Juneau -- The Alaska Senate Thursday approved a bill that changes the way the Alaska Oil and Gas Conservation Commission (AOGCC) is funded. Senate Bill 134, sponsored by Senator Drue Pearce (R-Anchorage), repeals the existing Oil and Gas Conservation Tax and, instead, institutes a program receipt system designed to provide stable funding for the Commission.

"The Oil and Gas Conservation Commission serves a vital function and it is imperative that we provide stable funding for the commission," said Pearce. "The original intent of the legislature was to fund the functions of the commission solely from a tax on the production of oil and gas. However, the scope of the commission's work has expanded, while income from oil and gas production has declined. This measure ensures the vital work of the commission will continue despite falling oil production levels."

The Oil and Gas Conservation Commission is an independent quasi-judicial agency created by the legislature to promote the conservation and efficient production of Alaska's oil and natural gas while protecting health, safety, and the environment. The Commission functions as the regulatory agency overseeing the underground operation of the Alaska oil industry on private and public lands and waters.

The AOGCC's responsibilities include regulating drilling and production of oil and gas to ensure that physical waste does not occur, protecting correlative rights of mineral interest owners, and ensuring maximum resource recovery. In addition, the AOGCC administers Alaska's Class II Underground Injection Control Program, and determines well categories under the Federal Natural Gas Policy Act of 1978.

SB 134 creates a program receipt system in which the regulatory cost charge is directly associated with the total volume of fluids produced or injected. It also adds four staff members to strengthen the commission's ability to protect the public interest.

"This type of funding system more accurately reflects the factors directly associated with the workload of the commission," said Pearce. "SB 134 creates a stable funding source that will enable the AOGCC to provide the monitoring services necessary to protect the future of Alaskan interests."

SB 134 was approved overwhelmingly by the Senate. It is one of a number of bills introduced by the Republican Majority to change the way Alaska does business. The Senate Majority has pledged to restructure and streamline government as part of its long-range fiscal plan to address the state's $1 billion fiscal gap. SB 134 now goes to the House for consideration.

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