Legislature(2015 - 2016)BARNES 124
03/18/2015 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SJR13 | |
| Presentation(s): Middle Earth by Calista Corporation and Donlin Gold | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SJR 13 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 139 | TELECONFERENCED | |
| + | TELECONFERENCED |
SJR 13-OCS OIL & GAS EXPLORATION/DEVELOPMENT
1:02:54 PM
CO-CHAIR NAGEAK announced that the first order of business is CS
FOR SENATE JOINT RESOLUTION NO. 13(RES), Supporting oil and gas
exploration and development on the outer continental shelf
offshore of the state; opposing attempts to prohibit future oil
and gas development in the Beaufort and the Chukchi Seas,
including the Hanna Shoal area; and requesting that the federal
Administration cease and desist from restrictions that adversely
affect active or future leases in high petroleum potential areas
in the Beaufort and Chukchi Seas, including the Hanna Shoal
area.
1:03:25 PM
CHAD HUTCHISON, Staff, Senator John Coghill, Alaska State
Legislature, introduced CSSJR 13(RES) on behalf of the sponsor,
Senator Coghill. He explained the resolution is in opposition
to recent efforts by the federal executive branch to further
restrict areas in the Chukchi and Beaufort seas as it relates to
oil and gas development. The specific concern is the Hanna
Shoal area in the Chukchi Sea. There are some active and
adjacent leases where it is felt there will be a negative
effect. There is concern about the ability to renew those
active leases that are currently in the area and there is a
concern that some of the mitigation costs associated with
designating the Hanna Shoal as an environmentally sensitive area
will further prohibit oil and gas development in that area.
MR. HUTCHISON began a PowerPoint presentation consisting of maps
of the area being talked about. Drawing attention to slide 2, a
map of the Beaufort Sea provided by the Bureau of Ocean Energy
Management (BOEM), he said the different colored boxes denote
the activity. Green indicates the historic leases that the oil
companies have had in the past and blue indicates areas of high
petroleum potential. Red indicates federally restricted areas,
of which one is a subsistence area by Barrow and another a
subsistence area by Kaktovik. These were previously restricted
by the Bush Administration and every five years the restriction
goes forward; the Obama Administration has continued the same
restriction from 2012 to 2017. Yellow indicates active leases,
none of which are in the restricted areas. Moving to slide 3,
he noted that the leases shown in green around Barrow and
Kaktovik are the historic leases and said the oil companies
generally don't have an ongoing interest in those. The active
leases shown in yellow are the ones about which the sponsor is
most concerned. He said slides 4 and 5 provide a less cluttered
view of what the proposed area looks like that the Obama
Administration is moving forward with.
1:06:16 PM
MR. HUTCHISON brought attention to slide 6, stating the real
concern is in the Chukchi Sea, which has a lot more activity.
He said the blue color indicates the areas with high petroleum
potential. There are more active leases as can be seen by there
being a lot more areas depicted in yellow. The red line near
the coast on slide 6 is the 25-mile buffer zone. The only thing
existing in that 25-mile area are historic leases that are no
longer of interest to the producers. The pink and red areas
near Barrow indicate the subsistence area for Barrow in which
there are no active leases, so there is not really any
resistance to that portion of it. The key area in the middle,
the Hanna Shoal area, is indicated by the yellow circle. It has
been studied the previous five years. Within that yellow circle
are historic and active leases as well as a large area with high
petroleum potential. Turning to slide 8 he explained that this
area is important because Shell has three active leases that are
adjacent to the Hanna Shoal area. Repsol has seven leases
actually in the Hanna Shoal area itself and another five leases
in the adjacent area that deal with similar petroleum prospects.
The concern is that designating an area as [environmentally
sensitive] will decrease the ability to renew those leases
beyond 2022 and will increase the mitigation costs to the oil
producers. Mr. Hutchison said slide 9 shows further
clarification as to what some of the proposed area looks like.
Slide 10 indicates the withdrawn areas [located within the draft
proposed program area]: the 25-mile buffer area, the
subsistence area around Barrow, and the Hanna Shoal area, which
is the new component to all this.
1:09:30 PM
CO-CHAIR NAGEAK said his statement is, "Here we go again." He
continued:
It really upsets me that people who live there, most
of them ... have been working on this issue for years
and years and years. All along the coast working with
the whalers, working with the industry, working with
everybody and going through the issue of reliance on
our resources offshore and onshore. And here we go
again. We have all this potential, but it really
comes to us as Native people and all people who live
along the coast where we rely on renewable resources.
We also rely on nonrenewable resources for our tax
base and for our livelihoods. A lot of people work in
that area.... Without the oil industry we wouldn't be
who we are today.
CO-CHAIR NAGEAK noted that just a few weeks ago the President
began considering placing the 1002 Area [in the Arctic National
Wildlife Refuge] near where he was born into a Wilderness. When
oil was discovered it was found out that the United States of
America had to do land claims. While doing the land claims the
federal government also created [Native] corporations. He
continued:
What are corporations? Well, they're an instrument to
make money. And why did the government give us
corporations when we wanted tribes? Well, they gave
us corporations and they ... locked up the areas where
our resources are or our resources have been. Since
time immemorial our people used those resources....
So, here we go again. What are we to do when the
government of the United States in infinite wisdom
gave us an instrument to say ... "go enrich yourself
but in the meantime we'll lock up every piece of land,
every piece of water ... and you're not going to have
anything." That is exactly what it is right now. We
didn't ask for corporations. But then for the past
several years this has been happening after working
diligently for years and years and years working with
the industry, with the government, with everybody.
And so what are we to do? There is one federal agency
who's locking up everything ... for those of us who
depend on the resource and ... another agency who's
willing to work with us and finding ways to make sure
that everything is protected in that area where they
are going to open up or they have opened up areas for
oil and gas exploration. So we have two agencies ...
that have given us heartache and hope at the same
time. So what are we to do? What [are] a whole lot
of my families going to do in Kaktovik when they have
a resource right underneath their feet but they can't
use it?
1:14:39 PM
REPRESENTATIVE JOSEPHSON understood that in the announcement
referred to by the resolution, the President also authorized
some exploratory development in a very preliminary stage from
Virginia down to the South Carolina coast. He said as far as he
knows President Obama is the first to allow that. He asked
whether the sponsor thinks that these restrictions in the Arctic
are due to Shell's performance in 2012.
MR. HUTCHISON replied that his personal opinion is that from
[the President's] perspective it might be related to that, as
well as related to an overreaching philosophical decision as it
relates to climate change and environmentally sensitive areas.
1:16:04 PM
CO-CHAIR NAGEAK opened public testimony.
1:16:23 PM
KARA MORIARITY, President and CEO, Alaska Oil and Gas
Association (AOGA), Anchorage, Alaska, spoke in support of SJR
13. She said the Alaska Oil and Gas Association (AOGA) is the
professional trade association for the oil and gas industry in
Alaska and its members represent the majority of the producers,
explorers, refiners, marketing, and transportation activities in
the state. The association's members have been operating in the
Arctic for more than 40 years. Oil and gas development is the
backbone of Alaska's economy, and as the largest undeveloped
energy basin in the U.S. the Arctic Outer Continental Shelf
(OCS) is the next generation of energy security for the U.S.
The Arctic OCS holds enormous oil and gas resources, estimated
by the Department of Interior at approximately 27 billion
barrels of oil and 132 trillion cubic feet of natural gas. In
comparison, the Trans-Alaska Pipeline System (TAPS) has carried
more than 17 billion barrels in just over 30 years. So, TAPS
has played a critical link in the nation's energy security,
transporting crude oil from Alaska's North Slope to West Coast
markets. The OCS development in the Beaufort and Chukchi seas
could feed into TAPS and maintain its viability for many more
years to come. Oil and gas development in the Arctic OCS means
more jobs for Alaskans. Development of the Chukchi and Beaufort
seas is predicted to produce an annual average of 35,000 direct
and indirect jobs representing a total payroll of over $70
billion.
MS. MORIARITY noted that since 1971, 84 wells have been drilled
in the Arctic OCS, all without incident. Industry has worked
with communities to incorporate traditional knowledge in
decision making, establish Conflict Avoidance Agreements, and
impose seasonal drilling limitations. New regulations and
further research has further ensured that development and
environmental protection can co-exist. Three AOGA member
companies hold leases within the withdrawn areas or directly
adjacent to it. While the federal withdrawal language states
that "nothing in this withdrawal affects the rights under
existing leases in the withdrawn areas," there are still many
unknowns for the operators, such as the ability to renew active
leases or how the transport or building of infrastructure into a
pipeline would be affected. The prior four lease sales
scheduled in the Beaufort and Chukchi seas were included in the
Bureau of Ocean Energy Management's previous five-year leasing
plan, but were withdrawn and subsequently not held. It is
AOGA's fear that additional restrictions or delays will limit
the opportunities for development in the Arctic OCS.
MS. MORIARITY said that as the sea ice stays open longer and
other countries move forward with exploration and development in
their waters and transportation through the ice-free Northwest
Passage, Alaska's arctic seas could be left largely unattended.
With little infrastructure in place communities along Alaska's
north coast will be at the greatest risk with no ability to
respond. Development of the Arctic OCS for exploration and
development would bring that infrastructure to a very rural
onshore area and the industry's continued presence would provide
security and response capabilities should they be needed. She
said AOGA supports SJR 13 to maintain all of the proposed
leasing areas in the Beaufort and Chukchi seas and to resist
additional restrictions on leasing in the final program.
1:20:46 PM
CO-CHAIR NAGEAK closed public testimony after ascertaining no
one else wished to testify.
1:21:18 PM
REPRESENTATIVE TARR stated she has concerns about the
resolution. Four of the five areas withdrawn were previously
withdrawn so there has been a history under both Democratic and
Republican administrations to exclude those areas from leasing.
She understood from what she has read that the new area was
picked for its biological importance, the subsistence needs of
the people living nearby, and to ensure that the marine animals
and endangered whales swimming through those areas are protected
and will be there for future generations. She said she is
cautious because the revenue issue has not yet been resolved so
the state doesn't stand to gain much from this OCS development
and she would like to see this matter resolved before moving
forward.
1:22:44 PM
CO-CHAIR NAGEAK reiterated that this issue has been worked on
for a very long time and studies have been done. The North
Slope Borough has a diploma wildlife management and he was a
drafter for many years of that diploma. He has been in offshore
and onshore issues for more than half his life. He has watched
all of this happening. His first job right after high school in
1969 was in Prudhoe Bay, so he has been involved in oil issues
for a very long time and in working with the industry and
others. So it is upsetting when things like this happen. In
the late 1980s and early 1990s a look was taken at how the
offshore rigs would work and there was a rig right outside of
Barrow. This rig was put in the area where the Chukchi and
Beaufort seas meet, which is a very volatile area. In the
summer he has been near it many times while hunting. He shared
his experience of being right in front of Barrow while hunting
and seeing all kinds of animals when suddenly the ice began
coming in very fast. The community knows how that area is and
how dangerous it is and this has been told to everybody who
comes up to do work in that area. Discussions about what the
administration wants to do will be continued in his community as
well as in this committee
1:26:34 PM
REPRESENTATIVE JOSEPHSON stated he will not be objecting to the
resolution.
CO-CHAIR TALERICO offered his appreciation of Co-Chair Nageak's
input on this issue because it is rare for the committee to get
actual firsthand knowledge and experience from someone who
thoroughly knows the area.
1:27:17 PM
CO-CHAIR TALERICO moved to report CSSJR 13(RES) out of committee
with individual recommendations and the accompanying [zero]
fiscal note. There being no objection, CSSJR 13(RES) was
reported from the House Resources Standing Committee.