Assembly votes for lease buybacks

Gov. Frank Murkowski and the Alaska Legislature should buy back shallow gas leases on the southern Kenai Peninsula, and start the gas leasing process from square one, the Kenai Peninsula Borough Assembly said Tuesday night.

By a 6-3 margin, the assembly passed Resolution 2003-129, urging the buyback, particularly of leases within the Homer Bridge Creek Watershed and other environmentally sensitive areas around Homer.

The measure passed over the objections of some assembly members and representatives of the borough administration who said urging a buy back would send a message to the oil and gas industry that the borough opposed development.

Assembly member Gary Superman, of Nikiski, who voted against the resolution, called for reconsideration at the Jan. 6 meeting.

Assembly members Milli Martin, of Diamond Ridge, and Chris Moss, of Homer, were the sponsors of the measure. Both said the state's public process has been flawed, the public has not been given adequate notice of the advent of the sale and many residents have not been aware of their lack of say over subsurface mineral rights beneath their homes.

"People are asking that when something is proposed, that they at least be notified," she said. "By and large, the public wasn't aware of it."

Many became aware of gas leases only after they'd been let in June. Given the inadequacy of the state's process, a buy back was the right thing to do, she said.

"I believe these leases need to be bought back. I think we need to start this over," she said.

Moss said it is important not to get sidetracked from the real issue.

"The issue isn't whether we are sending a message to the oil companies that we are not going to develop the lower peninsula," he said. "It's more a message of what's good government."

Good government, he said, means good public participation.

"You may not agree with what comes out of it, but the main thing is that you have that opportunity to participate," he said.

Alaska is "an owner state," which gives folks on the lower peninsula as much right to speak on these issues as anyone, Moss said. And precisely because everyone has a stake in development, he said, he was careful not to word the resolution in such a way as to indicate the lower peninsula should be forever off limits to oil and gas development. What he wants is dialogue prior to leasing, he said.

"That didn't occur in this case, and I think that is a critical issue in this whole process," he said.

If the leases are allowed to stand, what message is sent to the public, he asked.

"That it doesn't matter what happens? That if you can get by with it, public participation isn't important?" he said.

The shallow gas leases involve eight blocks totaling roughly 22,000 acres between Anchor Point and Homer on which the state owns subsurface mineral rights. Lapp Resources Inc. acquired those leases earlier this year and has since sublet six leases to Unocal. According to Diana Lewis, a natural resources specialist with the Alaska Division of Oil and Gas, Lapp paid a $500 lease application fee and $1 per acre for the right to explore for and tap gas in the state's subsurface holdings.

Besides asking for a buy back, the resolution asked the Legislature to amend state law to eliminate the ability of the state to waive local land-use regulations without advance public notice and hearings and to require adoption of "clear and high standards" that must be met before local laws can be waived. Further, the resolution asks that state law regarding where and how such shallow gas leases are advertised be amended to include requiring publication of notices in local newspapers, not just a paper "of general circulation."

Among the issues raised by residents upset at the prospect of shallow gas development through their surface holdings was that notices were published in the Anchorage Daily News, but not in the Homer News or Homer Tribune, two widely read local weeklies.

Some members of the assembly backed extensive amendments supported by the administration and essentially written by Bill Popp, borough oil and gas liaison, that would have softened the resolution's language. Popp and others said a resolution urging a buy back would send a message to the oil and gas industry that the Kenai Peninsula did not want development.

The amendments would have urged the state to put a moratorium on gas development while addressing public concerns through "a thorough set of workshops and public hearings" leading eventually to gas development guidelines. A similar moratorium has been applied in the Matanuska Valley, where drilling in shallow gas leases already is under way. That action was a direct response to public protest.

The proposed amendments also included reserving the right for the assembly to return to the issue and advocate a buy back if the results of the public process were deemed unsatisfactory.

During discussion, assembly member Ron Long, of Seward, had indicated he was prepared to support the amendments because they would have resulted in further public dialogue while reserving the buyback advocacy option. However, Long said he bristled at the suggestion that the oil and gas industry would somehow take assembly support of a buy back in this one case as an indication the borough wasn't supportive of the industry in general. He called that idea "ludicrous" considering the borough's long history of support for the oil and gas industry.

Martin said she could hardly blame Homer-area residents for being upset and for wanting the process reversed. She said the state has an opportunity right now to buy the leases back at relatively little cost, considering that no drilling has actually taken place.

By a narrow 5-4 vote, the amendments were defeated. Assembly members Paul Fischer, of Kasilof, Betty Glick, of Kenai, Grace Merkes, of Sterling, and Superman supported the amendments.

Following a failed attempt by Fischer to table the measure, the assembly prepared to vote on the original, unamended resolution.

Mayor Dale Bagley asked to be heard.

"Obviously, I'm not in favor of this resolution and I wish the amendment had passed. It didn't," he said. He then turned the microphone over to Popp.

The issues facing the borough in terms of its long-term gas supply and deliverability can only be addressed through additional drilling, Popp said. Adding a final plea to turn down the buy back option at this time, he said advocating a buy back and to actually have a buy back would "chill any interest on behalf of industry in bidding on these leases in the future. The oil and gas industry is risk averse," he said.

The final vote was 6-3 with Glick and Long joining Martin, Moss and assembly members Dan Chay, of Kenai, and Pete Sprague, of Soldotna, in support of the buy back resolution. Glick, who had introduced the amendments, had nevertheless said she, too, was disturbed that local land-use laws could be waived by the commissioner of the Department of Natural Resources merely by deeming development an overriding interest of the state.

"People should have been part of the public process," she said.

She also noted that parts of the lease area are under the city of Homer's main water supply and another part beneath McNeil Canyon Elementary School.

In other business, the assembly:

Postponed action on a Resolution 2003-130 (substitute) proposing a special election on March 30 asking voters to authorize the borough to fund school district co-curricular activities directly. The proposed ballot proposition would require approval of a half-mill tax levy. The matter will be taken up again for further public testimony Jan. 6.

Approved Ordinance 2003-41 (substitute) authorizing a negotiated sale of land in the Cooper Landing area to the Cooper Landing Senior Citizen Corporation Inc.

Approved Ordinance 2003-19-28 appropriating $1.5 million for preliminary design of the Central Peninsula General Hospital expansion project.

Defeated unanimously Ordinance 2003-44, which would have permitted boats used as primary residences to be included in the senior citizen exemption from property taxes.

Correction:

Due to a reporting error, a comment made during discussion of a resolution proposing a buyback of lower Kenai Peninsula shallow gas leases was attributed to the wrong assembly member. Assembly President Pete Sprague called ludicrous the idea that proposing a buyback would be seen by the oil and gas industry as meaning the borough did not support development.

Assembly member Ron Long, of Seward, to whom use of the word was wrongly attributed, said he shared that opinion.

The Clarion regrets the error.