A Republican lawmaker is pushing a bill that would deregulate helium mining to the benefit of a company with ties to the former state party chair.
Sen. Mark Finchem’s bill would move Arizona’s oil and gas commission out from under the Department of Environmental Quality, making it independent.
The commission regulates the production of resources like helium.
The bill would exempt helium mining from having to obtain groundwater aquifer protection permits, which the Prescott Republican says are overbearing.
It would also let the Oil and Gas Conservation Commission set its own fees.
“The oil and gas commission has been hamstrung to the point where it can't be effective, and this is just another example of the resources in this state that if properly managed would be paying for education, public safety, infrastructure and for those people that can’t care for themselves,” Finchem told his colleagues.
The only company signed in support of the bill is a helium mining company called Desert Mountain Energy, which is based in Canada.
Former Arizona Republican Party Chair Kelli Ward is one of its directors.
“Dr. Ward's experience as a legislator and party head will be extremely helpful as the company seeks to grow exponentially with its leases in Arizona,” Desert Mountain Energy stated in a press release announcing Ward’s appointment to the board of directors in 2021.
Finchem said the company isn’t his reason for running the bill, and Ward didn’t request it.
“The bill was brought to give the O&GC the horsepower to execute on its mission. Under current law, the commission has been prevented from carrying out its prescribed mission,” Finchem said in a text.
State Democrats oppose the legislation, arguing that helium extraction should be subject to aquifer permitting rules to protect Arizona’s water supply.
“I worry that it’s going to give the commission too much power to set their own fees for their own industry, and it could actually allow injection wells farther into Arizona which could potentially harm our water supply,” said Sen. Lauren Kuby (D-Tempe).
Helium is a valuable resource, not just used for blowing up balloons.
The gas is also used for things like space exploration technology and medical equipment. It can be used to cool down nuclear reactors and identify gas leaks. But helium is also rare on earth and mainly exists in underground depositories.
As a nonrenewable resource with limited availability, there is a helium shortage worldwide.
“The Arizona helium industry is kind of being squashed by overregulation,” Commissioner James Ballard told lawmakers. He said the cost of regulation in Arizona is preventing helium wells from being added.
The commissioners of the Oil and Gas Conservation Commission are responsible for penalizing violations of Arizona oil and gas drilling regulations.
Ballard is a former geoscientist. His LinkedIn profile says he conducts “independent studies to promote helium exploration and development.” He published an article on the helium potential in Arizona’s Holbrook Basin in northern Arizona, an area where Desert Mountain Energy operates.
Sen. Janae Shamp (R-Wickenburg) is also running a bill supported by Desert Mountain Energy that would solely exempt helium and production wells from needing to obtain aquifer protection permits and exempt the commission from ADEQ rulemaking requirements for one year.
The chairman of the commission is Frank Thorwald, who also supports the bill. He was appointed to his role by former Republican Gov. Doug Ducey.
Helium is not considered to be a pollutant, but the extraction of helium from underground depositories happens through a process similar to fracking, which can have environmental consequences.
“An aquifer protection permit does not prevent them from doing exploration or production, it merely requires them to demonstrate up front that they will not be contaminating the aquifer. Water is precious, especially here in Arizona, and once it is polluted, it is often difficult to clean up,” the Sierra Club Grand Canyon Chapter wrote in a memo opposing the bill.
The ADEQ is signed in as “neutral” on the bill, which is common practice for state agencies. ADEQ Legislative Liaison Krista Osterberg testified that ADEQ has no issue with updating outdated fees or creating a separate fund for the commission, but they do have concerns.
Osterberg warned that Finchem’s bill could violate standards set by the federal Safe Drinking Water Act, which regulates water quality.
“APP permits protect one of Arizona’s most precious natural resources — water. … All Arizona aquifers are treated as potential sources of drinking water,” Oppleman wrote. “ADEQ does not believe that the Arizona Oil and Gas Conservation Commission (AZOGCC) Commissioner should have the authority to exempt facilities from ADEQ APP permits,” ADEQ Communications Director Caroline Oppleman said in an email.
The bill would give the commission its own fund and let it use federal money and private grants, gifts and contributions. But ADEQ notes that some of the funding the commission uses now isn’t transferable.
“ADEQ is currently administering a $25 million federal grant from the U.S. Department of the Interior to close orphaned oil and gas wells, which cannot be transferred to another entity,” Oppleman wrote.
