Legislature(2011 - 2012)BUTROVICH 205

03/19/2012 03:30 PM Senate RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 159 SUSITNA STATE FOREST TELECONFERENCED
Moved CSSB 159(RES) Out of Committee
*+ SB 215 GASLINE DEV. CORP: IN-STATE GAS PIPELINE TELECONFERENCED
Heard & Held
+ HJR 29 BLM LEGACY OIL WELL CLEAN UP TELECONFERENCED
Moved SCS HJR 29(RES) Out of Committee
Bills Previously Heard/Scheduled
              HJR 29-BLM LEGACY OIL WELL CLEAN UP                                                                           
                                                                                                                                
4:05:07 PM                                                                                                                    
CO-CHAIR WAGONER announced consideration of HJR 29.                                                                             
                                                                                                                                
CO-CHAIR PASKVAN moved  to bring HJR 29 before  the committee for                                                               
discussion.                                                                                                                     
                                                                                                                                
CO-CHAIR WAGONER objected for discussion purposes.                                                                              
                                                                                                                                
4:05:45 PM                                                                                                                    
REPRESENTATIVE  CHARISSE   MILLETT,  Alaska   State  Legislature,                                                               
sponsor of HJR 29, explained  that this issue was brought forward                                                               
to  her by  someone  who interned  with the  Alaska  Oil and  Gas                                                               
Conservation  Commission  (AOGCC)  and inventoried  legacy  wells                                                               
that were  drilled between 1944 and  1981 by the US  Navy and the                                                               
US Geological Survey (USGS). These  wells were drilled when there                                                               
wasn't any way  to plug and abandon a well  and there weren't any                                                               
regulations. There  are 136  wells spread  all over  the National                                                               
Petroleum Reserve (NPR-A)  and they are all in  various stages of                                                               
decay. Some  of them are unplugged,  some are full of  diesel and                                                               
some have  shacks with barrels of  diesel in them. The  Bureau of                                                               
Land  Management (BLM)  has  plugged seven  wells;  42 wells  are                                                               
still in violation of AOGCC rules.                                                                                              
                                                                                                                                
The state has asked  the BLM to come up and  clean the wells, but                                                               
their plan is about one well a  year. These wells pose a risk not                                                               
only to  the pristine environment  of the  Arctic, but just  as a                                                               
risk to the  ecosystem. The last survey of the  wells was done in                                                               
2007.                                                                                                                           
                                                                                                                                
REPRESENTATIVE MILLETT  said three  wells have  been lost  due to                                                               
coast line erosion;  they're just missing. Three  others can't be                                                               
found due to  the terrain of the North Slope,  its permafrost and                                                               
snow flow;  some wells are  wide open up  there in lakes  with no                                                               
casing.  One  is  called  the "whistling  well;"  the  reason  is                                                               
because natural  gas is  escaping from it  and has  been escaping                                                               
for the last 50 years.                                                                                                          
                                                                                                                                
As the state  fights to open ANWR, these wells  are being used on                                                               
environmentalist  websites saying  they  are  oil company  wells.                                                               
They aren't! They  have been told that 17 of  the wells are being                                                               
used to monitor climate change, but  they don't know how they are                                                               
cased,  if  diesel  is  still  present  or  if  they  really  are                                                               
monitoring climate change.  It's a disgrace to  Alaskans to allow                                                               
the federal government to treat our land this way.                                                                              
                                                                                                                                
REPRESENTATIVE MILLETT  said she  met with  the BLM  in Anchorage                                                               
twice and with the BLM and  Department of Interior (DOI) twice in                                                               
Washington, D.C. (DC) and was  told both times thanks for coming,                                                               
but we don't have any money.                                                                                                    
                                                                                                                                
4:10:52 PM                                                                                                                    
She related further  that a land conveyance was  done between the                                                               
Arctic  Slope Regional  Corporation and  the North  Slope Borough                                                               
and  the  federal  government  that  transferred  33  wells.  The                                                               
federal  government   has  now  said  in   that  conveyance  that                                                               
responsibility for abandoning and  plugging those wells lies with                                                               
the new  land owner, which  was not  part of the  agreement. And,                                                               
ironically, the federal government has  leased land in NPR-A, and                                                               
the  OCS for  a total  of $9  billion. If  a private  company was                                                               
doing this, the fines would be over $40 billion.                                                                                
                                                                                                                                
REPRESENTATIVE MILLETT  said that  Senator Murkowski  brought the                                                               
issue to  Secretary Salazar's  attention and  he said  they could                                                               
plug  three wells  this  year. With  enough  pressure and  public                                                               
exposure she thought  the rest of those wells  could be abandoned                                                               
and plugged appropriately.                                                                                                      
                                                                                                                                
4:13:37 PM                                                                                                                    
CARL  PORTMAN,  Deputy  Director,  Resource  Development  Council                                                               
(RDC),  Anchorage, AK,  supported  HJR 29.  Every  member of  the                                                               
House  supported this  resolution and  joined in  as co-sponsors.                                                               
The DOI and  other federal agencies require  private companies to                                                               
explore for and produce domestic  energy and mineral resources in                                                               
an   environmentally  responsible   manner.  And   through  laws,                                                               
regulations and permitting, federal agencies  have set a high bar                                                               
to mitigate  impacts to  the environment.  As a  result, industry                                                               
has  been  held to  the  highest  standards. When  violations  or                                                               
permitting  requirements occur,  companies are  held responsible,                                                               
often facing  steep fines. However, in  the case of lands  in the                                                               
federal Arctic,  the government has  not held itself to  the same                                                               
high standard.                                                                                                                  
                                                                                                                                
Of  the 130  legacy wells  that were  drilled, Mr.  Portman said,                                                               
only  a  handful of  were  properly  plugged and  reclaimed.  The                                                               
remaining wells  are out of  compliance with  regulations adopted                                                               
by  the   AOGCC.  The  federal   government  has   been  reminded                                                               
repeatedly  of  its  obligation  to plug  the  legacy  wells  and                                                               
reclaim sites, but  the state cannot impose fines  on the federal                                                               
government. If  it could, they  would exceed $8 billion  and much                                                               
more of the statute of limitations could be disregarded.                                                                        
                                                                                                                                
MR. PORTMAN said  that HJR 29 points out the  double standard and                                                               
hypocrisy that  exits in the federal  government's permitting and                                                               
regulation  of resource  development  activities  in Alaska.  The                                                               
resolution rightly  urges the federal  government to  comply with                                                               
the same  laws and  requirements it  expects industry  to follow.                                                               
The federal  government should  lead by example  and set  an even                                                               
higher standard for itself.                                                                                                     
                                                                                                                                
4:16:52 PM                                                                                                                    
CATHY  FOERSTER,  Chairman,  Alaska   Oil  and  Gas  Conservation                                                               
Commission  (AOGCC), Anchorage,  AK, strongly  supported HJR  29.                                                               
She  thanked the  legislature  and all  others  who have  rallied                                                               
around this issue  in DC for our  state. It is a  subject that is                                                               
near  and  dear  to  her  heart.  She  presented  a  power  point                                                               
explaining  that the  federal government  drilled the  wells from                                                               
1944 to  1981 in  northern Alaska called  legacy wells.  They are                                                               
all on  the western North  Slope with geography and  biology just                                                               
like ANWR, but  all are in an area called  the National Petroleum                                                               
Reserve instead of a national wildlife refuge.                                                                                  
                                                                                                                                
4:17:38 PM                                                                                                                    
She  said the  BLM within  the DOI  is the  agency that  operates                                                               
these  wells that  have has  been out  of compliance  with Alaska                                                               
regulation at  one time  or another  and most  of them  still are                                                               
today. Given the condition of most  of these wells, review of the                                                               
applicable  regulations would  likely  reveal that  they are  not                                                               
even in compliance with the DOI's own regulations.                                                                              
                                                                                                                                
MS. FOERSTER said  she didn't have enough time to  go through all                                                               
the wells,  but she showed  them pictures of the  most troubling.                                                               
One was of  hundreds of rusting drums that had  chemicals in them                                                               
at  one time.  DOI doesn't  have enough  budget to  clean up  the                                                               
mess; they  can't pick up  drums, but  they have enough  money to                                                               
rent a  helicopter, fly a bunch  of people out there  and to take                                                               
pictures of it.                                                                                                                 
                                                                                                                                
4:20:29 PM                                                                                                                    
SENATOR WIELECHOWSKI said her testimony  was compelling and asked                                                               
why not sue them.                                                                                                               
                                                                                                                                
MS.  FOERSTER replied  that  the state  can't  trump the  federal                                                               
government  and can't  sue it  either. She's  been told  the only                                                               
thing  she could  do is  embarrass them  in the  court of  public                                                               
opinion. "So, here we go."                                                                                                      
                                                                                                                                
She said  the state BLM  would like to  clean this mess  up, too,                                                               
but  their  hands are  tied  by  the  meager budget  the  federal                                                               
government gives  them. It's  against the rules  to even  ask for                                                               
more money  for this  stuff. The  feds have  all that  money from                                                               
lease sales and she mentioned the  renovation of the Mall and re-                                                               
sodding. For  the same  money they could  plug and  abandon (P&A)                                                               
all those wells.                                                                                                                
                                                                                                                                
MS.  FOERSTER  explained  that  in  Alaska  proper  plugging  and                                                               
abandonment  of  wells   is  governed  by  Article   2  of  AOGCC                                                               
regulations.  The purpose  of properly  plugging and  abandonment                                                               
includes:  public  safety,  protection  of  the  environment  and                                                               
protection of  sources of drinking water;  it includes sufficient                                                               
down  hole cement  and plugs  to insure  that underground  fluids                                                               
cannot migrate.  With very few  exceptions, the 137  legacy wells                                                               
do not comply with this  requirement. She said several wells were                                                               
left open  to the surface and  some were filled with  diesel when                                                               
the federal government left them.                                                                                               
                                                                                                                                
4:23:20 PM                                                                                                                    
Proper P&A of wells require that  all underground pipe be cut off                                                               
five  feet  below  ground  level  so that  it  cannot  create  an                                                               
excavation  hazard  or  become  a  problem  during  normal  earth                                                               
movement and with few exceptions,  again, most of the wells don't                                                               
comply.  The  oil industry  gets  blamed  for situations  in  the                                                               
picture. Proper  P&A requires  sufficient surface  remediation so                                                               
that the site blends in  with the natural vegetation again within                                                               
a  few seasons.  Many  of  the legacy  well  sites are  permanent                                                               
eyesores  littered with  rotting  wood, rusting  metal and  other                                                               
debris.  The   few  wells  that   have  been   re-vegetated  have                                                               
potentially  more serious  down-hole  mechanical issues,  because                                                               
they are not secure.                                                                                                            
                                                                                                                                
MS. FOERSTER  said delaying  P&A has caused  several wells  to be                                                               
lost and  the BLM  has taken  them off  their concern  list since                                                               
they can no  longer find them, but  out of sight and  out of mind                                                               
doesn't mean  out of trouble.  Postponing the abandonment  of the                                                               
remaining wells puts them at risk of being lost, as well.                                                                       
                                                                                                                                
4:26:39 PM                                                                                                                    
MS. FOERSTER said  the state shouldn't have to  force the federal                                                               
government into compliance; they  should provide adequate funding                                                               
to bring these wells into  compliance with both state and federal                                                               
regulations, maybe from federal lease sale money.                                                                               
                                                                                                                                
CO-CHAIR PASKVAN  thanked her for the  "awesome presentation" and                                                               
asked a  rough estimate of what  it would cost to  make 130 wells                                                               
safe.                                                                                                                           
                                                                                                                                
4:28:27 PM                                                                                                                    
MS.  FOERSTER  replied  $500  million-or   less,  but  there  are                                                               
probably ways to  do it cheaper. For example,  oil companies have                                                               
said if  they get to lease  the land they would  plug and abandon                                                               
them for free.  Also, the BLM cleans  up one or two  wells a year                                                               
and leaves,  but a  large part  of the  cost is  mobilization and                                                               
demobilization  of  the equipment.  If  they  were to  move  that                                                               
equipment up  there and  do more  than one well  at a  time there                                                               
would be enormous economies of scale.                                                                                           
                                                                                                                                
SENATOR WIELECHOWSKI said  he found it hard to  believe that this                                                               
is  not  a  violation  of  some federal  law.  Have  the  state's                                                               
attorneys looked at this?                                                                                                       
                                                                                                                                
MS. FOERSTER  replied "yes we  have, and  no we can't."  She even                                                               
talked to the head of the  EPA Crimes Division who assured her if                                                               
it happened more than five  years ago, the statute of limitations                                                               
would apply.  The EPA would love  to help, but they  can't figure                                                               
out what to do.                                                                                                                 
                                                                                                                                
CO-CHAIR PASKVAN asked if Alaska spent  the money to clean it up,                                                               
could it attach or hold on to some federal royalty dollars.                                                                     
                                                                                                                                
MS.  FOERSTER replied  that the  Attorney General  hadn't offered                                                               
that as a solution.                                                                                                             
                                                                                                                                
4:31:29 PM                                                                                                                    
CO-CHAIR WAGONER opened public testimony.                                                                                       
                                                                                                                                
4:31:32 PM                                                                                                                    
DAVID  THERIAULT, Alaska  Conservation  Alliance, Anchorage,  AK,                                                               
supported HJR 29. He said they  knew very little about this issue                                                               
before Representative Millett's office  approached them about it.                                                               
Ms. Foerster's  presentation was  very persuasive.  Their concern                                                               
is to protect  the environment and health, but they  also want to                                                               
see consistent  rules consistently  applied for both  private and                                                               
government entities.                                                                                                            
                                                                                                                                
CO-CHAIR  WAGONER  said  maybe  his  group  could  contact  other                                                               
conservation  groups  to  get  them   involved  in  putting  some                                                               
pressure on the federal government.                                                                                             
                                                                                                                                
MR.  THERIAULT  responded  that  the  conservation  community  is                                                               
learning about it now and starting  to talk about it with some of                                                               
the  national  organizations and  they  all  want to  solve  this                                                               
problem one way or another.                                                                                                     
                                                                                                                                
CO-CHAIR  WAGONER, finding  no  further  comments, closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
CO-CHAIR WAGONER offered Amendment 1.                                                                                           
                                                                                                                                
                                                 27-LS1208\A.1                                                                  
                                                       Nauman                                                                   
                                                      3/17/12                                                                   
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR WAGONER                                                                 
                                                                                                                                
                                                                                                                                
     Page 1, line 3, following "region":                                                                                      
          Insert "; and urging the Office of the Governor                                                                     
      to increase nationwide awareness about legacy wells                                                                     
     and well sites"                                                                                                          
                                                                                                                                
     Page 2, line 24, following "region":                                                                                       
          Insert "; and be it                                                                                                   
          FURTHER   RESOLVED    that   the    Alaska   State                                                                  
     Legislature  respectfully requests  the  Office of  the                                                                    
     Governor    to    disseminate    information    through                                                                    
     appropriate   national  news   outlets  and   by  other                                                                    
     available  means to  increase  awareness nationwide  of                                                                    
     the  dangerous  conditions  of  the  legacy  wells  and                                                                    
     legacy  well  sites  in  the   state  and  the  federal                                                                    
     government's failure to plug  the legacy wells properly                                                                    
     and reclaim the legacy well sites"                                                                                         
                                                                                                                                
CO-CHAIR WAGONER explained that at  the time when the legislature                                                               
was  given a  doubling of  their office  accounts, he  refused to                                                               
accept  his, but  he was  pursuing diverting  that money  to this                                                               
cause. The amendment  asks the governor and his  office to become                                                               
involved in  this resolution process  and get  them to buy  PR in                                                               
certain  newspapers, and  maybe  use a  photo  array of  properly                                                               
abandoned  wells in  Alaska. He  thought  it would  have a  major                                                               
effect  on what  the feds  would  be able  to do  to answer  this                                                               
problem.                                                                                                                        
                                                                                                                                
CO-CHAIR  PASKVAN  asked  the  bill  sponsor's  thoughts  on  the                                                               
amendment.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  MILLETT  said  she welcomed  the  amendment.  Her                                                               
staff  found  that  a  full  page  black  and  white  ad  in  the                                                               
Washington Post would cost $54,000 to $110,000.                                                                                 
                                                                                                                                
CO-CHAIR WAGONER  said if  they can't get  the money  together to                                                               
use newsprint,  they could  use the Internet  and send  emails to                                                               
every conservation club in the United States.                                                                                   
                                                                                                                                
4:37:35 PM                                                                                                                    
SENATOR FRENCH  said it  looks like the  language is  designed to                                                               
coax the  governor and not use  a "shall" or "must,"  so a fiscal                                                               
note could be avoided, and he thought that was a good idea.                                                                     
                                                                                                                                
CO-CHAIR  WAGONER   found  no  objections  to   Amendment  1  and                                                               
announced that it was adopted.                                                                                                  
                                                                                                                                
CO-CHAIR  PASKVAN  moved  to  report   HJR  29  as  amended  from                                                               
committee with individual recommendations  and no attached fiscal                                                               
note. There  were no  objections and SCS  HJR 29(RES)  moved from                                                               
committee.                                                                                                                      

Document Name Date/Time Subjects
SB 215 - Route Comparison.pdf SRES 3/19/2012 3:30:00 PM
SB 215
SB 215 - Sponsor Statement and Legislation.pdf SRES 3/19/2012 3:30:00 PM
SB 215
SB 215 - Energy Cost Comparison.pdf SRES 3/19/2012 3:30:00 PM
SB 215
SB 215 - Fairbanks Impact.pdf SRES 3/19/2012 3:30:00 PM
SB 215
HJR 29_BLM Legacy Wells_AOGCC.pdf SRES 3/19/2012 3:30:00 PM
HJR 29
HJR 29_Version A.pdf SRES 3/19/2012 3:30:00 PM
HJR 29
HJR29_Fiscal Note_1-2-022012-LEG-N.pdf SRES 3/19/2012 3:30:00 PM
HJR 29
HJR 29 Amend Wagoner.pdf SRES 3/19/2012 3:30:00 PM
HJR 29
Draft CS SB 159-D version.pdf SRES 3/19/2012 3:30:00 PM
SB 159