless regulatory red tape,
as drilling and production processes have
fundamentally changed since the statue was written.
8:38:40 AM
The committee took an at-ease from 8:38 a.m. to 8:41 a.m.
8:41:17 AM
RYAN MCKEE, Staff, Representative George Rauscher, Alaska State
Legislature, read the sectional analysis to HB 349 [included in
the committee packet] on behalf of Representative Rauscher,
prime sponsor.
8:43:03 AM
REPRESENTATIVE MCCARTY questioned the significance of a change
from "that" to "which".
MR. MCKEE suggested someone from the Alaska Oil and Gas
Conservation Commission (AOGCC) should be able to explain.
8:43:31 AM
REPRESENTATIVE DRUMMOND remarked that the sectional analysis
should explain what would happen to law as a result of the
change from "which" to "that", and she said she was not sure the
sectional analysis would "stand up to scrutiny."
8:44:00 AM
CO-CHAIR HANNAN noted that the change from "which" to "that" is
found in Section 1, on [page 1], line 6, and asked a
representative from AOGCC to offer explanation.
8:44:24 AM
JEREMY PRICE, Chair/Commissioner, Alaska Oil and Gas
Conservation Commission, Department of Commerce, Community &
Economic Development, told Co-Chair Hannan that that particular
change had been made by [Legislative Legal Services] rather than
requested by AOGCC. In response to a follow-up request from Co-
Chair Hannan, he offered his understanding that the goal of the
legislation is to no longer require a holding of a hearing in
instances of well spacing and regarding drilling. He said AOGCC
is pleased to see the substantive change, in Section 1, from
"may" to "shall" in direction of the commission establishing a
drilling unit for each pool. He offered further clarification
as to the process of discovery and drilling and spacing
exceptions.
8:47:36 AM
JESSIE CHMIELOWSKI, Engineering Commissioner, Alaska Oil and Gas
Conservation Commission, Department of Commerce, Community &
Economic Development, specified the changes requested by AOGCC
are relatively small and occur on page 1, lines 7-8, the
deletion of "shall" and insertion of "may"; and on page 1, lines
14-15, the deletion of "after notice and hearings". She said
those changes give AOGCC more flexibility and help it change its
goal.
8:48:33 AM
CO-CHAIR HANNAN mentioned news coverage regarding a gas leak
that happened the day before, and she interpreted the article to
indicate that there had not been well spacing that was
adequately evaluated. She said she thought this is the problem
that well spacing language is meant to prevent. She asked
whether a hearing [of the commission] could have prevented that
occurrence and whether well spacing has "anything to do with
that discharge of gas."
8:50:27 AM
MS. CHMIELOWSKI indicated that the well in question would not
have qualified for an exemption. She offered further details.
In response to a follow-up question regarding the protection of
economic development alongside assurance of no risk to the
public, she first explained that what is being talked about is
not the distance of the well from another well's surface, but
rather where the well penetrates the reservoir. She noted that
when a well is drained too quickly, it results in waste, and
AOGCC encourages "ultimate maximum recovery from a reservoir."
It monitors where wells are drilled. Wells are built based on
geology and reservoir characteristics; default drilling sections
based on governmental sections are out of date, she explained.
She described a well that goes down vertically and then changes
to horizontal, crossing multiple governmental sections. There
can be multiple, long lateral [drills]. She said building more
than one well in a governmental section does not promote waste;
it allows for more recovery from the reservoir, which is a goal
of AOGCC. She explained that [through HB 349], AOGCC is asking
the legislature to relieve the commission from an administrative
burden. She noted that the protection of owners to receive
their share of the resource would remain unchanged under the
proposed legislation.
8:56:40 AM
MR. PRICE proffered that a governmental section is 160 acres of
subsurface distance around a well. He said at this point in
time, when a company finds oil and gas, it has to "settle in for
a while" before it is able to drill additional wells, in order
to "jump through these hoops that are largely unnecessary at
this point in time."
8:58:25 AM
MS. CHMIELOWSKI, in response to Representative Prax, confirmed
that the spacing of the well in the aforementioned event of
yesterday was not the issue. What happened was a surprise that
could not have been predicted.
8:59:00 AM
REPRESENTATIVE RAUSCHER, in response to a query from
Representative Prax, said he would bring photos showing how
wells were drilled [on the North Slope], where he worked in the
'70s and '80s, with comparison to how wells are drilled now. He
clarified that the proposed legislation would clean up language
to avoid requiring an unnecessary process.
9:01:46 AM
CO-CHAIR HANNAN noted this is not a North Slope issue but a Cook
Inlet one, and she said she would like the committee to
understand the problem being faced in that location. She
mentioned "spindle tops" in Allegheny, New York, which have been
in existence since the 1860s.
9:03:10 AM
REPRESENTATIVE DRUMMOND reflected on the number of drilling
sites she has seen in the Kern River oil field, in Bakersfield,
California.
9:04:01 AM
CO-CHAIR HANNAN announced that HB 349 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB167 VerO.SupportingLetters2.4.11.22.pdf |
HCRA 4/12/2022 8:00:00 AM |
HB 167 |