DNR and AGDC figures: roughly 20 million cubic yards of state gravel could be needed for pipeline; agency says decommissioning rules and recipients unresolved

Department of Natural Resources officials and a project representative told the Senate Resources Committee on April 22 that material conveyances, reclamation requirements and financial assurances for a proposed gas pipeline remain unresolved.

Acting DNR Deputy Commissioner Derek Nottingham said the department had not taken a final action on how state materials might be conveyed for the project and that he did not have firm figures on which parties would receive state materials. Weston Nash, a commercial analyst in DNR's Division of Oil and Gas, clarified that the agency treats the draft rule package as conveying some materials "at a base price of $0 per cubic yard" under newly proposed regulation language and that material sales are generally handled by the Division of Mining, Land and Water rather than the oil and gas division.

Nash also explained DNR's current practice of requiring financial-assurance agreements for similar authorizations and said a decommissioning/restoration requirement is enforced through those agreements rather than a statutory mandate: "We have different remedies as to fund that requirement, be it a bond, or a sinking fund that is funded throughout the life of production." He added there is no explicit statute that automatically requires decommissioning funds, and that the commissioner currently has discretion to implement or waive such an arrangement.

When the committee asked for numeric estimates, AGDC representative Frank Richards offered an operational estimate for state material needs: "about 20,000,000 yards that will be required from the state material sites," covering access roads, pipe bedding, storage yards and slope work near the liquefaction area. Richards cited recent DNR rate guidance of about $3 per cubic yard and said that figure would imply roughly $60,000,000 in commercial value at that published rate.

The committee requested that DNR produce more precise estimates for total cubic yards expected from state conveyances, expected price per cubic yard, and annual maintenance needs; Chair Giesel asked staff to provide maps of municipal and borough boundaries to clarify which lands are state-managed and which are municipal.

No final decisions were announced at the hearing; DNR officials said they would follow up with the committee with further details.

Ending: The committee asked DNR to deliver numeric estimates and mapping information for the next meeting and reserved industry testimony for April 23.