"Statewide, these resources are abundant and widely distributed. They hold the promise of bringing a much cleaner, locally-produced, alternative energy source to areas of rural Alaska long dependent upon diesel or fuel oil barged in from distant sources for heat and power."
- Rep. Kohring
"An Act relating to regulation of shallow natural gas leasing and closely related energy projects; and providing for an effective date."
House Bill 69 is legislation that clarifies the Alaska Oil and Gas Conservation Commission's (AOGCC) authority to regulate the state's shallow and unconventional natural gas resources, including allowing for variances from AOGCC's general regulatory requirements in certain cases. Alaska possesses tremendous shallow natural gas resources, such as shallow coal bed methane gas. Production involves extraction of methane gas from coal deposits lying at relatively shallow depths of about 3,000 feet. In Cook Inlet alone, there is an estimated 1.5 trillion tons of coal, with an estimated 200 trillion cubic feet of coal bed methane. Two hundred trillion cubic feet of gas is enough to supply the U.S. natural gas requirements for more than eight years. The entire state has coal-bed methane resources estimated at 1,000 trillion cubic feet, not including natural gas from tight sands also in place across Alaska.
Statewide, these resources are abundant and widely distributed. They hold the promise of bringing a much cleaner, locally-produced, alternative energy source to areas of rural Alaska long dependent upon diesel or fuel oil barged in from distant sources for heat and power. Production of coal-bed methane and other forms of shallow natural gas development also has little effect on the environment. A typical well is drilled in two to three days, and advanced drilling technology uses simple air to drill a well, greatly reducing drilling wastes. Further, wells are lined and cemented from top to bottom which protects groundwater, and as no oil is present, there is no risk of an oil spill. Once in production, the "footprint" of a typical well is less than one acre.
Despite such promise and benefits, shallow natural gas and coal bed methane are still expensive to develop. Such projects are very sensitive to development and production costs which include the costs of safety and excessive regulations. Shallow natural gas is being regulated as though it is a deep hole, high-pressured reservoir such as on the North Slope. In fact, shallow gas wells are more like low-pressure water wells that produce gas. Therefore, the purpose of HB 69 is to ensure that the AOGCC has the authority and discretion necessary to regulate such projects in an appropriate manner, suited specifically to the nature and characteristics of shallow natural gas development projects, while also providing for human safety and environmental protection.