Legislature(1995 - 1996)
02/06/1996 10:24 AM 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 AND GAS
February 6, 1996
10:24 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative Scott Ogan, Vice Chair
Representative Gary Davis
Representative Bill Williams
Representative Tom Brice
Representative Bettye Davis
Representative David Finkelstein
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
* HOUSE BILL NO. 388
"An Act revising laws relating to oil and gas leasing to authorize
a program of areawide leasing."
- HEARD AND HELD
* HOUSE BILL NO. 389
"An Act relating to `best-interest findings' for oil and gas
leases."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 388
SHORT TITLE: AREAWIDE OIL & GAS LEASING
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG,B.Davis
JRN-DATE JRN-PG ACTION
01/05/96 2368 (H) PREFILE RELEASED
01/08/96 2368 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2368 (H) O&G, RESOURCES, FINANCE
02/06/96 (H) O&G AT 10:00 AM CAPITOL 124
BILL: HB 389
SHORT TITLE: BEST INTEREST FINDINGS OIL LEASES
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG,B.Davis
JRN-DATE JRN-PG ACTION
01/05/96 2368 (H) PREFILE RELEASED
01/08/96 2368 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2368 (H) O&G, RESOURCES, FINANCE
02/06/96 (H) O&G AT 10:00 AM CAPITOL 124
WITNESS REGISTER
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: Testified on HB 388 and HB 389
GEORGE R. FINDLING, Manager
Government and Public Relations
ARCO Alaska, Incorporated
P.O. Box 100360
Anchorage, Alaska 99501
Telephone: (907) 263-4174
POSITION STATEMENT: Testified on HB 388 and HB 389
ACTION NARRATIVE
TAPE 96-8, SIDE A
Number 000
The House Oil & Gas Special Committee was called to order by
Chairman Norman Rokeberg at 10:24 a.m. Members present at the call
to order by Chairman Norman Rokeberg were Representatives Rokeberg,
Ogan, G. Davis and Williams. A quorum was present. This meeting
was teleconferenced to Anchorage and Fairbanks.
CHAIRMAN NORMAN ROKEBERG announced that the agenda was HB 388 and
HB 389.
HB 388 AREAWIDE OIL & GAS LEASING
HB 389 BEST INTEREST FINDINGS OIL LEASES
Number 118
CHAIRMAN ROKEBERG said HB 388 and HB 389 were companion bills and
that it was hard to address one bill without the other. He said
the two topics of HB 388 and HB 389 were separated because the
subject matter was different in some ways. He added that if either
HB 388 and HB 389 pass, it will be in effect a way to streamline
the leasing and the best interest findings process. He referred to
a work session, dated December 18, 1996, and said, at that time, HB
388 and HB 389 were developed. He said committee substitutes and
sponsor substitutes were handed out this morning, and apologized.
Representative Brice and Representative Finkelstein joined the
committee meeting at 10:30 a.m.
Number 274
CHAIRMAN ROKEBERG read from his HB 388 sponsor statement. In the
Alaska statute it states that "it is the best interest of the state
to encourage an assessment of its oil and gas resources, allowing
maximum flexibility in the methods of issuing leases." He said the
aim is to give the commissioner and his director the ability to do
business with the private sector. "The provisions of this bill
grant the commissioner of the Department of Natural Resources (DNR)
new flexibility to meet the needs of the petroleum industry in
acquiring access to lands for exploration." He added that this had
been an outstanding issue for a number of years. He said HB 388
mandates annual lease sales of acreage previously offered, limits
best-interest findings to substantial new information, eliminates
the five year limit on "exempt" and re-offered" sales and lastly it
establishes a program of areawide oil and gas leasing to cover the
entirety of both the oil and the gas reservoir. He concluded that
HB 388 gives the director of the Division of Oil and Gas (DO&G)
discretionary authority to include such areas the director deems
appropriate, such as areas onshore of the Arctic Slope and portions
of Cook Inlet.
CHAIRMAN ROKEBERG said the Governor introduced bills that
specifically involve best interest findings in the North Slope
onshore areas, north of the Umiat baseline. He said the committee
will hear testimony from the Administration. The intent of HB 388
is to compliment their authority and give the director more tools
to break down barriers and obstacles, as well as mandating the
annualized leasing offers.
Number 442
CHAIRMAN ROKEBERG then discussed HB 389. He said HB 389 involves
best-interest findings, which is the written determination by the
commissioner of the DNR, as written in the statutes, on whether
the "interests of the state will best served," by leasing the area
under consideration for proposed oil and gas activities. He said
best-interest findings take into consideration all facts pertinent
to the land, resources, property or interest in them and can take
from six months to one or more years to complete. The period of
time that a best-interest finding is valid is unclear in statute.
CHAIRMAN ROKEBERG said HB 389 allows the DO&G to revise existing
best interest findings when substantial new information is
presented to the department. Currently, if there is new
information, the DO&G must spend the resources and time to revise
the best-interest findings. The HB 389 calls for a revision only
when the new information is substantial, information that is
essential and critical in regards to the best interests of the
state. A revision in best interest findings would only be done
when new information significantly impacted the leasing area. The
revision would include a period of public comment.
CHAIRMAN ROKEBERG concluded that the intent of HB 389 is to reduce
the time, effort and funding required by the DO&G to meet its
statutory mandate and streamline the leasing process.
Number 571
CHAIRMAN ROKEBERG said HB 388 and HB 389 might need further work to
bind them closer together.
Number 590
KENNETH A. BOYD, Director, Division of Oil and Gas, Department of
Natural Resources was first to testify. He said he had just
received copies of HB 388 and HB 389, but added that he has had
discussions with Chairman Rokeberg and is familiar with these
issues. He said he would limit the discussion to the broad
principals of legislation. He said he would avoid sections of the
bill and cited Title 38 which has one section referring back to a
previous section which related to another section. He said he
would discuss the general principals of leasing and areawide
leasing.
Representative Bettye Davis joined committee meeting at 10:36 a.m.
MR. BOYD said areawide leasing was born out of discussion with
industry some months ago. Areawide leases offer areas of land,
consistently wanted by industry, on a regular basis.
Number 732
MR. BOYD showed a map of the North Slope that outlined the leases
that had been offered in the past. He pointed to 80 leases that
have been offered on a regular basis, absent law suits and other
things. He then referred to a large section of the map and said it
is a area for lease, Sale 87, in the proposed five year oil and gas
schedule. He said in the middle of January he wrote a letter, to
both the Speaker of the House and the President of the Senate,
asking for a revision of this program. The DO&G wants to change
Sale 87, to cut the portion off at the Umiat baseline and then
incorporate areas to the east, ending at the boundary of Arctic
National Wildlife Refuge (ANWR). He said the boundaries of this
sale are already in affect.
MR. BOYD said the lease sale process isn't simple because of the
best-interest finding. The best interest findings is a statute
requirement of DO&G requiring a published document incorporating
socio-economic and other issues encompassing that area. This
document includes information gathered through a process, required
by statute, where preliminary findings are gathered and then
published. Following this information, a 60 day comment period is
held. Information is incorporated, at the discretion of the
director of DO&G and the commissioner of DNR, and then the
preliminary finding is modified and a final finding is published 90
days before. "There's a 20 day period of reconsideration," the
director and the commissioner sign the document and reconsider any
comments. If differences between the Administration and the public
are not resolved at this point, then the issue will be worked out
in the court system. Modifications to the findings might include
changes such as new requirements to fly a certain distance over
specific habitats at certain times of the year, changes in pipeline
size or modifications in distances near streams.
Number 897
MR. BOYD said SB 308, which passed a few years ago, expanded the
best interest findings process by requiring all comments to be on
the record. An issue that was not raised during the finding
process cannot be taken to court without first receiving comment by
the Administration.
Number 1013
MR. BOYD said after the best interest findings comes out, the lease
sale is relatively anti-climatic. He said areawide leasing will
require a little bit bigger finding, but it won't be that difficult
because of Sale 80. He said it easier to start this process on the
North Slope and added that 99 percent of the state's income is
derived from this area. He then referred back to Sale 80, and said
that the best interest findings for that sale was done under SB
308. He cited the law under SB 308, an expanded public process and
the flexibility that the director is limited to only those things
that are reasonably foreseeable and non-speculative. The best
interest finding was issued for Sale 80 and has not been challenged
by special interest groups, the environmental community or other
concerned citizens. The best interest finding stood, the sale was
held and earned $3.5 million for the state of Alaska.
MR. BOYD said the goal would be to take the best interest finding
of Sale 80 and expand on that for an areawide lease. He said the
factors of the North Slope are relatively consistent and with the
possible exception of some new habitats, there should not be that
many additions to the best interest finding done for Sale 80. The
Administration's proposal for areawide leasing is that starting in
1998, the area leased will cover the area from the Colville River
to the Canning River north of Umiat baseline onshore while
eliminating the portion of Sale 87 south of the Umiat baseline. He
said the portion below the Umiat baseline, eliminated from this
proposed sale, will be offered at a later date. This areawide
leasing proposal does not disrupt the current leasing program.
Sales are already on the five year program including two sales this
year, Sale 86A in August and Sale 85A in December as well as
several sales next year. Sale 85A is the Cook Inlet sale.
Number 1190
MR. BOYD said on a yearly basis, under law, DO&G is able to offer
the acreage without a new finding. The commissioner is required to
write a letter requesting any new information in that area which
needs to be incorporated into the finding. That information is
gathered in the form of testimony, letters, public hearings. The
commissioner takes that information and can change the mitigating
measures or determine that these issues are not relevant and carry
on with the sale. "At the end of five years it really begs the
question of whether a new finding is necessary."
Number 1220
MR. BOYD said he would now address HB 388 and referred to Chairman
Rokeberg's sponsor statement. He said that currently DO&G does not
have to mandate annual lease sales of acreage previously offered.
He said he didn't see why DO&G couldn't do it, because once the
finding is in place the lease sale is not a big deal and mentioned
that it only takes a few hours to adjudicate the bids. He said the
only problem with this aspect of HB 388, is that if you have to do
something you not previously required, what are the consequences.
He questioned the possibility of requiring something, that either
DO&G does not want to do, should not do, or cannot do, which might
bring about possible litigation. "If you mandate something, I hope
you give us a way out so we don't hang ourselves with a mandate."
Number 1285
MR. BOYD then referred to the section of the sponsor statement
which states, HB 388 "limits best-interest findings to substantial
new information." He said the word "substantial" is similar to the
word "reasonable" in that it provides context for law suits because
what is substantial to one person is inconsequential to another.
He cited examples where a new species establishes a habitat as
compared to a view shed complaint which is more likely to come
under the discretion of the commissioner. He said he did not see
how every possible instance could be listed under either
substantial or insubstantial. He said the word, "substantial"
gives another level of certainty and a tool by which the
commissioner can use to say that a raised issue does not fall under
a substantial consideration.
Number 1380
MR. BOYD then referred to eliminating the five year limit on
"exempt" and "re-offered" sales. He said this process is included
in the law. Currently, when a lease sale is done, a year later,
another lease sale can be proposed. The commissioner issues a
letter stating this proposed lease sale in April and any comments
are submitted. The commissioner makes a determination whether or
not this new information requires any change such as including new
stipulations on the lease. He then asked Chairman Rokeberg if the
language used in HB 388 means that if you have an existing finding,
and as long as changes are being made to that finding, why stop it
in five years.
Number 1460
CHAIRMAN ROKEBERG said that is what is meant.
Number 1469
MR. BOYD said, although he had no personal objections to that
language, he could not comment for the Administration. He added
that the incremental changes done to a finding over a period of
five years can create a messy document and suggested that at that
point all pieces should be gathered together into a cohesive whole.
He said there are benefits from doing a best interest findings. He
said technological advances can sometimes allow things to be done
that could not be done in previous years.
Number 1513
MR. BOYD then referred to the section regarding the establishment
of a program of areawide oil and gas leasing to cover the entirety
of an oil and gas reservoir. He said he thought the intention was
good, but was afraid that it created an unneeded new process. In
HB 388, there are two places which would require the writing of new
regulation. It would require the establishment of a new program
that, Mr. Boyd thought, ran in parallel to the existing five year
program. He said he did not think a new program needed to be
established. He asked how HB 388 would be different from the
current program and conditions currently existing in law.
Number 1583
CHAIRMAN ROKEBERG asked, in the interest of time, if Mr. Boyd could
comment on HB 389. He noted that Representatives Brice,
Finkelstein, and B. Davis were on time to the meeting, but had left
the committee room while the majority caucus finished.
Number 1646
MR. BOYD asked for an explanation of the differences between HB 388
and HB 389. He restated that he felt the word "substantial" was a
good modifier because it gave the director of DO&G and the
commissioner of DNR more power to make decisions on what is
substantial and in the interest of the state.
Number 1700
CHAIRMAN ROKEBERG said, at this point, HB 388 and HB 389 are very
similar and work will be needed to be done to differentiate them.
He asked Mr. Boyd to comment on the Administration's position in
terms of the "bills introduced in both bodies by the Governor" in
terms of best-interest findings and limitations in regard to
geography and core areas.
MR. BOYD said the "Administration's bill" is relatively simple.
The DO&G believes that they have a lease sale program which allows
areawide leasing. He said they were already doing areawide
leasing, but had not referred to it by that name. He said DO&G was
authorized to do areawide leasing with some minor adjustments. He
said "the Governor's bills, and I don't remember the numbers, but
they are identical on the House and the Senate side," streamline
the best interest finding in regard to instances where the land is
not available to the state, the best interest finding is done, and
then at a later time, if the land becomes available in the interim,
the land can then go up for sale.
Number 1796
MR. BOYD said, in regards to the core areas, the Governor wants to
start on the North Slope to see if it works and whether it is of
interest to industry. He said it gives the Administration an
opportunity to have, on a year to year basis, an area that is
accepted by the public. This is a project on which it is felt
expansion can happen. He said one of the twists in offering this
land for lease, is the title work. One of the concerns the
Division of Land had, along with the person in DO&G who works with
the title program, was how a title was going to be written on an
area that is 3.5 million acres. Meetings between industry and
among the Administration have concluded that title work will be
done after the sale. He said there are very few title issues on
the North Slope, with the exception of the rare Native Allotment
issues which are very easy to resolve when they occur. He said
DO&G does not warrant title today in a lease sale. He cited the
process that would occur, at the conclusion of a lease sale money
will be held in escrow until the title is clear. He said a sale
consisting of 3.5 million acres, might only result in a sale of
500,000 acres. Therefore, title work would only need to happen for
those 500,000 acres. He said because of the factors, in the North
Slope, this title work would take a short time.
Number 1870
MR. BOYD said he felt this program could work anywhere, but he said
it needed to start somewhere and the North Slope was the place to
begin this process. He said, the North Slope is where you have the
least resistance and where you have established findings of good
standing. He then referred to the area with the Cook Inlet. He
said areas in the Cook Inlet obviously have substantial interest to
both the industry and the state of Alaska. He said currently the
preliminary finding is being worked on for Sale 85A in Cook Inlet
and is due out in March with a proposed sale in December of 1996.
He said that all acreage allowed in Cook Inlet is being
incorporated into that sale and added that it is an exempt sale.
At the request of industries in that region, the commissioner is
considering a 140,000 acres in the lower Kenai Peninsula. The
commissioner has held public hearings and round table discussions
to gather comments which will be incorporated in the March
preliminary finding document. He again referred to the steps of
the process, the 60 day comment period, the revision and
reexamination of comments into a final finding. Mr. Boyd, said he
hoped, that as the Administration has for Sale 80, a good base best
interest finding will be established for Cook Inlet. When that
occurs, an areawide leasing program could be incorporated into the
Cook Inlet region. He then referred to the North Slope area as the
best place to work the bugs out of a program with the least chance
of having the program stalled or stopped.
Number 1957
GEORGE R. FINDLING, Manager, Government and Public Relations
ARCO Alaska, Incorporated said he just received the committee
substitutes this morning, so he wanted to focus his comments on his
reactions to the committee substitutes. He stated that he has
given input towards HB 388 and HB 389 on previous occasions.
CHAIRMAN ROKEBERG said the committee would be holding over HB 388
and HB 389 until Thursday to give everyone a chance to look at the
committee substitutes and to see if any modifications need to be
made. He asked everyone to look at the section of the committee
substitute focusing on the need for areawide leasing and best
interest finding exemptions in onshore areas of the North Slope.
MR. FINDLING said he would be focusing their review on HB 388 in
its establishment of a new program. He said he agreed with Mr.
Boyd's comments in regards to that issue. In HB 389, on page two,
lines 12 through 18, he asked whether that section is
(indiscernible-paper shuffling) a parcel that has been through the
exempt sale and would come out again. He also requested clarity to
the reference to the commissioner comparing a revised best interest
finding under G.2 and why that reference is in (indiscernible) and
why it is not in the I clause as well.
CHAIRMAN ROKEBERG asked him to hold those questions in abeyance.
Number 2097
REPRESENTATIVE GARY DAVIS asked if there needed to be one bill
incorporating HB 388 and HB 389 or whether there should be two
separate bills.
CHAIRMAN ROKEBERG commented that research needs to be done in
regards to that question. He said he wanted to get the
Administration position. The committee substitutes attempt to
strike a balance between the Administration, Senate and the
position of industry. He said that it is necessary to refer to the
areawide leasing program, as it is laid out in HB 388 to make the
best interest finding bill, HB 389, work properly.
Number 2219
REPRESENTATIVE BILL WILLIAMS asked Mr. Boyd if the Administration
was already doing areawide leasing.
Number 2230
MR. BOYD said yes it is doing areawide leasing, but it needs
clarification such as can be provided in the original HB 388, but
not found in the committee substitute. He said a fiscal note comes
into play if a new program were to be established requiring more
people to accomplish that task.
Number 2256
REPRESENTATIVE DAVID FINKELSTEIN asked if the provision mentioned,
where non-state lands which have a best interest finding and later
become state lands are exempt from having to repeat a best interest
finding process, is located in HB 388 or HB 389.
Number 2285
CHAIRMAN ROKEBERG said neither HB 388 or HB 389 incorporate that
provision.
Number 2290
REPRESENTATIVE FINKELSTEIN asked how often that occurred and if it
was specifically a North Slope phenomena.
Number 2299
MR. BOYD said it is applicable to the North Slope. He said there
is still land to be patented and transferred. As time passes, more
and more land comes into state ownership. He said he would have to
consult with title experts, but he believed it was a rare
occurrence.
Number 2312
REPRESENTATIVE FINKELSTEIN asked if the five year best interest
finding limit was a hinderance to DO&G or if five years was a
natural time period when the Administration would be rethinking
these areas anyway.
Number 2329
MR. BOYD said it has been his six year experience, that the five
year reevaluation has mostly been a matter of new or updated
mitigation measures because of new information being afforded the
DO&G such as a seasonal drilling restriction or a new standard of
awareness by the public. In his experience, there has not been any
substantial rewrite of a best interest finding because of that
process. It is unlikely that there would be a change of wildlife
habitat.
Number 2387
REPRESENTATIVE FINKELSTEIN asked if the history of the areawide
lease offerings in the North Slope, have been small areas or
whether there have been large amounts available.
Number 2405
MR. BOYD said he believed Sale 80 would be the largest. He said
that the term, areawide leasing, has made people focus on the issue
and said if the Administration had simply said they would combine
this parcel with that parcel, he believed that no one would have
objected, but because it was called areawide leasing people
perceived that it was something different.
Number 2450
CHAIRMAN ROKEBERG pointed to information available in the committee
packet in reference to federal areawide leasing in the Gulf of
Mexico which has proved to be extremely successful.
TAPE 96-8, SIDE B
Number 000
CHAIRMAN ROKEBERG referred to the fact that in this sale, the term
that was used was areawide leasing. He said HB 388 and HB 389 is
his attempt to draw a compromise or a bill which will give the
Administration more tools and offer more land to industry.
Number 040
REPRESENTATIVE FINKELSTEIN said that within Sale 80 there is
already leased lands. He asked that within the Administration's
best interest finding an economic analysis is included as to what
the state could have made on leasing smaller areas adjacent to the
existing leases in comparison to a large scale sale.
Number 080
MR. BOYD said this economic briefing occurs in a confidential
meeting between the commissioner and the DO&G staff. He believed
the results from this briefing are published, but not the actual
analysis. He said intuitively, it shouldn't matter. He said the
advantage to areawide leasing is that it avoids edges where
possible. He said, when you draw edges, you run the risk of
cutting off an edge of a structure that the company wants to
protect its interest.
Number 150
REPRESENTATIVE FINKELSTEIN said he questioned the concept of
mandates when you are required to sell large leases.
Number 166
MR. BOYD said you can put different terms on specific leases which
gives flexibility to offer a speculative area at a lower rate and
a better area at a higher rate.
Number 190
REPRESENTATIVE FINKELSTEIN asked if you could put on different
requirements for different bids, some of them being bonus bids,
some of them being royalty bids, within the same sale.
Number 198
MR. BOYD said yes, and has been done in the past and cited
examples.
Number 215
CHAIRMAN ROKEBERG asked for clarification of the Umiat baseline and
was told that it was 69.30 North. He then asked whether there was
an exemption in the Administration bill, SB 245, on doing a best
interest finding.
Number 264
MR. BOYD said SB 245 does not exempt best interest finding, it says
that land can be offered for sale if you do a finding for it, even
if you have not offered it for sale previously. He said that there
are cases where a tract of land, which is surrounded by areas
having best interest findings, becomes available, and common sense
would tell you that those tracts of land are not that different
from the surrounding land therefore the best interest finding could
be applicable to those lands as well.
CHAIRMAN ROKEBERG said he wanted to clarify his intent on this
legislation, that he did not wish to create a new program which
causes the Administration to lose resources, but rather codify what
is being done. He received clarification that SB 245 does not
cover the Cook Inlet region and then asked if it would want to be
covered by legislation in the future.
Number 355
MR. BOYD said that the Cook Inlet is a much more complicated land
ownership position. He said that the Administration is currently
in the process of selling large tracts of land in its lease
program.
Number 324
CHAIRMAN ROKEBERG asked, that when the Administration wanted to
include the Cook Inlet in the areawide legislation, whether it
would take two years for it to be put on their schedule.
Number 385
MR. BOYD said they just have to notify the legislature that they
are changing or adding a sale, especially if it is a re-offering
sale. If the land was previously offered for sale, then the
Administration can offer it immediately within the five year
limitation. He said it took a long time to get to the point where
this can happen, due to law suits.
Number 422
CHAIRMAN ROKEBERG asked if the DO&G was reluctant to take on the
Cook Inlet because of environmental concerns as well as the
fisheries concerns in the Cook Inlet region.
MR. BOYD said the DO&G attempts to meet the needs of the public and
the state, he said the division does not have enough people to do
two large findings. He again stated that the North Slope is the
better place to learn about how the process will work, because a
finding is already in place that the DO&G feels can stretch
throughout the North Slope. He said he hopes to have an
established finding in the Cook Inlet by the end of this year. He
stated that it is a matter of building a good foundation first.
Number 469
CHAIRMAN ROKEBERG asked if the Administration is then looking at an
areawide lease program and best interest finding for the Cook Inlet
area.
Number 480
MR. BOYD said that over time he hopes to put together reasonable
mitigation measures that satisfies the needs of all concerned
parties in both areas. He restated that it needs to start on the
North Slope.
CHAIRMAN ROKEBERG stated that it would appear that DO&G would need
to come back to a future legislature to get authority to get the
same thing in the Cook Inlet unless we pass HB 388 and HB 389.
MR. BOYD said he believed that it could happen now.
CHAIRMAN ROKEBERG asked if that included the best interest finding
as well.
MR. BOYD said there would be some bumps in that, but that is what
he is hoping could be fixed.
CHAIRMAN ROKEBERG discussed the lifetime of a best interest
finding. He said there is no statutory stipulation for the five
year life of the best interest finding. There are provisions in
the exempt sale and the re-offering provisions that indicate that
you can only go back five years, so there is a de facto five year
life in those circumstances.
Number 551
MR. BOYD agreed that in current law there is a five year life. He
said in general terms, it might be good to extend the life of the
best interest finding. He then asked if it was useful to go back
and revisit the finding to recreate it. He said, he was unclear
what the Administration's position would be on that point, but if
the division is being diligent, as is required under current law,
then at five years, it is a question of repackaging the
information.
MR. BOYD at Chairman Rokeberg's request cited the case where law
suits caused the lease sale program to stop for a period of time in
the Cook Inlet region, he said this example is where revisions and
modifications of the best interest finding might have caused this
to happen. He said the end result was the creation and adoption of
SB 308 which changed the law regarding the finding process and
added that, as events unfold, new modifications in the finding
interest will need to occur to get to the standards of SB 308.
Number 693
CHAIRMAN ROKEBERG said it appeared that a great deal of money,
effort and time in the DO&G was spent every five years to reinvent
the wheel. He questioned how many best interest finding have to be
done in the North Slope.
Number 717
MR. BOYD said he agreed with him, but then cited an example of
getting an encyclopedia with yearly updates. He asked how many
supplements are you going to need to get before you want to buy a
whole new set. He said, if the revisions can be incorporated into
the best interest finding document, he saw no problem with this
proposal. He said that in some sense, revisions are supplements
because they are issued as stipulations or mitigating measures.
The whole best interest finding document would not be published
again until the next best interest finding process. He reiterated
that the best interest finding is a public process.
Number 780
REPRESENTATIVE TOM BRICE asked the difference between incorporating
the data that would be collected in that five year period into a
document rather then doing a whole new best interest finding.
Number 810
MR. BOYD said, at the end of five years, the whole process does not
need to be done, especially on the North Slope or possibly
everywhere, as long as every time a sale is held information is
being gathered. He said as a practical matter, incorporation might
make sense.
Number 860
REPRESENTATIVE BRICE said incorporation is one thing versus going
through a whole other process where the end result is the same. He
asked if after five years it needs to go through the whole
redefinition.
MR. BOYD said it does, because under current law there is not much
use for a six year old finding.
Number 907
REPRESENTATIVE SCOTT OGAN said he felt it would be a good idea to
have a permanent best interest finding in order to prevent an anti-
development agenda. He then cited an example where a new
administration might raise concern over a decline in the caribou
herds, which is a cyclic phenomena, rather than a issue of concern.
Number 964
MR. BOYD said a permanent best interest finding eliminates the
public process. An issue can be raised, but the Administration has
opportunity to respond to that. He said the legislature can choose
to eliminate this process, but said his contention was that the
best interest finding process gives you a chance to get it out on
paper and discuss it.
Number 1000
CHAIRMAN ROKEBERG said "we are not changing" the public input and
comment process, but there is recognition that the best interest
findings document is an ongoing process and that a five year period
is a short period of time. He added that this period of time has
been an issue of complaint from businesses, who can not plan far
enough in advance with this time constraint. He suggested having
an annual program that re-offers core areas which would allow the
industry to do capital expansion.
Number 1104
REPRESENTATIVE FINKELSTEIN said the work you need to do ahead of
time (indiscernible due to glass being set down next to the
microphone) in order to meet your schedule.
Number 1132
MR. BOYD said the five year schedule program goes back five years,
in order to give industry a chance to comment. He said the first
three years of the process are long and spread out, allowing for
industry to get onto the schedule the acres they wish to include in
the sales. He said, in an areawide lease process, that schedule
falls away because the land does not need to be nominated.
Number 1306
REPRESENTATIVE FINKELSTEIN asked what the next step would be for
offshore leasing in the Beaufort Sea.
Number 1325
MR. BOYD repeated the importance of laying a good foundation in
areawide leasing. He said the process should start onshore in the
North Slope, because it is the easiest area. From that foundation
you have two options, either to focus on the Beaufort Sea or the
Cook Inlet. He said findings need to be done for both those areas,
and are scheduled to be done within the next two years to resolve
mitigating issues. At that point a determination of the industry
interest should be done, and then incorporate that area, shown the
most interest, next.
Number 1354
REPRESENTATIVE FINKELSTEIN asked, in regards to this leasing
project in the Beaufort Sea, whether there would be zones and then
asked if most available acreage in the Cook Inlet had been offered.
MR. BOYD said most acreage has been offered. He then said most of
the offshore areas in the North Slope have been offered from Barrow
to Demarcation Bay. The whole offshore area around ANWR has been
leased and said he would check the date of that sale, but said it
was sometime in the 1980s.
REPRESENTATIVE FINKELSTEIN asked if that area is being shown the
greatest interest these days.
MR. BOYD said he did not have any comment on that.
Number 1400
CHAIRMAN ROKEBERG said HB 388 and HB 389 would be held over until
the Thursday committee meeting.
ADJOURNMENT
There being no further business to come before the House Oil & Gas
Special Committee, Chairman Rokeberg adjourned the meeting at 11:45
a.m.
| Document Name | Date/Time | Subjects |
|---|