Legislature(2003 - 2004)
05/19/2003 04:24 PM House FIN
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* first hearing in first committee of referral
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CS FOR SENATE BILL NO. 185(FIN)
"An Act providing for a reduction of royalty on certain
oil produced from Cook Inlet submerged land, and for a
credit for certain exploration expenses against oil and
gas properties production taxes on oil and gas produced
from a lease or property in the state."
Representative Berkowitz expressed concern about moving a
bill of this magnitude without having the opportunity to
fine-tune its programs. He observed that incentives were
being made available without adequate knowledge of the level
of exploration throughout the state. He raised questions
about access to all producers. He questioned whether ten
years' hold on data was too much, or whether two years might
encourage competition.
Representative Berkowitz MOVED to ADOPT Amendment #1, by
Representative Berkowitz and Representative Kerttula:
REPORT TO THE LEGISLATURE. On or before the first day
of the Second Regular Session of the Twenty-Third
Alaska State Legislature, the commissioner of natural
resources shall prepare a report to the legislature.
The report must include a discussion
(1) Specific incentives that could be used to spur
oil and gas exploration;
(2) A comprehensive plan to lower pipeline tariffs
for independent oil producers;
(3) A comprehensive plan for reasonably priced
access to facilities and infrastructure;
(4) An informational study on the higher cost of
exploration and development in the state and plans
to mitigate that higher cost; and
(5) The potential costs and benefits inherent to
each incentive plan.
Co-Chair Williams OBJECTED.
In response to a question by Co-Chair Harris, Representative
Berkowitz stated that the Department had been apprised of
the changes proposed by the amendment. He pointed out that
the amendment requires a comprehensive report from the
Department of Natural Resources regarding oil exploration.
He maintained that the areas contained in the amendment
needed further study.
Representative Whitaker asked that his name be added to the
amendment.
STEVE PORTER, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
stated that the report indicated by the amendment was more
comprehensive than anticipated. He expressed concern
regarding the words "comprehensive plan" in regards to the
level of effort required. He observed that additional
personnel would be needed if the level of detail required
were great.
Representative Berkowitz MOVED to AMEND the Amendment to
delete the word "comprehensive" from lines 11 and 13. Co-
Chair Williams OBJECTED for purpose of further discussion.
Representative Hawker noted that "plan" indicated intent to
lower pipeline tariffs and implied that current practices
needed to be changed. He stated that he would be more
comfortable with an amendment that discussed the
"feasibility" or "reasonability" of lower pipeline tariffs.
Mr. Porter suggested the wording:
(2) An analysis of the impact of pipeline tariffs on
independent oil producers;
Representative Berkowitz WITHDREW his MOTION and MOVED
Amendment #1.a, which would change "comprehensive plan" to
"an analysis".
Vice-Chair Meyer OBJECTED. He asked the definition of
independent oil producers. He noted that the title of the
bill indicated Cook Inlet Oil and asked if this reflected a
concern for access to the pipeline in the Cook Inlet or
TAPS. He also asked whether facilities referred to those in
Cook Inlet or all facilities. He suggested that a clear
definition of independent oil might be available. Mr.
Porter indicated that the word "independent" might not be a
definitive statement. He asked whether this was focused on
the North Slope.
Representative Kerttula stated that the focus was mainly for
non-carriers in the North Slope. Mr. Porter indicated that
removing "independent oil producers" would be more
inclusive. Rep. Meyer concurred that this might be
preferable since the bill was focused on the North Slope.
Representative Berkowitz noted that that the cost of
exploration expenses might be anywhere in the state.
Representative Whitaker maintained that the intent of the
report is to find out what is probable and possible.
Representative Hawker clarified lines 4 and 5. He suggested
that (4) be changed to read "an analysis of the costs of
exploration and development in the state and opportunities
or approaches to mitigate that higher cost".
Representative Whitaker observed that the report need not be
overly comprehensive. Representative Hawker concurred that
his suggested was to focus on viable and immediate
opportunities.
Representative Hawker suggested that (5) be finished to
read: "inherent to each option."
Amendment 1A was Amended to read and MOVED:
REPORT TO THE LEGISLATURE. On or before the first day
of the Second Regular Session of the Twenty-Third
Alaska State Legislature, the commissioner of natural
resources shall prepare a report to the legislature.
The report must include a discussion
(1) Of specific incentives that could be used to
spur oil and gas exploration;
(2) And an analysis of the impact of pipeline
tariffs on independent oil producers;
(3) And an analysis of the costs of access to
facilities and infrastructure;
(4) And an analysis of the costs of exploration
and development in the state and opportunities or
approaches to mitigate that higher cost; and
(5) Of the potential costs and benefits inherent
to each option.
There being NO OBJECTION, Amendment 1.A was ADOPTED as
Amended.
Mr. Porter clarified that the Department would not be able
to immediately analyze the impacts of the bill.
Representative Berkowitz emphasized that this was his
concern with the bill. Mr. Porter clarified that they would
not be able to analyze the effectiveness of the bill until
the following year.
Representative Berkowitz pointed out that his intent was
that next session, when an oil and gas bill was introduced,
the research would give adequate background information.
Representative Foster MOVED to report HCSSB 185 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTIONS, it was
so ordered.
HCSSB 185 (FIN) was REPORTED out of Committee with a
recommendation and
CSSB 185(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with two previously published fiscal
impact notes: DNR #2 and REV #3.
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