Legislature(1993 - 1994)
1994-03-14 House Journal
Full Journal pdf1994-03-14 House Journal Page 2761 HB 199 The following was read the second time: HOUSE BILL NO. 199 "An Act providing for oil and gas exploration licenses, and oil and gas leases, in certain areas of the state; and providing for an effective date." with the: Journal Page -ZERO FISCAL NOTE (REV) 3/5/93 549 GOVERNOR'S TRANSMITTAL LETTER 549 O&G RPT CS(O&G) NEW TITLE 3DP 2NR 2312 -ZERO FISCAL NOTE (DNR) 2/9/94 2312 RES RPT CS(O&G) NEW TITLE 5DP 2NR 1AM 2543 -PREVIOUS ZERO FISCAL NOTE (DNR) 2/9/94 2543 FIN RPT CS(O&G) NEW TITLE 7DP 1AM 2713 -PREVIOUS ZERO FISCAL NOTE (DNR) 2/9/94 2714 1994-03-14 House Journal Page 2762 HB 199 Representative Phillips moved and asked unanimous consent that the following committee substitute be adopted in lieu of the original bill: CS FOR HOUSE BILL NO. 199(O&G) "An Act relating to the exploration and production of oil and gas and related hydrocarbons, to oil and gas exploration licenses, and to oil and gas leases in certain areas of the state; and providing for an effective date." There being no objection, it was so ordered. Amendment No. 1 was offered by Representative Brown: Page 2, line 23, after "AS38.05.005 - 38.05.040,": Insert "38.05.140(f)," Page 9, after line 15: Insert a new bill section to read: "* Sec. 4. AS 38.05.140(f) is amended to read: (f) The submerged and shoreland lying north of 57 degrees, 30 minutes north latitude and east of 159 degrees, 49 minutes west longitude within the Bristol Bay drainage are designated as the Bristol Bay Fisheries Reserve. Within the Bristol Bay Fisheries Reserve no surface entry permit to develop an oil or gas lease or oil and gas exploration license may be issued on state owned or controlled land until the legislature by appropriate resolution specifically finds that the entry will not constitute danger to the fishery." Renumber the following bill sections accordingly. Page 12, line 6: Delete "secs. 2 - 7" Insert "secs. 2 - 8" Page 12, line 7: Delete "Section 8" Insert "Section 9" 1994-03-14 House Journal Page 2763 HB 199 Representative Brown moved and asked unanimous consent that Amendment No. 1 be adopted. Representative Green objected. Representative Brown moved and asked unanimous consent that CSHB 199(O&G) and all pending amendments be returned to the Finance Committee. Representative Phillips objected. The Speaker stated that the House would recess until 5:00 p.m., and so, the House recessed at 12:05 p.m. HB 199 CSHB 199(O&G) was again before the House. Representative Vezey rose to a point of order citing Section 388 of Mason's Manual regarding limiting debate to the motion before the body. The Speaker cautioned the member to proceed in order. The Speaker invoked Section 102 of Mason's Manual. The call was satisfied. The question being: "Shall CSHB 199((O&G) and all pending amendments be returned to the Finance Committee?" The roll was taken with the following result: 1994-03-14 House Journal Page 2764 HB 199 CSHB 199(O&G) Second Reading Return to Finance Committee with all pending amendments YEAS: 17 NAYS: 23 EXCUSED: 0 ABSENT: 0 Yeas: Brice, Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Mackie, Menard, Navarre, Nicholia, Nordlund, Sitton, Ulmer, Willis Nays: Barnes, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, MacLean, Martin, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Vezey, Williams And so, the motion failed. Amendment No. 1 was again before the House. Objection to Amendment No. 1 was not maintained and so, it was adopted. Amendment No. 2 was offered by Representative Brown: Page 11, lines 26 - 28: Delete "proposed Competitive Oil and Gas Lease Sales 80, 87, and 88, as the area to be offered in each of those proposed competitive oil and gas lease sales" Insert "any area proposed for a competitive oil and gas lease sale that" Representative Brown moved and asked unanimous consent that Amendment No. 2 be adopted. Representative Green objected. The question being: "Shall Amendment No. 2 be adopted?" The roll was taken with the following result: 1994-03-14 House Journal Page 2765 HB 199 CSHB 199(O&G) am Second Reading Amendment No. 2 YEAS: 14 NAYS: 26 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Menard, Nicholia, Nordlund, Sitton, Ulmer, Willis Nays: Barnes, Brice, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Moses, Mulder, Navarre, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Vezey, Williams And so, Amendment No. 2 was not adopted. Amendment No. 3 was offered by Representative Brown: Page 6, lines 29 - 30: Delete "The regulations must provide for at least one period for that purpose during each calendar year." Representative Brown moved and asked unanimous consent that Amendment No. 3 be adopted. Representative Green objected. The question being: "Shall Amendment No. 3 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 3 YEAS: 15 NAYS: 25 EXCUSED: 0 ABSENT: 0 1994-03-14 House Journal Page 2766 HB 199 Yeas: Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Menard, Navarre, Nicholia, Nordlund, Sitton, Ulmer, Willis Nays: Barnes, Brice, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Vezey, Williams And so, Amendment No. 3 was not adopted. Amendment No. 4 was offered by Representative Brown: Page 7, line 20: Delete "and" Page 7, line 21, after "exploration license": Insert ", and (3) describe the process and procedures that will be used to solicit competitive sealed bids if more than one proposal was submitted for an area" Page 7, line 25, after "proposal": Insert "for an area" Page 8, lines 5 and 6: Delete ", to determine which prospective licensee should be issued the exploration license" Page 8, line 7, after "licensees": Insert "and the public" Representative Brown moved and asked unanimous consent that Amendment No. 4 be adopted. Representative Green objected. Representative Ulmer moved and asked unanimous consent that the question be divided into two parts. 1994-03-14 House Journal Page 2767 HB 199 The Speaker ruled the question was divisible. There being no objection, Amendment No. 4 was divided into two parts. Amendment No. 4, Part A: Page 7, line 20: Delete "and" Page 7, line 21, after "exploration license": Insert ", and (3) describe the process and procedures that will be used to solicit competitive sealed bids if more than one proposal was submitted for an area" Page 7, line 25, after "proposal": Insert "for an area" Page 8, lines 5 and 6: Delete ", to determine which prospective licensee should be issued the exploration license" The question being: "Shall Amendment No. 4, Part A be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 4, Part A YEAS: 18 NAYS: 22 EXCUSED: 0 ABSENT: 0 Yeas: Brice, Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, James, Mackie, MacLean, Menard, Navarre, Nicholia, Nordlund, Ulmer, Willis Nays: Barnes, Bunde, G.Davis, Foster, Green, Hanley, Hudson, Kott, Larson, Martin, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Sitton, Therriault, Toohey, Vezey, Williams And so, Amendment No. 4, Part A was not adopted. 1994-03-14 House Journal Page 2768 HB 199 Amendment No. 4, Part B: Page 8, line 7, after "licensees": Insert "and the public" There being no objection to Amendment No. 4, Part B, it was adopted. Amendment No. 5 was offered by Representative Brown: Page 3, following line 11: Insert a new subsection to read: "(e) The commissioner may not issue exploration licenses to a licensee so that, at any one time, the licensee holds exploration licenses on more than 1,000,000 acres." Page 3, line 29, after "cover": Insert ", subject to the maximum acreage limitation on exploration licenses by one licensee under AS38.05.131(e)," Representative Brown moved and asked unanimous consent that Amendment No. 5 be adopted. Representative Green objected. Representative Grussendorf rose to a point of order stating that debate should be limited to the motion before the body. The Speaker cautioned the member to proceed in order. Amendment to Amendment No. 5 by Representative Navarre: In subsection (e), following "licenses on more than": Delete "1,000,000" Insert "2,000,000" Representative Navarre moved and asked unanimous consent that the amendment to Amendment No. 5 be adopted. There being no objection, the amendment to Amendment No. 5 was adopted. 1994-03-14 House Journal Page 2769 HB 199 There being no objection to Amendment No. 5 as amended, it was adopted. Amendment No. 6 was offered by Representative Brown: Page 3, line 29: Delete "not less than 20,000 acres and" Representative Brown moved and asked unanimous consent that Amendment No. 6 be adopted. Representative Green objected. The question being: "Shall Amendment No. 6 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 6 YEAS: 16 NAYS: 24 EXCUSED: 0 ABSENT: 0 Yeas: Brice, Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Mackie, Menard, Moses, Navarre, Nicholia, Sitton, Willis Nays: Barnes, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, MacLean, Martin, Mulder, Nordlund, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Ulmer, Vezey, Williams Navarre changed from "Nay" to "Yea". And so, Amendment No. 6 was not adopted. 1994-03-14 House Journal Page 2770 HB 199 Amendment No. 7 was offered by Representative Brown: Page 3, lines 24 - 25: Delete "upon fulfillment of the work commitments contained in the exploration license" Insert "after drilling a well that is capable of producing oil or gas in paying quantities" Page 8, lines 18 - 19: Delete "the work commitment obligation set out in an oil and gas exploration license issued under AS 38.05.132 has been met" Insert "a well that is capable of producing oil or gas in paying quantities has been drilled within the exploration license area" Representative Brown moved and asked unanimous consent that Amendment No. 7 be adopted. Representative Green objected. The question being: "Shall Amendment No. 7 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 7 YEAS: 6 NAYS: 34 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Davies, Finkelstein, Grussendorf Nays: Barnes, Brice, Bunde, B.Davis, G.Davis, Foster, Green, Hanley, Hoffman, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Menard, Moses, Mulder, Navarre, Nicholia, Nordlund, Olberg, Parnell, Phillips, Porter, Sanders, Sitton, Therriault, Toohey, Ulmer, Vezey, Williams, Willis And so, Amendment No. 7 was not adopted. 1994-03-14 House Journal Page 2771 HB 199 Amendment No. 8 was offered by Representative Brown: Page 8, line 27, after "production": Insert ", together with a cash bonus payable, or a fixed royalty share or net profit share reserved, to the state, as the commissioner may determine" Representative Brown moved and asked unanimous consent that Amendment No. 8 be adopted. Representative Green objected. The question being: "Shall Amendment No. 8 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 8 YEAS: 13 NAYS: 27 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, MacLean, Menard, Nicholia, Nordlund, Sitton, Willis Nays: Barnes, Brice, Bunde, G.Davis, Foster, Green, Hanley, Hoffman, Hudson, James, Kott, Larson, Mackie, Martin, Moses, Mulder, Navarre, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Ulmer, Vezey, Williams And so, Amendment No. 8 was not adopted. 1994-03-14 House Journal Page 2772 HB 199 Amendment No. 9 was offered by Representative Brown: Page 11, lines 11 - 23: Delete all material. Renumber the following bill sections accordingly. Page 12, line 6: Delete "secs. 2 - 7" Insert "secs. 2 - 6" Page 12, line 7: Delete "Section 8" Insert "Section 7" Representative Brown moved and asked unanimous consent that Amendment No. 9 be adopted. Representative Green objected. The question being: "Shall Amendment No. 9 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 9 YEAS: 13 NAYS: 27 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Hoffman, Menard, Navarre, Nicholia, Nordlund, Ulmer, Willis 1994-03-14 House Journal Page 2773 HB 199 Nays: Barnes, Brice, Bunde, G.Davis, Foster, Green, Grussendorf, Hanley, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Sitton, Therriault, Toohey, Vezey, Williams And so, Amendment No. 9 was not adopted. Amendment No. 10 was offered by Representative Brown: Page 3, lines 4 - 9: Delete all material. Reletter the following subsection accordingly. Representative Brown moved and asked unanimous consent that Amendment No. 10 be adopted. Representative Green objected. The question being: "Shall Amendment No. 10 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 10 YEAS: 8 NAYS: 32 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Finkelstein, Nicholia, Nordlund, Sitton, Willis Nays: Barnes, Brice, Bunde, Davies, B.Davis, G.Davis, Foster, Green, Grussendorf, Hanley, Hoffman, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Menard, Moses, Mulder, Navarre, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Ulmer, Vezey, Williams And so, Amendment No. 10 was not adopted. 1994-03-14 House Journal Page 2774 HB 199 Amendment No. 11 was offered by Representative Brown: Page 3, line 30: Delete "500,000 acres" Insert "100,000 acres" Representative Brown moved and asked unanimous consent that Amendment No. 11 be adopted. Representative Green objected. The question being: "Shall Amendment No. 11 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 11 YEAS: 10 NAYS: 30 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Menard, Sitton Nays: Barnes, Brice, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Moses, Mulder, Navarre, Nicholia, Nordlund, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Ulmer, Vezey, Williams, Willis And so, Amendment No. 11 was not adopted. Amendment No. 12 was offered by Representative Brown: Page 2, line 26: Delete "land" Page 2, line 27: After "(1)" Insert "land" Delete "and" 1994-03-14 House Journal Page 2775 HB 199 Page 2, line 28, after "(2)": Insert "land" Page 3, line 3, after "Meridian": Insert "; and (3) tide and submerged lands" Representative Brown moved and asked unanimous consent that Amendment No. 12 be adopted. Representative Green objected. The question being: "Shall Amendment No. 12 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 12 YEAS: 11 NAYS: 29 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, B.Davis, Finkelstein, Grussendorf, Navarre, Nicholia, Nordlund, Ulmer, Willis Nays: Barnes, Brice, Bunde, Davies, G.Davis, Foster, Green, Hanley, Hoffman, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Menard, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Sitton, Therriault, Toohey, Vezey, Williams And so, Amendment No. 12 was not adopted. Amendment No. 13 was offered by Representative Brown: Page 1, line 1, through page 12, line 7: Delete all material and insert: "An Act relating to oil and gas leases." BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: * Section 1. AS 38.05.140(c) is amended to read: 1994-03-14 House Journal Page 2776 HB 199 (c) A person may not take or hold at one time phosphate leases on state land exceeding in the aggregate 10,240 acres. A person may not take or hold sodium leases or permits during the life of sodium leases on state land exceeding in the aggregate acreage 5,120 acres, except that the commissioner may, where it is necessary in order to secure the economic mining of sodium compounds, permit a person to take or hold sodium leases or permits for up to 15,360 acres. A person may not take or hold at any one time oil or gas leases exceeding in the aggregate 750,000 [500,000] acres granted on tide and submerged land and 750,000 [500,000] acres on all land other than tide and submerged land, including leases held both as lessee and under option or operating agreement from others. Where more than a single person holds an interest in an oil or gas lease, each person shall be charged only with that percentage of the total acreage that [WHICH] corresponds to its percentage share of the total beneficial interest in the lease. * Sec. 2. AS 38.05.180(m) is amended to read: (m) An oil and gas lease must cover a reasonably compact area not exceeding 20,000 [5,760] acres, and may be for a maximum period of 10 years, except that the commissioner may issue a lease for a period not less than five years upon a finding that it is in the best interests of the state. An oil and gas lease shall be automatically extended if and for so long thereafter as oil or gas is produced in paying quantities from the lease or if the lease is committed to a unit approved by the commissioner. A lease issued under this section covering land on which there is a well capable of producing oil or gas in paying quantities does not expire because the lessee fails to produce oil or gas unless the lessee is allowed reasonable time to place the well on a producing status. Upon extension, the commissioner may increase lease rentals so long as the increased rental rate does not exceed 150 percent of the rate for the preceding year. If drilling has commenced on the expiration date of the primary term of the lease and is continued with reasonable diligence, including such operations as redrilling, sidetracking, or other means necessary to reach the originally proposed bottom hole location, the lease continues in effect until 90 days after drilling has ceased and for so long thereafter as oil or gas is produced in paying quantities. 1994-03-14 House Journal Page 2777 HB 199 An oil and gas lease issued under this section that [WHICH] is subject to termination by reason of cessation of production does not terminate if, within 60 days after production ceases, reworking or drilling operations are commenced on the land under lease and are thereafter conducted with reasonable diligence during the period of nonproduction." Representative Brown moved and asked unanimous consent that Amendment No. 13 be adopted. Representative Green objected. The question being: "Shall Amendment No. 13 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 13 YEAS: 5 NAYS: 35 EXCUSED: 0 ABSENT: 0 Yeas: Brown, Carney, Davidson, Finkelstein, Grussendorf Nays: Barnes, Brice, Bunde, Davies, B.Davis, G.Davis, Foster, Green, Hanley, Hoffman, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Menard, Moses, Mulder, Navarre, Nicholia, Nordlund, Olberg, Parnell, Phillips, Porter, Sanders, Sitton, Therriault, Toohey, Ulmer, Vezey, Williams, Willis And so, Amendment No. 13 was not adopted. Amendment No. 14 was offered by Representative Brown: Page 1, lines 2 and 3 (title amendment): Delete "in certain areas of the state" Page 9, lines 12 - 15: Delete "In unproven areas the commissioner may offer additional incentives, including a reduction of royalty to a minimum of five 1994-03-14 House Journal Page 2778 HB 199 percent in the case of oil and gas, and other terms in and granting a permit or lease for exploration and development whenever it appears to be in the best interests of the state to do so." Insert "[IN UNPROVEN AREAS THE COMMISSIONER MAY OFFER ADDITIONAL INCENTIVES, INCLUDING A REDUCTION OF ROYALTY TO A MINIMUM OF FIVE PERCENT IN THE CASE OF OIL AND GAS, AND OTHER TERMS IN AND GRANTING PERMIT OR LEASE FOR EXPLORATION AND DEVELOPMENT WHENEVER IT APPEARS TO BE IN THE BEST INTERESTS OF THE STATE TO DO SO.]" Representative Brown moved and asked unanimous consent that Amendment No. 14 be adopted. Representative Green objected. The question being: "Shall Amendment No. 14 be adopted?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Amendment No. 14 YEAS: 15 NAYS: 25 EXCUSED: 0 ABSENT: 0 Yeas: Brice, Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Menard, Navarre, Nordlund, Sitton, Ulmer, Willis Nays: Barnes, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, Mackie, MacLean, Martin, Moses, Mulder, Nicholia, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Vezey, Williams And so, Amendment No. 14 was not adopted. Representative Phillips moved and asked unanimous consent that CSHB 199(O&G) am be considered engrossed, advanced to third reading and placed on final passage. 1994-03-14 House Journal Page 2779 HB 199 Representative Ulmer objected. The question being: "Shall CSHB 199(O&G) am be advanced to third reading on the same day?" The roll was taken with the following result: CSHB 199(O&G) am Second Reading Advance to Third Reading YEAS: 23 NAYS: 17 EXCUSED: 0 ABSENT: 0 Yeas: Barnes, Bunde, G.Davis, Foster, Green, Hanley, Hudson, James, Kott, Larson, MacLean, Martin, Moses, Mulder, Olberg, Parnell, Phillips, Porter, Sanders, Therriault, Toohey, Vezey, Williams Nays: Brice, Brown, Carney, Davidson, Davies, B.Davis, Finkelstein, Grussendorf, Hoffman, Mackie, Menard, Navarre, Nicholia, Nordlund, Sitton, Ulmer, Willis And so, lacking the necessary 30 votes, CSHB 199(O&G) am failed to advance and will be in third reading on tomorrow's calendar.