04/30/2001 02:04 PM House FIN

SENATE BILL NO. 143                                                                                                           
                                                                                                                                
     "An Act authorizing 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  for activities  relating  to the  processing of  an                                                                   
     application  under  that   Act;  and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
DARWIN PETERSON, STAFF, SENATOR  JOHN TORGERSON, testified in                                                                   
support  of the  legislation  on behalf  of  the sponsor.  He                                                                   
observed that  the legislation  was introduced to  facilitate                                                                   
the state's  effort to  issue right-of-way  leases for  a gas                                                                   
pipeline project.  Any sponsor of the pipeline  project would                                                                   
have to obtain  a right-of-way lease across  state lines. The                                                                   
legislation  would authorize  the state  to be reimbursed  by                                                                   
work performed by the State Pipeline  Coordinator's Office in                                                                   
processing  an  application  for a  right-of-way  lease.  The                                                                   
current  law allows  the collection  of a  fee for  submitted                                                                   
applications. The  legislation would allow  the reimbursement                                                                   
for  fees before  an  application  has actually  been  filed.                                                                   
There  must  be  agreement  by   the  pre-applicant  and  the                                                                   
department.  The state  incurs  a financial  burden from  the                                                                   
preliminary  activities  of  processing   of  a  right-of-way                                                                   
application before  it is issued.  The legislation  lifts the                                                                   
burden  from  the  state  and   facilitates  the  process  by                                                                   
allowing the applicant to pay  in advance for what they would                                                                   
have to pay for anyway.                                                                                                         
                                                                                                                                
Co-Chair  Williams  asked the  type  of  work that  would  be                                                                   
required. Mr. Peterson  explained that the work  would be for                                                                   
technical  assistance and  consultation. He  referred to  the                                                                   
fiscal note by the Department  of Natural Resources and noted                                                                   
that costs include  work to establish a Gas  Pipeline Office,                                                                   
provide   technical  assistance   to  proponents,   reimburse                                                                   
efforts   related  to   permit   process  streamlining,   and                                                                   
consultation   with   the  state's   federal   and   Canadian                                                                   
counterparts.                                                                                                                   
                                                                                                                                
BILL  BRITT,   STATE  PIPELINE  COORDINATOR,   DEPARTMENT  OF                                                                   
NATURAL RESOURCES,  ANCHORAGE, testified via  teleconference.                                                                   
He  observed that  there  are a  variety  of activities  that                                                                   
occur  before the  permit application  is  received; all  are                                                                   
directed toward receiving a complete  permit application. The                                                                   
better the  application the faster  the processing. It  is in                                                                   
the interest of  all parties to resolve questions  before the                                                                   
application is received.                                                                                                        
                                                                                                                                
TAPE HFC 01 - 108, Side A                                                                                                     
                                                                                                                                
Co-Chair Williams asked what would  happen if the application                                                                   
were  not granted.  Mr.  Peterson  clarified  that the  state                                                                   
would   keep  any   money  given   to   the  State   Pipeline                                                                   
Coordinator's Office for pre-application work.                                                                                  
                                                                                                                                
In response  to a question  by Representative  Lancaster, Mr.                                                                   
Peterson observed that the practice  has already occurred and                                                                   
is supported by industry.                                                                                                       
                                                                                                                                
Representative  Whitaker  asked   if  existing  gas  pipeline                                                                   
permits and  leases are in place.  Mr. Britt stated  that the                                                                   
pre-application agreements  have been related to  all the oil                                                                   
and gas  lines on the  North Slope in the  last 5 -  7 years.                                                                   
He observed that there is one  conditional state right-of-way                                                                   
in place,  which is held by  Yukon Pacific Lines for  the tag                                                                   
lines.  He clarified that  Foothills Pipe  Lines Alaska  Inc.                                                                   
went through  an extensive amount  of processing but  has not                                                                   
completed the process or been  given a state right-of-way for                                                                   
the alignment.  They completed  the federal process  and were                                                                   
granted  a federal  right-of-way.  The state  would  probably                                                                   
enter  into   a  pre-application   agreement  with   the  gas                                                                   
producer's consortium  and Foothills  Pipe Lines  Alaska Inc.                                                                   
He did  not anticipate  an agreement  with the Yukon  Pacific                                                                   
Lines.                                                                                                                          
                                                                                                                                
Representative  Lancaster  MOVED  to  report SB  143  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
SB  143  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and with a  new fiscal  impact note  from the                                                                   
Department of Natural Resources.