01/30/1997 01:07 PM House RES

 HJR 12 - LEASES IN NATL PETROLEUM RESERVE                                   
                                                                               
 Number 166                                                                    
                                                                               
 CO-CHAIRMAN OGAN announced the first order of business was House              
 Joint Resolution No. 12, urging the Secretary of the Interior to              
 conduct competitive oil and gas lease sales within the National               
 Petroleum Reserve in Alaska.  He called on Representative Green to            
 present HJR 12.                                                               
                                                                               
 Number 190                                                                    
                                                                               
 REPRESENTATIVE JOE GREEN, sponsor of HJR 12, referred to a map in             
 the committee packet that showed the National Petroleum Reserve -             
 Alaska (NPR-A) and the Arctic National Wildlife Refuge (ANWR).  He            
 said, "For familiarizing anybody who may not be aware, the Kuparuk            
 River, Prudhoe Bay, Milne Point, all those units that have been so            
 productive for so many years, and then on the west side of that               
 blow-up is the Colville River delta, and it is the Colville River             
 delta where the recent Alpine discovery that ARCO has been so               
 instrumental in developing will take place.  That main channel is             
 the eastern boundary of the ... Alaska National Petroleum Reserve,            
 and it is that area that we're ... trying to energize the federal             
 government to resume leasing, when it's just a river-width away               
 from known commercial production."                                            
                                                                               
 REPRESENTATIVE GREEN explained that area was set aside in 1923 as             
 a petroleum reserve.  "By anybody's definition of that, that means            
 something to be developed for petroleum," he said.  Representative            
 Green indicated he would outline the area's history and answer                
 geographical or technical questions.  A staff member would then               
 present the legislation.                                                      
                                                                               
 Number 312                                                                    
                                                                               
 REPRESENTATIVE GREEN advised that then-President Warren G. Harding,           
 by executive order in 1923, established Naval Petroleum Reserve No.           
 4, which contained approximately 37,000 square miles of land.                 
 Approximately the size of Indiana, it comprised about one-third of            
 the North Slope.  Representative Green said, "That later was                
 changed, and so that no one gets confused, in 1976 became the                 
 National Petroleum Reserve of Alaska, and I'll get to that in a               
 minute, but you may have heard either of those definitions, and               
 we're ... talking about the same area."                                       
                                                                               
 REPRESENTATIVE GREEN said as far back as the 1800s, trapping,                 
 whaling, hunting and bartering took place throughout coastal                  
 Alaska.  After the Civil War, when Secretary Seward was                       
 instrumental in its purchase, Alaska became a U.S. territory.  From           
 roughly 1900 to 1920, several U.S. Geological Survey reports were             
 done.  In 1901, Frank C. Schrader and W.J. Peters did a geologic              
 traverse in that area and in the Brooks Range; In 1903, Alfred                
 Brooks, for whom the Brooks Range was named, did similar work.                
                                                                               
 REPRESENTATIVE GREEN noted that oil seeps at Cape Simpson, not far            
 from what he termed "the sensitive environmental area" of Teshekpuk           
 Lake, were delineated and pictures taken in 1909.  In addition,             
 Ernest de K. Leffingwell, considered by some to be the "father of             
 geology in Alaska," made a comprehensive geological report in 1919.           
                                                                               
 REPRESENTATIVE GREEN explained that from 1923 to 1926, an active              
 U.S. Geological Survey worked the rivers and mountain ranges,                 
 trying to delineate what was contained within the petroleum                   
 reserve.  From 1926 to 1943, there was essentially no activity.  It           
 was considered too remote and too expensive to develop.  "But the             
 main thing was that during that period of time in the Lower 48,               
 there were many, many, many oil discoveries throughout the Lower              
 48, and we ... really had more oil than we could use," he stated.             
                                                                               
 Number 518                                                                    
                                                                               
 REPRESENTATIVE GREEN reported that in 1943, activity resumed for              
 the next couple of years because of World War II.  He referred to             
 a handout in the committee packet, accompanied by a tabulation of             
 wells by name and number.  He noted that between 1945 and 1952, 45            
 shallow-core tests and 36 test wells were drilled in that area and            
 said, "[D]uring that time, three oil provinces and three gas                  
 deposits were discovered, none of which were commercial.  So then             
 we were over the war, and it was again thought too far away, so in            
 1953 to '73, there was another period of inactivity."                         
                                                                               
 REPRESENTATIVE GREEN recalled the Arab embargo of 1973 and the long           
 gas lines in the Lower 48.  He said, "So between '74 and '82, there           
 was another activity that ended up ultimately with Husky Oil                  
 Company's becoming the contractor.  We drilled 21 more test wells             
 over the next seven years, and again, ... [were] not able to come             
 up with anything of a commercial nature.  1976, some of you may be            
 aware of the Naval Reserves Production Act, which in effect changed           
 the name of this to its current name.  And it provided for oil                
 sales from other naval petroleum reserves - Elk Hills was probably            
 the most notable - that had production and was actually being sold            
 commercially, then, rather than being kept for a naval reserve."              
                                                                               
 Number 637                                                                    
                                                                               
 REPRESENTATIVE GREEN continued:  "Unfortunately, in 1982 the                  
 program terminated and the operations were taken over by BLM; and             
 that's where we stand right now.  But in the GS studies, there were           
 some 11 trillion cubic feet of natural gas and at least six billion           
 barrels of oil estimated by the way they do their estimating for              
 the federal government.  Of that six billion barrels, three-fourths           
 of it lie, by their estimate, within the eastern one-fourth of the            
 NPR-A, which is the area of most interest to the State of Alaska,             
 obviously."                                                                   
                                                                               
 Number 687                                                                    
                                                                               
 REPRESENTATIVE GREEN continued:  "Then, of course, there was                  
 development progressively moving ... from Prudhoe Bay to Kuparuk              
 River to out into the delta, and unfortunately, the early                     
 development in the Colville delta was uneconomic as well.  And only           
 recently did ARCO find what has now become known as the `Alpine               
 discovery,' and [they] do plan to go ahead and develop that                   
 commercially.  There are environmental considerations being                   
 considered at the time.  And the development area, certainly the              
 subsurface is still proprietary, but the development area that they           
 propose abuts the river and consequently abuts the NPR-A.  And it's           
 because of that, and the fact that it would certainly seem to me              
 reasonable to develop this entire discovery, whatever it might be,            
 if it does go over or if there are ancillary fields that are on the           
 west side.  The best place to find oil is near an oil field, and              
 that seems reasonable."                                                       
                                                                               
 REPRESENTATIVE GREEN continued:  "And there is a pre-existing                 
 agreement that says that any oil discovered and produced ... from             
 NPR-A would be shared 50-50 with the State of Alaska and the                  
 federal government.  And my final statement, other than answering             
 questions, would be that I want to make perfectly clear that in no            
 way does this have any effect, or diminish in any way, our emphasis           
 on trying to get ANWR open.  They are completely separate entities.           
 It's just an additional thing that I think would be good for the              
 State of Alaska."  Representative Green turned the presentation               
 over to Jeff Logan.                                                           
                                                                               
 Number 790                                                                    
                                                                               
 JEFFREY A. LOGAN, Legislative Assistant to Representative Joe                 
 Green, stated he had little to add.  "I would only state what is              
 stated in the resolution, that the resolution simply asks the                 
 Secretary of the Interior to re-establish oil and gas lease sales             
 in the NPR-A," he said.  "We believe the legislature should urge              
 the Secretary [of the Interior] to do so, because it would be in              
 the best interests of the state for three reasons.  The economic              
 activity associated with a leasing program and the potential                  
 exploration and development would benefit Alaskans.  The potential            
 oil that might be found in NPR-A would flow through the TAPS                  
 pipeline, and we all know how important it is to keep the pipeline            
 open.  And, as Representative Green stated, the state receives 50             
 percent of the revenues from all sales, rentals, bonuses and                  
 royalties."                                                                   
                                                                               
 Number 854                                                                    
                                                                               
 REPRESENTATIVE RAMONA BARNES made a motion to move HJR 12 from the            
 committee with individual recommendations.                                    
                                                                               
 CO-CHAIRMAN OGAN noted that Representative Nicholia had joined the            
 meeting.  He asked if there was any discussion or objection to the            
 motion.  There being no objection, HJR 12 moved from the House                
 Resources Standing Committee with individual recommendations.                 
 HJR 12 - LEASES IN NATL PETROLEUM RESERVE                                    
                                                                              
 Number 1481                                                                   
                                                                               
 CO-CHAIRMAN OGAN announced the next order of business was House               
 Joint Resolution No. 12, urging the Secretary of the Interior to              
 conduct competitive oil and gas lease sales within the National               
 Petroleum Reserve in Alaska.  Co-Chairman Ogan had inadvertently              
 omitted taking public testimony on HJR 12 before it moved out of              
 committee.  He apologized to those who had signed up to testify and           
 asked if there were suggestions.                                              
                                                                               
 CO-CHAIRMAN HUDSON suggested that written testimony be elicited               
 from those who wanted to testify.  That testimony could then be               
 transmitted with HJR 12 to the next committee of referral.                    
                                                                               
 CO-CHAIRMAN OGAN agreed.  He again apologized and stated it had not           
 been his intention.  Co-Chairman Ogan turned the gavel back to Co-            
 Chairman Hudson for the next order of business.