04/21/2004 04:20 PM Senate RES

        SB 312-CONVENTIONAL & NONCONVENTIONAL GAS LEASES                                                                    
                                                                                                                                
CHAIR SCOTT  OGAN called the Senate  Resources Standing Committee                                                             
meeting  to  order at  4:20  p.m.  Present were  Senators  Thomas                                                               
Wagoner,  Ben  Stevens,  Ralph Seekins,  Georgianna  Lincoln  and                                                               
Chair Scott Ogan. Senator Fred  Dyson arrived at 4:26 and Senator                                                               
Kim Elton  arrived at 4:27. The  first order of business  to come                                                               
before the committee was SB 312.  He noted a draft of enforcement                                                               
standards for  coalbed methane (CBM) development  and state-owned                                                               
resources in the Mat-Su Borough  in the committee packets. First,                                                               
he wanted to  compare the Mat-Su property owner's  bill of rights                                                               
with Department  of Natural Resources (DNR)  leasing regulations.                                                               
Issues that  were left out  could be identified and  addressed in                                                               
next week's meeting.                                                                                                            
                                                                                                                                
He explained  that SB  312 puts the  shallow gas  leasing program                                                               
into more of  a traditional oil and gas leasing  program. This is                                                               
problematic for certain developers in  the more rural areas where                                                               
energy  is needed  for things  such as  mines. He  is considering                                                               
bifurcating  the   program,  based   not  on  boroughs,   but  on                                                               
geological  basins  and population.  He  believes  that areas  of                                                               
higher  populations have  more surface  use conflicts  and needed                                                               
more  scrutiny  than   other  areas  that  don't   have  a  large                                                               
population, but nevertheless have a greater need for energy.                                                                    
                                                                                                                                
CHAIR OGAN thought one of  the ways to resolve surface/subsurface                                                               
conflicts is to provide a  tax break incentive for producers that                                                               
would  be   applicable  to   expenditures  beyond   their  normal                                                               
operations and SB 312 includes such an incentive.                                                                               
                                                                                                                                
He  asked the  committee  to  review a  legal  opinion from  Jack                                                               
Chenoweth,    Legislative     Legal    Services,     about    the                                                               
constitutionality  of  giving  surface  owners  veto  power  over                                                               
subsurface access  through their  properties. The  opinion stated                                                               
that  it is  not  only unconstitutional,  but  would probably  be                                                               
considered   a   revision,   which  requires   a   constitutional                                                               
convention.                                                                                                                     
                                                                                                                                
SENATOR  SEEKINS  said  that  he  hadn't  received  any  negative                                                               
comments  on the  shallow  gas  leasing act  from  people in  the                                                               
Denali Borough. They were satisfied with the way it was.                                                                        
                                                                                                                                
CHAIR  OGAN  supported  the  idea  that  development  in  heavily                                                               
populated areas would have a higher level of scrutiny.                                                                          
                                                                                                                                
SENATOR DYSON asked why SB  312 doesn't address the similar issue                                                               
in the Homer area.                                                                                                              
                                                                                                                                
CHAIR OGAN replied that these regulations will be statewide.                                                                    
                                                                                                                                
MS. LINDA HAY,  staff to Senator Ogan, said  her understanding is                                                               
that  SB 312  was developed  for  the Mat-Su  Borough, but  Homer                                                               
would have  a series  of workshops  on this  issue and  then they                                                               
would get together to work something out.                                                                                       
                                                                                                                                
CHAIR OGAN  noted there would be  further work on this  issue and                                                               
adjourned the meeting at 4:32 p.m.