Legislature(2005 - 2006)CAPITOL 124
03/15/2005 05:00 PM House OIL & GAS
| Audio | Topic |
|---|---|
| Start | |
| HB197 | |
| HB142 | |
| HB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 197 | TELECONFERENCED | |
| *+ | HB 142 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
HB 197-OIL SPILL EXEMPTIONS FOR GAS WELLS 5:04:20 PM CHAIR KOHRING announced that the first order of business would be HOUSE BILL NO. 197, "An Act exempting certain natural gas exploration and production facilities from oil discharge prevention and contingency plans and proof of financial responsibility, and amending the powers and duties of the Alaska Oil and Gas Conservation Commission with respect to those plans; and providing for an effective date." 5:04:34 PM CHAIR KOHRING, as chair of the House Special Committee on Oil and Gas, sponsor of HB 197, explained that the bill addressed an unintended consequence that resulted from last year's House Bill 531: [That was the bill regarding] the coal bed methane issue where we put into place some pretty restrictive requirements. ... The bill went a little bit too far in terms of requiring C-Plans, which is the term referring to oil spill contingency plans, and it also requires proving financial responsibility for all kinds of gas wells, whether there are any threats of oil spills or not. And what we'd like to do is to put in place an exemption to the existing state law for gas wells where there is no threat of any ... oil seepage through the formations when the gas wells are drilled.... [Alaska Oil and Gas Conservation Commission (AOGCC)] will determine if the formations will potentially have oil where the gas is being drilled, and if they determine that there is oil that could potentially work its way through the formations and come out and spill on the ground and cause environmental problems, then they would not allow the exemptions. So it's entirely dependant on what their analysis and evaluation of the formations in the ground are. So what's we're essentially doing with this legislation; [HB] 197 is clarifying the authority that the state has by amending the existing law dealing with oil discharge prevention. 5:06:16 PM CHAIR KOHRING continued: With the current law that we have in place, it actually is going to make it harder for smaller companies to operate because, with the C-Plan requirements, it's going to add to the extra cost ... associated with gas exploration. So we could actually see less gas drilling and exploration if they're subject to these C-Plans and ... proving financial responsibility. 5:07:31 PM DANIEL SEAMOUNT, Commissioner, Alaska Oil and Gas Conservation Commission (AOGCC), Alaska Department of Administration, noted that the AOGCC had submitted a letter of support for HB 197. Regarding the bill, he commented: It mends the laws regarding oil discharge prevention and contingency plans, and also proof of financial responsibility, otherwise known as C-Plans. It allows better use of the geologic information and expertise that the AOGCC has in understanding the need for such plans. Under current law, the C-Plan is required for wells drilled to explore for or produce oil.... The C-Plan ... was not in the past required for wells drilled to produce only gas, however ... [House Bill 531] passed in 2004 kind of had an anti-loophole. The only wells that could be technically exempted were basically only coal bed methane wells, and other gas wells that were not nonconventional ... did not technically have the ability to be exempted from a C- Plan. So we don't believe that that was the ... legislators' intent ... last year, and it resulted in a mismatch between the current scope of the C-Plan exemption and the facts of Alaska's geology. ... And those facts are: drilling for gas in many areas, whether it's nonconventional or not, carries virtually no risk of an oil spill. There are thick geologic sections containing both conventional and nonconventional gas reservoirs, but they have very little potential for the existence of zones capable of flowing liquid hydrocarbons. A C-Plan requirement only adds costs and delay to gas exploration with no increased protection to the environment. We believe HB 197 corrects the inadequacies in current law by providing for a case-by-case geologic evaluation of wells drilled to explore for gas. ... Wells drilled to explore for gas would qualify for a C-Plan exemption only if the AOGCC determines the evidence demonstrates with reasonable certainty that the well will not penetrate a formation capable of flowing any kinds of liquid hydrocarbons to the ground surface. So the approach of HB 197 is to base C-Plan exemption decisions on applications of the AOGCC's geologic expertise.... 5:12:54 PM REPRESENTATIVE GARDNER commented that the Alaska Department of Environmental Conservation (ADEC) "already has authority to do this on a case-by-case basis, and this bill simply clarifies the circumstances under which they can do this." 5:13:19 PM REPRESENTATIVE KERTTULA asked if the bill would apply to conventional as well as nonconventional gas. MR. SEAMOUNT responded that it would,.but noted, "Only in the case where we have determined that geologically there is ... virtually no risk of hitting zones that are capable of flowing oil to the surface." REPRESENTATIVE KERTTULA asked if currently all conventional wells are required to have C-Plans. MR. SEAMOUNT replied that wells drilled before 2004 were exempted, and then he deferred to ADEC. 5:14:35 PM LARRY DIETRICK, Director, Division of Spill Prevention and Response, Alaska Department of Environmental Conservation (ADEC), stated that the department supports the bill. He commented that ADEC has historically relied on the AOGCC's expertise regarding the North Slope. REPRESENTATIVE KERTTULA asked if ADEC had intended to raise the financial responsibility level from $25,000 to $1 million. MR. DIETRICK replied that the intent was that if the determination was made that there was no oil that would float to the surface in a particular reservoir, then both the financial responsibility and the C-Plan requirements would be voided. 5:16:16 PM REPRESENTATIVE KERTTULA said, "If they're required to do a C- Plan, then they're under the $1 million level, even if it's nonconventional. Am I right?" MR. DIETRICK replied affirmatively. REPRESENTATIVE KERTTULA continued, "So under the current situation, current law, which created this glitch, for nonconventional, they were under the ... $25,000 per incident. Is that how it was working with financial responsibility?" MR. DIETRICK answered that this was correct. REPRESENTATIVE KERTTULA noted, "The only gap now ... is that, for the wells that are exempted, what happens if ... we turn out to be wrong, and there actually is an oil spill. Is there any way to go back, or any financial responsibility required at all? MR. DIETRICK responded, "We rely on the AOGCC determination then of whether or not the potential exists. ... And so therefore a contingency plan and financial responsibility would not be required up front." He said that he could not think of any case in the past where AOGCC was wrong in a case like this. He noted, "I think the likelihood of that occurring [is] very remote, so there are no specific provisions for that right now." 5:19:04 PM CHAIR KOHRING asked if there was anyone in Juneau or on teleconference who wished to testify. There was no one. REPRESENTATIVE KERTTULA asked if other facilities or pipelines have to have financial responsibility. MR. DIETRICK responded that the exemption would not apply to any other category of facilities that are regulated and required to have financial responsibility or C-Plan, including nontank vessels, tank vessels, railroad, pipelines, and oil terminal facilities. He said, "It's only for the wells." 5:21:14 PM REPRESENTATIVE DAHLSTROM moved to report HB 197 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 197 was reported from the House Special Committee on Oil and Gas.
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