Legislature(2013 - 2014)BARNES 124

03/15/2013 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 9 MINING/PROCESSING OF RARE EARTH ELEMENTS TELECONFERENCED
<Bill Hearing Postponed>
*+ HB 129 OIL & GAS EXPLORATION/DEVELOPMENT AREAS TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 158 DNR HUNTING CONCESSIONS TELECONFERENCED
Heard & Held
         HB 129-OIL & GAS EXPLORATION/DEVELOPMENT AREAS                                                                     
                                                                                                                                
1:07:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  announced that the  first order of  business would                                                              
be HOUSE BILL  NO. 129, "An Act  relating to approval for  oil and                                                              
gas  or gas  only exploration  and development  in a  geographical                                                              
area; and providing for an effective date."                                                                                     
                                                                                                                                
1:08:04 PM                                                                                                                    
                                                                                                                                
DANIEL   S.   SULLIVAN,  Commissioner,   Department   of   Natural                                                              
Resources (DNR), offered  to discuss how HB 129 will  fit into the                                                              
broader strategic goals  of the state.  He has  had an opportunity                                                              
to pre-brief a number  of members on the bill,  but he understands                                                              
some questions remain.                                                                                                          
                                                                                                                                
COMMISSIONER  SULLIVAN  recalled  from previous  discussions  that                                                              
the  state has  a comprehensive  strategy  focused  on the  Trans-                                                              
Alaska Pipeline System  (TAPS) throughput issue and  its desire to                                                              
reverse  the TAPS decline.   The  DNR's strategy  is comprised  of                                                              
four  key parts:   First,  the DNR  wants to  enhance the  state's                                                              
global competitiveness  and investment climate, the  keystone part                                                              
being  tax reform.   Second,  the  DNR wants  to promote  Alaska's                                                              
resources   and    create   positive   investment    opportunities                                                              
throughout  the  U.S.  and  world.     Third,  the  DNR  wants  to                                                              
facilitate  and   incentivize  the  next  phase   of  North  Slope                                                              
development, whether  it will consist of large  fields, shale oil,                                                              
unconventionals,  small   pools,  and  big  or   small  companies.                                                              
Finally, the  DNR wants to ensure  that the permitting  process is                                                              
structured, efficient,  timely, and  provides certainty,  which is                                                              
the main  focus of  HB 129, in  particular, as  it relates  to oil                                                              
and gas related development.                                                                                                    
                                                                                                                                
1:11:02 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN advised  that  part of  the DNR's  strategy                                                              
has  been  to  contact  potential  investors,  current  investors,                                                              
including  big and  small companies.    Certainly, the  department                                                              
has  heard during  the  aforementioned  discussion  about the  tax                                                              
issue  and competitiveness.    However,  the issue  of  permitting                                                              
reform and modernization  as it relates to efficient,  timely, and                                                              
certain  permitting  has  also  often   been  raised.    In  fact,                                                              
recently senior  Repsol officials  focused not only  on meaningful                                                              
tax  reform, but  also  expressed  desire for  such  a system  for                                                              
permitting.    This  bill  and  the  broader  permitting  strategy                                                              
relate  to  many   other  things  with  respect   to  the  state's                                                              
interest,    whether    it's    the     TAPS    throughput,    gas                                                              
commercialization  of the  North  Slope, Cook  Inlet  oil and  gas                                                              
development, or strategic and critical minerals.                                                                                
                                                                                                                                
1:12:24 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN said  HB 129 focuses  more specifically  on                                                              
oil and  gas activities.   The DNR  has found everyone  interested                                                              
in a achieving  a competitive environment, which  is important not                                                              
only with  respect to  fiscal issues,  but also  to extend  beyond                                                              
them.   Whether  it  is  federal delays  or  the large  number  of                                                              
lawsuits, Alaska's reputation  is not what is desired  in terms of                                                              
its permitting  system.   The department  thinks that changes  are                                                              
necessary;  however,  it's also  important  to emphasize  the  DNR                                                              
believes desirable  changes can happen without lessening  the very                                                              
high  standards critical  for the  environment  and still  achieve                                                              
responsible resource development throughout the state.                                                                          
                                                                                                                                
COMMISSIONER SULLIVAN  offered his belief HB 129  can achieve this                                                              
while still  maintaining the importance  of public input  on these                                                              
issues.   This bill  maintains that  it is particularly  important                                                              
to receive input  at the beginning of exploration  and development                                                              
phases in  geographical areas.   This bill would  allow deliberate                                                              
decision-making and  bring certainty into the DNR's  system.  This                                                              
would  benefit  everyone,  including  Alaskans,  the  public,  and                                                              
investors, which is primarily what this bill intends to do.                                                                     
                                                                                                                                
1:14:54 PM                                                                                                                    
                                                                                                                                
WILLIAM C.  BARRON, Director,  Division of  Oil & Gas,  Department                                                              
of  Natural Resources  (DOR), stated  that several  years ago  the                                                              
division  began  reviewing general  aspects  of  its oil  and  gas                                                              
operations.   The division  continually attempts  to reach  out to                                                              
citizens of the  state as well as industry and  discovered parties                                                              
have an  underpinning desire  to have  a broader understanding  of                                                              
all  activities  that  might be  associated  with  exploration  or                                                              
development  in an area  rather than  to consider  one project  or                                                              
one plan  at a  time.   In short, communities  want to  understand                                                              
holistically what is going to happen throughout an area.                                                                        
                                                                                                                                
MR.  BARRON  said  the DNR's  challenge  in  permitting  has  been                                                              
similar to ones  encountered during areawide lease  sale planning.                                                              
In  that  regard,   communities  and  industry  consider   how  to                                                              
progress  the lease  sale, determine  what areas  to include,  and                                                              
extend  that  process  when  it   considers  the  exploration  and                                                              
development phases.   However, this not a question  of whether oil                                                              
and gas activity  will occur, but rather is an  effort to identify                                                              
what kind  of activity  and how that  activity will be  performed.                                                              
In  fact, once  the lease  sale  occurs, the  state  has made  the                                                              
decision that it's  in the best interest of the  state to proceed.                                                              
Thus, the  next logical progression  is to determine the  level of                                                              
activity and how it will be performed.                                                                                          
                                                                                                                                
1:17:20 PM                                                                                                                    
                                                                                                                                
WENDY  WOOLF,  Petroleum Land  Manager,  Division  of Oil  &  Gas,                                                              
Department of  Natural Resources  (DNR), stated she  would discuss                                                              
how the  division currently  approves exploration and  development                                                              
activities on state  oil and gas leases.  Next,  she would explain                                                              
how HB  129 will  help the  department to  streamline its  process                                                              
for approving exploration and development activities.                                                                           
                                                                                                                                
MS. WOOLF  turned to slide 2  entitled, "Areawide Oil &  Gas Lease                                                              
Sales."    She began  with  a  review of  the  division's  current                                                              
system for  leasing and permitting,  such that the DNR  offers oil                                                              
and gas  leases in five geographical  areas called  areawide lease                                                              
sales, including the  North Slope, the North Slope  Foothills, the                                                              
Beaufort Sea, Cook Inlet, and the Alaska Peninsula.                                                                             
                                                                                                                                
1:18:07 PM                                                                                                                    
                                                                                                                                
MS. WOOLF said  HB 129 takes the statutory requirement  to provide                                                              
notice at  the beginning of each  phase of a multi-phased  project                                                              
and allows  the department to review  the phase across  the entire                                                              
geographical  area  rather  than  to  conduct  finite  reviews  on                                                              
individual projects  [slide 3].   In this instance, it  relates to                                                              
oil  and gas  development,  in  general,  and the  phases  include                                                              
exploration,  development,   and  transportation.     The  initial                                                              
leasing phase occurs  with the decision to offer  leases through a                                                              
public  process, which  is the  oil  and gas  lease sale  process.                                                              
She identified  the decision the  department reaches at  that time                                                              
as the  best interest  finding (BIF).   Again,  at this  stage the                                                              
DNR defines  how oil and gas  development will occur,  not whether                                                              
it will occur.   The bill will allow the DNR to  examine a broader                                                              
geographical  area when  evaluating  how that  development  should                                                              
occur.                                                                                                                          
                                                                                                                                
MS. WOOLF  explained  how the process  would change  under  HB 129                                                              
[slide 4]The bill would allow  the DNR to authorize  oil and gas                                                             
exploration  and  development  activities  holistically  across  a                                                              
geographical  area.     The  process  would  still   preserve  the                                                              
requirement  for  public  participation  at the  beginning  of  an                                                              
exploration or development  phase, which she deemed  as being very                                                              
important.  The  public benefits since people  can comprehensively                                                              
evaluate oil  and gas  activities within  a geographical  area and                                                              
have  an opportunity  for input  at  the beginning  of the  lease,                                                              
before the  development phase happens.   In reality, this  bill is                                                              
really  about  planning  at  the onset,  which  is  something  the                                                              
public has  requested.  Similarly,  the industry  benefits because                                                              
it will know at  the outset the parameters of the  project so they                                                              
can  submit plans  accordingly, which  gives industry  predictable                                                              
results.                                                                                                                        
                                                                                                                                
1:20:21 PM                                                                                                                    
                                                                                                                                
MS.  WOOLF next  offered to  step through  the oil  and gas  lease                                                              
sale process [slide  5].  The first step in the  proposed areawide                                                              
oil and  gas lease sale  is to provide  a broad public  notice and                                                              
opportunity  to  comment.   The  DNR initially  evaluates  certain                                                              
statutory  criteria  and  develops mitigation  measures  for  each                                                              
lease.  The oil  and gas director issues a final  finding which is                                                              
valid for up to  10 years.  However, the final  finding requires a                                                              
general -  not site  specific - public  notice and an  opportunity                                                              
to  comment  prior  to  the  exploration  phase,  the  development                                                              
phase, and the transportation or pipeline phase.                                                                                
                                                                                                                                
MS.  WOOLF stated  that the  best  interest finding  (BIF) is  the                                                              
leasing  phase,   which  defines  the  oil  and   gas  exploration                                                              
allowed.    Additionally,  subsequent  notices  are  held  at  the                                                              
beginning of each phase, as required by statute.                                                                                
                                                                                                                                
1:21:39 PM                                                                                                                    
                                                                                                                                
MS. WOOLF  reviewed the life  of an oil  and gas lease  [slide 6].                                                              
After the final finding  by the director is made   the oil and gas                                                              
lease is  issued.  Initially, an  operator would submit  the first                                                              
plan of operation,  for example, for a seismic  operation spanning                                                              
several  leases, with  an opportunity  to comment.   The DNR  will                                                              
then issue  an approval of the  plan of operation, subject  to any                                                              
special stipulations.   Next, once  the seismic work  is finished,                                                              
the operator  would submit the next  plan of operation,  perhaps a                                                              
few  years  later, for  an  exploration  well.    Such a  plan  of                                                              
operation  might consist of  an ice  road with  an ice  pad, which                                                              
would require a  public notice and comment period.   Subsequently,                                                              
the DNR would approve the plan of operation for the first well.                                                                 
                                                                                                                                
MS. WOOLF said if  the operator was successful with  the well, the                                                              
operator might  present a plan for  a second well within  the same                                                              
lease.   The DNR would  issue a public  notice and hold  a comment                                                              
period  prior  to   approving  the  plan  of  operation   for  the                                                              
exploration  well.     If  the  operator  is   successful  with  a                                                              
discovery,  the  lessee would  formulate  a development  plan  and                                                              
initially submit a  conceptual development plan to  DNR to outline                                                              
how  the  lease   will  be  developed,  followed   by  an  initial                                                              
development plan of operation for the first pad.                                                                                
                                                                                                                                
MS.  WOOLF highlighted  that once  again,  the DNR  would issue  a                                                              
public notice  and would hold a  comment period for  the beginning                                                              
of the  development phase.   If the operator  needs to  modify the                                                              
plan after  this phase  is approved, the  operator would  submit a                                                              
modified  development  plan,  which would  require  an  additional                                                              
public notice and comment period.                                                                                               
                                                                                                                                
MS. WOOLF  said that  finally, once  the operator  is ready  for a                                                              
pipeline  that  the   operator  must  come  in   with  a  separate                                                              
application  for  the  pipeline.    Under  HB  129,  the  pipeline                                                              
process  will   not  change   since  pipeline  applications   will                                                              
continue to  be processed  for common carriers  under AS  38.35 or                                                              
for an easement under AS 38.05.850.                                                                                             
                                                                                                                                
1:24:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether  she has been  outlining the                                                              
current lease process.                                                                                                          
                                                                                                                                
MS. WOOLF  confirmed the aforementioned  procedure is  the current                                                              
process.                                                                                                                        
                                                                                                                                
1:24:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  asked the  presenter to  point out  the                                                              
steps on the slide as she proceeds.                                                                                             
                                                                                                                                
MS.  WOOLF agreed  to  do so.   She  identified  she is  currently                                                              
covering year 8, slide 6.                                                                                                       
                                                                                                                                
1:25:00 PM                                                                                                                    
                                                                                                                                
MS.  WOOLF   said  in  the   event  an  operator   had  additional                                                              
development plans  or need enhanced recovery that  once again, the                                                              
operator would be  required to submit a plan of  development, with                                                              
a plan  of operation  for the new  pad and the  DNR would  issue a                                                              
public  notice and  comment period  prior to  issuing a  decision.                                                              
Even  though this  process still  pertains to  the same  operator,                                                              
the  same lease,  and  the same  reservoir  being developed,  each                                                              
piece  will require  separate public  noticing, which  is how  the                                                              
DNR has been implementing leases.                                                                                               
                                                                                                                                
MS.  WOOLF,  in  the  even  an  adjacent   lease  is  issued,  the                                                              
aforementioned  process would  begin again,  with public  noticing                                                              
necessary  for  additional  exploration  wells  and  the  plan  of                                                              
development,  even  if  the  operation   will  tie  into  existing                                                              
facilities.   However,  the  transportation  process is  performed                                                              
separately once the pipeline is constructed.                                                                                    
                                                                                                                                
1:26:13 PM                                                                                                                    
                                                                                                                                
MS. WOOLF  explained changes  to the lease  process under  HB 129.                                                              
Primarily  HB  129  will  allow  an [oil  and  gas  lease]  to  be                                                              
evaluated  over  a  broader  geographical  area [slide  7].    She                                                              
related a  scenario, in which the  geographical area on  the North                                                              
Slope  might be  defined as  the Western  North Slope.   In  fact,                                                              
this  area has  been extensively  developed and  is separate  from                                                              
the  North Slope  parcels that  are not  as well  developed.   She                                                              
pointed   out  potential   geographical   areas  for   exploration                                                              
activities   on   the   slide.      Specifically,   the   proposed                                                              
geographical  areas  would  consist  of  broader  areas,  but  the                                                              
overall  area  would  be  smaller than  the  areawide  lease  sale                                                              
boundaries.                                                                                                                     
                                                                                                                                
MS.  WOOLF  explained that  at  the  beginning of  an  exploration                                                              
phase, the DNR  would provide a public notice  with an opportunity                                                              
to comment.   At this  time, the public  will be able  to evaluate                                                              
where exploration  should occur in  the broader area  and identify                                                              
any  specific concerns.    For example,  on  the  North Slope  the                                                              
activities  would include  such  things as  ice  roads, ice  pads,                                                              
portable drilling  equipment, off-road vehicle use,  and temporary                                                              
housing.                                                                                                                        
                                                                                                                                
1:27:40 PM                                                                                                                    
                                                                                                                                
MS.   WOOLF   said  the   geographical   areas   for   development                                                              
activities,  by  definition,  would  be more  focused  [slide  9].                                                              
Once  an  operator   has  reached  the  development   phase,  more                                                              
permanent  activities will  happen.  Thus  the geographical  areas                                                              
are typically  smaller and may encompass  a number of  leases that                                                              
are  being planned  for development.    Further, the  geographical                                                              
area may  include an  existing oil and  gas unit with  discussions                                                              
of future  development.  Additionally,  the DNR may want  to focus                                                              
on  the core  area that  is  already fully  developed  in a  large                                                              
legacy field such as Kuparuk or Prudhoe Bay.                                                                                    
                                                                                                                                
1:28:37 PM                                                                                                                    
                                                                                                                                
MS. WOOLF,  for the purpose  of discussion, suggested  how leasing                                                              
would happen  under HB 129  on a small  area located  between some                                                              
of  the legacy  fields  to  further  demonstrate how  the  process                                                              
would work  [slide 10].   The  DNR would  define the  geographical                                                              
area and  prepare a  public notice and  an opportunity  to comment                                                              
for  the exploration  activities  - defining  what the  activities                                                              
would consist  of.  Meanwhile,  the DNR would solicit  information                                                              
from other  state, federal,  and  local agencies,  as well  as the                                                              
industry with  respect to the  exploration phase decision.   Based                                                              
on the input,  the DNR would finalize and approve  the exploration                                                              
phase decision.   Once  that happens  an operator  would submit  a                                                              
plan  of operation.    However, at  this point  the  DNR will  not                                                              
public notice each  plan of operation since the  geographical area                                                              
is included in the exploration phase.                                                                                           
                                                                                                                                
1:29:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER asked her to clarify the public notice process.                                                                
                                                                                                                                
MS. WOOLF  answered that the public  notice process is tied  to AS                                                              
38 and specifically  to AS 38.05.945  (b) and (c), which  is a 30-                                                              
day process.   She further explained that AS 38.05.945  requires a                                                              
broad public notice.                                                                                                            
                                                                                                                                
1:30:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  related  her understanding  that  since                                                              
the  oil  and  gas  activities  under  the  lease  would  cover  a                                                              
geographical area  that the authorization  is broad and  would not                                                              
necessitate  individual  public  noticing  for  subsequent  plans,                                                              
largely since the public will have already provided comments.                                                                   
                                                                                                                                
MS. WOOLF  answered that  is correct;  that individual  plans will                                                              
not be  public noticed,  but the  geographical  area plan will  be                                                              
public noticed.   Further, individual  plans must comply  with the                                                              
mitigation measures  in the lease and cover all  of the parameters                                                              
and special  stipulations in the  exploration phase approval.   In                                                              
fact, any  time a  plan of  operation is  submitted that  does not                                                              
comply or  is one that contains  an exception, the DNR  would need                                                              
to public  notice since the plan  of operation would not  meet the                                                              
lease  parameters.   Therefore, nothing  in HB  129 would  prevent                                                              
the  DNR   from  reviewing  specific   portions  of  a   [plan  of                                                              
operation]  and request  public  comment for  specific  activities                                                              
that are out of the norm.                                                                                                       
                                                                                                                                
1:31:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER asked for further explanation of the chart.                                                                    
                                                                                                                                
MS. WOOLF  explained that this means  is that when the  lease plan                                                              
of  exploration is  submitted, public  notice  and opportunity  to                                                              
comment does  not need  to be performed  for each individual  plan                                                              
of operation.   The public notice  portion will already  have been                                                              
done.    However,  the  plan  of   operation  will  still  require                                                              
approval  by the  division.    Of course,  when  the  oil and  gas                                                              
division  approves a  plan  of operation  -  and  the division  is                                                              
currently  working  on  its  regulations   covering  the  approval                                                              
process - it goes  through an agency review.  She  emphasized that                                                              
internal  review does not  change under  the bill.   In  fact, the                                                              
plan of  operation is subject  to lease mitigation  factors, which                                                              
have already undergone  an extensive public process.   In response                                                              
to  a question,  Ms. Woolf  pointed out  the purple  lines on  the                                                              
chart  for "Exploration  Phase"  and  for "Development  Phase"  on                                                              
slide  9 indicate  points at  which additional  public notice  and                                                              
opportunity are not required.                                                                                                   
                                                                                                                                
1:32:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON asked  whether  the reason  the  public                                                              
notice and opportunity  to comment is not required is  that it has                                                              
already been  done for the geographical  area.  She  understood if                                                              
anything changed,  that a subsequent  public comment  period could                                                              
be held.                                                                                                                        
                                                                                                                                
MS. WOOLF said that is correct.                                                                                                 
                                                                                                                                
1:33:15 PM                                                                                                                    
                                                                                                                                
MS.  WOOLF  resumed her  presentation.    She predicted  that  the                                                              
development  phase decisions  would  be tied  to  a more  specific                                                              
development, such  as an operator  might submit a group  of leases                                                              
for an  oil and  gas unit that  will be  operated by one  company.                                                              
First,  the companies  would come  in with  an overall  conceptual                                                              
plan for developing  the lease, group of leases, or  the unit.  At                                                              
that point,  the DNR would issue  a public notice on  the smaller,                                                              
more focused  geographical area,  indicating the type  of proposed                                                              
activity  for the  oil and  gas development,  including any  pads,                                                              
roads, or  pipelines.  At  the time the  DNR issues  its decision,                                                              
it will  have the parameters  of how  operators will  submit their                                                              
plans of  operation.   So long  as the  operator submits  plans of                                                              
operations in  compliance with the  lease mitigation  measures and                                                              
the  development  phase  parameters, the  operator  could  proceed                                                              
with  its  site  specific  plans  of  operation.    In  fact,  the                                                              
operator can  proceed with  its site  specific plans of  operation                                                              
without the  need for additional  public notice for each  of those                                                              
phases.                                                                                                                         
                                                                                                                                
MS.  WOOLF  highlighted  that  under HB  129,  the  public  notice                                                              
periods  will be  deleted  for the  individual  plan, the  amended                                                              
plan, and  the modified or enhanced  recovery plan.   However, the                                                              
bill  would   not  change  the   public  notice   requirement  for                                                              
transportation,  which, as  mentioned  earlier is  a separate  not                                                              
addressed by the bill.                                                                                                          
                                                                                                                                
1:35:02 PM                                                                                                                    
                                                                                                                                
MS.  WOOLF emphasized  the  department  will continue  to  approve                                                              
plans  of  operation  as  part of  the  lease  requirement,  which                                                              
doesn't change  under the bill.   Additionally, the bill  will not                                                              
change any other  permitting requirements oil and  gas development                                                              
is  subject   to  such  as  permits   from  Alaska  Oil   and  Gas                                                              
Conservation Commission  (AOGCC), local  permits, or  permits from                                                              
the  Department   of  Environmental   Conservation  (DEC).     For                                                              
instance,  the proposed changes  will not  affect wetland  permits                                                              
necessary  for  dredge and  fill,  or  other kinds  of  permitting                                                              
activities.  In  essence, what this bill does is  to allow the DNR                                                              
to review oil and  gas leases more holistically.   In essence, the                                                              
public will  provide input on a  geographical area rather  than be                                                              
asked to react to an individual project.                                                                                        
                                                                                                                                
1:35:55 PM                                                                                                                    
                                                                                                                                
MS.  WOOLF discussed  results [slide  10].   Again,  HB 129  would                                                              
provide the  state, the  public, local  agencies, and industry  an                                                              
opportunity for  a holistic, comprehensive  review of oil  and gas                                                              
activities prior  to exploration  or development.   The department                                                              
would  define a  geographical  area,  prepare the  public  notice,                                                              
define  the  activities  and  types  of  activities  allowed,  and                                                              
request  public  comment  on  the exploration  phase.    Once  the                                                              
exploration  phase   is  approved,  the  division   would  approve                                                              
specific plans of  operation in compliance with  the conditions of                                                              
the approved  exploration  phase.  Using  the process  established                                                              
under  HB  129, it  would  not  be necessary  to  seek  additional                                                              
public noticing for each of the exploration phase activities.                                                                   
                                                                                                                                
1:36:52 PM                                                                                                                    
                                                                                                                                
MS. WOOLF said  once operators are successful and  the lease moves                                                              
to a  development phase,  the DNR would  prepare a public  notice,                                                              
define the development  activities for the geographical  area, and                                                              
solicit public comments.   Once the development  phase approval is                                                              
complete,  so long as  the operators  are in  compliance with  the                                                              
lease  mitigation  measures  and   all  the  stipulations  in  the                                                              
development   phase   approval,   they  can   proceed   with   the                                                              
development  activities  and their  plans  of operations  will  be                                                              
approved by the  division without the further  need for additional                                                              
public notice.   Again, the pipeline  process would be  dealt with                                                              
separately.                                                                                                                     
                                                                                                                                
1:37:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON expressed  concern that geographical  areas                                                              
might  be broad  since  they  are not  defined.   For  example,  a                                                              
geographical  area might  include all  of Cook  Inlet lease  area.                                                              
He expressed further  concern that the public would  only have one                                                              
opportunity  to comment  prior to  the seismic  activity or  other                                                              
activity through  the development  phase.  In  fact, the  area for                                                              
the development  phase would  be so broad  that the public  really                                                              
would not  have an  opportunity to  comment.   At the time  public                                                              
comment is solicited,  the pad location would be  unknown and they                                                              
won't know  if development  will occur in  multiple places  in the                                                              
basin.   Without some constraints,  the public could  assume there                                                              
could be  20 wells drilled at  Anchor Point because  the potential                                                              
exists  since the  leases exist.   Consequently,  the public  will                                                              
only have "one shot" at it.                                                                                                     
                                                                                                                                
MR.  BARRON agreed  that  Representative  Seaton  has raised  good                                                              
concerns.    However,  he  characterized  Representative  Seaton's                                                              
comments  as "mixing  some things  in a bucket  and stirring  them                                                              
around."   He  said the  aforementioned  activities wouldn't  take                                                              
place in  that way in Cook  Inlet.  First, the  exploration phase,                                                              
by  definition,  would be  a  broader  area than  the  development                                                              
phase.   Second, the development  phase could  be the size  of the                                                              
unit itself  or smaller  if the  department chose  to make  it so.                                                              
Finally,  seismic  activities  currently  undergo  extreme  public                                                              
disclosure  relative  to  the National  Marine  Fisheries  Service                                                              
(NMFS), which  is also  part of  the process.   Hence, the  public                                                              
would know  what oil and  gas activity would  be occurring  in the                                                              
specific geographical areas.                                                                                                    
                                                                                                                                
1:41:39 PM                                                                                                                    
                                                                                                                                
MR.  BARRON highlighted  that  the  division would  establish,  by                                                              
regulation,  the   geographical  areas  for  the   exploration  or                                                              
development using  a public process.   For example, the  DNR would                                                              
identify   the  geographical   areas   in  the   Kenai  area   for                                                              
exploration, which   might encompass the entire west  side of Cook                                                              
Inlet, but it  would likely also identify small  discrete packages                                                              
for the actual exploration.   He envisioned this would  be done by                                                              
regulation.   Additionally,  the  public process  associated  with                                                              
establishing  those  geographical   areas  will  engage  with  the                                                              
public upfront.                                                                                                                 
                                                                                                                                
MR. BARRON  characterized the process  under the bill  as "getting                                                              
ahead of the  overall work activity."  Certainly,  this will allow                                                              
people to know a  given area will be part of  a broad geographical                                                              
area  for  exploration.   Further,  the  development  phase  would                                                              
consist  of a  more defined  finite  area.   This  is the  process                                                              
department has  developed to  ensure public involvement;  however,                                                              
Representative  Seaton raises  some very valid  points on  whether                                                              
the public  will only  have one time  for a  "bite at the  apple."                                                              
Keep  in   mind  that  every   decision  the  division   makes  is                                                              
appealable, he said.                                                                                                            
                                                                                                                                
MS. WOOLF confirmed  that is correct.  The plan  of operation that                                                              
would still  require approval  for the  very specific  activities,                                                              
which an appealable decision.                                                                                                   
                                                                                                                                
MR. BARRON concurred  that the public will have  an opportunity to                                                              
appeal the decision to the commissioner.                                                                                        
                                                                                                                                
1:43:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SEATON   [referring  to   slide   9],  said   the                                                              
exploration  phase  includes  exploration  wells  on  any  of  the                                                              
leases.  For example,  Apache has leases on the west  side of Cook                                                              
Inlet  and  has  also  been  performing  seismic  operations  from                                                              
Anchor Point to Kenai  on the east side of Cook  Inlet.  Under the                                                              
bill  as  depicted  on  the  slide,  he  understood  Apache  could                                                              
indicate  the  plan to  perform  seismic  operations,  exploration                                                              
pads, and wells  for the entire area on multiple  leases, but only                                                              
be subject  to a  single public  noticing and  comment period  for                                                              
the  initial proposed  oil and  gas  lease exploration  plan.   He                                                              
expressed  concern  that  Ninilchik  residents  would  not  likely                                                              
comment on  seismic or exploration  pad activity on the  west side                                                              
of  Cook   Inlet;  however,   they  would   want  to  comment   if                                                              
exploration  pads were  planned for  downtown Ninilchik.   In  any                                                              
event, once, once  the statewide lease sales occurred  the comment                                                              
period will  be closed.   In other  words, he predicted  residents                                                              
would wish  to comment  on noise activity  or exploration  pads in                                                              
their  own  neighborhood,  but not  necessarily  for  activity  in                                                              
remote areas.   He  wondered if the  effect of HB  129 will  be to                                                              
cause people  to prematurely  react when  they normally  would not                                                              
desire to comment.                                                                                                              
                                                                                                                                
MR.  BARRON   offered  his   belief  it   would  verge   on  being                                                              
irresponsible  for the division  to put the  entire Cook  Inlet in                                                              
one geographical area.   First, he pointed out  unique differences                                                              
exist between the  east and west side of Cook Inlet.   Second, the                                                              
division  has held  this discussion  internally,  and he  recalled                                                              
suggestions  that perhaps  the two  portions of  the west side  of                                                              
Cook   Inlet  would   fall   in  different   geographical   areas.                                                              
Meanwhile,  he  predicted  the  east  side  of  Cook  Inlet  could                                                              
contain numerous  geographical  areas, even  for exploration.   He                                                              
understood  residents on  the east  side  of Cook  Inlet might  be                                                              
interested in  the west side  of Cook Inlet  but not know  when to                                                              
comment;  however,   part  of  the  public  process   will  be  to                                                              
establish geographical  areas for the exploration  phase in public                                                              
forums so residents  are informed of the size and  location of the                                                              
geographical areas.   Once  the aforementioned geographical  areas                                                              
are established,  the DNR intends to  reach out to the  public and                                                              
industry  to evaluate  what activities  should occur  on the  west                                                              
side in each  geographical area.  Specifically,  he envisioned the                                                              
process would occur  in an open forum in order  to determine which                                                              
activities should  take place.  For example, the  discussion would                                                              
identify  whether issues  will arise with  respect to  subsistence                                                              
hunting  and fishing.   Further,  that type of  activity could  be                                                              
identified  in smaller  areas rather  than over  the entire  lease                                                              
sale.                                                                                                                           
                                                                                                                                
1:47:43 PM                                                                                                                    
                                                                                                                                
MR.  BARRON highlighted  the  intent  of HB  129  is to  initially                                                              
identify  areas and  concerns in  a public process  to inform  the                                                              
public  that  certain   areas  are  protected.     Meanwhile,  the                                                              
industry will  also know  what needs to  happen to mitigate  their                                                              
operations  to satisfy  the  findings  of the  geographical  area.                                                              
Actually,   he  envisioned   the   geographical   areas  for   the                                                              
development  phase  will  be  even   more  fine-tuned.    Once  an                                                              
exploration  well has reached  total depth  (TD) and the  operator                                                              
seeks to  identify a  unit, the  operator would  need to  submit a                                                              
development  plan.    Perhaps  the  unit  might  actually  be  the                                                              
geographical area.   Again, at  that point, the public  associated                                                              
with  the geographical  area  could  clearly  weigh in  while  the                                                              
industry will  know exactly how to  proceed in the  specific area.                                                              
Certainly, each  area will  be different, such  as North  Slope as                                                              
compared to Kenai.                                                                                                              
                                                                                                                                
1:48:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON allowed it  would be  nice if that  process                                                              
happened,  but  he  did  not see  anything  in  the  statute  that                                                              
requires  the  lease  to  unfold  in that  fashion.    After  all,                                                              
currently, Apache  has performed  seismic operations in  the whole                                                              
Cook  Inlet.   Under  the  bill,  their  activity would  not  only                                                              
include the  seismic program, but  the exploration pads  and wells                                                              
in all  of its leased  areas.  He  asked whether anything  in this                                                              
statute constrains  activities so an operator's  activity wouldn't                                                              
encompass the entire geographical area.                                                                                         
                                                                                                                                
MS. WOOLF emphasized  it is important to remember  this process is                                                              
not  required,  but only  represents  an  approach that  could  be                                                              
taken.  Keep  in mind that  the Cook Inlet area  and Southcentral,                                                              
Alaska  have already  undergone an  extensive  planning effort  on                                                              
state lands.   For instance,  the Kenai  Peninsula Area   plan and                                                              
the Susitna  Area Plan  are finished, yet  those plans  will still                                                              
undergo an  extensive public process  every 10 years.   That's the                                                              
point at which  the state and local government  decides how should                                                              
the state's  surface lands  be used, she  said.  For  example, the                                                              
area  plan review  considers  the  highest and  best  use and  the                                                              
multiple   resource   values   that    need   to   be   protected.                                                              
Specifically,  all oil  and  gas development  is  subject to  area                                                              
plans and  must be  in compliance  with those  plans.   Basically,                                                              
the  process  under  the  bill represents  yet  another  layer  of                                                              
planning on top of  the area plan.  In fact, at  least in the Cook                                                              
Inlet,  the base  layer  area plans  lay  out  the foundation  for                                                              
state land management,  including wildlife habitat  and industrial                                                              
settlement.  If  oil and gas development will be  allowed, the oil                                                              
and gas leasing process will happen.                                                                                            
                                                                                                                                
MS.  WOOLF highlighted  that  the way  the  division performs  its                                                              
BIF,  which  is   a  phased  review  of  the   lease,  effectively                                                              
postpones  exploration,  development,   and  transportation  phase                                                              
analysis reviews until  a later date.  This allows  the department                                                              
to  holistically   consider  the  geographical  area   instead  of                                                              
undergo  individual  consideration.    In terms  of  the  previous                                                              
example  of Apache's  seismic activity,  if  Apache requested  the                                                              
entire  Cook Inlet  area be  considered  and the  division made  a                                                              
decision  that covers  the west side  of Cook  Inlet, then  Apache                                                              
wouldn't  be included  in the  decision since  the activity  would                                                              
not cover the  entire Cook Inlet geographical area.   Furthermore,                                                              
anytime a  plan doesn't meet lease  mitigation measures or  any of                                                              
the  parameters,  the  division  would need  to  hold  a  specific                                                              
public notice for that particular operation.                                                                                    
                                                                                                                                
MS. WOOLF  pointed out  the public  notice being  used is  the [AS                                                              
38.05.945] noticing,  which means  that if the division  described                                                              
the whole Kenai  Peninsula as an area, the statute  is very broad,                                                              
which would require  notices be posted in all post  offices in the                                                              
Kenai  Peninsula  Borough.   The  notice  would state  the  entire                                                              
geographical area  in the Kenai  Peninsula, ranging from  Homer to                                                              
Soldotna.   It would be  incumbent upon  the resident to  note the                                                              
planned  activity at  "their  back door"  and  to investigate  and                                                              
comment on  the plan.   This  is precisely  why the division  tied                                                              
the noticing to  the AS 38.05.945 requirements - to  make it clear                                                              
that  the division  wants  public  input  from across  the  entire                                                              
geographical area,  in particular, to identify any  concerns prior                                                              
to exploration and development.                                                                                                 
                                                                                                                                
1:53:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  expressed additional concern  that once the                                                              
lease moves  to the development  phase, any modifications  made to                                                              
the operation plan  would not be subject to further  public notice                                                              
or  comment  periods.    He  related   a  scenario  in  which  one                                                              
development  plan is  approved, but  subsequently modified,  which                                                              
would not allow for additional public comment.                                                                                  
                                                                                                                                
MS. WOOLF,  with respect to  the development phase,  indicated the                                                              
operator will define  a reservoir, which will be  more focused and                                                              
specific.   By contrast this will  allow the division  to consider                                                              
the project  holistically.   She related a  scenario in  which the                                                              
geographical area  included Anchor Point and Homer  but the entire                                                              
area is underlied  by oil and gas.  The proposed  plan might be to                                                              
develop the area  using three to four pads, with  one pipeline and                                                              
feeder   lines,  as   well  as   build   a  processing   facility.                                                              
Certainly, all  the aforementioned  activities would be  listed in                                                              
the notice since  it is very specific to oil and  gas development.                                                              
If  the  public  comment  includes  concerns  about  noise,  truck                                                              
traffic  close  to residents,  or  the  location of  the  pipeline                                                              
bisects  public recreational  opportunities,  it  is important  to                                                              
learn  those concerns  at the  beginning  of the  project.   After                                                              
all,  this allows  the  division  to define  the  criteria in  its                                                              
decision so  the operator can  plan around the public's  concerns.                                                              
Furthermore,  if the operator  isn't able to  do so,  the division                                                              
would  need   to  issue  another   public  notice  based   on  the                                                              
operator's  inability  to  work   within  the  parameters  of  the                                                              
decision.                                                                                                                       
                                                                                                                                
1:55:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SADDLER offered  his belief  the  current situation  has                                                              
substantial  feedback   loops.     He  asked  the   department  to                                                              
characterize  the  types of  comments  the division  receives  and                                                              
whether the  comments are consistent  or if new points  are raised                                                              
throughout the  process.   He further asked  how the  comments are                                                              
processed by the division.                                                                                                      
                                                                                                                                
MR. BARRON  answered that with  very rare exception,  the division                                                              
does  not receive  many comments  on  the plans.   Typically,  the                                                              
comments the division  receives are usually extreme  ones opposing                                                              
any  oil and  gas  development in  the  area.   Incidentally,  the                                                              
comments  on  projects  are  not  generally  addressing  localized                                                              
concerns.   Surprisingly, the vast  majority of the  projects have                                                              
almost no  comments.  As  a matter of  fact, the division  started                                                              
examining the process  and began wondering whether  peopled didn't                                                              
understand what was  happening in the whole area or  that it was a                                                              
localized issue.   Moreover, the  division wanted to find  ways to                                                              
better  represent  the  citizens   and  achieve  better  planning.                                                              
Ultimately,  he said  division  is interested  in  acting as  good                                                              
land  management stewards  and  seeks to  enhance  and expand  its                                                              
knowledge  base to encompass  a broader  base of  the public  in a                                                              
way that allows them to comment more holistically.                                                                              
                                                                                                                                
MR. BARRON,  in response  to the  second question,  said that  any                                                              
public comments  made under  the current  system are addressed  by                                                              
the decision, for  example, when four or five people  say the same                                                              
thing, such  as submitting a form  letter.  In the event  only one                                                              
person commented,  the division's response would be  to answer why                                                              
the decision is being made.                                                                                                     
                                                                                                                                
CO-CHAIR SADDLER  understood that  the division receives  comments                                                              
and acknowledges them.   He asked whether the  division integrates                                                              
or changes any plans.                                                                                                           
                                                                                                                                
MR. BARRON  answered yes;  the division  has frequently  gone back                                                              
to  the  industry  to  identify   a  reasonable  concern  and  has                                                              
modified the plan accordingly.                                                                                                  
                                                                                                                                
1:58:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  asked how this  system compares to  systems used                                                              
in other  states, and for federal  notices.  He asked  whether the                                                              
DNR's current system is excessive or if it is insufficient.                                                                     
                                                                                                                                
MR. BARRON said  it is difficult to do any  significant comparison                                                              
to  the Lower  48 because  most of  the land  in the  Lower 48  is                                                              
privately owned  rather than  being state land.   With  respect to                                                              
the  federal structure,  he believed  Alaska's  structure is  more                                                              
onerous.   He related  his experiences  have been  limited  to the                                                              
Kenai  Peninsula,  in particular,  to  Bureau of  Land  Management                                                              
(BLM) properties.   Otherwise, the  lead agency had been  the U.S.                                                              
Fish and Wildlife  Service (USFWS).  The division  typically works                                                              
with the lead agency  on the process.  Ironically,  he stated that                                                              
one of the  ideas for the  bill originated with USFWS,  since that                                                              
agency wanted  to know  upfront all of  the activities  that would                                                              
occur.  In  other words, the USFWS  did not want to know  "bite by                                                              
bite" or  "year by year" what  activity would happen.   Again, the                                                              
division would like to establish the activities in advance.                                                                     
                                                                                                                                
2:00:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  surmised that  criticism might  be that  the DNR                                                              
is trying  to avoid  public's opportunity  to  comment.  He  asked                                                              
whether the  intent of  the bill  is to  block public comment  for                                                              
oil and gas exploration and development.                                                                                        
                                                                                                                                
MR.  BARRON  answered absolutely  not.    Instead, the  DNR  would                                                              
prefer  to  identify  the  public's concerns  in  advance  of  the                                                              
activity  and let  the public  "lean in  real hard"  and "be  very                                                              
specific"  about the  activities associated  with the  exploration                                                              
or  development  in  an  attempt  to  holistically  inform  people                                                              
rather than inform them piecemeal.                                                                                              
                                                                                                                                
2:00:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   FEIGE  asked   whether   [the  upfront   comments   are                                                              
preferable]  rather  than  to have  individual  leasees  react  to                                                              
individual public comments throughout the process.                                                                              
                                                                                                                                
MR. BARRON answered yes.                                                                                                        
                                                                                                                                
2:00:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  whether he anticipated any  meaningful reduction                                                              
in public comment.                                                                                                              
                                                                                                                                
MS.  WOOLF replied  that she  expects more  public comments  under                                                              
the  bill, because  it will  allow the  public to  comment in  the                                                              
beginning and  help plan  and evaluate a  project prior  to moving                                                              
forward with  land management.   She offered  her belief  that the                                                              
public  finds  that   a  much  more  meaningful   dialogue.    She                                                              
suggested  that there  is a lot  more participation  in the  DNR's                                                              
planning  processes than  in the  reaction to  a specific plan  of                                                              
operation.    She  surmised  that  one  reason  few  comments  are                                                              
received so since  people have the sense that  their comments will                                                              
not make  a difference.  However,  at the initial  planning point,                                                              
the  division   is  defining  the   parameters  in   which  future                                                              
exploration and development will occur.                                                                                         
                                                                                                                                
[MR. BARRON nodded yes.]                                                                                                        
                                                                                                                                
2:01:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  said it  seemed  to  him that  this  bill                                                              
would  front-end load  the permitting  process.   He wondered  how                                                              
this change will  affect the department's workload.   It seemed as                                                              
though a lot of work would need to happen initially.                                                                            
                                                                                                                                
MR. BARRON  replied the DNR  has discussed this  aspect internally                                                              
and the  description of  "front-end loading"  is an accurate  one.                                                              
He anticipated that  projects would move through  the process more                                                              
quickly since  the process currently  includes a 30-40  day public                                                              
comment period,  along with a 10-day  public review at  each step,                                                              
which is  time consuming.   Additionally, it's time-consuming  for                                                              
the DNR  to answer  comments on each  phase.   Thus he  thought HB                                                              
129 would  speed up the process  by identifying the  activities in                                                              
an  area,  which  will  be more  meaningful.    He  suggested  the                                                              
primary  points as  being to  know in  advance and  to be able  to                                                              
anticipate  project management.   Finally,  it is  better to  plan                                                              
upfront rather than stop and plan again, which also adds costs.                                                                 
                                                                                                                                
2:04:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE asked  whether the  DNR would  have more time  for                                                              
permit enforcement.                                                                                                             
                                                                                                                                
MR. BARRON answered that should be one of the benefits.                                                                         
                                                                                                                                
2:04:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  whether  different producers  would                                                              
be working in the same area.                                                                                                    
                                                                                                                                
MR.  BARRON  answered  he  identified   part  of  the  reason  the                                                              
division  is doing  this  now.   He related  a  scenario in  which                                                              
three leases are  adjacent to one another in a  geographical area,                                                              
but  the  operators need  to  go  through  the entire  process  to                                                              
submit applications  and obtain public comment on each  lease.  If                                                              
one operator  undergoes the  process and  the next operator  wants                                                              
to use the same  rig, the second operator must  undergo the entire                                                              
process.   He pointed out  under the bill,  it won't  matter which                                                              
operator  is  involved,  if the  division  establishes  the  right                                                              
geographical  area and people  know the  activity that  will occur                                                              
the process works much smoother.                                                                                                
                                                                                                                                
REPRESENTATIVE JOHNSON  wanted to make  sure that is how  it would                                                              
work and he said he is now satisfied.                                                                                           
                                                                                                                                
2:06:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  inquired as to the reason  this legislation                                                              
is needed.   He wondered  whether the  department already  has the                                                              
authority   and   it's   more  a   matter   of   regulation   than                                                              
necessitating a change in statute.                                                                                              
                                                                                                                                
MR. BARRON  answered  that when this  process  was started  a year                                                              
ago,  the opinion  was split  in  terms of  whether the  statutory                                                              
change was necessary.                                                                                                           
                                                                                                                                
2:07:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER queried as to who was giving the advice.                                                                  
                                                                                                                                
MR. BARRON  responded the  department engaged  numerous people  in                                                              
the  division, within  DNR, and  in the  Department of  Law.   The                                                              
division's goal  has been  to avoid court.   However,  since there                                                              
has  not  been a  unified  sense  within  the department,  it  was                                                              
thought best to go the legislative route.                                                                                       
                                                                                                                                
2:08:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER understood.   However,  he highlighted  his                                                              
concern, which  is the  exclusionary problem,  such that  when the                                                              
statutes  say  something  is allowed,  implicitly,  it  identifies                                                              
something that  can't be  done.  He  suggested that this  wouldn't                                                              
be  necessary unless  the division  is  otherwise prohibited  from                                                              
doing something.   He  expressed his  concern that this  validates                                                              
that  the division  is  prohibited  from  doing "something."    He                                                              
cautioned the  DNR to be sure  the department isn't  inadvertently                                                              
compromising some  other authority,  since the department  already                                                              
has the authority  - in his  view.  He characterized  his question                                                              
as being a rhetorical  question.  He offered to  support the DNR's                                                              
decision  to  pass  the  bill  out   of  committee.    He  further                                                              
requested  the director  to hold  a discussion  with him prior  to                                                              
the bill going to the floor for a vote.                                                                                         
                                                                                                                                
2:11:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON shared Representative  Hawker's concern.                                                              
She  suggested  this will  give  certainty  to companies  and  the                                                              
public on  what the  DNR can  do and if  something different  will                                                              
occur,  it means  starting the  process  over in  a certain  area.                                                              
However,  she  anticipated some  people  would  use this  bill  to                                                              
drive  the process.   She said  she can  see both  sides, but  was                                                              
concerned about unintended consequences.                                                                                        
                                                                                                                                
MR. BARRON appreciated the comments.                                                                                            
                                                                                                                                
2:12:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   stated  he  is  concerned   about  public                                                              
comment, such  that there  is one  generalized comment  period but                                                              
not a  specific comment  phase.   He asked  at what point  besides                                                              
the  broad  general area  people  would  have the  opportunity  to                                                              
comment on  development taking place  in their area.   He recalled                                                              
temporary water  use permits  were allowed to  be rolled  over for                                                              
five years  but general  DEC air  quality permits  do not  require                                                              
public comment.   Additionally, an  AOGCC permit to  drill doesn't                                                              
require public comment, he said.                                                                                                
                                                                                                                                
MR. BARRON  responded  that when  the DNR defines  and works  with                                                              
the  public on  exploration activities,  it  can identify  seismic                                                              
activities  and exploration drilling.   At  that time,  the public                                                              
can raise  concerns about specific  areas and identify  areas that                                                              
need to  be avoided or  stipulate what needs  to be put  in place.                                                              
In fact, what's  really important is  to be able to consider  on a                                                              
broader basis  the activities that  could take place in  the area.                                                              
Again, the  fine tuning would happen  with the development  of the                                                              
geographical area.   In fact, it  is focused and  upfront comments                                                              
on  how to  develop,  but  not whether  development  will  happen.                                                              
Furthermore,  the   lease  sale   identifies  that  oil   and  gas                                                              
exploration development  will take place, which is  why the parcel                                                              
is  up for  lease.    He offered  his  belief that  including  the                                                              
public  in  the  planning  phase   is  much  more  important  than                                                              
understanding  each individual  activity.   He agreed there  might                                                              
be three operators  performing the activity, but  what's important                                                              
is people will know  what activity will take place  and what rules                                                              
govern the activity.                                                                                                            
                                                                                                                                
2:17:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON understood  Mr. Barron's  position is  that                                                              
people  in  the  central  Kenai  Peninsula  will  have  sufficient                                                              
understanding of  the impacts  of a gas  plant on the  whole Kenai                                                              
Peninsula if they know that type of facility is being planned.                                                                  
                                                                                                                                
MR.  BARRON offered  his  belief it  comes down  to  how well  the                                                              
geographical  areas are  established.   He  characterized this  as                                                              
the crux  of the question.   If the areas are  established through                                                              
the  public process  when the  DNR develops  its regulations,  the                                                              
public has  yet another  opportunity to weigh  in and  specify the                                                              
size,  location,   and  purpose  of  a  geographical   area.    He                                                              
anticipated that would  be the type of engagement  with the public                                                              
the DNR would encourage.                                                                                                        
                                                                                                                                
2:18:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  asked whether  this bill would  require the                                                              
DNR to develop regulatory conditions on geographical areas.                                                                     
                                                                                                                                
MS.  WOOLF  answered  that the  DNR  has  regulation  requirements                                                              
under  the department's  lease sale  provisions.   It states  that                                                              
when the  department chooses  to hold a  phased oil and  gas lease                                                              
sale, public  notice will  be provided  under regulations  adopted                                                              
by  the department.    Consequently,  the  DNR has  been  actively                                                              
working on  regulations related to  how the DNR approves  plans of                                                              
operation.   If  this  bill were  to  pass, the  department  would                                                              
incorporate   any  additional   regulations   into  the   existing                                                              
regulation project.   While the  current regulation  project isn't                                                              
specifically  tied to this  bill, it is  how the department  would                                                              
address the  regulations.  She indicated  this relates to  a phase                                                              
under the  DNR's lease sale,  not a project  phase under  the plan                                                              
of operation.                                                                                                                   
                                                                                                                                
2:19:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SADDLER asked  whether any  exploration and  development                                                              
would occur  outside of  the geographical  areas or  if it  is all                                                              
covered under the bill.                                                                                                         
                                                                                                                                
MR. BARRON answered  this activity would be associated  with state                                                              
lands that  are part  of a lease  sale so any  state land  that is                                                              
part of a lease sale would be rolled into this package.                                                                         
                                                                                                                                
2:20:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  to discuss  the difference  between                                                              
public  notice and  public notification.   He  offered his  belief                                                              
that public notice  requires a 30-day comment period.   He related                                                              
a scenario in which  in a well is planned, whether  the public can                                                              
contest it  after the comment period,  perhaps on-line, so  if the                                                              
operator decides to put in a platform, the public can comment.                                                                  
                                                                                                                                
MS. WOOLF  responded that  the department  is actively  working on                                                              
this.   In fact, the  DNR's decisions  are public information  and                                                              
the  information on  decisions,  along with  any  non-confidential                                                              
information  the department  receives from  the other agencies  is                                                              
available.     Specifically,  the  department  has   been  working                                                              
internally  to try  to make  this information  more accessible  to                                                              
enable  the public  to readily  view individual  decisions on  the                                                              
DNR's  website.     However,  people  can  currently   obtain  the                                                              
information, she said.                                                                                                          
                                                                                                                                
2:22:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHNSON  acknowledged   that  is   what  he   was                                                              
interested  in hearing.   Since  the  department has  transparency                                                              
and is  working to make  the process  even more transparent  gives                                                              
him a certain amount of comfort.                                                                                                
                                                                                                                                
2:22:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE, after  first determining  no one  else wished  to                                                              
testify, closed public testimony on HB 129.                                                                                     
                                                                                                                                
2:23:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  expressed   concern  that  the  bill  will                                                              
create  public  distrust  of  the  process.   For  example,  if  a                                                              
geographical area  encompassed all  of Southeast Alaska,  Wrangell                                                              
residents would  not likely testify during the  exploration phase.                                                              
However, if  the operator  made a subsequent  decision to  drill a                                                              
well  in  Wrangell,  he  wondered   if  residents  would  have  an                                                              
opportunity  to weigh in  [since the  public comment period  would                                                              
be closed  at that point].   Overall,  the changes could  distress                                                              
people,  especially since  the DNR's  [statutes  would] not  limit                                                              
the scope  of the geographical  areas.   He concluded that  if the                                                              
geographical area  an areawide lease  sale on the  Kenai Peninsula                                                              
is large, he will have problems with this [bill].                                                                               
                                                                                                                                
2:25:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  shared Representative  Seaton's  concern;                                                              
however,  he  predicted an  initial  lawsuit  will charge  that  a                                                              
geographical  area  is too  big.    Therefore, he  encouraged  the                                                              
department to  make the geographical  areas as small  as possible.                                                              
He offered  his support  for the  concept noting  that this  [bill                                                              
represents]   good  mega-project   management,  especially   since                                                              
history  indicates  a project  is  most  successful when  all  the                                                              
information is  available upfront.   He understood that  each time                                                              
a project  is slowed it becomes  more expensive.  Anyway,  he felt                                                              
certain numerous  people will  challenge oil  and gas projects  if                                                              
the DNR  goes beyond  a large  area.   He supported the  committee                                                              
moving the bill along.                                                                                                          
                                                                                                                                
CO-CHAIR  SADDLER said  he likes  the idea  of HB  129.  He  takes                                                              
comfort in  the department's testimony  that a significant  amount                                                              
of public  testimony would  not be  cut off by  the bill  and that                                                              
dialogue  will occur.   He predicted  there would  be more  public                                                              
comment upfront if  people realize that they have  the opportunity                                                              
to influence the process.                                                                                                       
                                                                                                                                
2:27:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SADDLER moved  to report  HB 129 out  of committee  with                                                              
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
REPRESENTATIVE  SEATON objected  for  the purpose  of  discussion.                                                              
He said  he wasn't necessarily opposed  to "getting a  handle" [on                                                              
geographical areas];  however, he did not think  "we've got enough                                                              
meat on the bones,  currently."  For one thing,  the committee has                                                              
not  considered any  amendments since  this is  the first  hearing                                                              
the on  the bill.  He  was unsure whether  the public even  has an                                                              
awareness of  HB 129.   Therefore, he  objected, not  because he's                                                              
opposed   to  larger   geographical  areas,   but  because   there                                                              
currently  isn't any  restraint on  the size  of the  geographical                                                              
areas.   In  conclusion, he  did not  think this  would serve  the                                                              
public well.                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON maintained his objection.                                                                                 
                                                                                                                                
2:28:24 PM                                                                                                                    
                                                                                                                                
A roll call vote  was taken.  Representatives  Hawker, Johnson, P.                                                              
Wilson,  Saddler, and  Feige voted  in favor of  reporting  HB 129                                                              
out of  the committee.   Representative  Seaton voted against  it.                                                              
Therefore,  HB  129  was  reported  out  of  the  House  Resources                                                              
Standing Committee by a vote of 5-1.                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB 129 Briefing Paper.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB 129 Fiscal Note DNR-DOG-2-27-13.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB 129 House Resources Hearing Request.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB 129 Transmittal Letter.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB 129 ver A.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB 129 Weissler Public Testimony .pdf HRES 3/15/2013 1:00:00 PM
HB 129
HB129 Sectional Analysis.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HRES HB129 DNR Presentation 3.15.13.pdf HRES 3/15/2013 1:00:00 PM
HB 129
HRES HB 158 Letter Packet 7.pdf HRES 3/15/2013 1:00:00 PM
HB 158
HRES HB158 Letter Packet 8.pdf HRES 3/15/2013 1:00:00 PM
HB 158