CSHB 548(RES): "An Act authorizing the amendment of Northstar Unit oil and gas leases between the State of Alaska and BP Exploration (Alaska) Inc.; and providing for an effective date."
00CS FOR HOUSE BILL NO. 548(RES) 01 "An Act authorizing the amendment of Northstar Unit oil and gas leases 02 between the State of Alaska and BP Exploration (Alaska) Inc.; and providing 03 for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 06 (1) the production of oil and gas from state land is a matter of statewide 07 interest and effect because it is an important source of revenue to the state and job 08 opportunities for the people of the state; 09 (2) BP Exploration (Alaska) Inc. holds state oil and gas leases in the Northstar 10 Unit that include net profit share provisions; 11 (3) unless the net profit share provisions of the Northstar Unit leases are 12 amended, production of oil and gas from the unit is highly unlikely to begin before the year 13 2002, if at all; 14 (4) because of the development account provisions of the net profit share
01 leases, the later that these leases are developed, the less "net profits" the state receives; 02 (5) if the net profit share provisions of the Northstar Unit leases are amended, 03 full production of oil and gas from the unit may begin as early as the year 1999; 04 (6) amending the net profit share provisions of the Northstar Unit leases to 05 provide for a supplemental royalty will maximize the economic benefits of oil and gas 06 production to the people of the state by encouraging timely production from the unit; 07 (7) the development of the Northstar Unit will provide additional revenue to 08 the state; 09 (8) the timely development of the unit may result in increased state revenue 10 in future lease sales; and 11 (9) the timely development of the unit may result in technological 12 breakthroughs and other cost savings that may make other development opportunities in 13 Alaska economically feasible. 14 (b) With respect to the effect of the effort to secure earlier development of the leases 15 on employment opportunities for state residents and on the state's economy, the legislature 16 finds that 17 (1) paragraph 41 of the 1980 lease and paragraph 31 of the 1983 lease are to 18 be amended; under each of the proposed amendments, 19 (A) the lessee, BP Exploration (Alaska) Inc., undertakes 20 (i) to use its best efforts to advertise for, recruit, and employ 21 qualified residents of the state; 22 (ii) to contract with existing licensed Alaska firms to fabricate 23 the modules to develop the Northstar Unit leases within the state and, in 24 contracting with those firms, to encourage its contractors to employ and, when 25 necessary, train existing state residents; 26 (iii) to enter into contracts with Alaska-licensed vendors, 27 contractors, and suppliers for the provision of supplies and services; and 28 (B) several state agencies with responsibility for improving the 29 employment opportunities of state residents, including training, commit to efforts to 30 supplement and support the lessee's undertakings; 31 (2) the lessee, BP Exploration (Alaska) Inc., has made significant investments
01 in the state, is ranked as one of the state's largest private sector employers, and regularly 02 enters into contracts to obtain support services; consequently, the lessee's fulfillment of the 03 undertakings described in (1) of this subsection should materially contribute to existing 04 resident workforce employment opportunities and to the state's economic stability; 05 (3) a good faith effort by the lessee, BP Exploration (Alaska) Inc., and the state 06 agencies to fulfill the undertakings described in (1) of this subsection should ensure that, under 07 the amended leases, benefits will accrue directly and immediately to the people of the state; 08 and 09 (4) the mutual commitments made by the parties to the lease in these 10 amendments to secure to state residents and businesses the advantages and benefits of both 11 expanded resident hire opportunities and additional work by in-state businesses are in the best 12 interests of the people of the state and are considerations of paramount importance to the 13 legislature in its decision to conditionally approve the proposed amendments of the Northstar 14 Unit leases. 15 (c) It is the intent of the legislature that the commissioner of natural resources not 16 exercise authority under sec. 2(b)(1) of this Act to amend the Northstar Unit leases until all 17 of the mutual representations made by the lessee and the state agencies that are set out in 18 (b)(1) of this section are substantially complied with. 19 * Sec. 2. AMENDMENT OF LEASES AUTHORIZED. (a) The State of Alaska and BP 20 Exploration (Alaska) Inc. are parties to the following leases in the Northstar Unit: 21 (1) ADL 312798, effective February 1, 1980; 22 (2) ADL 312799, effective February 1, 1980; 23 (3) ADL 312808, effective February 1, 1980; 24 (4) ADL 312809, effective February 1, 1980; and 25 (5) ADL 355001, effective August 1, 1983. 26 (b) The commissioner of natural resources 27 (1) may amend the Northstar Unit leases described in (a) of this section to the 28 extent set out in the "First Amendment to the Northstar Unit Leases Between the State of 29 Alaska and BP Exploration (Alaska) Inc.", dated March 22, 1996; 30 (2) may not exercise the authority granted in (1) of this subsection unless the 31 governor, after being advised by the commissioners of commerce and economic development
01 and labor, as appropriate, first determines and certifies that 02 (A) the lessee, BP Exploration (Alaska) Inc., 03 (i) has adopted a program to advertise for, recruit, and employ 04 qualified residents of the state in the development of these leases and that, by 05 implementing that program, the lessee will employ qualified residents of the 06 state in at least 85 percent of the jobs that are related to the development of the 07 Northstar Unit leases; 08 (ii) has negotiated contracts to fabricate all modules necessary 09 to develop the Northstar Unit leases within the state, the contracts were 10 negotiated only with existing Alaska-licensed firms, and that in contracting 11 with those firms, the lessee has used its best efforts to require its contractors 12 to employ and, when necessary, train existing state residents; and 13 (iii) has entered into contracts with Alaska-licensed vendors, 14 contractors, and suppliers for the provision of supplies and services in the 15 development of these leases and the associated contracts; and 16 (B) the state agencies having specific responsibility for improving the 17 employment opportunities of state residents, including job service offices for 18 employment recruitment and state-sponsored or supported programs for training, are 19 actively supplementing and supporting the lessee's undertakings. 20 * Sec. 3. REPORTING PROVISIONS. The lessee, BP Exploration (Alaska) Inc., shall file 21 with the commissioner of labor at least every six months the reports that the commissioner 22 of labor determines are necessary to evaluate the lessee's efforts described under 23 sec. 2(b)(2)(A) of this Act. 24 * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).