Legislature(1993 - 1994)
01/31/1994 05:00 PM House O&G
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL & GAS
January 31, 1994
5:00 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Pete Kott, Vice Chairman
Representative Harley Olberg
Representative Gary Davis (arrived at 5:10 p.m.)
Representative Sitton
MEMBERS ABSENT
Representative Jerry Sanders
Representative Jerry Mackie
COMMITTEE CALENDAR
SB 151: "An Act providing for oil and gas
exploration incentive credits for
certain activities on certain land
in the state; and providing for an
effective date."
HEARD AND HELD OVER
HB 199: "An Act providing for oil and gas
exploration licenses, and oil and
gas leases, in certain areas of the
state; and providing for an effective
date."
HEARD AND HELD OVER
WITNESS REGISTER
KEN BOYD, Deputy Director
Division of Oil & Gas
Department of Natural Resources
3601 C Street, Suite 1380
Anchorage, Alaska 99510
Phone: (907) 762-2548
POSITION STATEMENT: In Support of SB 151 and HB 199
BECKY GAY, Executive Director
Resource Development Council
121 West Fireweed Lane, Suite 250
Anchorage, Alaska 99503-2035
Phone: (907) 276-0700
POSITION STATEMENT: In Support of SB 151
JACK CHENOWETH, Legislative Legal Counsel
Legislative Affairs Agency
130 Seward Street, Room 406
Juneau, Alaska 99801
Phone: (907) 465-2450
POSITION STATEMENT: Overview of HB 199
CLIFF BURGLIN
Address Not Available
POSITION STATEMENT: Opposed to SB 151 and HB 199
PREVIOUS ACTION
BILL: SB 151
SHORT TITLE: OIL & GAS EXPLORATION INCENTIVE CREDITS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
03/05/93 618 (S) READ THE FIRST TIME/REFERRAL(S)
03/05/93 618 (S) OIL & GAS, JUDICIARY, FINANCE
03/05/93 618 (S) ZERO FISCAL NOTES (DNR, REV)
03/05/93 619 (S) GOVERNOR'S TRANSMITTAL LETTER
03/16/93 (S) O&G AT 08:00 AM
03/16/93 (H) MINUTE(O&G)
03/16/93 (S) MINUTE(O&G)
03/23/93 (S) O&G AT 5:00 PM BUTRVICH RM 205
03/23/93 (S) MINUTE(O&G)
03/30/93 (S) MINUTE(O&G)
03/31/93 1002 (S) O&G RPT 3DP 1DNP/AM
03/31/93 1002 (S) PREVIOUS ZERO FNS (DNR, REV)
04/15/93 1418 (S) JUD REFERRAL WAIVED Y11 N9
04/18/93 1468 (S) FIN RPT 6DP 1DNP
04/18/93 1468 (S) PREVIOUS ZERO FNS (DNR, REV)
04/18/93 (S) FIN AT 01:00 PM SENATE FIN 518
04/18/93 (S) MINUTE(FIN)
04/18/93 (S) MINUTE(RLS)
04/21/93 1613 (S) RULES 3CAL 1NR 4/21/93
04/21/93 1620 (S) MOVED TO BOTTOM OF CALENDAR
04/21/93 1633 (S) READ THE SECOND TIME
04/21/93 1633 (S) AM NO 1 FAILED Y9 N11
04/21/93 1634 (S) AM NO 2 FAILED Y7 N13
04/21/93 1634 (S) ADVANCE TO THIRD READING FAILED
Y11 N9
04/21/93 1634 (S) THIRD READING 4/22 CALENDAR
04/22/93 1675 (S) READ THE THIRD TIME SB 151
04/22/93 1675 (S) PASSED Y14 N6
04/22/93 1675 (S) EFFECTIVE DATES SAME AS PASSAGE
04/22/93 1675 (S) JACKO NOTICE OF RECON
04/23/93 1714 (S) RECON TAKEN UP-IN THIRD READING
04/23/93 1715 (S) PASSED ON RECONSIDERATION
Y14 N6
04/23/93 1715 (S) EFFECTIVE DATES SAME AS
PASSAGE
04/23/93 1717 (S) TRANSMITTED TO (H)
04/24/93 1508 (H) READ THE FIRST TIME/REFERRAL(S)
04/24/93 1508 (H) OIL & GAS, RESOURCES, FINANCE
01/31/94 (H) O&G AT 05:00 PM CAPITOL 124
BILL: HB 199
SHORT TITLE: OIL & GAS EXPLORATION LICENSES/LEASES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
03/05/93 549 (H) READ THE FIRST TIME/REFERRAL(S)
03/05/93 549 (H) OIL & GAS, RESOURCES, FINANCE
03/05/93 549 (H) -ZERO FISCAL NOTE (REV) 3/5/93
03/05/93 549 (H) GOVERNOR'S TRANSMITTAL LETTER
03/15/93 (H) O&G AT 05:00 PM CAPITOL 124
03/16/93 (H) O&G AT 08:00 AM CAPITOL 124
03/22/93 (H) O&G AT 05:00 PM CAPITOL 124
03/22/93 (H) MINUTE(O&G)
03/25/93 (H) O&G AT 05:00 PM CAPITOL 124
03/31/93 (H) O&G AT 05:00 PM CAPITOL 124
04/06/93 (H) MINUTE(O&G)
04/07/93 (H) O&G AT 05:00 PM CAPITOL 124
04/07/93 (H) MINUTE(O&G)
01/13/94 (H) O&G AT 05:00 PM CAPITOL 124
01/26/94 (H) O&G AT 05:00 PM CAPITOL 124
01/31/94 (H) O&G AT 05:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 94-3, Side A
Number 002
CHAIRMAN GREEN called the meeting to order at 5:05 p.m.
Number 026
SB 151 - OIL & GAS EXPLORATION INCENTIVE CREDITS
KEN BOYD, DEPUTY DIRECTOR, DIVISION OF OIL & GAS, DEPARTMENT
OF NATURAL RESOURCES (DNR), testified via Anchorage that SB
151 extends a program that has existed on state lands for
ten years. He said though the exploration incentives
program already exists in Title 38, the state is able to
grant exploration incentive credits on wells that are
determined by the commissioner of the Department of Natural
Resources to (indiscernible). He explained that during the
review process for a sale area, a confidential briefing is
given to the commissioner of DNR. At that time a petroleum
economist, after having looked at all the terms and
conditions, recommends to the commissioner the bonus
payment, the terms of the lease and among other things,
exploration incentive credits. He stated the purpose of
exploration incentive credits is to get wells drilled
earlier than requested by the terms of the lease. In
exchange for that, the state agrees to a certain percentage
of the well cost. He said that those terms and conditions
vary from lease sale to lease sale, but that more recently
the terms have generally been in the range of 15 to 20
percent of the cost of certain wells.
MR. BOYD said SB 151 will expand the program to nonstate
lands, but there are certain differences from the existing
program. He stated the first difference occurs on page two,
line five. He indicated the difference is that under
current statute, there is a slightly narrower definition of
the taxes for which the exploration incentive might be
applied and they are mostly severance taxes. He said SB
151 has a broader tax statute that includes other kinds of
taxes. He stated the reason for that is the entities,
Native corporations for example, may not have any lease
holding in the state. He explained they may have old
leases, they may not pay rents or royalties, or they may not
have any bonus payments to pay, so the state broadened the
tax statute to give them the opportunity to apply their
credits. He referred to page two, lines 12 through 14 as
having a time cap.
MR. BOYD explained the intent of the bill, as it was
originally written, was to have the program for ten years.
He stated the bill passed the Senate in 1993 which, of
course, would have been ten years, but now that it is 1994,
the committee may wish to consider the date being moved to
2004. He explained that SB 151 would treat the data
somewhat differently (page two, lines 19 through 29). He
said the data that is derived from any of the test,
stratigraphic, or exploratory wells are held for 24 months
and then are released to the public. He explained that
under current statute, there is a two year period of
confidentiality, but at the end of that period, if wells are
meeting certain tests and conditions, the confidentiality
period may be extended for a longer time. He stated the
company has the option to do that. He said that with SB
151, at the end of 25 months the well would be made public.
He referred to page three, line two, explaining that SB 151
reduces the cap to 25 percent, the maximum the state will be
willing to allow as an exploration incentive credit on
nonstate lands. He said, while the state believes that it
receives a benefit or potential benefit from participating
in these wells on nonstate land, the state believes the real
benefit it will obtain is in getting the data on the
nonstate lands. He indicated that the state feels this cap
is a reasonable amount to allow. He said in some cases the
state will always get some severance taxes and some other
payments, but that it usually does not get the bulk of the
royalties. He explained what the state is really looking for
in this program is information. He said that if one looks
at a map of the state of Alaska, especially at the interior
basins, it is a hodge podge of ownership. There are state
lands that are mixed with federal lands which are intermixed
with private lands, quite often Native land. He said that
if a well is drilled on state land, then the state gets the
data; if the well is drilled on nonstate lands, it does not
always get the data; and if the well is drilled on private
lands, the state does not have a right to the data. He
testified that in certain cases determined by the DNR
commissioner, the state may wish to have the information
that comes from a privately drilled well, because it may be
next to state lands and could provide valuable information
for the exploration of adjacent state lands. He stated that
the program under SB 151 is not mandatory. The commissioner
has the discretion to not accept any program or any offers
made to him or her. Mr. Boyd referred to page three, line
six, section (f), and stated that the $50,000,000 in total
is meant to be over a period of ten years. He said these
terms are different than the exploration incentive credit
program that exists now, and under current statute there is
no time limit or cap on the program. He indicated that the
rest of the provisions of the bill were the same as current
statute.
Number 132
CHAIRMAN GREEN asked the committee members if they wished to
address either of the areas that Mr. Boyd mentioned, either
page 2, line 14 to change the July 1, 2003, program date to
2004 to comply with the ten year program that was
envisioned, or page three, line nine regarding the
$50,000,000 cap.
Number 149
REPRESENTATIVE GARY DAVIS made a motion to amend page two,
line 14 to read 2004.
REPRESENTATIVE PETE KOTT seconded the motion.
CHAIRMAN GREEN indicated for the record that he did not
believe the date change amendment was a recommendation by
DNR, he thought it was pointing out fact.
Number 166
BECKY GAY, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT COUNCIL,
testified via teleconference from Anchorage. She thanked
the committee for the opportunity to testify in support of
SB 151. She stated when most people think of oil
development, they think of development, production, or
construction, but exploration is actually the lifeblood of
the oil and gas industry. She stated the industry has high
upfront costs and risks. She indicated that the Resource
Development Council (RDC) believes that SB 151 will give a
true incentive to explore Alaska lands, including nonstate
lands. She said there is so much acreage off limits or not
offered in Alaska, that the RDC feels this is a definite
step forward. She stated SB 151 will augment and broaden
the scope of the present leasing system, and it will
encourage new players, both large and small, in exploration.
She said SB 151 will encourage prospecting for smaller,
local targets, such as village natural gas opportunities,
which would help Alaska. She indicated that the state will
still receive revenues, particularly severance taxes, on any
lands that are nonstate, so she felt there was a definite
incentive for the state to move forward on SB 151. She said
SB 151 will enhance the value of nearby sate lands, even if
those lands are not being explored at that moment and it
will maximize the odds of discovery since it does apply to
all of the aforementioned lands. She felt that SB 151 was a
long-term economic strategy for a more stable resource
climate and it would help Alaska to become less dependent
upon mega-projects and a less risky, more sound way to
proceed with oil and gas. She stated the RDC supports SB
151 as written, especially in light of the judicial rulings
on oil and gas lease sales. She said the RDC believes SB 151
would send a clear signal that oil and gas is still viewed
by the administration and the legislature as a part of
Alaska's long-term economic future.
Number 197
CHAIRMAN GREEN commented that the committee had not heard
from village or regional corporations, possibly due to
problems with arriving by plane into Juneau, although he did
not know if those groups were planning to testify. He
stated there was some discussion in 1993 about the
difference in the amount of credit between state and
nonstate property. He said the village corporations and
regional corporations had expressed some concern about that.
He asked Mr. Boyd if he had heard anything recently about
that issue.
Number 209
KEN BOYD stated he had not heard anything recently on that
issue. He said, he did know that the DNR commissioner had
met with representatives from Native organizations and
explained to them that the state believes the benefit
derived to the state is in proportion to the amount of money
that it is willing to credit. He stated that, even though
the cap on state land under existing statute is 50 percent,
in the last six or seven lease sales none of the incentive
credits offered have been above 20 percent. He said that
only one credit in state history has been offered at 30
percent.
Number 220
CHAIRMAN GREEN indicated he would accept a motion to move SB
151 out of committee with individual recommendations.
Number 224
REPRESENTATIVE KOTT made a motion that the committee move SB
151 as amended by the House Oil and Gas Committee to House
Judiciary, the next committee of referral.
Number 226
REPRESENTATIVE JOE SITTON seconded the motion. There were
no objections.
Number 228
HB 199 - OIL & GAS EXPLORATION LICENSES/LEASES
CHAIRMAN GREEN stated he would like to take up HB 199, a
companion bill to SB 151, in that it is a bill having to do
with large block leasing.
Number 246
JACK CHENOWETH, LEGISLATIVE LEGAL COUNSEL, LEGISLATIVE
AFFAIRS AGENCY, stated he was the drafting attorney assigned
to HB 199. He stated there have been a number of drafts of
HB 199 for the committee in the months since the first
session culminating in the draft marked "1012\I" in the
upper right hand corner. He said this was the version that
he would testify to the committee about.
MR. CHENOWETH said HB 199 deals with authorizing oil and gas
exploration licensing. He said that section one gives the
DNR commissioner the latitude to grant extensions of time,
as under current statute, for payments due on leases and
sales of state land, minerals, or materials and also to
cover any exploration licenses that are issued under the
authority given to him in HB 199. He said section two sets
out a new process for oil and gas exploration licensing.
Subsection (a) of AS 38.05.131 beginning at page two, is
unchanged from earlier drafts of the bill and essentially
says what other provisions of the Alaska Lands Act say that
apply to the oil and gas exploration licensing process. He
said subsection (b) of AS 38.05.131 puts certain lands off
limits, essentially land north of the Umiat Baseline of the
North Slope of Alaska and the areas in the Cook Inlet Basin.
Subsection (c) of AS 38.05.131 directs the DNR commissioner
to undertake preliminary written determinations of
nonexcluded land that is subject to oil and gas exploration
licensing, and to give notice along the lines provided in AS
38.05.945 (b) for the public to have an opportunity to
comment on the DNR commissioner's selections. He said
subsection (d) of AS 38.05.131 gives the commissioner
authority to adopt regulations.
MR. CHENOWETH said the licensing process, and its
limitations, are set out in AS 38.05.132. He referred to
page three at lines 12 through 14, which indicates that the
purpose is to encourage exploration for oil and gas on state
land. He said subsection (b) of AS 38.05.132 describes what
is required in the licensing process and sets limitation on
licensing. He stated exploration licensing gives the
licensee the right to explore for a term not to exceed 10
years for deposits of oil and gas on unleased state land and
the right to convert a license for the land that has been
explored into an oil and gas lease. He stated subsection
(c) of AS 38.05.132 sets limitations in terms of acreage.
He said exploration licensing is not subject to acreage
limitations that are imposed otherwise in the Alaska Land
Act. He said the specific limitations are that the
licensing area be not less than 20,000 or more than 500,000
acres. There is a requirement that the licensee commit to
performing a specific work commitment. He said work
commitment must be translated in terms of dollars of direct
exploration expenditure and the obligation on the licensee
is to complete at least 25 percent of the licensee's total
specified work commitment, not later than the fourth
anniversary date of the issuance of that license. He said
in other words, the licensee has four years in which to show
that it has expended dollars equal to at least twenty five
percent of the total specified work commitment, as outlined
in the original license. He said that the licensee in
paragraph (4) of AS 38.05.132 is obliged to post a bond or
other security subject to annual renewal.
MR.CHENOWETH said that page four, line 10 indicates how the
bond is to be determined and adjusted as years pass and as
work is performed. He stated the direct exploration
expenditures that the licensee makes, count toward the
reduction in the amount of the security or bond the licensee
is obliged to keep in place. In other words, the bond is
posted for the full amount at the outset. As the licensee
performs work, those amounts that can be determined to be
direct exploration expenditures tied to the total specific
work commitment are subtracted and the bond or security is
recomputed by dividing by the remaining period of years of
the license period, so there should be a reducing security
obligation over the period of the license. He said under
paragraph (5) of AS 38.05.132, the commissioner is to review
the bond or security and revoke the license if it is not
maintained.
MR. CHENOWETH continued that paragraph (6) of AS 38.05.132
indicates there is to be a license fee charge as determined
by the commissioner. He said it sets an upward ceiling of
one dollar for each acre of land, or fraction of the acre of
land, that is encompassed in the exploration license. He
said under paragraph (7) of AS 38.05.132, the licensee is
conditioned upon agreement that the exploration expenditures
are subject to audit. He referred to his earlier statement
about the necessity of completing certain work by the fourth
anniversary date. He said section (d) of AS 38.05.132
indicates what happens as a consequence of not completing or
meeting that obligation. He stated if the licensee has not
completed 25 percent of the total work commitment specified
by that date, the exploration license terminates on that
fourth anniversary date. He said if the licensee has
completed at least 25 percent, but has not reached 50
percent, the commissioner is authorized to remove or delete
or require the licensee to relinquish portions of the
exploration license and terminate the licensee's rights in
the areas that are relinquished or deleted. He referred to
licensees that are between the 25 and 50 percent work
commitment completion. He stated the measure by which the
deletion or relinquishment occurs is referred to in sections
(A), (B), and (C) of AS 38.05.132. He said that 25 percent
must be relinquished as of the fourth anniversary date and
then an additional ten percent at each subsequent
anniversary date until up to an additional 50 percent of the
original license area has been relinquished. In other
words, it is a sliding scale intending to encourage
licensees to keep exploring and is to the licensee's benefit
to get work done earlier rather than to sit on the license
and perform little or no work on it for the ten years that
the licensee's have it. He said subsection (e) of AS
38.05.132 refers to the revocation in the event the licensee
fails to maintain the bond or security in place. He said
subsection (f) of AS 38.05.132 offers definitions for the
two key terms of HB 199, the work commitment and the manner
of computation of direct exploration expenditure.
MR. CHENOWETH referred to AS 38.05.133 as procedural. He
said it refers to what the DNR commissioners are to do as
the licensing process gets underway. He said the licensing
process is to be initiated when the DNR commissioner, or a
prospective licensee submits to the DNR commissioner a
proposal which identifies specific areas that are open to
exploration licensing, proposes specific work commitments,
and states the minimum qualifications of the licensee,
identified in regulations. He said perspective licensees
may initiate proposals only in response to a call for
proposals by the DNR commissioner or during a period
specified in regulations adopted by the DNR commissioner.
He said the regulations must provide for at least one period
for that purpose during each calendar year. In other words,
the DNR commissioner has a key role in the timing and
offering of the opportunity to engage in exploration
licensing. He said it is not something that the DNR
commissioner would necessarily have to respond to on the
part of prospective exploration licensees until the
commissioner and DNR are ready to enter into that situation.
He stated the DNR commissioner is to give notice and must
act on proposals he receives within 30 days. He said under
subsection (e) of AS 38.05.132, the DNR commissioner may ask
for additional information on a proposal submitted by a
prospective licensee. He said the DNR commissioner shall
issue written findings addressing the matters set out in the
relevant provisions of AS 38.05.035 (e) and (g) and then if
the commissioner finds the state's best interest would be
served by issuing a license, his finding must indicate that.
He said if only one proposal is submitted the commissioner
must identify the perspective licensee whom the commissioner
believes should be issued the exploration license. He said
there is a provision in AS 38.05.035 (g) that refers to the
submission of one proposal being submitted by one
perspective licensee and what happens in those cases, what
the commissioner is required to do in the event competing
proposals are submitted, and how it is to be handled from
that point on AS 38.05.035(h). He said there are provisions
covering conversion of licenses to leases in AS 38.05.134.
He said certain provisions for which the earlier sections of
HB 199 exempt other parts of the Alaska Lands Act are
enumerated in the lease conversion provision. He said there
is a requirement of a royalty of not less than 12.5 percent
of production and an annual rent of three dollars per acre
or fraction of an acre, and any other conditions or
obligations the commissioner is prepared to specify in the
lease. He said section three makes a change that picks up
the additional four sections, AS 38.05.131 - 134, with an
additional cross-reference to them in AS 38.05.135 (a). He
said that section four, apart from the reworking of the land
to be leased, brings in reference to land that is subject to
an oil and gas exploration license being accepted from a
leasing program that the DNR commissioner is authorized to
enter into under AS 38.05.180 (d). He stated in section
five, covering land to be leased to the highest responsible
bidder, there is an exception made for land under license to
be converted to lease. He said that section six refers to
notice requirements in AS 38.05.945 (a) being applicable to
licensing and leasing under AS 38.04.132 - 134. He said
that section seven's reference to the additional excluded
area is a temporary provision intended to cover land already
picked up in three of the competitive lease sales; 80, 87,
and 88. He said his recollection was that the exclusion
will come to an end and at some point that land could be
open to exploration licensing. He said section eight gives
the DNR commissioner advance authority to prepare
regulations to cover the licensing program. In other words,
the commissioner is given a head start on adopting
regulations to implement the licensing program before the
effective date and only that section is given an immediate
effective date. He stated the remainder of the bill has a
90 day effective date. He indicated this was the same
approach used in SB 151.
Number 470
REPRESENTATIVE SITTON asked if the bonding provision is
prohibitive to small operators or small companies. He also
asked how hard is it to get a bond and are bonds readily
available.
CHAIRMAN GREEN said, in his experience unfortunately, the
smaller the operator, the more costly the bond. He said
from his standpoint, exploration in Alaska is extremely
expensive. He said exploration in Alaska is not something
that is necessarily conducive to the small operator. He
stated there are some possibilities of making a special
dispensation to a smaller operation. He said it seemed to
him that if an independent operator in North Texas or
Oklahoma, for example, tried to operate in Alaska, it would
be on a peripheral basis, around existing oil fields,
somewhat like what the independents do in the contiguous
United States. He said HB 199 is geared towards unknown
areas. He said there are several basins in the state with
little to no exploration having been done. He said it is
going to take an operator with a significant sum of money
because even if there is a discovery, the operator has to
get it from the well back to the market.
Number 510
REPRESENTATIVE SITTON stated he wanted to follow up with a
friendly question. He wanted to know what purpose the
bonding provision served given the conditions that Chairman
Green had just described, and given the provisions on
relinquishment.
KEN BOYD stated the purpose of the bonding goes back to
establishing the work commitment. He said the state has to
have some protection, so it gets companies that are bidding
a reasonable, responsible amount. For example, a company
could come in and bid any amount of work at any level when
it is clearly incapable of doing that kind of work. He said
as part of the total package, the bonding formula doesn't
require companies to have an enormous amount of money in any
given year, yet still protects that state. He stated,
without the bonding provision, HB 199 falls apart.
Number 555
REPRESENTATIVE SITTON asked why the state couldn't tighten
up on the relinquishment side and have the same guarantees.
Number 560
CHAIRMAN GREEN indicated he did not understand the question,
since there is a relinquishment in HB 199.
Number 562
REPRESENTATIVE SITTON stated that both relinquishment and
bonding serve a dual purpose. He said both are aimed at
guaranteeing that the company live up to its side of the
deal. In response to Mr. Boyd's comments on bonding and the
reasoning for it, he speculated that it might be possible
to tighten up on the relinquishment part of the proposal and
achieve the same purpose.
Number 574
CHAIRMAN GREEN stated he thought that one of the main
reasons for the bonding is there has to be some
accountability for the bids. He said another reason is if
there is not a cash requirement, the process might be opened
up to speculation. For example, an operator might come to
Alaska from Texas and tie up 500,000 acres on a bogus bid
and then try to peddle it to another operator. He said in
the past, this procedure has been quite lucrative to some
people. He said that securing acreage, and then building
what is called "a play" to peddle to another company with a
lot of money. He said the concept is that the state doesn't
want to be in the business of allowing an operator to lock
up a large parcel of land for a ten year period and be out
speculating with that large parcel of land.
Number 600
REPRESENTATIVE SITTON asked Chairman Green if such
speculation has taken place in Alaska.
Number 602
CHAIRMAN GREEN stated yes. He said there used to be a
situation called "over-the-counter type" leasing. He said
it led to speculation and was fairly popular in the Cook
Inlet area on much smaller areas.
Number 607
REPRESENTATIVE DAVIS said, in reference to Representative
Sitton's question, that has been a concern for him. He
stated one thing that clarified it in his mind was the
situation in the state of Alaska with who owns the land. He
said it is largely state and federally owned land, where
independents primarily work on private land. He said that
fact in Alaska limits the operation of small independents
anyway. He said he shared Representative Sitton's concern,
but he did not see any options. He said he knows there were
discussions during the interim and that was one the issues
that was hashed out in detail. He said he also knows from
reading the literature, that one apparently independent in
Representative Sitton's area is still concerned about the
provision.
Number 638
CHAIRMAN GREEN stated there are a couple of independents in
the Anchorage area who are also affected, perhaps
restricted, by this. He maintained that somebody with a
limited funding, in the context of less than millions of
dollars of ready cash, perhaps should not be involved in
something of that magnitude. He stressed it is a way to
evaluate state land that doesn't lend itself to be evaluated
under the current leasing program. He stated there are
competitive leases that HB 199 will not affect in any way.
He said HB 199 does not exclude anybody from bidding on the
more conventional lease sales.
Number 671
REPRESENTATIVE SITTON stated that short of Alaskans
achieving something in the bonding world equivalent to the
notion of universal access health care, he supposed that
Alaskans would have to live with it.
Number 681
REPRESENTATIVE DAVIS stated that Representative Sitton was
correct about universal access. He said as a small
excavating contractor he could not get a bond for a million
dollar project to be competitive with larger companies. He
stated there is definitely some lack of universal access.
Number 694
CHAIRMAN GREEN stated he thought that Mr. Boyd made a good
opening comment when he said that HB 199 as it is now, may
be acceptable to most all of the players, but it certainly
is not what each one of them individually would like.
Number 707
REPRESENTATIVE SITTON referred to page six, lines 26 and 27.
He stated he was familiar with the mechanism for the
establishment of regulations and that his familiarity leads
him to be a little weary of saying outright that the DNR
commissioner will establish minimum qualifications for the
licensee. He hopes the legislature was not encouraging the
Executive Branch to get into more law making than it is
already doing.
Number 733
KEN BOYD said the intention of that provision is to keep the
eligibility for the program the same as it is for the
state's five year schedule, which is that a qualified
applicant is "...a natural person who is at least 18 years
of age, a corporation"...
TAPE 94-4, SIDE A
Number 001
KEN BOYD said the program is open to all.
Number 003
REPRESENTATIVE SITTON said an open program was good and he
was glad to have it on the record that the state intends to
do that.
CHAIRMAN GREEN stated he would like to have a motion to
adopt the Committee Substitute for HB 199 so the committee
can be acting on the current version.
Number 008
REPRESENTATIVE DAVIS made the motion. There was no
objection.
Number 011
CLIFF BURGLIN, testified via teleconference from Fairbanks,
there are no perimeters or numbers in HB 199. He said he
noticed two numbers ($5,000,000 and $50,000,000) that the
state was going to give to oil companies for work they may
or may not do. He stated one of the things the legislature
is doing is trying to figure out how to make ends meet. He
asked how the state could make ends meet by making large oil
companies the state's favorite charity. He said he wanted
to correct the legislator who said there are no or very few
independents on state or federal land in other states. He
said there are thousands of independents who drill wells on
federal and state lands in every other state, and there are
ways for them to obtain leases. He stated the highest
bonding that he knows of for any state is $20,000. He also
wanted to make another clarification. He said that
independents have drilled wells in the state of Alaska. He
then addressed his comments to Representative Sitton saying
he could not believe that Representative Sitton could tell
him that he thoroughly understands HB 199, and he didn't
believe any other legislator could either. He stated he
could not believe the public has not had a chance to look at
the bill. He stated he sent some legislators testimony for
the hearing, but the only people who have been meeting on HB
199 are the oil companies and some people from DNR. He
stated HB 199 will tie up potentially all of the land in the
state, including the surface rights.
MR. BURGLIN also addressed the proposed preliminary report
on the settlement of the Mental Health Trust Lands
litigation. He said it seemed to him as he read through the
report that unless the state steals the land, they have a
right to select land before either HB 199 or SB 151 go
through. He said he wanted to know how the legislature is
going to satisfy the Mental Health Trust. He said he knew
that the trust is not favorable towards HB 199 or SB 151,
and if the trust has any kind of legal representation, they
will be "jumping all over you legislators before they let
you pass this bill or anything like it." He asked why there
was no publicity on the bill since it is going to affect the
pocketbooks of every Alaskan. He said it appeared to him
the money was going to go from Alaskans' pocketbooks to
multinational oil companies' pocketbooks, who by their own
admission, are cutting back, destroying jobs, and leaving
the state. He asked how legislators could push the
legislation through without telling people what it means.
He said it is Alaskans' money the legislature is giving away
with SB 151. He indicated that the legislators were trying
to bribe the oil companies to come back, but they are
leaving. He stated if the oil companies did not want to
stay, the legislature should let them go and let others come
in. He referred to the bonding provision of HB 199 and said
the big oil companies have their own security, so they don't
have to put up a bond. He said even if an oil company did
have to put up a $20 million bond and then did something
wrong, the company would tell the state to sue it. He asked
which commissioner the legislature would let distribute the
land. He asked who would monitor the commissioner against
special interests and cronies. He asked if the legislature
would set up safeguards in HB 199 or would it trust the DNR
commissioner to take care of everything in the right way.
He asked again who would watch the commissioner.
Number 130
CHAIRMAN GREEN indicated that he would attempt to answer
some of Mr. Burglin's questions. He referenced Mr.
Burglin's comments about the $5,000,000 to $50,000,000
credits. He thought that Mr. Burglin was referring to SB
151, and SB 151 was no longer before the committee. He said
he did not believe there were no independents in other
states. He said the committee was aware of hundreds of
independents in the other states. He referred to Mr.
Burglin's comments on the lack of publicity on the bill and
informed him that meetings were held during the first
session of the 18th Legislature, and the committee had held
a special interim meeting. He referred to Mr. Burglin's
reference to the Mental Health Trust Lands and stated it is
another issue. He concurred with Mr. Burglin, there may be
some difficulties once that issue has been settled. He
acknowledged that companies are leaving Alaska, and have
been for several years. He said the legislation was an
attempt to try and entice companies to stay and perhaps
bring back some companies that have left. He referred to
Mr. Burglin's indication that he is a co-owner in several
wells in Alaska. He said he thought that was probably the
answer for independents, to group together.
Number 161
MR. BURGLIN indicated he did try to testify on SB 151, but
it was heard so quickly he did not have a chance. He asked
how Chairman Green could say the public had an adequate
chance to testify on these bills when he just got one of the
final working drafts 25 minutes ago. He disagreed with
Chairman Green vehemently that the bills have received the
publicity they deserve. He stated that with the potentially
adverse effects the bills could have on Alaskans, he did not
believe there was any legislator that understood what the
bills were about. He stated he would be happy to go to
Juneau to discuss the bills with anyone that thought they
could explain it to him.
CHAIRMAN GREEN offered his personal invitation to Mr.
Burglin to come to Juneau to discuss the bill with him. He
said it was not his intention to pass the bill out of
committee, it was his intention to keep the committee
substitute in committee, study it, and then come back and
pass it out.
Number 185
MR. BURGLIN indicated he would like to have some written
answers to some of the questions that he had raised.
Number 187
CHAIRMAN GREEN said if he would submit the questions in
writing, the committee would respond.
Number 188
MR. BURGLIN indicated he already had submitted questions.
Number 189
CHAIRMAN GREEN asked to whom he submitted the questions.
Number 190
MR. BURGLIN responded that he had submitted questions to the
committee and he would fax his questions to Chairman Green's
office.
Number 199
CHAIRMAN GREEN adjourned the meeting at 6:06 p.m.
| Document Name | Date/Time | Subjects |
|---|