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