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HB 382                                                                                            
HOUSE BILL NO. 382 by the House Rules Committee by request of                                       
the Governor, entitled:                                                                             
                                                                                                    

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     "An Act repealing the time limitation on the authority of the                                  
     Department of Natural Resources to enter into agreements with a                                
     person or persons desiring to own an oil or natural gas pipeline                               
     proposed to be located on state land for the purposes of providing                             
     for payment of the reasonable costs incurred in preparing for                                  
     activities before receipt of an application under the Alaska Right-                            
     of-Way Leasing Act; and providing for an effective date."                                      
                                                                                                    
was read the first time and referred to the House Special Committee on                              
Oil & Gas and the Resources Committee.                                                              
                                                                                                    
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Zero, Dept. of Natural Resources                                                                
                                                                                                    
The Governor's transmittal letter dated January 12, 2004, follows:                                  
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a bill allowing the Department of                                   
Natural Resources (DNR) to continue to enter into reimbursement                                     
agreements with applicants for DNR's preliminary work on oil and gas                                
pipeline right-of-way lease applications. DNR's preliminary work                                    
streamlines the application process. An effective permitting process is                             
critical to revitalizing the oil and gas industry and growing Alaska's                              
economy. DNR's current authority to enter into reimbursement                                        
agreements expired on December 31, 2003. The bill contains a                                        
retroactive provision to ensure there is no "window" period when                                    
reimbursement agreements could not be entered into by DNR.                                          
                                                                                                    
AS 38.35 requires pipeline right-of-way lease applicants to submit                                  
detailed applications that include significant engineering and design                               
work. Substantial investments of time and money are needed even                                     
before an application is officially submitted to DNR. Costs of pre-                                 
application work by state agencies like DNR can range from about                                    
$40,000 for a simple pipeline to several millions of dollars for a                                  
project like the proposed Alaska natural gas pipeline. Incomplete                                   
applications or applications that must be revised later are costly, create                          

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delays that could cost a producer the construction season, and may                                  
directly impact a decision on the feasibility of a project.                                         
                                                                                                    
DNR's assistance and guidance results in a good working relationship                                
with the applicant. It also results in early communication and                                      
explanation of state law requirements to applicants, complete initial                               
applications, quicker processing by DNR, fewer revisions, and a                                     
greater chance of approval of the project by DNR.                                                   
                                                                                                    
I urge your prompt and favorable action on this matter.                                             
                                                                                                    
                                Sincerely yours,                                                    
                                /s/                                                                 
                                Frank H. Murkowski                                                  
                                Governor"