Legislature(2001 - 2002)
04/02/2001 03:35 PM Senate RES
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SB 76-RIGHT-OF-WAY LEASING ACT
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:35 p.m. and announced SB 76 to be up for
consideration.
SENATOR THERRIAULT, sponsor of SB 76, said since the bill's
introduction, the Administration has carried on negotiations with
officials at Alyeska regarding terms. All have agreed to the
language in the sponsor substitute. He explained the contents of
the bill as follows.
Section 1 modifies the length in which a lease for a pipeline
right-of-way can be granted from 10 years to 30 years. That would
conform to federal law. He thought it made sense to conform our law
to federal laws so that pipelines that cross both state and federal
lines would be assured they have a right-of-way to continue
operations.
Section 2 deals with the issue of how to deal with ongoing
negotiations that exceed the original lease length. The state does
not want to be subject to litigation just because negotiations are
ongoing.
Section 3 deals with reimbursements of the state's expense in
negotiating for a lease extension, language that was in the
Governor's original bill.
Section 4 deals with the definition of state land and rights-of-way
across it.
Section 5 deals with the 30 years applicable to leases that are
currently in existence.
SENATOR ELTON asked if there is a definition in statute of "timely
requested."
SENATOR THERRIAULT answered that there is no definition of that
term in statute but there is one in regulation that says two years.
He thought the committee might want to allow some flexibility in
regard to the TransAlaska pipeline.
SENATOR LINCOLN said the fiscal note indicates a potential savings
to the state that would begin to accrue in 2014. She asked if he
had any idea what the cost savings would be.
SENATOR THERRIAULT replied, "The expense of the permitting process
will get rolled into the tariff that is paid for shipping the
product down the line. That impacts on the state treasury, because
it reduces the wellhead value. It doesn't start accruing until
then, because right now if existing law continued, it would be back
before us in 10 years…"
MR. STEVE JONES, TransAlaska Pipeline System right-of-way renewal
project manager, stated support for SB 76 and pointed out that they
had spent the last month and a half working on language that
everyone would be happy with.
MR. BILL BRITT, State Pipeline Coordinator, stated support for SB
76. Regarding Senator Elton's question about the term, "timely
requested," the Right-of-way Leasing Act only applies to large
common carrier oil and gas pipelines and does not apply to the
smaller gathering lines.
CHAIRMAN TORGERSON asked what his intentions are for the renewal,
which says up to 30 years.
MR. BRITT answered they would first have to receive an application
and the applicant would request the term of renewal. He presumes it
will be 30 years. He said they are in the process of cooperating
with Alyeska to do a reliability center maintenance study, which
will give them the exact physical condition of what they consider
to be the critical systems on the TransAlaska Pipeline. He also
pointed out that five other pipeline right-of-way leases on the
North Slope expire on the same day as the TransAlaska Pipeline's
right-of-way lease. DNR will have to deal with those five pipelines
at the same time.
CHAIRMAN TORGERSON asked what DNR will do if they are found to be
out of compliance with the lease and they have signed a 30-year
lease.
MR. BRITT said he presumed Senator Torgerson meant they had a 30
year lease and encountered a problem after the renewal. He
explained the lease has a number of tools so that, "We can issue
orders directing Alyeska to take specific actions." They have done
this a number of times and Alyeska has responded to every one of
those.
MR. BRITT explained, "Should that fail, we have the ability to go
perform the work ourselves and bill the operator for doing the
work. Should the operator not respond, we have the ability to go to
court and a whole series of tools we can use to affect whatever
change we think is necessary."
SENATOR LINCOLN asked how many times the state has utilized the
"recourse" he is talking about.
MR. BRITT said he has been employed in this position for the last
four years and prior to that some actions were taken. During his
term, he has issued about 10 directives instructing Alyeska to take
specific actions. No further steps needed to be taken.
SENATOR ELTON asked if he supports the legislation.
MR. BRITT responded that he does support it.
SENATOR ELTON asked his definition of "timely requested."
MR. BRITT stated that DNR has recently promulgated regulations that
ask that applications be submitted two years prior to the
expiration of the lease and that would be his definition. The
regulations allow the commissioner to waive that period should
circumstances warrant a waiver. He reiterated for the purpose of
this bill, he is only talking about the big pipelines.
SENATOR ELTON asked how he would define a feeder line off the
pipeline, like the feeder line to Williams.
MR. BRITT told members DNR does not have a separate lease for that
line; it is covered by the TAPS right-of-way lease.
Number 1000
SENATOR PEARCE moved to pass SSSB 76 from committee with its zero
fiscal note and individual recommendations. There were no
objections and it was so ordered.
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