Fate of shallow gas bills uncertain

Posted: Wednesday, April 28, 2004

The regulatory future of shallow gas development in Alaska could be decided by the end of the current legislative session.

Exactly how far lawmakers may go to change the current controversial law is unclear.

What is clear is how angry many residents of the lower Kenai Peninsula and Matanuska Valley have become over the impact shallow gas development could have on their property rights and the environment, and over the way they were largely ignored by the state's lease-sale process.

Eight bills addressing various aspects of the existing law are today winding their way through the legislative process. Most are unlikely to survive, but at least three appear to have a better shot than the others.

House Bill 364 passed out of the House Resources Committee on Friday and now awaits a hearing on the House floor. The bill was sponsored by Rep. Paul Seaton, R-Homer, whose district includes some 22,000 acres leased to a shallow-gas development company and where recent well-attended public meetings left little doubt that many area residents don't like facing the prospect of gas drilling equipment biting into their surface holdings.

Originally, HB 364 was scheduled for a hearing before the House Finance Committee, but removal of a provision requiring the Department of Natural Resources to buy back leases in the Kachemak Bay region eliminated the need.

The bill would prohibit the issuing of more shallow natural gas leases in the vicinity of Kachemak Bay and modify the authority for extending existing leases.

"This is a much less expensive and more politically feasible way of safeguarding the interests of local residents," Seaton said in an newsletter to constituents this week.

Seaton said Monday he is working on getting the support necessary to bring HB 364 to the House floor.

House Bill 531, sponsored by Rep. Beverly Masek, R-Willow, received a hearing before the House Finance Committee on Monday. This bill mirrors Senate Bill 312, sponsored by Sen. Scott Ogan, R-Palmer, which is to get a hearing Friday before the Senate Resources Committee.

Under the state's existing shallow-gas law, adopted in the mid-1990s, the commissioner of the Department of Natural Resources may unilaterally waive local ordinances if they get in the way of gas development. Both HB 531 and SB 312 would remove that provision.

Each version would eliminate over-the-counter, first-come-first-served leasing by the state and replace it with areawide leasing or exploration licensing. They would require a finding that the lease sale is in the best interest of the state.

Applied regularly to larger oil and gas lease sales, the best-interest-finding standard was bypassed in the shallow-gas law in an attempt to help promote exploration and development of small natural gas deposits in remote areas for local use. But what looked good on paper became increasingly controversial, first in the Matanuska Valley and then on the Kenai Peninsula, and led to the spate of bills aimed at repair now before the Legislature.

While HB 531 and SB 312 attempt to correct the problems of the shallow natural gas program, they fail to address the concerns surrounding the leases that have already been issued, Seaton said.

Another measure, House Bill 395, got a hearing in the House Finance Committee on Tuesday. It was passed on to the Rules Committee to be scheduled for a vote on the House floor. The bill would codify "significant increased protections" for water quality, public notice, bonding and public complaint resolution, Seaton said. Like HB 531 and SB 312, it also would repeal the DNR commissioner's authority to override local ordinances.

"Extensive procedural changes have been made to the bill, but the intent of the bill remains the same," Seaton said.

Asked how he viewed the chances of any bill becoming law this year, Seaton was cautious.

"I think it is fairly good," he said. "We just don't know what's going to happen on the Senate side. I don't mean that negatively. We just don't know."

Several other shallow-gas bills also languish in committee, including HB 370, which would protect water from the impacts of shallow gas development; HB 420, which, among other things, would require a developer to notify landowners in writing at least 30 days before initial entry; SB 250, which would establish a moratorium on new leases in the Kachemak Bay area and require a buy-back of existing leases; and SB 310, which would resolve issues surrounding property rights, water quality and local resident involvement.

Bills that do not make it out of the Legislature this session will die. Their provisions would have to be reintroduced next year with the opening of the next Legislature following the fall elections.

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