Legislating drilling: Do proposed bills address the real issues?

MAT-SU -- The furor over potential coal-bed methane development in the Valley has not gone unnoticed by legislators in Juneau. From Valley lawmakers to those in Anchorage and Kenai, bills have been steadily floating in with various suggestions for changing the guidelines pertaining to shallow-gas drilling.

All CBM bills are not created equal, nor do they address the same issues. A bill sponsored by Rep. Paul Seaton, R-Sterling, would place a moratorium on the issuance of state shallow-gas leases in the Kachemak Bay area. Another bill, sponsored by Rep. Les Gara, D-Anchorage, would require all state leases for coal-bed methane exploration and production to comply with surface water protection requirements, and would repeal provisions in House Bill 69 which "allowed the commissioner of the Department of Natural Resources to waive the application of local planning requirements with respect to shallow natural gas development," according to the bill title.

Four bills, including both Seaton's and Gara's, are in the House Oil and Gas Committee, and a hearing on two bills sponsored by Valley legislators was held Feb. 5.

Rep. Carl Gatto, R-Palmer, along with Representatives Bill Stoltze, R-Butte/Chugiak and John Harris, R-Valdez, sponsored HB 395, addressing issues such as public notice, public property rights and water rights. It, along with HB 420, sponsored by the Oil and Gas Committee, chaired by Rep. Vic Kohring, R-Wasilla, was the focus of the Feb. 5 hearing. At the hearing, Kohring suggested combining the two bills and tabled discussion on the matter to allow the combining work to be done.

"I decided we should take the good elements of both and put them together," Kohring said, adding that the combination would increase the bill's chance of passing this session.

House Bill 420, he said, added a requirement for advance notice before gas drilling companies enter a landowner's property. It also created a safety net for property owners by setting up a fund based on gas extraction amounts to cover any potential damage to water wells. Gas companies appear to like the bill, Kohring said, because they'd get the money back after reclamation.

Gatto said work on combining the two bills has progressed well, and the new bill, also titled HB 395, should be ready for public hearing again soon.

"House Bill 395 is alive and well," Gatto said. "The idea is to get it to the point where it's really okay, and can withstand scrutiny."

Kohring said although the new document is not yet a matter of public record, he understands the bill has increased protections for water quality beyond what was offered in HB 420.

Chris Whittington-Evans, president of Friends of Mat-Su, along with a few other members of the group, met with Gatto Friday and discussed the legislation. Friday afternoon, Whittington-Evans said he still had some significant reservations about the now-combined bill.

"These bills, thus far, that have been put forward; there are some that are reasonable and are a start," Whittington-Evans said. "With some additional work they could provide some protection. It's a partial step toward reasonable CBM leasing and development. [But] from our standpoint, we need a more comprehensive view on this program. It doesn't look at bringing back, again, coal-bed methane development into the traditional oil and gas standards."

One bill put forward thus far does bring coal-bed methane development back under the more strict standards. Some are saying perhaps the bill to watch most closely is Senate Bill 312, which would essentially gut House Bill 69 altogether, returning the coal-bed methane drilling process to a competitive lease process and allowing DNR to issue gas-only leases. The bill is sponsored by the Senate Resources Committee -- chaired by Sen. Scott Ogan -- and has been assigned just two hearings in the Senate -- one in that committee and one in the Senate Finance Committee.

Although Ogan did not respond to a message left Friday requesting comment on the legislation, he has stated in other venues that the bill is a move to address concerns raised at public meetings in the Valley over the past six months.

According to staff at DNR, the bill would reinstitute a best-interest finding process for all leases applied for after Jan. 1. That provision alone, staff said, may allay some concerns. Under a best-interest finding process, DNR staff would select the land to be leased, and offer it to the highest bidder. Leases are now offered under an open-entry system, which allows gas companies to pick land to develop, and lease it on a first-come, first-served basis. The bill would also reinstitute the public notice requirements conventional leases are currently held to.

In discussing SB 312 and the newly modified HB 395, Gatto said he believes important issues are addressed in both bills, and doesn't foresee them being combined.

"I think each will stand on its own merits," Gatto said. "If it's legal and Scott likes it, I think that [SB 312], in addition to the language proposed by House Bills 395 and 420, are all a fix."

Whittington-Evans applauded the bill, although he said it still didn't address the problems of development on the approximately 300,000 acres of shallow-gas leases held in the Valley.

"It gives protection to residents of other parts of Alaska, but unfortunately, it does little for his constituents in the Valley," Whittington-Evans said. "Without the reacquisition provision, without coming up with a way of reacquiring the existing leases … we're not any better off in the Valley -- at least not for the next five and a half years."

The five-and-a-half years Whittington-Evans referred to is the length of time remaining on shallow-gas leases currently held in the Valley, plus the optional three-year lease extension available at the end of the first three years.

"The architect of the shallow-gas program recognized that his initial program has some fatal flaws," Whittington-Evans said, "and he's attempting to rectify some of those, but those fatal flaws exist for the already applied-for land."

The public will have a chance to comment on SB 312 during a teleconferenced hearing scheduled for Feb. 23, at 3:30 p.m.

While the flotilla of legislation moves forward in the legislature, the public hearing process initiated by DNR's Division of Oil and Gas is moving forward as well. After a week off, three CBM workshops remain -- one added on Wednesday, Feb. 25 at 6 p.m. to allow the numerous aspects relating to surface impacts to be discussed over two meetings. Pat Galvin, with DNR's Division of Oil and Gas, said Oil and Gas staff are hoping to wrap up the workshops and examine the issues raised in time to have proposals ready before the session adjourns. He said the bills that have been put forward so far do not supersede or duplicate the efforts begun through the public workshop process.

"Some of the bills deal with issues we really aren't addressing, such as lease buy-backs," Galvin said. "With other issues, such as water protection and surface impacts, we're kind of running in tandem and can hopefully support each other."

Galvin said while the department continues to work through the public workshops, they've been regularly updating the Web site to help both concerned citizens and legislators keep track of what's going on.

"The proposed reports and the recommended standards won't be completed until the very end of the legislative session," Galvin said. "But we're trying to keep the information flowing out."

Whittington-Evans said he's concerned that the two efforts running in tandem -- that of legislators to address constituent concerns over coal-bed methane and that of state officials to address public outcry over the same issue -- may be leading up to a potential waste of time.

"It's an exercise in futility," Whittington-Evans said. "Why is the public being engaged in a process that may be completely or partially changed during the legislative session? There's a disconnect between the public being engaged in the process and the legislators

in Juneau. To be doing the two things simultaneously, and have neither one of them being done well, what results is a disenfranchisement of the people."

According to the wording in SB 312, if it passes, the bill will apply only to leases applied for after Jan. 1 or issued before Dec. 31. DNR staff said the leases currently held in the Valley would, upon the bill's passage, be the only leases the state's shallow-gas leasing program applies to -- and that's the process under revision through the CBM workshops being held in the Valley.

Whittington-Evans said while FoMS has applauded DNR for placing a hold on leases and working through the process, he fears that this lack of coordination may render the process useless and make the state appear unstable on many levels.

"Industry itself is very much in a state of uncertainty because of all this flux," Whittington-Evans said. "It's horrible for property owners, but it's equally bad for the industry to try to work on a firm footing. There ought to be more surety for all involved, and the best way to encourage that is to start over, instead of trying to piecemeal

laws that would put some protections in place."