Who owns the land under your home?

SUTTON -- Alaska is a state rich with minerals, and a technology relatively new to the state is making it easier for some companies to tap into smaller sources of those minerals, such as methane found in porous beds of coal, and extract them.

Although many argue natural resource development in Alaska should be encouraged and supported, others don't believe resource development should be allowed to interfere with private property rights. Many property owners are concerned about a potential loss of say in what happens on their property, to their source of drinking water and to their quality of life. And many are just beginning to understand how the passage of recent legislation pertaining to shallow bed methane drilling affects them.

About 340 people gathered at Sutton Elementary School Monday to discuss coal bed methane and ask questions of state representatives from the Department of Natural Resources' division of oil and gas and division of mining, land and water. Some in the area said they'd never seen such a large community turnout, which drew attendance from Palmer, Wasilla and even Houston.

Jennifer McGill from Chickaloon's environmental section, in a presentation about how coal-bed methane is extracted, discussed some of the community's concerns. While production may lead to a short-term increase in the local economy, she said, it could lead to a decrease in property values and have several negative social and environmental impacts. In addition to rapid development and the issues it may bring to a local community, both socially and environmentally, conflicts over split estates -- property in which the subsurface rights are not owned by the owner of the surface rights -- could prove problematic, she said. According to state statute, mineral or subsurface rights take precedence over the rights of the property owner.

Chris Rose, a Sutton resident, attorney and Mat-Su Borough Planning Commissioner, gave the audience an overview of the legislation and political changes that pertain to shallow gas drilling in Alaska. In 1996, he said, a law was passed to allow shallow gas well development, primarily geared at finding inexpensive forms of energy to people in bush communities. Since that time, the business of shallow gas drilling has changed significantly -- and so have Alaska's laws pertaining to it.

Shallow-gas leases are activated on a first-come, first-served basis. The state, he said, determines which areas are eligible for lease and sets up a leasing program. Applications for lease are taken, along with a $5,000 bond, and given one day of public notice in local publications. Some of the leases in the Sutton area, he said, was noticed for one day in Frontiersman and Anchorage Daily News in 2000, and was posted at the Department of Natural Resources' Web site. The lease is considered by DNR and, if approved, the applicant has the lease for three years, during which time it can drill discovery wells. DNR can renew its lease for one more three-year period before reclaiming it -- unless a well goes into production, at which time they can hold the lease as long as the land is producing.

Pirtle Bates, a natural resource specialist with the division of oil and gas, later corrected Rose's statement that the notice for the comment period for leases issued in the Sutton area lasted only one day. Notices were also sent to local community councils, to regional corporations, the Mat-Su Borough and other municipalities. Since that time, the public comment process has been changed and the department is not required to go through the full public notice process.

Rose also pointed out that House Bill 69, introduced by Rep. Vic Kohring, R-Wasilla, during the last legislative session and signed into law earlier this summer by Gov. Frank Murkowski, limits the amount of say local communities can have on natural gas development in their area. The law allows DNR's commissioner to overrule local ordinances put in place to limit or restrict shallow gas development. Sutton, he said, recently created a special land use district for the community and, under the guidelines of that plan, shallow-gas drilling would require the approval of a conditional use permit from the borough. But if the borough denied that permit, the decision could be overridden by DNR's commissioner.

DNR's petrologist, Jim Hansen, agreed that the decision could be appealed, but added that DNR Commissioner Tom Irwin has no plans to unilaterally override the decisions of local governments.

"I was told it was a responsibility he did not want to take," Hansen said, "and he said he would not take that responsibility lightly."

Hansen said the shallow-gas leasing program was introduced as an alternative to current gas stocks, now in decline.

"The program was designed to bring revenue into the state, bring operators into the state, and find alternatives to Cook Inlet gas," Hansen said. "It was purposefully designed as fast-track development."

Currently, he said DNR is considering 13 applications that would result in the lease of about 68,000 acres across the Valley. According to maps on its Web site, www.dog.dnr.state.ak.us/oil/programs/shallow gas/shallow gas.htm, which were on display at the meeting, those leases cover much of the Valley, from Sutton to Willow. The communities of Willow, Houston, Palmer and Sutton are all covered by leases either pending approval, already approved but not issued, or issued.

Areas covered by a lease may be misleading, state representatives pointed out. If a developer has a hunch a shallow-gas well may be successful in a 10-acre parcel, they're not able to lease out just that area. A lease would be issued for the whole section -- 640 acres.

Some of those holdings, including those in the Farm Loop area, are currently in the public-comment phase. While public comments are welcomed, Hansen said the criteria for issuing the lease is a little different than other public-comment-driven approvals.

"It's the job of the director to decide whether the subject of the lease would benefit the people of the area," Hansen said. The word "area," he said, doesn't just pertain to the people living in the immediate vicinity of the lease. "We consider the Mat-Su Valley as an area, not just here [in Sutton]."

Residents asked several questions about how they could ensure their drinking water remains unpolluted and produces at the same level it currently does. Gary Prokosh, chief of water for the division of mining, land and water, said their best defense was to obtain water rights, a three-year process at minimum, and get a state-certified water test.

Other questions, such as how residents could guarantee a responsible developer leased their land was harder to answer. Beyond the public comment phase, property owners have little say in who obtains property rights under their land. Leases are issued on a first-come, first-served basis, and anyone can post the initial $5,000 bond to apply for a lease. Going into production costs more -- $25,000 is required after the lease is approved and up to $500,000 may be required for the company to go into production, so money is one limiting factor.

When property owners wanted to know how close drilling operations could be in proximity to their home, they were told that the state had no restrictions. No restrictions are currently in place preventing the use of toxic chemicals for fracturing the coal seam, either, although Alaska Oil and Gas Commissioner Randy Reudrich said it made little sense for some of the harsh chemicals used in other areas to be used here because they were too costly.

"This entry endeavor is aimed at low cost," Reudrich said.

As far as choosing a reputable developer to lease their sub-surface rights, state officials said there was little they could do beforehand, but property owners are protected if damage occurs.

"We can't deny anybody from getting a lease," Hansen said. "But if they get a lease, they're going to have to be bonded, and the bonding covers any damage. The last thing that we want are any fly-by-nights."

Water, then gas -- drilling for shallow gas simple and complex

Coal-bed methane, according to a presentation by Jennifer McGill of Chickaloon's environmental section given at the Monday meeting held in Sutton, is essentially natural gas trapped inside porous coal seams. To extract it, a sealed well is drilled through the coal seam -- less than 5,000 feet deep -- and anchored into a solid layer below the coal. The well casing is perforated in the area of the coal seam and the seam is fractured to allow groundwater to be taken out. McGill's presentation showed an average of 12,000 gallons per day, per well are taken out before methane extraction begins. This water, by some companies, is released back onto the ground. Evergreen Resources typically re-injects the water back into the ground. Alaska Oil and Gas Commissioner Randy Reudrich told the audience Monday the water, when re-injected, is done so at a low level in the soil -- below an impermeable layer that rests below the water table.

But the drilling process has just begun with the removal of water from the well. Some wells, to stimulate gas flow, require hydraulic fracturing. That's a process in which pressurized substances are hydraulically injected into the coal seam to get the gas to flow. McGill's research showed that some companies sometimes use carcinogenic or toxic substances as injector fluids.

Later in the meeting, John Tanigawa, special projects manager for Evergreen Resources, was asked what his company uses for fracturing. Nitrogen, air, water, soap and a compound used in producing ice cream are commonly used in its Houston pilot wells, he said. When asked about a spill of hydrochloric acid that recently happened at an Evergreen well in Trinidad, Colo., Tanigawa said that substance is not used in Alaska.

General production of a shallow gas well, McGill said, is about seven to 10 years.

Learn more about coal-bed methane drilling

Alaska Center for the Environment spokesman Cliff Eames invited residents who didn't want shallow-gas drilling in their area to sign a petition his group has created opposing coal-bed methane drilling in the Mat-Su.

"Coal-bed methane development, because of its many potential adverse impacts, is not consistent with private property rights, residential development, local decision-making, protection of fish and wildlife and their habitat or responsible public lands stewardship," the petition states.

Eames said those interested in knowing more about ACE's stance can stop by the group's booth at the Alaska State Fair. Eames said people interested in knowing the potential impacts of coal-bed methane drilling are welcome to attend the upcoming Oil and Gas Summit being put on by the Oil and Gas Accountability Project. The summit will be held at Best Western Lake Lucille Inn on Oct. 17 and 18.

State officials have agreed to hold two meetings, one in Palmer and one in Big Lake, to allow residents to find out more about the leases that may cover their property. The Big Lake meeting is set to for 6 p.m., Sept. 8 at Big Lake Elementary. The Palmer meeting is scheduled for 6 p.m. on Sept. 10 at Palmer Junior Middle School.