Evergreen CEO makes case for company

Spectrum, by Mark Sexton

As president and CEO of Evergreen Resources, I would like to provide information as to Evergreen's policies, commitments, plans and business practices. I would also like to express sincere appreciation for the spirit of cooperation by the borough administration, including Mat-Su Borough manager John Duffy, of Evergreen's operations over the last two years. As many are aware, we have provided several tours of our well sites and numerous presentations to the Mat-Su Borough Assembly during this time. Until now, we have been encouraged by the borough administration and the assembly to make a substantial investment in the Matanuska-Susitna Borough.

We are glad to have had the opportunity to present residents of the Mat-Su Valley with our perspective and philosophy when it comes to coal-bed methane development. Some candidates for public often have taken a strong stance for a moratorium on drilling without requesting a meeting or discussing this with us. This would force us to seriously reconsider the cost of keeping tens of millions of dollars of equipment idle in Alaska. It is critical that Mat-Su residents understand that this operation is merely an exploration project at this time. We expect to spend tens of millions of dollars in the borough's economy during this phase, gathering the data that all of us require to make responsible decisions.

More than adequate time is available for residents to become knowledgeable about our operations before Evergreen commits to actually developing this resource. We have always been accessible to discuss our projects, but we will redouble our efforts to provide accurate, understandable information to Mat-Su residents, the assembly, and the borough administration. I have personally attended town meetings in Sutton and Wasilla to answer the questions of Valley residents.

Borough Mayor Tim Anderson has requested that Evergreen support a repeal of House Bill 69. We understood that the borough worked closely with the Alaska Municipal League on this issue. Our understanding is that the AML endorsed the local control language in writing, with Mayor Anderson's encouragement. Our conversations with the Valley delegation suggested that a compromise proposed by Mayor Anderson provided comfort in the amount of local control the borough administration now has in the bill. The bill passed the Senate on a 19-to-1 vote. We are confused by this reversal of policy by the borough administration. Until recently, members of our organization believed that we had the borough administration's full support.

Evergreen's company policy is to negotiate a Surface Use Agreement with landowners before developing on their private property. The well density is spaced broadly enough that this is usually achieved with few problems. We look for mutually beneficial arrangements with surface owners. A good example of this is the private property Evergreen developed in Houston. In the very rare instance of a breakdown in negotiations with landowners, we are required to post a bond until the issue is settled. It is imperative to note that a surface owner has never had to rely on that bond to collect compensation for our temporary use of a portion of their land. This is because Evergreen strongly respects the property rights of surface owners and makes every effort to work with them. Our track record in this area is exemplary.

As many know, the state generally retains the mineral rights. There are responsibilities associated with the rights to develop the mineral estate. If Evergreen is precluded from developing the mineral estate we have leased, the state and federal governments may view this as a taking, which could penalize the state if control of the state's subsurface rights are perceived to be conveyed to the surface owner by virtue of permission for access. The U.S. Attorney General may litigate this as a violation of Sec. 6 (1) of the Statehood Act, "Provided, That any lands or minerals hereafter disposed of contrary to the provisions of this section shall be forfeited to the United States by appropriate proceedings instituted by the Attorney General for that purpose in the United States District Court for the District of Alaska." Successful litigation may call into question the loss of the entire subsurface estate belonging to the state, including the North Slope. I do not have to explain the seriousness of this action if It were to happen.

In conclusion, Evergreen may not have a choice of giving surface landowners total control of the mineral estate they do not own. There are Statehood Act, Constitutional, and contractual conflicts with this position.

Evergreen's experience in these matters is that potential conflicts will be resolved by a strong mutual respect for the rights of both of the split-estate owners. In addition, constitutional, statutory and regulatory protections are currently in place which are adequate to protect private property rights. Evergreen deeply understands the responsibility the borough administration has to protect residents' property rights, including the state's subsurface prop" rights. We suggest that the administration do so with the clear understanding of existing rights under state law, and not pass redundant layers of protection that simply cost both the taxpayers and industry more time and money for compliance. We will all suffer and lose in the long run.

In Las Animas County, Colo., where Evergreen currently operates, the energy industry pays more than 50 percent of the local taxes. We directly and indirectly employ more then 400 people, while producing clean-burning natural gas that benefits everyone in the area.

Evergreen is a nationally recognized leader in the development of coal-bed natural gas using the latest technology. We have received numerous national and state awards for good stewardship and being a good neighbor. Alaska's former Governor Tony Knowles presented the Interstate Oil and Gas Compact Commission's National Environmental Stewardship Award to Evergreen. It is in our company's best interest and in the borough's interest for us to conduct ourselves according to the highest industry standards. We have been instrumental in energy industry leadership toward setting those high standards, as expressed in Evergreen's corporate mission statement, as well as our involvement in the communities where we do business.

Evergreen commits to Mat-Su residents to make our operations in Alaska another model of how to do it right, as we have done in the Raton Basin and other areas. At the and of the day it will be a sterling example that will set the standard for the rest of the nation. We will work hard to provide clean energy for a bright future for all of Mat-Su residents. I can say with confidence that the borough will not experience any of the problems that the anti-development groups have been alleging in their efforts to scare local residents unnecessarily about coal-bed methane development. Evergreen understands how important quality of life issues are to the Mat-Su residents. We share those values, both personally and professionally.

Mark Sexton is the president and CEO of Evergreen Resources.