Legislature(2001 - 2002)

03/26/2002 09:19 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR SENATE BILL NO. 319(RES)                                                                                            
     "An Act relating to shallow natural gas leasing; and providing                                                             
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  JOHN TORGERSON,  sponsor of  the bill,  explained that  the                                                            
original  shallow  gas leasing  program  was established  to  enable                                                            
"exploration and  production of shallow gas lease  deposits in rural                                                            
areas  to supply  energy"  to  rural  area users.  He  informed  the                                                            
Committee  the  changes proposed  in  this  bill would  "evolve  the                                                            
program  into  a more  robust  and viable  commercial  program  that                                                            
should  benefit all  parties."  He stated  the key  elements in  the                                                            
proposal include such things  as the generation of increased revenue                                                            
to the  State by raising  application fees  for shallow gas  leasing                                                            
from $500 to  $5,000 thereby keeping  the fee more in line  with the                                                            
actual  expense   of  processing   the  application;  lowering   the                                                            
Department of Natural Resources  administrative costs by instituting                                                            
automatically  renewable leases and removing "unworkable  deadlines"                                                            
for  issuance  of leases;  providing  better  reservoir management;                                                             
replacing  the 3,000 foot  depth requirement  with language  stating                                                            
that some  portion of  the field must  be within  3,000 feet  of the                                                            
surface;  increasing field  acreage  to allow for  a viable  leasing                                                            
program; removal  of the requirement  for prospective applicants  to                                                            
conduct  a  title search;  improving  protection  for  surface  land                                                            
owners; and implementing  a conversion methodology to allow existing                                                            
leases to be converted to the new program.                                                                                      
                                                                                                                                
MARK  MYERS,  Director,  Division  of Oil  and  Gas,  Department  of                                                            
Natural  Resources testified  via teleconference  from Anchorage  to                                                            
voice  the  Department's  support  of  the  bill.  He  stated  these                                                            
warranted  changes  would  convert  the program  into  a  commercial                                                            
program that would provide benefits to the State and landowners.                                                                
                                                                                                                                
JOHN  TANIGAWA,  Special   Projects  Manager,  Evergreen   Resources                                                            
Corporation, testified  via teleconference from Mat-Su in support of                                                            
SB 319 as it removes obstacles  to exploration activities. He stated                                                            
the bill is  economically sound, and  an "excellent example"  of the                                                            
State working  with industry to benefit  government, industry,  "but                                                            
particularly the public."                                                                                                       
                                                                                                                                
KEVIN TABLER,  representative, Unocal, testified via  teleconference                                                            
from Anchorage to voice  that Unocal supports the amendments to this                                                            
bill.  He asserted  that the  shallow gas-leasing  program  enhances                                                            
access to and development of the State's resources.                                                                             
                                                                                                                                
CHARLOTTE  MACCOY, representative,  Teck Cominco  Alaska,  testified                                                            
via teleconference  from Anchorage  to voice support for  this bill.                                                            
She stated  the proposed  amendments address  concerns Teck  Cominco                                                            
has regarding  bonding requirements. She alerted the  Committee that                                                            
private lands  might have been inadvertently  omitted from  proposed                                                            
language  regarding the  depth issue  change located  on page  4, in                                                            
Sections 7 and 8.                                                                                                               
                                                                                                                                
Mr. Myers shared  with the Committee that the Department  recognizes                                                            
Teck Cominco's  concerns and stated an amendment could  address both                                                            
of Teck Cominco's concerns.                                                                                                     
                                                                                                                                
Co-Chair  Kelly asked Mr.  Myers to work  with Senator Torgerson  to                                                            
develop amendment language.                                                                                                     
                                                                                                                                
The bill  was SET ASIDE.  [Note: This bill  was brought back  before                                                            
the Committee later in the meeting.]                                                                                            
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 319(RES)                                                                                            
     "An Act relating to shallow natural gas leasing; and providing                                                             
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
[This bill was heard earlier in the meeting]                                                                                    
                                                                                                                                
AT EASE 10:33 AM / 10:34 AM                                                                                                     
                                                                                                                                
Amendment #1:  This amendment deletes "field subject  to lease under                                                            
AS 38.05.177"  and inserts "field, if a part of the  field is within                                                            
3,000 feet of  the surface" on page 4, lines 26-27  and page 5, line                                                            
26.                                                                                                                             
                                                                                                                                
Senator Wilken offered a motion to adopt Amendment #1.                                                                          
                                                                                                                                
Co-Chair Kelly objected for discussion.                                                                                         
                                                                                                                                
Senator  Torgerson   explained  that   Amendment  #1  addresses   an                                                            
oversight  in the bill that  limits producing  gas to "lands  leased                                                            
from  the state."  He stated  that the  adoption  of this  amendment                                                            
would make the language consistent throughout the bill.                                                                         
                                                                                                                                
Co-Chair Kelly withdrew the objection.                                                                                          
                                                                                                                                
There being no objection, Amendment #1 was ADOPTED.                                                                             
                                                                                                                                
Senator Leman  moved "to report the committee substitute  for Senate                                                            
Bill 319 Finance from Committee  with individual recommendations and                                                            
accompanying fiscal note."                                                                                                      
                                                                                                                                
There  being  no  objection,  CS SB  319  (FIN)  was  REPORTED  from                                                            
Committee  with  a new  zero fiscal  note,  dated 3/22/02  from  the                                                            
Department of Natural Resources.                                                                                                
                                                                                                                                
AT EASE 10:36 AM / 10:44 AM                                                                                                     
                                                                                                                                
                                                                                                                                

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