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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Bill Creating Legal Framework For Management of Carbon Sequestration Passes House Committee  Posted: February 10, 2011

February 9, 2011

Hon. Brent Yonts
Kentucky House of Representatives
Frankfort, Kentucky 40601

Re: House Bill 259

Dear Representative Yonts:

I have discussed my earlier suggestions with Sara Smith, and we have agreed to making these technical changes and leaving the others unchanged:

1. Section 3(1) provides that the Division of Oil and Gas “shall seek” primary jurisdiction over “matters relating to” geologic sequestration of CO2. I’m assuming that the purpose of this provision is to direct the Cabinet to seek primacy under the Safe Drinking Water Act for Class VI wells. By using “is authorized to” rather than “shall,” the bill would avoid a fiscal impact that in current form is not funded.

2. Reference to Class V wells remains.

3. Section 4 allows pooling of pore space once the owners of at least 51% “of the surface acreage overlying the storage facility” have agreed. The surface owners may own none of the pore space if the mineral have been severed, and should probably reference the “owners of at least fifty one percent (51%) interest in the pore space for the storage facility” in order to assure that the proper folks have consented.

4. In Section 5, a list of persons known to “own or lease” the pore space is to be provided. Fee ownership and leasehold possession may not be the only forms of property rights, and it would be better to simply say all persons reasonably known to “have a property interest in the pore space”.

5. The bill is silent on how those with an interest that is pooled will be compensated. Section 5(4) should include a new sentence to read “The pooling order shall identify the compensation to be paid to the interest holders in the pooled pore space and the basis for valuation of the pooled interest.”

Please let me know if you have any questions. I would be happy to work with D. Todd to develop a floor amendment to address these concerns, and will be in Committee in the morning to support the bill.

Cordially,

Tom FitzGerald
Director

Cc: D. Todd Littlefield
Sara Smith




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