Legislature(2007 - 2008)BARNES 124
03/31/2008 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SJR17 | |
| SB229 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 17 | TELECONFERENCED | |
| += | SB 229 | TELECONFERENCED | |
| + | TELECONFERENCED |
SJR 17-OFFSHORE OIL & GAS REVENUE 1:36:19 PM CO-CHAIR JOHNSON announced that the first order of business would be SENATE JOINT RESOLUTION NO. 17, Urging the United States Congress to provide a means for consistently sharing, on an ongoing basis, revenue generated from oil and gas development on the outer continental shelf with all coastal energy-producing states to ensure that those states develop, support, and maintain necessary infrastructure and preserve environmental integrity. SENATOR BILL WIELECHOWSKI, Alaska State Legislature, sponsor of SJR 17, presented the following testimony: This resolution calls on Congress to provide Alaska and other coastal states with a fair share of revenue from oil and gas leasing and development in the Outer Continental Shelf [OCS]. As you know, [under] the Mineral Lands Leasing Act of 1920 ... the federal government shares with the states 50 percent of revenue generated from mineral production on federal lands within each state's boundaries. The shared mineral revenue is distributed to the states automatically, outside of any budget process. Unfortunately, there is no comparable authority for the federal government to automatically share revenue from oil and gas activities occurring six miles or more offshore with adjacent coastal states. For years coastal states have argued that they deserve a share of OCS revenues because they provide the infrastructure that supports offshore operations and bear the environmental risks of offshore development. On several occasions Congress has recognized this vital contribution and has created revenue sharing programs, most of which have been temporary or only extended to a handful of states. ... Under the most recent example the federal government agreed to give Alabama, Louisiana, Mississippi, and Texas 37.5 percent of revenue from oil and gas leasing and development in newly opened federal waters in the Gulf of Mexico. This act is expected to distribute more than $60 billion to those four states over the next twenty-five years. Alaska was excluded from this program despite the efforts of our congressional delegation. This resolution supports the position that all coastal states with adjacent OCS development should receive on a regular and ongoing basis a fair share of revenue from OCS activities as compensation and reward for their contribution to the nation's energy infrastructure. Since statehood oil and gas activities from Alaska's Outer Continental Shelf have generated almost $5 billion for the federal government. This does not include the $2.6 billion the federal government earned in the last Chukchi Sea sale. If the revenue sharing program, like the one that is currently in place in the Gulf of Mexico, had been in place back in February [2008] when the sale took place, Alaska would have stood to gain $975 million from the sale alone. And more leasing and development are likely to occur in the future as two- thirds of the nation's Outer Continental Shelf is off the coast of Alaska with as much as 55 billion barrels of technically recoverable oil and 280 trillion cubic feet of technically recoverable gas. The resolution has the support of Alaska's congressional delegation, the administration, and those coastal communities most affected by offshore oil and gas development and I would urge your support. 1:39:45 PM REPRESENTATIVE EDGMON understood that U.S. Senator Jeff Bingaman [Chair, Energy and Natural Resources Committee] does not support this revenue sharing. What are the prospects of revenue sharing actually happening, he asked. SENATOR WIELECHOWSKI related that U.S. Senator Ted Stevens is urging this resolution and thinks it is important. Senator Wielechowski said it is his understanding, as well, that Senator Bingaman is not supportive of any OCS revenue sharing, but that Senator Bingaman has also stated he would not oppose someone else trying to push the issue. Senator Wielechowski understood that U.S. Senator Max Baucus is interested in opening up this revenue sharing to other states, including Alaska. So, it is a challenge, but there are prospects of it happening. From the fundamental standpoint of fairness, there is really no fair reason why Alaska should not get a share of the revenue when four other states are receiving it. SENATOR WIELECHOWSKI, in further response to Representative Edgmon, explained that the 50 percent of revenue addressed by the first whereas in the bill [page 1, lines 6-8] is from mineral production on federal land within the state's boundaries. Within zero to three miles the states get a small amount of compensation, but past six miles the states get nothing. Because the vast majority of the Chukchi Sea sales were beyond six miles, Alaska got nothing. 1:42:15 PM REPRESENTATIVE WILSON asked how far offshore the programs go for those states that do receive the revenue sharing. SENATOR WIELECHOWSKI responded that in the Chukchi Sea some of the sales were sixty miles out, possibly more. He deferred to his staff person, Ms. Sydeman. MICHELLE SYDEMAN, Staff to Senator Bill Wielechowski, Alaska State Legislature, said she believes the revenue sharing programs go out to the 200 mile limit, which is the limit that defines the federal OCS. 1:43:05 PM REPRESENTATIVE SEATON inquired whether any portion of SJR 17 would apply to the extended jurisdiction included in [HJR 39] which urges the U.S. to ratify the Law of the Sea Treaty. MS. SYDEMAN replied she has 10 years of OCS discussions and she is not familiar with any OCS revenue sharing program that looks beyond the 200 mile limit. She said she imagines the Law of the Sea applies to those waters that are not within the jurisdiction of any nation. 1:44:10 PM KEVIN BANKS, Acting Director, Central Office, Division of Oil & Gas, stated that the [Palin] Administration supports such a resolution. It is only fair that Alaska receive the same kind of treatment as Texas, Louisiana, Mississippi, and Alabama, especially given the kinds of impacts that will fall on the rural Alaska communities adjacent to the OCS. The major industrialization of oil and gas development will have a huge impact on those communities. 1:45:14 PM REPRESENTATIVE SEATON asked whether there is any mechanism for looking at the differential benefit to the state should a gas line be built and there are bids from OCS or no revenue to the state that would displace gas bids that would be applicable from state or federal lands. MR. BANKS said the appropriate way to think about this is that the development for areas like the Beaufort Sea and Chukchi Sea is still fairly immature. So, the state would presumably move gas through a gas pipeline first. It is also a matter of the cost of development - the cheaper onshore gas would likely reach the pipeline before offshore gas. He said he is not sure the state needs to be concerned about displacement of state gas insofar as how OCS gas would line up with the state's. It involves a certain amount of guess work. If a very large project were to develop in the Chukchi Sea for gas, that would be self supporting and meet needs for gas into some gas pipeline onshore and, under current rules, Alaska would get no revenue from it. However, it would also string along a bunch of onshore projects that may, at the moment, be too small to reach the pipeline and from which the state would share in 50 percent of the revenue. In general, he said, OCS gas would help a gas pipeline project, but Representative Seaton is correct that the state would get a lot less revenue for it. 1:47:58 PM REPRESENTATIVE SEATON inquired whether there is anything that would prevent a producer owning both offshore and onshore leases and owning capacity in the gas line from substituting offshore gas, for which the state would get no royalty or production tax, for onshore gas. MR. BANKS answered no, there probably is not any mechanism at the Federal Energy Regulatory Commission (FERC) or the financing of the pipeline that would obligate a producer to produce its onshore gas prior to its offshore gas. 1:49:02 PM REPRESENTATIVE SEATON surmised that receiving a share of offshore revenues would provide a potential benefit to the state and be one more reason for going forward with the gas pipeline. The revenue sharing would at least eliminate the concern that the state would do all the work and not get any of the benefit. MR. BANKS said correct, it would level the playing field. 1:50:17 PM CO-CHAIR JOHNSON closed public testimony after ascertaining that no one else wished to testify. REPRESENTATIVE ROSES moved to report SJR 17 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SJR 17 was reported from the House Resources Standing Committee.
| Document Name | Date/Time | Subjects |
|---|