Mat-Su gas leases relinquished

ANCHORAGE -- After more than two years of conflict and controversy, the coal-bed methane debate in the Mat-Su lost most of its steam with one stunning announcement Thursday morning.

Pioneer Natural Resources Co. has agreed to return the shallow natural gas leases on more than 250,000 acres in the Mat-Su Borough, Gov. Frank Murkowski said Thursday at a press conference in Anchorage.

The leases had been held by Evergreen Resources Inc., a company acquired by Pioneer in a merger finalized earlier this week.

Evergreen purchased the lion's share of its leases in 2003, sparking an outcry relating to public notice, property rights and conflicts of interest. Under the pressure of a recall effort relating to the CBM controversy, state Sen. Scott Ogan resigned in August.

After negotiating with the state, Murkowski said, Pioneer has agreed to relinquish interest in shallow natural gas leases on 224,000 acres in the Mat-Su. This includes 74,000 acres formerly held by Evergreen Resources and an additional 150,000 individual leases to which it had access.

These leases were obtained under the 'streamlined' process enacted by House Bill 69 in 2003. The act

did not include the conventional public hearing process used to determine an official 'best-interest finding' by the state Department of Natural Resources.

"These leases have created a tremendous amount of anxiety among residents and property owners in the Mat-Su," Gov. Murkowski said. "We've removed 100 percent of the leases that were secured under this truncated Shallow Gas Leasing Act procedures, and by doing this I hope we've substantially reduced the anxiety."

Land leased in the Homer area under the shallow-gas leasing program was not discussed at the meeting. Chris Whittington-Evans, president of Friends of Mat-Su, said he welcomed the announcement, and that it may mean Friends of Mat-Su no longer has an interest in a lawsuit pending against the state. He said parties involved in the suit will meet and re-evaluate the case soon.

"There is still a need for both statewide, as well as local regulation systems for shallow natural gas," Whittington-Evans said. "The gas is not going away and, as gas prices go up, gas becomes more desirable. Those leases will more than likely be applied for again."

Pioneer will also drop exploration applications on 30,000 acres it recently converted from shallow natural gas lease applications. It will retain exploration rights on 48,000 acres leased under the state's conventional oil and gas leasing program, primarily in the Pioneer Unit south of Wasilla.

In a press release from Pioneer, the company cited regulatory uncertainty as a critical factor in its decision. Both the Department of Natural Resources and the Mat-Su Borough are drafting new regulations relating to shallow gas exploration and development.

DNR Commissioner Tom Irwin said the state's enforceable standards are due out in the next two weeks to a month. He said he believes the announcement takes the pressure off both the state and the Mat-Su Borough, and will allow work on regulations to be completed without the pressure of impending development.

"I don't presume to tell the borough what to do, but we have honored our commitment. We think now, because there's no immediacy, let's continue to work together," Irwin said. "We need gas in this state ... There are still subsurface owners, and they have rights to extract value, if it's there. Our position is responsible development of those resources."