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Title 31. Oil And Gas


Published: 2015

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Title 31. OIL AND GAS
Chapter 31.05. ALASKA OIL AND GAS CONSERVATION ACT

Article 01. ADMINISTRATION

Sec. 31.05.005. Alaska Oil and Gas Conservation Commission created.

 (a) There is created as an independent quasi-judicial agency of the state the Alaska Oil and Gas Conservation Commission, composed of three commissioners appointed by the governor and confirmed by the legislature in joint session. In making appointments to the commission under AS 31.05.009 and this subsection, the governor shall consider and give preference to a person who demonstrates experience in oil and gas operations in the state.

 (b) The governor shall designate one member of the commission as chair of the commission. This member shall serve as chair for a term of four years, but may not be appointed for successive terms as chair of the commission.

Sec. 31.05.007. Term of office; vacancy; removal.

 (a) The term of office of each member is six years. A commissioner, upon the expiration of a term, shall continue to hold office until a successor is appointed and qualified.

 (b) A vacancy arising in the office of a commissioner shall be filled by appointment by the governor and confirmed by the legislature in joint session, and, except as provided in AS 39.05.080 (4), an appointee selected to fill a vacancy shall hold office for the balance of the full term for which the predecessor on the commission was appointed.

 (c) A vacancy in the commission does not impair the authority of a quorum of commissioners to exercise all the powers and perform all the duties of the commission.

 (d) The governor may remove a commissioner from office for cause including but not limited to incompetence, neglect of duty or misconduct in office. A commissioner, to be removed for cause, shall be given a copy of the charges and afforded an opportunity to be publicly heard in person or by counsel in the commissioner's own defense upon not less than 10 days' notice. If a commissioner is removed for cause, the governor shall file with the lieutenant governor a complete statement of all charges made against the commissioner and the governor's finding based on the charges, together with a complete record of the proceedings.

Sec. 31.05.009. Qualifications of members.

Members shall be qualified as follows:

 (1) one member shall be a petroleum engineer who

 (A) holds a certificate of registration as an engineer under AS 08.48 and, under regulations adopted to implement that chapter, has qualified as a petroleum engineer; or

 (B) has earned a degree from a university in the field of engineering and has at least 10 years of professional subsurface experience in the oil and gas industry in drilling, well operations, production process operations, reservoir engineering, or a combination thereof; for the purposes of this subparagraph, a person meets the requirement of earning a degree in the field of engineering if the person obtains an undergraduate or graduate degree in engineering that meets the requirements for program accreditation by the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology and the person completes university or industry training specific to petroleum engineering that illustrates application of engineering principles to the problems encountered and methods used in the petroleum industry, including drilling, production, reservoir engineering, fluid flow through subsurface formations, and hydrocarbon transportation;

 (2) one member shall be a geologist who

 (A) holds a certification as a professional geologist under AS 08.02.011 and has professional experience in the field of petroleum geology; or

 (B) has earned a degree in the field of geology from a university accredited in the field of geology and has a minimum of 10 years professional experience in the field of petroleum geology; and

 (3) one member who shall have training or experience that gives the person a fundamental understanding of the oil and gas industry in the state.

Sec. 31.05.010. Application. [Repealed by Sec. 4 ch 158 SLA 1978].

 Repealed or Renumbered

Sec. 31.05.011. Quorum.

Two members of the commission constitute a quorum for the transaction of business, for the performance of a duty, or for the exercise of a power of the commission.

Sec. 31.05.013. Oath of office.

Each commissioner, before entering upon the duties of office, shall take and subscribe to the oath prescribed for principal officers of the state.

Sec. 31.05.015. Compensation of members of the commission.

Members of the commission are in the exempt service and shall receive an annual salary.

Sec. 31.05.017. Principal office; seal.

 (a) The commission shall establish a principal office and branch offices necessary to discharge its business efficiently. For the convenience of the public or of parties to a proceeding the commission may hold meetings, hearings, or other proceedings at other locations.

 (b) The commission shall have an official seal.

Sec. 31.05.020. [Renumbered as AS 31.05.095 ].

 Repealed or Renumbered

Sec. 31.05.021. Legal counsel.

 (a) The Department of Law shall provide full-time legal counsel to the commission. The legal counsel provided by the Department of Law is subject to the approval of the commission.

 (b) The commission may, subject to the approval of the attorney general, contract for the services of additional specialized legal counsel or legal consultants.

Sec. 31.05.023. Commission staff.

 (a) The commission shall employ such staff as it considers necessary to carry out its responsibilities.

 (b) The professional staff of the commission and the personal secretary of each commissioner are in the exempt service under AS 39.25.110.

 (c) The secretarial and clerical staff of the commission, except the personal secretary of each commissioner, are in the classified service.

 (d) In addition to its staff of regular employees, the commission may contract for and engage the services of consultants and experts the commission considers necessary.

Sec. 31.05.025. Conflict of interest.

 (a) Members and employees of the commission, except clerical and secretarial staff, are subject to AS 39.50.

 (b) A member of the commission is disqualified from voting upon any matter before the commission in which the member has a conflict of interest.

Sec. 31.05.026. Relationship to Department of Natural Resources.

 (a) The Department of Natural Resources shall have standing before the commission to raise all issues relating to state-owned land without regard to the type of proprietary interest held by the state in that land.

 (b) With respect to federal land from which the state or any subdivision of the state is entitled under federal law to receive a share of the federal royalty interest, the Department of Natural Resources shall have the same standing before the commission as if it were the holder of the equivalent royalty interest.

 (c) When both the Department of Natural Resources and the commission have the authority to require, and do require, the submission of substantially the same information from persons subject to this chapter, the commission, in order to alleviate the administrative burdens placed on those persons, may by regulation enter into an agreement with the Department of Natural Resources whereby either the commission or the Department of Natural Resources shall have the responsibility to collect the information lawfully required by both.

 (d) For budget and audit procedures and considerations, the commission shall have the same standing as any other major state agency. Whenever practicable the commission may enter into state interagency agreements concerning administrative, employee relations, and fiscal duties.

 (e) The Department of Natural Resources shall have the same standing (no more or less) before the commission as granted by law to any other proprietary interest.

Sec. 31.05.027. Land subject to commission's authority.

The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. The authority of the commission further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180 (p).

Sec. 31.05.030. Powers and duties of commission.

 (a) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter.

 (b) The commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it.

 (c) The commission shall adopt regulations and orders and take other appropriate action to carry out the purposes of this chapter.

 (d) The commission may require

 (1) identification of ownership of wells, producing leases, tanks, plants, and drilling structures;

 (2) the making and filing of reports, well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other subsurface information on a well for which a permit to drill has been issued by the commission, subject to the following:

 (A) the reports required to be filed by the commission under this paragraph shall be filed within 30 days after the completion, abandonment, or suspension of the well; and

 (B) the well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other information required to be filed by the commission under this paragraph shall be filed within 90 days after the completion, abandonment, or suspension of the well, unless extended by the commission on request;

 (3) the drilling, casing, and plugging of wells in a manner that will prevent the escape of oil or gas out of one stratum into another, the intrusion of water into an oil or gas stratum, the pollution of fresh water supplies by oil, gas, or salt water, and prevent blowouts, cavings, seepages, and fires;

 (4) the furnishing of a reasonable bond with sufficient surety conditions for the performance of the duty to plug each dry or abandoned well or the repair of wells causing waste;

 (5) the operation of wells with efficient gas-oil and water-oil ratios, and may fix these ratios;

 (6) the gauging or other measuring of oil and gas to determine the quality and quantity of oil and gas;

 (7) every person who produces oil or gas in the state to keep and maintain for a period of five years in the state complete and accurate records of the quantities of oil and gas produced, which shall be available for examination by the commission at all reasonable times;

 (8) the measuring and monitoring of oil and gas pool pressures;

 (9) the filing and approval of a plan of development and operation for a field or pool to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected.

 (e) The commission may regulate

 (1) for conservation purposes and, to the extent not in conflict with regulation by the Department of Labor and Workforce Development or the Department of Environmental Conservation, for public health and safety purposes,

 (A) the drilling, producing, and plugging of wells;

 (B) the perforating, fracture stimulation, and chemical treatment of wells;

 (C) the spacing of wells;

 (D) the disposal of salt water, nonpotable water, and oil field wastes;

 (E) the contamination or waste of underground water;

 (F) the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180 (p);

 (G) the underground injection of gas for purposes of storage;

 (2) the disposal of drilling mud, cuttings, and nonhazardous drilling operation wastes in the annular space of a well for which a permit to drill has been issued by the commission; in this paragraph, a "nonhazardous drilling operation waste" means a waste, other than a hazardous waste identified by the Environmental Protection Agency in 40 C.F.R., Part 261, its regulation identifying and listing hazardous wastes, associated with the act of drilling a well for exploratory or production purposes.

 (f) The commission may classify a well or a specific portion of a well as an exploratory, development, service, or stratigraphic test well and may classify a development well as an oil or gas well for purposes material to the interpretation or enforcement of this chapter.

 (g) When the commission finds sufficient likelihood of an unexpected encounter of oil, gas, or other hazardous substance as a result of well drilling in an area of the state, the commission may, by regulation, designate the area and specify a depth in the area as one in which wells or any boring into the soil in excess of the specified depth but not otherwise subject to this chapter are subject to the regulations and requirements adopted under this section. The designation of an area or specification of a depth under this subsection does not constitute a certification that no hazardous substance will be encountered in another area or at a lesser depth, and the state is not liable for any damages arising from such an unexpected encounter of a hazardous substance.

 (h) The commission may take all actions necessary to allow the state to acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for the control of underground injection related to the recovery and production of oil and natural gas and the control of underground injection in Class I wells, as defined in 40 C.F.R. 144.6, as amended.

 (i) The commission shall accept written plans submitted by lessees for purposes of AS 38.05.180 (f)(5). If a lessee submits a plan, the commission shall hold a public hearing on the plan and, within 45 days after receipt of the plan, grant approval of the plan if the plan contains a voluntary agreement by the lessee to use its best efforts to employ residents of this state, consistent with law, and to contract with firms in this state for work in connection with the development of the field, including the fabrication and installation of required facilities, whenever feasible. The decision of the commission to grant approval may not be appealed.

 (j) For exploration and development operations involving nonconventional gas, the commission

 (1) may not

 (A) issue a permit to drill under this chapter if the well would be used to produce gas from an aquifer that serves as a source of water for human consumption or agricultural purposes unless the commission determines that the well will not adversely affect the aquifer as a source of water for human consumption or agricultural purposes; or

 (B) allow injection of produced water except at depths below known sources of water for human consumption or agricultural purposes;

 (2) shall

 (A) regulate hydraulic fracturing in nonconventional gas wells to ensure protection of drinking water quality;

 (B) regulate the disposal of wastes produced from the operations unless the disposal is otherwise subject to regulation by the Department of Environmental Conservation or the United States Environmental Protection Agency;

 (C) as a condition of approval of a permit to drill a well for regular production of coal bed methane, require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity; the commission shall make the results of the water well testing program available to the public.

 (k) The commission shall certify to the Department of Natural Resources the volume of oil production from a field or platform for the purposes of AS 38.05.180 (f)(6)(A), (C), (E), and (G).

 (l) For purposes of AS 46.04.050 (c) and upon application by the operator, the commission shall evaluate the likelihood that a well at a natural gas exploration facility may penetrate a formation capable of flowing oil to the ground surface and issue a determination based on results of the evaluation. If the commission determines that evidence obtained through the evaluation demonstrates with reasonable certainty that a well will not penetrate a formation capable of flowing oil to the ground surface, it shall report its determination to the Department of Environmental Conservation. In this subsection,

 (1) "natural gas exploration facility" has the meaning given in AS 46.04.050(c);

 (2) "oil" has the meaning given in AS 46.04.050 (c).

 (m) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of AS 41.06, except for provisions in AS 41.06 for which the Department of Natural Resources has jurisdiction.

Sec. 31.05.032. Certification of gas storage capacity.

 (a) An owner of a gas storage facility that seeks an exemption under AS 38.05.180 (u) or a credit under AS 43.20.046 shall apply to the commission for certification of the facility's working gas storage capacity and certification of the facility's gas withdrawal capability. The application shall be on a form prescribed by the commission.

 (b) Within six months after receiving an application under (a) of this section, the commission shall determine and certify

 (1) the working gas storage capacity of the facility on the date the facility commences commercial operation rounded to the nearest 500,000,000 cubic feet;

 (2) whether the gas storage facility is capable of withdrawing a minimum of 10,000,000 cubic feet of gas a day; and

 (3) that the facility qualifies as a gas storage facility for the purposes of this section.

 (c) The commission shall provide a copy of the certifications required by (b) of this section to the owner of the gas storage facility that requested the certification, the commissioner of natural resources, and the commissioner of revenue.

 (d) If a gas storage facility ceases commercial operation, an owner of the gas storage facility shall give written notice to the commission that commercial operation has ceased. The notice must be filed with the commission before April 1 of the year immediately following the year in which the gas storage facility ceases commercial operation.

 (e) In this section,

 (1) "ceases commercial operation" means that the gas storage facility fails to inject or withdraw more than 100,000,000 cubic feet of gas during a calendar year following the year in which a gas storage facility commences commercial operation;

 (2) "commences commercial operation" means the first injection of non-native gas into a gas storage facility for purposes other than testing;

 (3) "cushion gas" means native and non-native gas in a gas storage facility that is needed to pressurize the facility and that allows the facility to function;

 (4) "gas storage facility" means a tank or a depleted or nearly depleted reservoir or pool in the state that is available for the storage of gas;

 (5) "native gas" means gas in a gas storage facility that was not injected;

 (6) "non-native gas" means gas that is produced elsewhere and injected into a gas storage facility;

 (7) "pool" has the meaning given in AS 31.05.170 ;

 (8) "working gas storage capacity" means the maximum volume of non-native gas a gas storage facility may safely contain without creating or causing waste; the maximum volume of non-native gas does not include the volume of cushion gas present or the volume required for proper functioning of the gas storage facility at the working gas storage capacity certified under (b) of this section.

Sec. 31.05.035. Confidential reports.

 (a) For all wells for which a permit to drill has been issued by the commission, the commission may require

 (1) the making and filing of reports, well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other subsurface information on a well for which a permit to drill has been issued by the commission;

 (2) the filing of flow test information and all logs, except experimental logs and velocity surveys run on a well and not required by (1) of this subsection; and

 (3) the operator to make available for copying the digitized log information, if it is available, on any log required to be filed under (1) or (2) of this subsection.

 (b) Reports and information required under (a)(1) and (2) of this section shall be filed within 30 days after the completion, abandonment, or suspension of a well. However, under (a)(1) of this section, the commission may not require the making of a log on a well completed, abandoned or suspended before June 19, 1970.

 (c) The reports and information required in (a) of this section that relate to an exploratory or stratigraphic test well and those portions of an application for a permit to drill an exploratory or stratigraphic test well that the commission determines contain proprietary engineering or geotechnical information shall be kept confidential for 24 months following the 30-day filing period unless the owner of the well gives written permission to release the application and reports and information at an earlier date. If the commissioner of natural resources finds that the required reports and information contain significant information relating to the valuation of unleased land in the same vicinity, the commissioner shall keep the reports and information confidential for a reasonable time after the disposition of all affected unleased land, unless the owner of the well gives written permission to release the reports and information at an earlier date. Well surface and bottom hole locations, well depth, well status, production data, and production reports required by the commission to be filed subsequent to the 30-day filing period shall be considered public information and may not be classified confidential. Production data, as used in this subsection, means volume, gravity, and gas-oil ratio of all production of oil or gas after the well begins regular production.

 (d) Engineering, geological, and other information not required by (a) of this section but voluntarily filed with the commission shall be kept confidential if the person filing the information so requests.

 (e) Notwithstanding (c) of this section, claims of confidentiality will be denied for information disclosed to the commission under AS 31.05.030 (h) that is required to be disclosed under 42 U.S.C. 300h-4.

 (f) Confidentiality under (d) of this section is not applicable to information submitted with or as part of a petition for a commission order or to information submitted for or as part of a hearing before the commission.