Legislature(1997 - 1998)
02/05/1998 10:08 AM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 274 - OIL & GAS CONSERVATION COMMISSION Number 0056 CHAIRMAN HODGINS announced the committee would hear HB 274, "An Act relating to the qualifications of the members of the Alaska Oil and Gas Conservation Commission; and providing for an effective date." REPRESENTATIVE CON BUNDE made a motion to move HB 274 before the committee. CHAIRMAN HODGINS asked Representative Bunde if he was referring to the proposed CSHB 274. REPRESENTATIVE BUNDE replied yes, CSHB 274, 0-LS0998\H, 12/5/97. CHAIRMAN HODGINS asked Representative Green or his staff member Jeff Logan, to present the bill. JEFF LOGAN, Legislative Assistant to Representative Green, stated that Alaskans are blessed with resources on a world class scale of hydro-carbons, oil and gas. These resources are owned by the people of Alaska. He stated that there is a demand for these hydro-carbons, therefore Alaska has entered into agreements with the companies that produce the hydro-carbons to bring oil and gas to the surface and put it into the pipeline. He explained that the companies have sophisticated technology and processes to implement the activities on Alaska's behalf with Alaska's agreement. He stated that relationships entered into with the companies are beneficial to both parties. He quoted President Reagan to say. "Trust but verify." He stated that the legislature needs to verify what the companies are doing. He pointed out that the legislature is empowered by the people to manage and conserve the resources. The Alaska Oil and Gas Conservation Commission (AOGCC) has been empowered to oversee these duties. The professional qualifications of the people empowered on the AOGCC are important. The bill will address these qualifications. Number 0344 MR. LOGAN stated that up until now there has not been a need for this bill. He referred to the committee members' packets and stated they contained the history of the commission and appointed people. He explained that up until now the commission had always had a qualified petroleum engineer. The proposed committee substitute to HB 274 will clarify the qualifications needed to hold the petroleum engineer's position on the AOGCC. Number 0475 REPRESENTATIVE GREEN stated that he wanted to stress that since before statehood there has always been a registered petroleum engineer on the commission or on the commission's predecessors. Every governor until the present governor has seen fit to have a registered petroleum engineer in that position because it is in the statute. He stated that the Governor has sought to bring in a mechanical engineer to fill this position. He stated that there is an absolute need for someone well versed in hydro-carbon production, development and containment. He explained that the two prime functions of the AOGCC, albeit police power to force unitization for conservation, is the correlative right protection and the prevention of waste. Number 0596 REPRESENTATIVE GREEN asserted that a mechanical or civil engineers do not understand what correlative rights or prevention of rights in a sub-surface reservoir mean. Therefore, the completion techniques, the operations of the fields and maximum efficient rates are unknown to people who have not had to work with them. He stated that it is his intent to be sure that the Governor and his staff understand the importance of the technical expertise, by making the statute is so clear that it cannot be avoided. Number 0690 REPRESENTATIVE GREEN stated that the Governor's staff did not say why they had relieved the current holder of that position and his predecessor; as they were capable of holding the position under the two prior governors. He said, "But now, all of a sudden, this is a broadened political horizon position rather than a technical position." He asserted that the AOGCC is a technical commission and it should be maintained that way. He indicated that they have been dealing with the industry because the industry feels that by trying to stay technical, the field may have been narrowed. The industry would like to broaden the field so that there are qualified people without necessarily having to be registered in the state of Alaska. He stated that he has a set of guidelines from the industry to use, which the need for creates another committee substitute. He asked for a few days time in order to incorporate the guidelines into the committee substitute. He indicated that it would alleviate some of the comments made by Attorney General Robert Mintz. Number 0784 REPRESENTATIVE CON BUNDE stated that he is realizing that there are some serious differences between, mechanical, civil and petroleum engineers. Number 0825 REPRESENTATIVE NORMAN ROKEBERG asked Representative Green if he is a registered engineer in the state of Alaska. Number 0835 REPRESENTATIVE GREEN responded that he is not. He informed the committee that he is a registered engineer in two states but not in the state of Alaska. He stated that he would not qualify under the current version of the bill. Number 0843 REPRESENTATIVE ROKEBERG asked if he, at one time, served as the director of the Division of Oil and Gas. REPRESENTATIVE GREEN responded that he served as director of the Division of Minerals and Energy Management which was the forerunner of the current Oil and Gas Commission and the Bureau of Mines as they were combined at that time. Number 0874 REPRESENTATIVE ROKEBERG stated that he wanted to establish Representative Green's credentials for carrying the bill. He asked Representative Green if he cared to elaborate any more. Number 0885 REPRESENTATIVE GREEN stated that at one time he worked for what is now the AOGCC doing reservoir modeling. He stated that it was back in the late 70s when there was a concern of what might happen with the Prudhoe Bay gas cap. He explained that he did a three dimensional reservoir simulator model to determine various off takes of gas development modes. Number 0927 REPRESENTATIVE ROKEBERG stated that there are some comments in the fiscal note and a reference to the comments in a letter from the assistant attorney general, regarding salary levels. He asked if the existing AOGCC salary compensation level makes any distinctions between the three members in regards to compensation. REPRESENTATIVE GREEN responded that the chairman has a slightly higher compensation which would not necessarily be the petroleum engineer's compensation. REPRESENTATIVE ROKEBERG asked if there was a distinction based on the professional qualifications of the members. REPRESENTATIVE GREEN responded that there was not. He stated that prior to the current chairman, a registered petroleum engineer was always the chairman before but it was not a requirement. Number 0981 REPRESENTATIVE ROKEBERG stated that he had been perusing the Alaska statutes in regards to engineering. He pointed out that he did not see a distinction other than in the practice of engineering itself. He asked how, in the list of architects, engineers, land surveyors and landscape architects, a distinction is made between types of engineers. Number 1029 REPRESENTATIVE GREEN stated that in the registration process the examinations are significantly different. He stated that they all take an engineering training exam first, unless they already have the experience from another state, which states that the person understands basic engineering principles. The next test is a specific examination in the particular field that they are trying to register in. Number 1062 REPRESENTATIVE ROKEBERG stated that in the proposed committee substitute for HB 274 there are references on page 2 to the accreditation by the Engineering Accreditation Commission and the Accreditation Board for Engineering and Technology and he asked for an explanation. Number 0174 REPRESENTATIVE GREEN stated that it is a national accreditation board that says that certain schools meet the qualifications both with the number of Doctorate professors they have and the courses that they teach and require for a degree in that particular field. Number 1090 REPRESENTATIVE ROKEBERG asked if that means that anyone who has the academic background under this method of accreditation, has received education in that particular discipline within the field of engineering. REPRESENTATIVE GREEN stated that it would indicate that the school was accredited in that particular department and that person would have received a degree from them. He clarified that the accreditation goes to the college or the university rather than the individual. A graduate meets the requirement of the accredited school. Number 1138 REPRESENTATIVE ROKEBERG informed the committee that there is no definition in Alaska Statutes on petroleum engineering, only on engineering generically and asked if that is correct. REPRESENTATIVE GREEN replied that is correct. REPRESENTATIVE ROKEBERG stated that this bill would take care of that by defining what a petroleum engineer is. Number 1165 REPRESENTATIVE GREEN stated that this version of the bill intends to state that an engineer would have to be proficient in a litany of things to be qualified for the job. Number 1178 REPRESENTATIVE ROKEBERG referred to the issue on incumbency and how it would work. He asked if he was going to address that in the committee substitute and if it would have any impact on the existing incumbency. REPRESENTATIVE GREEN responded that it should not have an impact on the existing incumbency with one respect, those who have been accepted by the legislature. Number 1222 REPRESENTATIVE ROKEBERG asked if there has been any legal action taken in regards to the disagreement between the branches of government. Number 1237 REPRESENTATIVE GREEN responded that there has not been any legal action taken between the two branches of government and there has not been any action taken against the state for not fulfilling its obligation under statute. Number 1253 REPRESENTATIVE ROKEBERG asked what happens. Number 1260 REPRESENTATIVE GREEN replied what would continue to happen because of the propensity of the Governor to continue to nominate people who are unqualified along the legislature's non-confirmation of those appointments; would result in a two commissioner membership. He stated that it would be a bad situation because there would not be a deciding vote. In effect the commission would be in limbo and should there be a disaster the state could be vulnerable. He stated that he is trying to fix this situation with this bill. Number 1319 CHAIRMAN HODGINS referred to the last year's meeting on confirmations where the current person was confirmed. He stated that it was his understanding that they confirmed him as being qualified to the seat that the legislature appointed him to. He explained that he understood that it is the Governor's prerogative to say which seat was filled but it was made clear at the hearing that he was to fill the at-large seat. He stated that he was qualified for this seat and that he wanted to correct Representative Green on that point. Number 1371 REPRESENTATIVE GREEN stated that he thought he corrected himself in that the legislature confirmed the non-technical seat and not the engineering seat. Number 1383 REPRESENTATIVE SCOTT OGAN stated that he is supportive of the proposed committee substitute to HB 274, as he shares the same concerns as Representative Green. The AOGCC is one of the most important commissions as they are the policemen of the oil fields. He asserted that they need to have expertise. He explained that during the confirmation hearings, he asked the person presently in the technical seat of the commission if he would characterize his education and background to be of a petroleum engineer. Representative Ogan asked Representative Green if he remembered what his response was. Number 1428 REPRESENTATIVE GREEN stated that in essence the response was no, he did not consider himself qualified. Number 1440 CHAIRMAN HODGINS stated that he would like to stick to the bill. He asked Representative Green if the committee could expect another committee substitute and stated that the committee could then hear this bill next week. Number 1465 REPRESENTATIVE OGAN stated that with all due respect to the gentleman in question he thought it was relevant to bring it up because that is the issue. He asked if the bill has a House Resources Standing Committee referral. CHAIRMAN HODGINS responded that it did. Number 1509 REPRESENTATIVE ROKEBERG asked what areas the committee substitute is going to be looking at. Number 1575 REPRESENTATIVE GREEN replied that it would modify the stringent requirements of being a registered petroleum engineer in the state of Alaska. He stated that by requiring there to be a registered engineer there then would be no question of the requirements. The committee substitute would require that the person be qualified to perform subsurface work and be a graduate engineer of an accredited college. He informed the committee that the person could be a mechanical or chemical engineer by education with ten years of work experience in subsurface activities, he would qualify. The committee substitute will increase the prior work experience from five to ten years. Number 1595 REPRESENTATIVE ROKEBERG referred to the issue of the talent pool salary level and asked if that was going to be addressed in the committee substitute. Number 1617 REPRESENTATIVE GREEN stated that will fall out because the pool will be expanded, as there no longer would be the requirement to be a petroleum engineer in the state of Alaska. He stated that is what the attorney general was complaining about, as there are too few of petroleum engineers in the state. REPRESENTATIVE ROKEBERG stated that because the expiration of the chairman's term is coming up, the geology seat will be vacant, so there could be the possibility that the commission may be in a position of not having a person with any subsurface petroleum knowledge. Number 1663 REPRESENTATIVE GREEN stated that is absolutely true. Number 1680 CATHERINE REARDON, Director, Occupational Licensing, Department of Commerce and Economic Development, stated that she would like to talk about the licensing of engineers. She stated that the division licenses engineers in conjunction with the Board of Registration of Architects, Engineers and Land Surveyors. She referred to Assistant Attorney General Mintz's memorandum from the Department of Law. She stated that there are 71 licensed petroleum engineers of whom, 35 have Alaska mailing addresses and 25 of those have a B.S. or M.S. in petroleum engineering from an accredited school. She continued that by law the appointees are required to be registered voters in Alaska. If the pool was to be broadened the non-residents would have to establish residency for thirty days and register to vote in order to be appointed. She pointed out that Alaskan hire has been a concern to Alaskans. Number 1789 MS. REARDON stated that the bill requires five years professional experience. She indicated that she was not sure if that meant experience after having obtained a petroleum engineering license or that they might qualify for the professional experience prior to obtaining the license. She explained that if it meant five years of having held a petroleum engineer's license, of the 25 Alaska licenses only nine have held the license for five years or more. She added that it may be that the others had held a license in another state working in Alaska based on their credentials and therefore would have the five years of holding a petroleum engineer's license. Number 1831 MS. REARDON referred to Representative Rokeberg's question of where the petroleum engineer qualifications were set out because they are not in statute. She informed him that they are in the regulations and the bill does refer to being qualified by statutory regulations. She stated that in order to be an Alaska licensed petroleum engineer, in addition, to passing the petroleum engineer examine, the person has to have a responsible charge of experience working under a licensed petroleum engineer. Number 1863 REPRESENTATIVE ROKEBERG asked for what period of time is the person required to work under the responsible charge supervision. MS. REARDON replied that she thought it is for two years but would get back to the committee on that. Number 1879 REPRESENTATIVE ROKEBERG asked if she thought the expansion of the hiring pool would eliminate some of her concerns. Number 1895 MS. REARDON stated that it sounds like one would not have to specifically have a petroleum's engineer's license specifically but one could have several other specialities of engineering licenses along with petroleum work experience. She declared that she would not be able to say how many of Alaska's other types of engineers would have that type of experience. Number 1905 REPRESENTATIVE ROKEBERG asked if she would be willing to work with the bill sponsors on the area of work experience. Number 1923 MS. REARDON stated that she would be happy to look in the files about the types of experience that people have had. Number 1964 CHAIRMAN HODGINS stated that it was his intent to hold the proposed committee substitute on HB 274 until the next meeting in order to look at the new committee substitute.
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