Legislature(1995 - 1996)
01/25/1996 11:30 AM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
January 25, 1996
11:30 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative Scott Ogan, Vice Chair
Representative Gary Davis
Representative Tom Brice
Representative David Finkelstein
MEMBERS ABSENT
Representative Bettye Davis
Representative Bill Williams
OTHER MEMBERS PRESENT
Representative Joe Green
Representative Gene Therriault
COMMITTEE CALENDAR
* EO 92 Consolidation of the Division of Oil and Gas with Division
of Geological and Geophysical Surveys
- DISAPPROVED AND MOVED OUT OF COMMITTEE
(* First public hearing)
WITNESS REGISTER
NICO BUS, Acting Director
Division of Support Services
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801-1724
Telephone: (907) 465-2406
POSITION STATEMENT: Supported EO 92
KENNETH A. BOYD, Director
Division of Oil and Gas
Department of Natural Resources
3601 C Street, Suite 1380
Anchorage, Alaska 99503-5948
Telephone: (907) 762-2547
POSITION STATEMENT: Supported EO 92
MILT WITSE, Acting Director
Division of Geological and Geophysical Surveys
Department of Natural Resources
794 University Avenue, Suite 200
Fairbanks, Alaska 99707-3645
Telephone: (907) 451-5000
POSITION STATEMENT: Supported EO 92
REPRESENTATIVE JOHN DAVIES
Alaska State Legislature
State Capitol, Room 422
Juneau, AK 99801
Telephone: (907) 465-4457
POSITION STATEMENT: Opposed EO 92
ACTION NARRATIVE
TAPE 96-3, SIDE A
Number 000
The House Oil & Gas Special Committee was called to order by
Chairman Norman Rokeberg at 11:30 a.m. Members present at the call
to order were Representatives Rokeberg, Ogan, and G. Davis. A
quorum was not present. This meeting was teleconferenced to
Anchorage and Fairbanks.
CHAIRMAN NORMAN ROKEBERG announced the agenda as EO 92.
EO 92 CONSOLIDATION OF THE DIVISION OF OIL AND GAS WITH DIVISION
OF GEOLOGICAL AND GEOPHYSICAL SURVEYS
Number 132
NICO BUS, Acting Director, Division of Support Services, Department
of Natural Resources (DNR) was first to testify. He explained the
proposed consolidation of the Division of Oil and Gas (DO&G) with
the Division of Geological and Geophysical Surveys (DGGS). He said
during the fiscal year 1996 budget deliberations, the funding for
the DGGS director was deleted through legislative action at a
savings of $74,000. During those deliberations, the legislature
encouraged DNR to consolidate smaller divisions, such as the
previous consolidation of the Division of Water and the Division of
Mining.
Number 232
MR. BUS said Commissioner Shively asked the Geological Mapping
Advisory Board to establish a committee and assess the role and the
function of the survey, as well as the director and state
geologist. This finalized report, completed in the fall, included
the following recommendations; have the director or state geologist
located in Anchorage with a five year term, to have an existing
strong geological survey which explored natural resources and
geological hazards, and pursue and develop partnerships with those
organizations that have similar goals. Other recommendations from
this report include strong and adequate funding. Due to the budget
deliberation process, it did not appear that this would be the
case.
Number 332
MR. BUS said the commissioner was looking at two objectives
including how to live within the fiscal constraints of the budget
reality and yet meet the recommendations of the committee. To do
this, DNR proposed the consolidation of DO&G with DGGS. Under EO
92, DO&G and DGGS would keep their own and distinct funding and
operations under the funding discretion of the legislature. EO 92
was done to keep a field presence without changing staffing between
the Fairbanks and Anchorage location. The acting director of the
geological survey will be the operational manager for the survey
but under EO 92, he/she will report to the director of DO&G.
MR. BUS said that under EO 92, the savings will amount to $50,000
because of combining administrative staff. Currently the DO&G has
a budget of $4.2 million and employs 50 staff while the DGGS has a
budget of $2.5 million and employs 25 staff. EO 92 would maintain
the integrity of the operations and yet obtain operational
efficiencies by increasing communication and cooperation between
the two organizations.
Number 550
CHAIRMAN ROKEBERG recognized Representative Finkelstein as being
present and announced a quorum was present. Representative Joe
Green and Representative Gene Therriault joined the committee at
the table.
Number 600
REPRESENTATIVE GENE THERRIAULT asked and it was confirmed that the
$50,000 savings was in the fiscal year 1997 budget. He then noted
that in the fiscal year 1996 budget there was already a savings of
$74,000 for the executive director's salary. He asked if EO 92 was
overturned, there would be a loss of $50,000 plus the need to
replace the money that was cut last year.
MR. BUS said currently there is not funding for the executive
director.
Number 643
REPRESENTATIVE DAVID FINKELSTEIN asked for details on the positions
that would be eliminated.
Number 657
MR. BUS said they would include administrative people, geological
or field personnel would not be cut under EO 92.
Number 690
REPRESENTATIVE THERRIAULT asked if consolidation with the Division
of Mining was addressed.
Number 710
MR. BUS said that a consolidation of the DGGS and the Division of
Mining was looked at in fiscal year 1986 and it was felt that it
was important to keep them separate and intact. The Division of
Mining and the Division of Water Management have since been
combined.
Number 768
CHAIRMAN ROKEBERG announced that Representative Brice had joined
the committee meeting.
Number 780
REPRESENTATIVE GARY DAVIS asked if there was a current position
titled Deputy Director of DGGS.
MR. BUS said yes, that presently the position functioning as Deputy
Director is a Geologist, Level 6 position.
Number 820
KENNETH A. BOYD, Director, Division of Oil and Gas, Department of
Natural Resources was next to testify. He said the state of Alaska
is enjoying a resurgence in mineral exploration which is fueled by
DGGS. The Division of Mining and Water Management does a good job
with existing mines, but DGGS assists with the development of new
mines and it is an important function. He then mentioned other
functions that DGGS has shared with DO&G such as coal and methane
exploration, geological fieldwork on the North Slope, and project,
"teamwork" done west of NPRA. He hoped that DGGS can work with
DO&G, while DGGS maintains it's vital roles in volcanology,
earthquake prediction, and mineral exploration.
Number 912
MILT WITSE, Acting Director, Division of Geological and Geophysical
Surveys, Department of Natural Resources testified next. He said
DGGS had no objections to this consolidation and have experienced
good relations with DO&G. He discussed declines in staffing and in
the budget within DGGS, such as the move of DGGS geologists, who
preformed lease evaluation to DO&G in the 1980s. He praised Ken
Boyd, who would be the director of what would essentially be an
expanded geologic survey. He emphasized the importance of
preserving a critical mass of scientists to carry out this work in
lieu of the downsizing of the state budget. He expressed concern
over the loss of technical support in Fairbanks. He concluded that
DGGS and DO&G support this consolidation.
Number 1049
REPRESENTATIVE THERRIAULT asked whether the technical support he
referred to meant combining employees of DGGS and DO&G employees
who do oil basin analysis.
Number 1065
MR. WITSE said DGGS staff, despite having areas of specialty, work
across a range of geologic investigation. He said the proposed
consolidation will increase coordination in both directions. DO&G
will work with DGGS on strategic field programs and DGGS will work
with DO&G on lease evaluation. The coal and methane production
program, which has already begun, will enjoy increased support in
addition to a overall increase of geographic and geophysic
expertise and which will aid the interpretation of geophysical
surveys.
Number 1162
REPRESENTATIVE THERRIAULT asked if there was concern over DGGS's
function in the hard rock mineral community will be eclipsed by oil
and gas.
Number 1175
MR. WITSE said it is not a concern, because of Ken Boyd's instincts
and support in the mineral side of DGGS. Mr. Boyd will oversee
DGGS if EO 92 is passed. He said EO 92 includes the Alaska statute
48.01 which details the mandate and the mission of the geological
survey. This statute would prevent oil and gas issues from
overshadowing the other roles of DGGS.
Number 1242
REPRESENTATIVE JOE GREEN stated the requests by DO&G for increased
funding especially in oil and gas pre-sale analysis. He said oil
companies tend to do much more individual research whereas mining
companies rely more heavily on DGGS. He expressed concern over the
sublimation of DGGS under DO&G especially if they were to delegate
oil and gas exploration duties rather than in mining exploration.
He stressed the importance of diversification of resources within
the state. He asked if the reason for not combining DGGS with
Division of Mining and Water Management was because DGGS would be
focused more on mining and why it was felt that this would not
occur with DO&G. He further asked if separate budgets and duties
mandated by EO 92 could be done for the consolidation of DGGS with
DO&G, why couldn't it be incorporated for a merger between DGGS and
Division of Mining and Water Management.
Number 1386
MR. WITSE said EO 92 specifies that the director of this
consolidation must have experience and education in geology which
Mr. Boyd has, but that the director of Division of Mining and Water
Management does not have. The Division of Mining and Water
Management director has an undergraduate degree in geology but is
not a practicing geologist. He added that when the consolidation
of DGGS with Division of Mining and Water Management was attempted,
several positions from Fairbanks were moved to Anchorage. It was
felt at the time that a consolidation between the Division of
Mining and DGGS would lead to the dissipation of DGGS. He
mentioned why a consolidation with DO&G was looked at now, that the
reasons included current joint projects between DO&G and DGGS and
the current loss of funding. Mr. Witse said the Geologic Mapping
Board, which acts as a board of directors for the DGGS, would
prevent any drift in the integrity and purpose of DGGS.
Number 1495
MR. WITSE said it is important to maintain or increase the
strategic mineral activities of the state, but added that the
greater potential revenue impact will probably be from coordinating
and consolidating the strategic oil activities of DGGS with the oil
expertise and lease evaluation group in DO&G. DGGS staff who
currently work on those issues would continue to do so, whether or
not EO 92 is passed, but work on those issues would be more
efficient under a consolidation. He mentioned that two major oil
companies, as well as one minor oil company, have contributed to
support the field work, so oil companies will be looking to DGGS
for information. He concluded that the consolidation listed in EO
92 is the right one at this time.
Number 1642
REPRESENTATIVE GREEN asked whether the state geologist position is
not so technical as it is administrative. He said the combination
of expertise within DGGS as well as the Geological Mapping Board
would continue to oversee the direction of DGGS. He said he
wondered whether the EO 92 consolidation was in the right
direction.
Number 1697
MR. WITSE disagreed with the statement that the state geologist
position is just an administrative position. He said,
historically, the director of DGGS has had a major role in the
developing the strategic direction of the survey. The position
incorporates that of a mentor, a technical advisor, and long term
strategist in terms of geological hazards, in oil and in minerals.
He said he felt the state would not be well served from the current
balanced approach if the position were to become an administrative
one.
Number 1830
MR. WITSE said the role of DGGS has been a strategic information
gathering and consolidation in all aspects of geology not just oil
and minerals, but hazard information as well. The DO&G had a role
of management of that one resource.
Number 1858
REPRESENTATIVE GREEN mentioned that from his direct experience he
found the position of the state geologists to be more of an
administrative position. He added that the Executive Branch has
submitted a person for the Oil and Gas Conservation Commission
who is not qualified in the areas of academics or experience, but
because the position is viewed as a administrative one where he can
rely on staff expertise, he was deemed qualified.
Representative Green leaves the committee meeting.
Number 1929
MR. WITSE said avoidance of this type of hiring was one of the
reasons why the establishment of the function of DGGS was codified
in the statute.
Number 1947
REPRESENTATIVE JOHN DAVIES stated for the record that he had been
an employee of DGGS. He stated respect for Commissioner Shively,
Milt Witse, and Ken Boyd. He stated his concern that EO 92 is
driven by budget considerations rather than what is best for the
state of Alaska. He said it is an attempt to make the best of a
bad situation and that the legislature should address the bad
situation rather than put band-aids on it. He questioned whether
the role of the state geologists would be diluted if the duty of
lease management was added to that role.
Number 2061
REPRESENTATIVE DAVIES reiterated, in an approving way, Mr. Witse's
definition of the role of the state geologist. He added the
research aspect of DGGS and how effective it has been especially in
aero-magnetic surveying. He said he did not feel that the mission
of DO&G fits into that research role. The importance of
maintaining DGGS independence and it's role was stressed and he
questioned how the state perceived the importance of DGGS's role in
future development. He added that geologic work done in the early
1900s is just now bearing fruit because this type of work can have
lead times of decades. He said the support for state salaries has
gone beyond the critical point and has lead to the development of
EO 92. He mentioned the reduction of administrative staff, in a
program that has already been squeezed, will force geologists to do
administrative work rather than mapping. Administrative losses
will have an effect on productivity.
Number 2212
REPRESENTATIVE DAVIS concluded that it is important to have a state
geologist, who will provide the strategic leadership, developing
linkages and joint efforts with the private sector, other states
and with the federal agencies. There has been a long history of
cooperation which is a result of background work. He questioned
whether the state geologist position can maintain these functions
as well as manage the lease program.
Number 2261
REPRESENTATIVE FINKELSTEIN said he found this issue difficult
because he shared Representative Davies concerns and yet he found
it hard to be negative about a cost cutting measure especially in
a proposal in which all the concerned parties agreed.
Number 2295
CHAIRMAN ROKEBERG validated his concerns, but added this committee
needed to meet their constitutional mandate and move this
resolution along and to do so, it needed to be a resolution in the
negative.
REPRESENTATIVE SCOTT OGAN made a motion to disapprove EO 92 and
move it out of committee.
CHAIRMAN ROKEBERG explained procedure at Representative
Finkelstein's request. He said that a standing committee or a
joint committee need to approve it. He added that because it was
the Speaker of the House's referral, he wants to move it along as
it serves no purpose by staying in the committee.
Number 2400
REPRESENTATIVE THERRIAULT, when asked, gave his opinion that he
disagreed with the fiscal note because it lacked money to fund the
position. He said he disagreed with the position Representative
Davies presented which was that the problem was an issue of state
funding. He said in the discussion of how to pay for state
government in the long haul, the long-range financial planning
commission proposed cuts of $100 million. The Governor is
proposing cuts of $35 million and attempting to preserve the
services that we want out of state government.
96-3, SIDE B
Number 000
REPRESENTATIVE THERRIAULT said EO 92 is an attempt to do this in a
good faith effort.
Number 014
CHAIRMAN ROKEBERG asked about the feasibility of nominating the
position currently held by Mr. Witse as state geologist.
Number 032
REPRESENTATIVE THERRIAULT said it would be possible, but with the
reduction of the budget it would be a question of pressing down on
staff rather than a structural change.
Number 045
Hearing no objections, a motion was passed in the House Special
Committee on Oil and Gas disapproving EO 92 and passing it out of
committee.
CHAIRMAN ROKEBERG stated that due to objections, HB 381 will not be
waved out of committee.
ADJOURNMENT
There being no further business to come before the House Oil & Gas
Special Committee, Chairman Rokeberg adjourned the meeting at 12:21
p.m.
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