Legislature(2003 - 2004)
04/01/2004 03:25 PM House O&G
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* first hearing in first committee of referral
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HB 364-NATURAL GAS LEASES NEAR KACHEMAK BAY CHAIR KOHRING announced that the first order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 364, "An Act establishing a moratorium on the issuance of state shallow natural gas leases in the vicinity of Kachemak Bay, and precluding the commissioner of natural resources from reissuing or otherwise extending leases within the moratorium area if the leases fail to produce gas in paying quantities within the terms of the lease or if there is a breach of a term or condition of the lease; and providing for an effective date." [In packets was a new proposed committee substitute (CS), Version 23- LS1464\S.] [Tape recording began at this point.] TAPE 04-12, SIDE A Number 0006 REPRESENTATIVE PAUL SEATON, Alaska State Legislature, sponsor of SSHB 364, explained that this legislation applies to conditions under which the director of the Division of Oil & Gas may extend leases that aren't producing paying quantities of gas. It allows the director the option to not issue leases for another three years if they're just being held speculatively. If the director just didn't renew those leases based on his/her own judgment, there could be a takings claim that it was arbitrary and capricious; however, if the director follows the statute [proposed in this bill], if there is a work plan in place and so forth, then the extension would be made. In addition to preventing a takings claim against the state, this prevents re- leasing of those leases to someone else under the shallow natural gas program. REPRESENTATIVE SEATON said nothing in the bill prevents those leases from being incorporated into an areawide lease sale if the new gas-only program goes forward. It makes incorporation into an areawide lease sale more likely, he suggested; currently, if there is a shallow natural gas lease on top of a deeper gas find, there is a difficult situation in Alaska relating to correlative rights, and the Division of Oil & gas has a policy of not issuing two sets of leases, one atop the other, with the shallow natural gas program. This bill allows the director to determine whether it's in the best interests of the state to extend those leases; if they're not extended, that specific area wouldn't be available for additional shallow natural gas leases. Number 0285 REPRESENTATIVE ROKEBERG said he didn't have an amendment prepared, but voiced concern about these lands' being off-limits to development. Suggesting these lands should be covered by areawide leasing but aren't, he said he'd be reluctant to support this legislation "if we're just going to lock up lands again." REPRESENTATIVE SEATON responded that if this legislation or similar provisions don't go forward, it would preclude areawide lease sales from incorporating this area; this will be under a shallow natural gas lease, and the division has a policy of not doing an areawide lease sale if there is a shallow natural gas lease, for reasons relating to correlative rights because of the various depths. Number 0560 REPRESENTATIVE ROKEBERG said he thinks it's a bad policy, even though he could understand Mr. Myers' position because there is some gray area about the depth and so forth. CHAIR KOHRING noted that he'd promised to bring this bill up for a vote, said he respected where the sponsor was coming from, but expressed concern that this legislation isn't the most conducive to development of resources. Number 0623 REPRESENTATIVE McGUIRE moved to report CSSSHB 364, Version 23- LS1464\Q, Chenoweth, 3/4/04, out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, it was so ordered. REPRESENTATIVE KERTTULA pointed out the new proposed CS, Version 23-LS1464\S. Number 0684 REPRESENTATIVE McGUIRE moved to rescind the committee's action in reporting the bill from committee. There being no objection, it was so ordered. Number 0722 REPRESENTATIVE HOLM moved to adopt the proposed CS, Version 23- LS1464\S. There being no objection, Version S was before the committee. Number 0782 REPRESENTATIVE McGUIRE moved to report CSSSHB 364, Version 23- LS1464\S, out of committee with individual recommendations and the accompanying zero fiscal notes. CHAIR KOHRING announced that CSSSHB 364(O&G) was reported from the House Special Committee on Oil and Gas.
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