Legislature(2021 - 2022)BARNES 124

01/24/2022 01:00 PM House RESOURCES

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Audio Topic
01:03:47 PM Start
01:04:13 PM HB135
01:39:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
                  HB 135-GEOTHERMAL RESOURCES                                                                               
1:04:13 PM                                                                                                                    
CHAIR PATKOTAK  announced that the  only order of  business would                                                               
be HOUSE BILL NO. 135,  "An Act relating to geothermal resources;                                                               
relating  to  the  definition   of  'geothermal  resources';  and                                                               
providing for an effective date."                                                                                               
CHAIR PATKOTAK  reminded committee  members that  today's hearing                                                               
on  HB  135 is  a  continuation  of the  PowerPoint  presentation                                                               
provided  by the  Department of  Natural Resources  (DNR) at  the                                                               
bill's previous hearing on 1/21/22.   He noted that clarification                                                               
would also  be provided  on previous questions  about how  HB 135                                                               
might affect water rights.                                                                                                      
1:05:46 PM                                                                                                                    
SEAN  CLIFTON, Policy  and  Program  Specialist, Central  Office,                                                               
Division of Oil  and Gas (DO&G), Department  of Natural Resources                                                               
(DNR), turned  to the  department's PowerPoint  presentation, "HB
135 GEOTHERMAL RESOURCES," that was  provided to the committee on                                                               
1/21/22.    He  displayed  slide   9,  "SECTION  2:  PREFERENTIAL                                                               
RIGHTS,"  and  explained  that  HB  135 seeks  to  clean  up  the                                                               
statutes pertaining to the Division  of Oil and Gas (DO&G) rather                                                               
than  to disposing  of the  State of  Alaska's geothermal  energy                                                               
resources, with  the purpose of issuing  exploration licenses and                                                               
leases  and  ultimately  units   of  those  leases,  facilitating                                                               
getting  clean and  renewable energy  into Alaskans'  homes.   He                                                               
pointed out that the mention water  of water rights on this slide                                                               
was just meant  to be analogous comparison, as HB  135 would have                                                               
no impact on the statutes that  are relevant to water rights.  He                                                               
noted that  Mr. Tom Barrett is  online to help clarify  how water                                                               
rights would be potentially relevant  to a geothermal development                                                               
situation as well as water rights generally.                                                                                    
1:07:45 PM                                                                                                                    
TOM BARRETT, Section Leader, Division  of Mining, Land and Water,                                                               
Department  of  Natural  Resources (DNR),  explained  that  water                                                               
rights  are a  legal right  to surface  or ground  water that  is                                                               
granted pursuant  to the [1966]  Alaska Water  Use Act.   A water                                                               
right allows  a specific  amount of water  from a  specific water                                                               
source to  be diverted,  impounded, or  withdrawn for  a specific                                                               
use.  When a water right  is granted, it becomes pertinent to the                                                               
land where the  water is being used  for as long as  the water is                                                               
being used.   If the land is sold the  water right transfers with                                                               
the land to  the new owner.   For example, a farmer  with a creek                                                               
running through his or her property,  would need a water right to                                                               
authorize  the  use  of  a   significant  amount  of  water.    A                                                               
significant amount  of water  is defined  as about  5,000 gallons                                                               
per  day  for   consumptive  use  or  30,000   gallons  for  non-                                                               
consumptive use.                                                                                                                
MR.  BARRETT  specified  that  a water  right  provides  a  legal                                                               
standing  to serve  those rights  against conflicting  water uses                                                               
that do not have water rights.   He said Alaska follows the prior                                                               
appropriation  system, meaning  a  person with  water rights  has                                                               
priority  to use  the water  over persons  who later  file for  a                                                               
water right from the same source.   In Alaska, about 18,000 water                                                               
rights have been issued.  To  issue a water right, [DNR] takes an                                                               
application and  small fee  from an  applicant, processes  it for                                                               
completeness, the specific location,  and method of diverting the                                                               
water.  An impact  analysis is done to be sure  it isn't going to                                                               
affect  other  appropriates,  although  [DNR]  doesn't  guarantee                                                               
people's water.  If it  isn't going to affect other appropriates,                                                               
[DNR] issues a  permit for 2-10 years depending on  the amount of                                                               
water  requested.   In  this  permit  phase, called  proving  the                                                               
applicant's  water rights,  the  applicant uses  their water  and                                                               
reports their water  use to [the department].  At  the end of the                                                               
permit  phase [DNR]  issues a  certificate for  the water  amount                                                               
actually used by the applicant.                                                                                                 
1:11:11 PM                                                                                                                    
REPRESENTATIVE  HANNAN   referenced  the  bill's   "bright  line"                                                               
distinction  between commercial  users and  non-commercial users.                                                               
In  describing  water  rights,  she  asked  whether  there  is  a                                                               
distinction  between commercial  users and  non-commercial users.                                                               
She further asked whether homeowners  would need a water right to                                                               
put in well.                                                                                                                    
MR.  BARRETT replied  that the  water  right is  purely based  on                                                               
volume, the  volume is  what triggers  it.   So, he  continued, a                                                               
homeowner with a well would not need to get a water right.                                                                      
REPRESENTATIVE  HANNAN posed  a scenario  in which  an individual                                                               
has a  well and a  geothermal commercial property  gets developed                                                               
and  needs water  for that  commercial use.   She  asked how  the                                                               
rights of  the individual property  owner with the well  would be                                                               
preserved  to ensure  access  to  the water  that  is being  used                                                               
without an established water right.                                                                                             
MR. BARRETT responded that that is  the benefit for a water right                                                               
even when  not required.   That water  right gives  an individual                                                               
the prior  priority base.   If a  homeowner doesn't have  a water                                                               
right and a  neighbor has a large commercial  operation that uses                                                               
lots of water  and causes an impact, the homeowner  would have to                                                               
work  with the  neighbor  regarding the  impact.   However,  when                                                               
issuing  a water  right, [DNR]  does look  for surrounding  water                                                               
users, but the best protection is to get a water right.                                                                         
REPRESENTATIVE  HANNAN asked  whether  there  are any  individual                                                               
noncommercial users in  Alaska who currently have  wells and have                                                               
established their water rights for those wells.                                                                                 
MR. BARRETT answered  yes, there are a  lot of household/domestic                                                               
water right owners.                                                                                                             
1:15:09 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER recalled  that  during his  45 years  in                                                               
Alaska it  has been a  big deal  for everyone to  establish their                                                               
water rights.   He inquired  as to  whether that process  has now                                                               
ended  and drilling  a  [water] well  is all  that  is needed  to                                                               
establish specific water  rights.  He further inquired  as to how                                                               
HB 135 would affect or put extra encumbrances on those rights.                                                                  
MR. BARRETT replied  that a well is basically just  access to the                                                               
water.  Someone wanting a  water right must submit an application                                                               
to the department that describes  how the applicant will get that                                                               
water, such as diverting a stream or putting in a well.                                                                         
REPRESENTATIVE RAUSCHER  asked whether  HB 135  would in  any way                                                               
affect  private  landowners  who  have  water  rights  for  their                                                               
MR. BARRETT responded that HB 135 would not change that.                                                                        
1:17:26 PM                                                                                                                    
REPRESENTATIVE MCCABE  posited that the freshwater  wells drilled                                                               
for drinking  water and domestic  consumption are  usually 50-300                                                               
feet deep at  the most, while in geothermal  energy [systems] the                                                               
water is briny and located  significantly deeper.  He inquired as                                                               
to  whether  it  is  correct  that  these  are  two  geologically                                                               
different horizons.                                                                                                             
MR. BARRETT answered that geothermal  [energy systems] can be one                                                               
thousand  to  several  thousand feet  deep  [slide  16,  "USEABLE                                                               
GEOTHERMAL ENERGY"],  whereas warm  springs and hot  springs tend                                                               
to  be much  shallower.    Freshwater aquifers  also  tend to  be                                                               
shallow and at depths of less than a thousand feet.                                                                             
REPRESENTATIVE MCCABE posited that, in  theory, folks living in a                                                               
geothermal area  can be producing  domestic freshwater  for their                                                               
homes  and businesses,  and because  the two  are separated  by a                                                               
long column  of rock they  could co-exist without  difficulty and                                                               
the two cannot be conflated.                                                                                                    
1:20:15 PM                                                                                                                    
DAVID  LEPAIN,  Chief  Geologist,   Division  of  Geological  and                                                               
Geophysical  Surveys  (DGGS),  Department  of  Natural  Resources                                                               
(DNR), confirmed  that Mr. Barrett's  answer is correct.   As was                                                               
stated  by Mr.  Masterman  [on  1/21/22] it  is  a difference  in                                                               
scale.   Part  of the  water  wells are  going  to be  up in  the                                                               
shallow stratigraphy anywhere  from a few tens of feet  down to a                                                               
few hundred feet deep; for example,  some wells in the hill areas                                                               
of Fairbanks are  upwards of 500 feet deep.   But still, they are                                                               
much shallower  than what  is being  talked about  for commercial                                                               
geothermal  energy.   Geothermal wells  are  going to  be on  the                                                               
order of many thousands  of feet deep, so there will  be a lot of                                                               
geology/rock separating  those two systems and  there is unlikely                                                               
to be communication between them.                                                                                               
CHAIR PATKOTAK  drew attention to  slide 16,  "USEABLE GEOTHERMAL                                                               
ENERGY," in  the presentation which highlights  the difference in                                                               
depths between the two types of water resource.                                                                                 
1:21:34 PM                                                                                                                    
REPRESENTATIVE  SCHRAGE   recalled  that  some  of   the  concern                                                               
expressed by committee members  was regarding whether [geothermal                                                               
wells] at depths  of 200-300 feet could  impact freshwater wells.                                                               
He requested  clarification that  what is  being talked  about is                                                               
commercial   geothermal  power   at   thousands   of  feet,   not                                                               
potentially  200 feet.   He  surmised that  geothermal reservoirs                                                               
are deep  as well as broad,  and probably not an  infinite source                                                               
of  power or  power generation.   He  asked whether  one user  of                                                               
geothermal power could  dilute that source of  energy for another                                                               
user in the region.                                                                                                             
MR. LEPAIN  replied that  there is  unlikely to  be communication                                                               
between  the shallow  part of  the  water systems  and the  water                                                               
being tapped into by a geothermal  project.  Even if a geothermal                                                               
project is tapping into relatively  shallow water, it is probably                                                               
going  to  be  on  the  flanks  of a  volcano  or  some  sort  of                                                               
geothermal site,  and those waters  tend to be high  in dissolved                                                               
solids  and tend  to  be non-potable  sources of  water.   It  is                                                               
correct  that most  often  geothermal projects  are  going to  be                                                               
tapping  non-potable water  sources  that are  many thousands  of                                                               
feet deep.   Referring to [slide 16], he further  stated that the                                                               
geothermal wells depicted on the slide  at the shallow end of 200                                                               
feet are highly unlikely.                                                                                                       
1:24:14 PM                                                                                                                    
MR.  CLIFTON  responded  to  the  other  part  of  Representative                                                               
Schrage's  question, which  he interpreted  as  being what  would                                                               
happen if  there were a  conflict between  two users of  the same                                                               
geothermal reservoir.  He said it  would be handled much the same                                                               
way as  done with other types  of energy reservoirs, such  as oil                                                               
and gas.   One function  of the  Alaska Oil and  Gas Conservation                                                               
Commission (AOGCC) is  to monitor resource pools  and ensure that                                                               
waste  is  prevented,  and  those  things  can  be  de-conflicted                                                               
through existing statutes.   But, he added, it is  almost never a                                                               
problem  because   the  operators  who  seek   to  develop  those                                                               
resources also  don't want to  waste the resources, they  want to                                                               
maximize them, and they usually  manage that on their own through                                                               
unitization of  the resource.   Also, it is unlikely  there would                                                               
be  a  conflict  between  a  private user  of  what  would  be  a                                                               
commercial  resource simply  because the  scale of  a commercial-                                                               
related  resource  is much  bigger  and  more powerful,  such  as                                                               
higher  temperatures and  pressures.   It's unlikely  that that's                                                               
the sort of  thing which private home or cabin  users are tapping                                                               
into.   If that situation did  come up, however, the  AOGCC would                                                               
be able to de-conflict it through existing statute and policies.                                                                
1:26:18 PM                                                                                                                    
REPRESENTATIVE  HANNAN  drew  attention  to  the  description  of                                                               
hydrothermal on  slide 16.  She  asked whether the steam  and hot                                                               
water  in  hydrothermal  geothermal energy  production  is  deep,                                                               
briny water that is already  down near the geothermal source, and                                                               
surface water is not used for that.                                                                                             
MR. LEPAIN  answered correct, for hydrothermal  systems the water                                                               
being pumped  is from  a depth  of thousands of  feet; it  is not                                                               
going  to be  surface water  and  it is  very unlikely  to be  in                                                               
communication with  surface water.   There is a  very significant                                                               
separation in terms  of depth for commercial  versus private home                                                               
1:27:34 PM                                                                                                                    
REPRESENTATIVE  HOPKINS  inquired  whether  AOGCC  has  statutory                                                               
authority  to deal  with  hydrothermal  and geothermal  resources                                                               
given that oil and gas are not geothermal.                                                                                      
MR.  CLIFTON  confirmed that  AOGCC  has  statutory authority  to                                                               
adjudicate that and to arbitrate conflicts.                                                                                     
1:28:27 PM                                                                                                                    
The committee took a brief at-ease.                                                                                             
1:28:50 PM                                                                                                                    
REPRESENTATIVE SCHRAGE  brought attention  to slide 16  and asked                                                               
whether a geothermal power plant  would be pumping water from the                                                               
reservoir  and then  reinjecting the  same water  back into  that                                                               
reservoir.   He further asked  whether this would run  afoul with                                                               
the Department of Environmental  Conservation (DEC) because water                                                               
is being discharged back into a reservoir.                                                                                      
MR. LEPAIN  confirmed that hot  water is pumped  from significant                                                               
depths,   then  run   through  a   steam   turbine  to   generate                                                               
electricity, then the water goes to  a cooling tower and after it                                                               
is  cooled the  water  is  reinjected into  the  subsurface at  a                                                               
comparable depth.   He  deferred to the  other experts  online to                                                               
answer whether DEC would be involved.                                                                                           
MR.  CLIFTON  answered  that  the   reinjection  wells  would  be                                                               
permitted and regulated  through AOGCC.  This  is something AOGCC                                                               
already does with other types  of production and injection wells,                                                               
and this is  a standard and usual practice.   He added that AOGCC                                                               
pays close attention to the  protection of other water resources,                                                               
such as drinking water sources.   He confirmed that the potential                                                               
for surface contamination or discharge would be DEC's domain.                                                                   
1:31:30 PM                                                                                                                    
LAURA  ACHEE, Legislative  Liaison,  Department of  Environmental                                                               
Conservation  (DEC), qualified  that as  the legislative  liaison                                                               
she  is not  familiar with  the details  specific of  permits for                                                               
discharge  as to  water.   Regarding questions  asked during  the                                                               
bill's  1/21/22  hearing, she  said  permits  from DEC  would  be                                                               
required for  discharging water and  it would have to  meet state                                                               
and federal water quality standards.                                                                                            
1:32:11 PM                                                                                                                    
REPRESENTATIVE SCHRAGE  surmised that if the  water is reinjected                                                               
into the  reservoir, DEC  does not  have oversight;  rather, that                                                               
would be permitted  through AOGCC.  But, he  further surmised, if                                                               
the  water is  being  discharged  on the  surface,  DEC would  be                                                               
involved and would monitor those discharges.                                                                                    
MS. ACHEE  replied that she will  get back to the  committee with                                                               
an answer in this regard.                                                                                                       
MR. CLIFTON added  that for operating a facility  like this there                                                               
is  extensive review  of the  engineering and  so forth,  and DEC                                                               
would have to  permit a contingency plan just like  for any other                                                               
facility related  to oil and  gas or to  generation.  It  is very                                                               
important  to  all of  the  state  agencies connected  with  that                                                               
permitting  process to  protect the  surface, the  drinking water                                                               
resources, prevent  to the greatest  extent possible any  sort of                                                               
environmental contamination,  and to have contingincies  in place                                                               
should anything like that occur.   This wouldn't be any different                                                               
from  any of  the  power  generation facilities  or  oil and  gas                                                               
related  facilities   that  have   already  been   permitted  and                                                               
operating in Alaska for decades.                                                                                                
1:34:14 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER inquired  about the  number of  agencies                                                               
that  would be  involved  when putting  in  [a geothermal  energy                                                               
MR. CLIFTON  responded that  he doesn't offhand  know all  of the                                                               
agencies that would be involved.  He  said DNR does a fair bit of                                                               
the surface use  permitting as well as  some pipeline permitting,                                                               
which  is  also a  surface  area.    In  addition, DEC  might  be                                                               
involved  through the  spill contingency  plan; as  well, permits                                                               
would  be needed  for any  planned discharge  from the  facility.                                                               
The Alaska Department of Fish  and Game (ADF&G) could be involved                                                               
should  there be  any potential  for disturbance  of wildlife  or                                                               
interference  with  streams.   Federal  agencies  might  also  be                                                               
involved,  so  it can  get  quite  broad  depending on  what  the                                                               
potential impacts are.   He offered to provide a  list of all the                                                               
potential  agencies  that  might  be  involved  in  permitting  a                                                               
surface facility for power generation from geothermal resources.                                                                
CHAIR  PATKOTAK confirmed  the committee  would  like to  receive                                                               
such a list prior to the bill's next hearing on 1/26/22.                                                                        
1:36:34 PM                                                                                                                    
REPRESENTATIVE  HOPKINS drew  attention  to  slide 31,  "DRILLING                                                               
REGULATIONS," and observed the  statement that AOGCC jurisdiction                                                               
over  geothermal is  triggered by  temperature or  commerciality.                                                               
He futher  observed the statement  that the new definition  in HB
135 ignores the temperature requirement.   He asked whether AOGCC                                                               
would still have  jurisdiction under the proposed  change for how                                                               
AOGCC's jurisdiction is triggered.                                                                                              
MR. CLIFTON pointed out that  the last bullet under AOGCC states:                                                               
"Exception: if  well may  encounter geothermal  resources, fluid,                                                               
or water  of enough heat/pressure  to threaten life/health."   In                                                               
this case,  he continued, AOGCC  would require permits,  and that                                                               
would be regardless of whether  it is a commercial development or                                                               
a private landowner.                                                                                                            
1:38:07 PM                                                                                                                    
REPRESENTATIVE  HOPKINS posed  a scenario  in which  there is  90                                                               
degree heat  in a shallow  well that is  pumped up to  the ground                                                               
and  that's not  enough  heat  or pressure  to  threaten life  or                                                               
health,  and then  there is  a resource  discrepancy between  two                                                               
operations as  they try to  become commercial, AOGCC is  not part                                                               
of that at that point?                                                                                                          
MR. CLIFTON  answered that a  commercial development is  going to                                                               
be permitted through AOGCC.                                                                                                     
CHAIR PATKOTAK  surmised that a  commercial development  is going                                                               
to be permitted through AOGCC despite temperatures.                                                                             
MR. CLIFTON replied yes.                                                                                                        
CHAIR  PATKOTAK  further  surmised that  if  AOGCC's  involvement                                                               
isn't  already  triggered with  the  rest  of the  process,  it's                                                               
involvement  would be  triggered if  the temperature  [is greater                                                               
than] 120 degrees celcius or simply commerciality.                                                                              
MR. CLIFTON responded correct.                                                                                                  
REPRESENTATIVE HOPKINS offered his understanding that even                                                                      
though HB 135 would not deal with temperature anymore, it would                                                                 
still be a trigger for the jurisdiction of AOGCC.                                                                               
MR. CLIFTON answered yes.                                                                                                       
1:39:19 PM                                                                                                                    
[HB 135 was held over.]                                                                                                         
1:39:58 PM                                                                                                                    
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 1:40 p.m.                                                                 

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