“The reason it was such a flash point is historically oil and gas development has been away from private property,” said Bob Shavelson, executive director of Cook Inletkeeper, a Cook Inlet environmental group.
In March 31, 2006, those leases finally expired, said David Lappi, president of Lapp. He paid a $5,000 filing fee and payments of $1 an acre a year. Although he had an option to renew those leases, he won’t do that.
“Politically, it would have been hard,” Lappi said. “We still think coal-bed gas has potential to produce energy for Homer, but until the community gets behind that, it’s not going to happen,” he added.
Union Oil of California, now owned by Chevron, had a farm-out arrangement with Lapp to possibly develop coal-bed methane in some lease areas, said Roxanne Sinz, a spokesperson for Chevron. Lapp still held the leases. With the leases expired, that arrangement is moot, she said.
Most oil and gas exploration and development on subsurface state land is done through an area wide sale process, with more stringent regulations. Changes made to the shallow gas leasing program before 2003 modified the shallow-gas leasing program and allowed leasing outside of area wide lease sales. Under legislation signed into law in June 2004, shallow-gas leasing was added to the area wide lease sale program.
Questions about coal-bed methane development in Homer and the Matanuska-Susitna Borough led to a reexamination of the shallow-gas leasing program and changes to state law. Landowners were concerned about the impact of development on their surface property. Environmental groups raised concerns about water quality.
Coal beds absorb natural gas and can sometimes be found in water wells. To get gas out of the ground, water has to be pumped out at a rate of about 10,000 gallons a day. That water would have to be safely disposed of, and could be contaminated. Lois Epstein, an oil and gas industry specialist with Cook Inletkeeper, raised concerns in 2003 about the affect of shallow-gas drilling on nearby wells and watersheds. What would a driller do with the excess water? How would it be handled? Where would it go? she asked.
Lappi said in 2003 that he would avoid drilling on surface land where owners objected. Water would be hauled away. His plans in 2003 were to drill one to three test wells. He said it might take five or 10 wells to become commercially productive. Lappi said he never did any drilling during his lease. He did do some preliminary field work and looked at water wells.
Exploration and development of shallow-gas wells is still going on in the Matanuska-Susitna Borough, said Kathy Wells, director of Friends of Mat-Su, an environmental group in the valley. Storm Cat and Forest Oil have leases on mental health trust lands. A locally owned company, Fowler Gas, is doing directional drilling on 640 acres of privately held subsurface lease land.
Although the legislature changed the coal-bed methane leasing rules, the issue of public notification of lease plans remains a concern.
“That’s still a big issue. The (Alaska) Department of Natural Resources doesn’t have a good method of notifying the public,” Wells said, such as sending out notices to nearby land owners.
As for Lapp Resources, the company is moving in a new direction: wind generated power. The company is looking at a wind energy project in Alaska and evaluating several potential sites, Lappi said.
“Alaska’s got lots of wind energy potential,” he said. “You just have to find it in a place where there’s a market.”
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