A bill that would resurrect a state leasing program for geothermal leasing was up for its first hearing in the Senate Resources Committee, Feb. 10.

In Senate Bill 161 geothermal exploration be licensed similar to the way oil and gas exploration licensing is done, with the license converted to conventional leases if a commercial-scale discovery is made.

The committee also worked on Senate Bill 171, Sen. Shelley Hughes’ bill making changes in the state’s industrial hemp pilot program to adjust it to changes in federal law in the 2018 national farm act passed by Congress that year. The state’ existing hemp program is designed as a pilot under the previous 2014 federal farm bill and it was developed under a previous state law, also sponsored by Hughes, that would allow pilot programs.

The Division of Agriculture has finalized state regulations to guide the pilot but the program is now being adjusted to changes in the federal law. One issue being dealt with is how growers are to be penalized if they exceed the 0.3 percent limit of THC, the chemical psychoactive ingredient that at a 1 percent level causes a hemp plant to be classed as marijuana. Marijuana can also have much higher THC, such as 30 percent.

Dave Schade, the state agriculture director, asked the senators to give his agency more flexibility in working with prospective hemp farmers if the raw product in the field, which must he tested, exceeds the 0.3 percent threshold through no fault of the farmer, such as from some natural factor. The committee is holding SB 171 for further work and will also be taking public testimony in a future hearing.

The geothermal bill, SB 161, is likely to be amended to give added protection to surface landowners who use small-scale geothermal resources for local use, such as home heating, according to comments made during the hearing Monday on the bill. Alaska had an active geothermal leasing and exploration program several years ago when a Nevada company was interested in tapping high temperature hot water near Mount Spurr, an active volcano west of Anchorage. The exploration did not result a commercial development and the project was abandoned. The state program subsequently lapsed.

The bill would give the Department of Natural Resources more flexibility for geothermal leasing, extending the lease term from three to five years to allow an explorer more time for research, securing of surface permits and to do field work needed to prove up a resource. The bill also doubles the amount of acreage that can be held for exploration from 51,200 acres to 100,000 acres because underground geothermal resources tend to be dispersed over large areas.

Senators at the hearing had questions about how geothermal leasing for a larger, commercial-type application would relate to small-scale use of geothermal by a homeowner, who might tap into a local hot or warm water spring for residential or small-scale local use. Sen. Jesse Kiehl, D-Juneau, said the bill, as written, removes a preference in existing law for surface landowners to geothermal resources under their property, and how a surface owner would be informed by the state if a large geothermal lease were issued to tap an underground resource

Tom Stokes, director of the state Division of Oil and Gas, said the notification of surface owners would be done in a manner similar to that used with oil and gas leasing. A public notice would be issued and all surface owners would be contacted directly, he told the committee.

Kiehl wasn’t satisfied. “I’d like to know if someone with a cabin on a hot springs would have to go to the state for a license,” and whether an exploration license and lease issued to a commercial explorer could preempt home use. Sen. Peter Micciche, R-Kenai, who is chair of the Resources committee, said he shared Kiehl’s concerns. He asked the department to think about the problem and to develop a solution for a future discussion. “Alaskans are using local resources now, do we want to know how this will work,” Micciche said.

Steve Masterman, director of the state Division of Geologic and Geophysical Surveys, told the committee that there was a kind of practical divide between how homeowners and local commercial operators might use geothermal energy and how larger industrial or utilities would use the resource. Larger entities are more interested in high-temperature, high volume resources which are typically expensive to develop, where local users typically use shallow, low-temperature and low-volume geothermal, which is less costly, Masterman told the senators.

Masterman said there are a number of ways the state can approach the problem, tapping into the experience of other states in separating small-scale local use from larger industrial-sale geothermal.

Sen. Cathy Giessel, R-Anchorage, who is also Senate President, asked the Department of Natural Resources to develop a map showing the locations of known geothermal resources near existing communities. Masterman said the DGGS will develop the map and have it available when the committee takes up the bill again. A similar bill is pending in the state House, as HB 220.

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