I wanted to just put into context some of the things that were spoken about earlier in terms of gas supplies that Mr. Myers was talking about. I agree that about two-thirds of Cook Inlet gas is currently exported either to the Agrium plant or as LNG, which means only one-third of our current gas being produced in Cook Inlet is used domestically, which I think - it's a distribution problem. That's not to say that jobs at the LNG plant and the Agrium plant are not important but I think that there shouldn't be any fear that we don't have enough gas right now. 

The other thing I wanted to put into context is just how much gas coalbed methane, if it were viable, could produce in this area. Evergreen has stated numerous times that they're talking about perhaps 1 trillion cubic feet. Now to put that into context, every year Municipal Light and Power, Chugach Electric, and Enstar use almost 120 billion cubic feet of gas in the Anchorage area so that means the trillion cubic feet that Evergreen might get is a little under 10 years worth of supply of gas for our area. So, even though that might happen, it's only a real short-term solution and when we're talking right now about having only nine years left of Cook Inlet gas, a trillion cubic feet just doesn't do a lot more for us.

Over the course of the 25-year coalbed methane field, we're only going to get about, at the most, 40 billion cubic feet of gas out of the coalbed methane in this area. That's about one-third of what we use currently in the Anchorage area. So, you can see that in context, coalbed methane is not going to put a dent in our energy future. I think that goes to the point of not being so myopic and looking only at oil and gas as sources of energy. We have lots of renewable energy resources in this area that we should be looking at.

Now, to get to the bill itself, generally I'm real happy that the best interest finding process is going to be used if this bill is passed for all future coalbed methane leases. However, as has been stated by many people earlier, it doesn't help that several hundred thousand acres have already been leased. And, to be honest, I don't know whether or not there's any other big areas that have coalbed methane potential that haven't been leased because this program was so wide open for a while that the companies have pretty much moved in and they have already leased, or have applied for leases, in areas where there's coalbed methane potential. So, even if this bill applies to the future leases, it's probably going to be a very tiny percentage of the total coalbed methane that could possibly be developed in the state. It really doesn't help us at all unless these leases are completely reissued under the new best interest finding if this passed.

A couple of specifics - I really believe that there should be higher royalties and higher rents. We're dealing with this right now with, you know, the arguments about whether or not we should tax oil companies more or less but, you know, if you look at the amount of royalties the state's giving out on coalbed methane - 6 ¼ to 12 ½ percent, it may barely cover the cost of administrating these programs. And the reason is that there's so much more infrastructure involved in these kinds of wells. As Mr. Myers put it earlier, you know, usually these wells are generally of low productivity, meaning that we get 1 to 1 ½ billion cubic feet out of each coal bed methane well. Compare that to a typical conventional well that's gonna get well over 100 billion cubic feet. You can see that there's 100 times the infrastructure necessary to get that same 100 billion cubic feet of gas if you use coalbed methane and the technology to get at it. And that's not even to mention the concerns about getting water problems because of the dewatering process but just the sheer infrastructure because each one of these wells has to have a road and has to have pipelines. And so, per well, we're just not going to get enough gas out of each well to make it something that's in the state's best interest unless we are charging a lot of money up front so I would like to see higher royalties and higher rents.

Another point that I'd like to make to support that is the Mat- Su Borough has recently determined that over 12,000 private lots have been leased, excuse me, 12,000 lots have been leased and they have not all been private but a high percentage of them are private land out there in the Valley. Over 12,000 of those lots have been leased under this program. The assessed value - we all know the assessed value is low compared to the appraised value or fair market value - the assessed value of this property is $235 million and Evergreen leased those lands for $30,000 - 60 leases at $500. Of course they have to pay the yearly rent of $1 per acre per year but, essentially, what Evergreen got was $235 million worth of surface value for $30,000. That is a travesty and that's the kind of thing that we have to be able to look at in the best interest finding to determine whether or not it is in the best interest of the community or the state in general to be leasing this land out because as property values go down in the borough, it's going to quickly erase any kind of economic gains that we can get from coalbed methane.

I also think that there should be more public comment period and I understand that that would have to apply to the conventional oil and gas too, if that were increased. I don't know if there's a way to break it out but I think because coalbed methane can happen in places where there are homes and neighborhoods that it cannot hurt to increase the days that people have to comment.

I also believe there should be higher bonding requirements. There is still only a $25,000 per incident bonding requirement in this bill and that just doesn't cut it and there has to be a lot more put up by these companies. If they are so careful and they do it right then they shouldn't have any problem putting that money up.

There's also a few things that really would never apply to conventional gas, and I'm sure I'm not going to cover them all. There has to be included somehow in the analysis when a best interest finding is done concerning coalbed methane or shallow gas, of course one of them was already mentioned by Mr. Myers and that is the same source drilling, which has occurred in the Lower 48 where shallow gas wells are drilled right into areas where aquifers - where people get their water wells. Another thing that can occur with conventional oil and gas, but it's of great concern to people about coalbed methane is methane seepage. It's particularly a concern in areas that have fractured and tilted geology like we do out in the Sutton area where basically you have thousands of communications to the surface from deep below because all of a sudden [indisc.] layers have been tilted up so it's not sedimentary layers way below the ground. And the methane, once released, once the de-watering process occurs, is [indisc.] into people's wells and their homes and other buildings. So, methane seepage is something else that I'm hoping will be particularly analyzed.

I also think that the concern about how much money stays in the state has got to be part of this best interest finding. Right now, the company that has most of the leases in the Mat-Su area is a company that's based in Denver and they're going to be taking 92 to 88 percent of the profit out of the state and that has to be looked at because we are the owner state. We do have a lot of natural resources. We want to make sure that we have a good deal for the people of the state that if there is going to be anything like this done, we've got to make sure that a lot of this money stays in the state. And another issue that I hope would be analyzed in the best interest finding is how much infrastructure of ours do they use. It's clear that what happened here is somebody swooped in and leased these areas where taxpayers like myself maintain the roads, rather than having to pay for those roads themselves. Mr. Myers mentioned earlier how things are done on the North Slope to minimize the infrastructure because it's costly. We've already got a lot of infrastructure and I hope that the impact on our infrastructure, including our public safety and our emergency services and our water supplies and sewer systems and our roads are all taken into account when these kinds of things are anticipated and analyzed in residential areas.

In conclusion I'd just like to say that unfortunately this bill admits all the faults of the original House Bill 394, which was the original shallow gas program. There are many and some of them were identified by Mr. Myers earlier. And it's unfortunate that this bill is not aimed at really helping those people who have been impacted by those faults because it does not apply retroactively. And it is amazing to me that the drafting errors of 394 were not found because it could have easily been written so that this kind of thing would have been precluded because everybody back in 1996 was talking about rural areas and the sloppy drafting of that bill has basically put us in the position now where we have to deal with a mistake that was made 8 years ago and we are dealing with it in a big way and we're not going to stop dealing with it until all these leases are reissued and then analyze those best interest findings. Thank you.