Legislature(2001 - 2002)

04/08/2002 09:04 AM House O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                                                           
                         April 8, 2002                                                                                          
                           9:04 a.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Hugh Fate, Vice Chair                                                                                            
Representative Fred Dyson                                                                                                       
Representative Vic Kohring                                                                                                      
Representative Gretchen Guess                                                                                                   
Representative Reggie Joule                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Scott Ogan, Chair                                                                                                
Representative Mike Chenault                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 308(FIN)                                                                                                 
"An Act relating to the Alaska coastal management program and                                                                   
the responsibilities of the Alaska Coastal Policy Council; and                                                                  
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSSB 308(FIN) OUT OF COMMITTEE                                                                                     
                                                                                                                                
CS FOR SENATE BILL NO. 319(FIN)                                                                                                 
"An Act relating to shallow natural gas; and providing for an                                                                   
effective date."                                                                                                                
                                                                                                                                
     - MOVED CSSB 319(FIN) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SB 308                                                                                                                  
SHORT TITLE:COASTAL ZONE MGMT PROGRAM/COUNCIL                                                                                   
SPONSOR(S): SENATOR(S) THERRIAULT                                                                                               
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/19/02     2233       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/19/02     2233       (S)        RES, FIN                                                                                     
03/04/02                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
03/04/02                (S)        Moved CS(RES) Out of                                                                         
                                   Committee                                                                                    
                                   MINUTE(RES)                                                                                  
03/06/02                (S)        RLS AT 0:00 AM FAHRENKAMP 203                                                                
03/06/02                (S)        <Pending Referral>                                                                           
03/06/02     2385       (S)        FN1: ZERO(GOV)                                                                               
03/06/02     2385       (S)        RES RPT CS 5DP 2NR TECH TITLE                                                                
                                   CH                                                                                           
03/06/02     2385       (S)        DP: TORGERSON, TAYLOR,                                                                       
                                   HALFORD, STEVENS                                                                             
03/06/02     2385       (S)        WILKEN; NR: LINCOLN, ELTON                                                                   
03/21/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/21/02                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee                                                                                    
                                   MINUTE(FIN)                                                                                  
03/22/02     2492       (S)        FIN RPT CS 4DP 3NR TECH TITLE                                                                
                                   CH                                                                                           
03/22/02     2492       (S)        DP: KELLY, GREEN, WILKEN,                                                                    
                                   LEMAN;                                                                                       
03/22/02     2492       (S)        NR: DONLEY, AUSTERMAN, WARD                                                                  
03/22/02     2492       (S)        FN1: ZERO(GOV)                                                                               
03/27/02                (S)        RLS AT 10:45 AM FAHRENKAMP                                                                   
                                   203                                                                                          
03/27/02     2543       (S)        READ THE SECOND TIME                                                                         
03/27/02     2543       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
03/27/02     2544       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
03/27/02     2544       (S)        READ THE THIRD TIME CSSB
                                   308(FIN)                                                                                     
03/27/02     2544       (S)        PASSED Y17 N3                                                                                
03/27/02     2544       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
03/27/02     2544       (S)        ELLIS NOTICE OF                                                                              
                                   RECONSIDERATION                                                                              
03/27/02     2540       (S)        RULES TO CALENDAR 1OR 3/27/02                                                                
03/28/02     2562       (S)        RECONSIDERATION NOT TAKEN UP                                                                 
03/28/02     2562       (S)        TRANSMITTED TO (H)                                                                           
03/28/02     2562       (S)        VERSION: CSSB 308(FIN)                                                                       
04/01/02     2733       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/01/02     2733       (H)        O&G, RES                                                                                     
04/08/02                (H)        O&G AT 9:00 AM CAPITOL 124                                                                   
                                                                                                                                
BILL: SB 319                                                                                                                  
SHORT TITLE:SHALLOW NATURAL GAS: LEASING & DISCHARGES                                                                           
SPONSOR(S): SENATOR(S) TORGERSON                                                                                                
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/19/02     2236       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/19/02     2236       (S)        RES, FIN                                                                                     
02/27/02                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
02/27/02                (S)        Moved CSSB 319(RES) Out of                                                                   
                                   Committee                                                                                    
02/27/02                (S)        MINUTE(RES)                                                                                  
03/01/02     2339       (S)        RES RPT CS 6DP 1NR SAME TITLE                                                                
03/01/02     2339       (S)        DP: TORGERSON, TAYLOR,                                                                       
                                   STEVENS, WILKEN,                                                                             
03/01/02     2339       (S)        LINCOLN, ELTON; NR: HALFORD                                                                  
03/01/02     2339       (S)        FN1: (DNR)                                                                                   
03/26/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/26/02                (S)        Moved CSSB 319(Fin) Out of                                                                   
                                   Committee                                                                                    
                                   MINUTE(FIN)                                                                                  
03/27/02     2535       (S)        FIN RPT CS 7DP 1NR NEW TITLE                                                                 
03/27/02     2535       (S)        DP: KELLY, OLSON, WILKEN,                                                                    
                                   AUSTERMAN,                                                                                   
03/27/02     2535       (S)        GREEN, WARD, LEMAN; NR:                                                                      
                                   DONLEY                                                                                       
03/27/02     2535       (S)        FN1: (DNR)                                                                                   
03/28/02                (S)        RLS AT 8:30 AM FAHRENKAMP 203                                                                
03/28/02                (S)        -- Time Change --                                                                            
03/28/02                (S)        MINUTE(RLS)                                                                                  
03/28/02     2556       (S)        RULES TO CALENDAR 3/28/02                                                                    
03/28/02     2557       (S)        READ THE SECOND TIME                                                                         
03/28/02     2557       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
03/28/02     2557       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
03/28/02     2557       (S)        READ THE THIRD TIME CSSB
                                   319(FIN)                                                                                     
03/28/02     2557       (S)        PASSED Y17 N- E3                                                                             
03/28/02     2557       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
03/28/02     2562       (S)        TRANSMITTED TO (H)                                                                           
03/28/02     2562       (S)        VERSION: CSSB 319(FIN)                                                                       
04/01/02     2733       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/01/02     2733       (H)        O&G, RES                                                                                     
04/08/02                (H)        O&G AT 9:00 AM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR GENE THERRIAULT                                                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room 121                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Sponsor of SB 308.                                                                                         
                                                                                                                                
DANA OLSON                                                                                                                      
HC-30 Box 5438                                                                                                                  
Wasilla, Alaska  99654                                                                                                          
POSITION  STATEMENT:   Testified on  SB 308,  expressing concerns                                                               
and requesting changes; voiced concerns about SB 319.                                                                           
                                                                                                                                
JOHN T. SHIVELY, Lobbyist                                                                                                       
for Foothills Pipe Lines Ltd.                                                                                                   
1336 West 12th Avenue                                                                                                           
Anchorage, Alaska  99501                                                                                                        
POSITION  STATEMENT:     Testified   in  support  of   [SB  308],                                                               
particularly the phasing section.                                                                                               
                                                                                                                                
SENATOR JOHN TORGERSON                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 427                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Sponsor of SB 319.                                                                                         
                                                                                                                              
MARK MYERS, Director                                                                                                            
Division of Oil & Gas                                                                                                           
Department of Natural Resources                                                                                                 
500 West 7th Avenue, Suite 800                                                                                                  
Anchorage, Alaska  99501-3560                                                                                                   
POSITION STATEMENT:   Answered question  relating to  the acreage                                                               
change in SB 319.                                                                                                               
                                                                                                                              
CHARLOTTE MacCAY, Senior Administrator                                                                                          
of Environmental and Regulatory Affairs                                                                                         
Teck Cominco Alaska Inc.                                                                                                        
3105 Lakeshore Drive, Building A, Suite 101                                                                                     
Anchorage, Alaska  99517                                                                                                        
POSITION STATEMENT:   Testified  on SB  319, stating  support for                                                               
most  provisions  in  the  bill;  offered  support  for  the  fee                                                               
increase if the  monies are directed to the  shallow gas program;                                                               
testified  in support  of  a five-year  lease  term with  renewal                                                               
options, which isn't part of the bill.                                                                                          
                                                                                                                              
KEVIN A. TABLER, Manager of Land and Government Affairs                                                                         
Union Oil Company of California (Unocal)                                                                                        
P.O. Box 196247                                                                                                                 
Anchorage, Alaska  99519                                                                                                        
POSITION STATEMENT:  Testified in support of SB 319.                                                                            
                                                                                                                              
JOHN TANIGAWA, Special Projects Manager                                                                                         
Evergreen Resources Alaska Corporation                                                                                          
P.O. Box 871845                                                                                                                 
Palmer, Alaska  99645                                                                                                           
POSITION  STATEMENT:    Testified  in  support  of  SB  319,  but                                                               
mentioned having an acreage limitation of 138,240 acres.                                                                        
                                                                                                                              
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-22, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE called  the House Special  Committee on  Oil and                                                               
Gas meeting to  order at 9:04 a.m.   Representatives Fate, Dyson,                                                               
Kohring,  and   Guess  were  present   at  the  call   to  order.                                                               
Representative Joule arrived shortly thereafter.                                                                                
                                                                                                                                
SB 308-COASTAL ZONE MGMT PROGRAM/COUNCIL                                                                                      
                                                                                                                                
[Contains discussion of HB 439]                                                                                                 
                                                                                                                                
Number 0065                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE announced  the first order  of business,  CS FOR                                                               
SENATE BILL NO. 308(FIN), "An  Act relating to the Alaska coastal                                                               
management  program  and  the   responsibilities  of  the  Alaska                                                               
Coastal Policy Council; and providing for an effective date."                                                                   
                                                                                                                                
Number 0089                                                                                                                     
                                                                                                                                
SENATOR  GENE  THERRIAULT,  Alaska  State  Legislature,  sponsor,                                                               
explained that in  its current form, SB 308  encompasses two main                                                               
ideas.  First, coastal resource  areas no longer may [incorporate                                                               
by reference] the  state statutes and regulations.   A problem in                                                               
the past has  been that coastal resource areas  or districts have                                                               
interpreted  statutes and  regulations differently  from the  way                                                               
state  agencies do  in  arriving  at consistency  determinations.                                                               
Therefore, the  Division of  Governmental Coordination  (DGC) has                                                               
indicated to  coastal resource districts  that they are  to adopt                                                               
their  own programs,  rather  than just  adopt  by reference  the                                                               
statutes and regulations; this occurred  some time ago.  What the                                                               
bill does [in Section 1] is enshrine DGC's directive in statute.                                                                
                                                                                                                                
SENATOR THERRIAULT  explained that  Section 2 deals  with phasing                                                               
of a  gas pipeline  project in  Alaska.   The language  is route-                                                               
specific and  project-neutral.  "We  have some definite  ideas of                                                               
where we would like the line  to be built," he told members, "but                                                               
we  don't much  care who  builds it."   Therefore,  he said,  the                                                               
language is structured  to allow anyone to take  advantage of the                                                               
routes that are suggested.                                                                                                      
                                                                                                                                
Number 0240                                                                                                                     
                                                                                                                                
SENATOR THERRIAULT noted  that this committee had  dealt with the                                                               
petition process  in [HB  439], sponsored  by [the  House Special                                                               
Committee on  Oil and  Gas, which  is chaired  by] Representative                                                               
Ogan.  Because that bill is  in the Senate currently, and because                                                               
it  came to  the  Senate  first, the  petition  process has  been                                                               
removed  from this  version of  SB 308.   However,  the title  is                                                               
relatively broad.  He explained that  SB 308 had been sent to the                                                               
House with  a broad title on  purpose, so that if  there were any                                                               
problems  dealing with  the petition  process  through [HB  439],                                                               
then [SB 308]  would be available as a vehicle  to make sure that                                                               
petition-process change is taken care of.                                                                                       
                                                                                                                                
SENATOR THERRIAULT reported that  Representative Ogan's staff had                                                               
been  dealing  with  "the  Senate committees"  to  come  up  with                                                               
language that fixes the problem.   Unfortunately, it will trigger                                                               
a  title change,  which  would  require a  two-thirds  vote on  a                                                               
title-change resolution  when it  comes back to  the House.   The                                                               
desire is  to keep  SB 308  as a possible  vehicle, in  case that                                                               
title change isn't possible.                                                                                                    
                                                                                                                                
Number 0365                                                                                                                     
                                                                                                                                
SENATOR  THERRIAULT returned  attention to  phasing [Section  2].                                                               
He explained:                                                                                                                   
                                                                                                                                
     In  order to  get a  consistency determination,  before                                                                    
     you can  actually get your permits,  you're supposed to                                                                    
     submit  your entire  project,  because  a gas  pipeline                                                                    
     project is  so large that it's  virtually impossible to                                                                    
     anticipate  every permit,  every  stream crossing  that                                                                    
     you're going  to need  for the project.   So  what this                                                                    
     language  does  is  it  allows  that  that  consistency                                                                    
     determination  would be  able to  be phased  in over  a                                                                    
     length of time.                                                                                                            
                                                                                                                                
[There was  a partial  motion to move  the bill,  but Legislative                                                               
Information  Office  (LIO)  personnel interjected  because  there                                                               
were testifiers.]                                                                                                               
                                                                                                                                
Number 0480                                                                                                                     
                                                                                                                                
DANA  OLSON  testified  via teleconference  on  her  own  behalf,                                                               
noting that she lives in an  affected coastal district.  She told                                                               
members  she  is  very concerned  about  the  coastal  management                                                               
program.   She asked that a  legal and factual basis  be provided                                                               
for the bill,  adding that Thomas Dewey once said  that a problem                                                               
well defined is  half solved.  She expressed concern  that SB 308                                                               
"has been primarily a reactionary type of situation."                                                                           
                                                                                                                                
MS. OLSON requested changes.  She  asked that the committee add a                                                               
fiscal  note to  SB 308  in order  to implement  AS 46.03.040,  a                                                               
state  requirement for  an environmental  plan.   She added,  "If                                                               
implementation of  this plan is  not desired by  the legislature,                                                               
then I ask that  you put a provision on this  bill and repeal it.                                                               
Having  this provision  sit here  on this  bill is  meaningless."                                                               
She  further requested  compliance  with "the  amendments to  the                                                               
coastal management  Act, which are  stated 'not  complied with.'"                                                               
She said  amendments to the  coastal management Act  require that                                                               
consideration  of  the entire  coastal  zone  -  and not  just  a                                                               
coastal  district -  be looked  at.   She noted  that one  of the                                                               
particular problems she  is addressing is "the  legal and factual                                                               
basis for construction permits."                                                                                                
                                                                                                                                
Number 0645                                                                                                                     
                                                                                                                                
JOHN  T.  SHIVELY,  Lobbyist  for   Foothills  Pipe  Lines  Ltd.,                                                               
testified   via   teleconference   in  support   of   [SB   308],                                                               
particularly the phasing section.  He explained:                                                                                
                                                                                                                                
     This  is [an]  issue  we've worked  with, with  Senator                                                                    
     Therriault  and  with  the   administration.    As  the                                                                    
     Senator said, generally, in order  to get a consistency                                                                    
     determination, which  is required for a  project in the                                                                    
     coastal zone, you  have to have all  your permits ready                                                                    
     to go.   This  project is way  too big  and complicated                                                                    
     for that, and ... the language  in the bill in front of                                                                    
     you  allows the  administration to  phase and  actually                                                                    
     make  what would  be,  I  believe, several  consistency                                                                    
     determinations, if  they were  necessary.  So  we think                                                                    
     it's a  good piece of  legislation, and we  support its                                                                    
     adoption.                                                                                                                  
                                                                                                                                
Number 0720                                                                                                                     
                                                                                                                                
VICE CHAIR FATE  asked whether there were questions  or if anyone                                                               
else  wished to  testify; there  was no  response.   He announced                                                               
that public testimony was closed.                                                                                               
                                                                                                                                
Number 0773                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING requested  that Senator Therriault address                                                               
the concerns expressed by Ms. Olson.                                                                                            
                                                                                                                                
SENATOR  THERRIAULT replied  by saying  he has  been involved  in                                                               
legislation dealing with the coastal  zone [program] for a number                                                               
of  years,  and  has  proposed  bills in  the  past  that  either                                                               
eliminated the program or made sweeping changes.  He then said:                                                                 
                                                                                                                                
     This  bill   doesn't  do  it.     It's  very  specific,                                                                    
     noncontroversial  things as  far  as  dealing with  the                                                                    
     administration  - people  that run  the program.   With                                                                    
     [regard]  to the  first section  that  talks about  the                                                                    
     nonadoption   through   reference,   that's   currently                                                                    
     basically in  place through  the directive  of Division                                                                    
     of  Governmental  Coordination; we're  just  enshrining                                                                    
     that in statutes.                                                                                                          
                                                                                                                                
SENATOR THERRIAULT addressed phasing:                                                                                           
                                                                                                                                
     As  the former  commissioner  [Mr. Shively]  indicated,                                                                    
     the gas pipeline project is  such a level of complexity                                                                    
     that having  all your permits ready  to go - so  that a                                                                    
     complete  consistency determination  can be  granted at                                                                    
     once  -  is  virtually  impossible.    And  the  people                                                                    
     running   the   program   ...    on   behalf   of   the                                                                    
     administration agree with that.                                                                                            
                                                                                                                                
SENATOR THERRIAULT  concluded by saying  he wasn't sure  what the                                                               
other  concerns were  about  the way  the  program operates,  but                                                               
didn't  believe  they  specifically concerned  the  two  sections                                                               
being asked for in this legislation.                                                                                            
                                                                                                                                
Number 0885                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING, with the  concurrence of Vice Chair Fate,                                                               
asked  Ms.   Olson  whether   Senator  Therriault's   answer  had                                                               
addressed her concerns adequately.                                                                                              
                                                                                                                                
MS. OLSON said  no.  She said  the bill is rather  broad, and she                                                               
emphasized  the need  to look  at the  whole problem,  instead of                                                               
"piecemealing"  it.   Ms. Olson  added, "It's  causing people  to                                                               
react to every little, particular  problem, where it really needs                                                               
to be looked at in a larger scope."                                                                                             
                                                                                                                                
REPRESENTATIVE KOHRING  requested that Ms. Olson  call his office                                                               
or e-mail or fax her concerns to him for a further look.                                                                        
                                                                                                                                
Number 0955                                                                                                                     
                                                                                                                                
SENATOR THERRIAULT remarked that  the statutory reference used by                                                               
Ms.   Olson   deals   with  the   Department   of   Environmental                                                               
Conservation,  not  DGC.   He  suggested  someone might  want  to                                                               
introduce  a  bill  to  address  that, but  said  it  wasn't  his                                                               
intention with SB 308.                                                                                                          
                                                                                                                                
Number 0990                                                                                                                     
                                                                                                                                
VICE CHAIR FATE asked whether  there were further questions; none                                                               
were offered.   He thanked participants and  again announced that                                                               
public testimony was closed.                                                                                                    
                                                                                                                                
Number 1013                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON   moved  to   report  CSSB   308(FIN)  from                                                               
committee  with  individual   recommendations  and  the  attached                                                               
[zero] fiscal note.  There  being no objection, CSSB 308(FIN) was                                                               
moved out of the House Special Committee on Oil and Gas.                                                                        
                                                                                                                                
Number 1041                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE called an  at-ease at 9:20  a.m.  He  called the                                                               
meeting back to order at 9:23 a.m.                                                                                              
                                                                                                                                
SB 319-SHALLOW NATURAL GAS: LEASING & DISCHARGES                                                                              
                                                                                                                                
Number 1059                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE announced  the final order  of business,  CS FOR                                                               
SENATE BILL  NO. 319(FIN),  "An Act  relating to  shallow natural                                                               
gas; and providing for an effective date."                                                                                      
                                                                                                                                
Number 1101                                                                                                                     
                                                                                                                                
SENATOR JOHN  TORGERSON, Alaska State Legislature,  sponsor of SB
319, explained  that the shallow  gas leasing  program originally                                                               
was proposed to enable exploration  and production of shallow gas                                                               
deposits in rural  areas, in order to supply  energy to villages,                                                               
mines, and other  rural users.  However, now that  the program is                                                               
fully  operational -  with  more than  100  leases processed  and                                                               
nearly 200  pending -  it is  apparent the  program has  become a                                                               
vehicle for  commercial gas development in  Fairbanks, Big Delta,                                                               
the Matanuska-Susitna area, and the lower Kenai Peninsula.                                                                      
                                                                                                                                
SENATOR TORGERSON reported  that the bill changes  the program in                                                               
five distinct  ways.  First,  it increases revenues to  the State                                                               
of Alaska.   [Section  2] raises  application [fees]  for shallow                                                               
gas leases from  $500 to $5,000, which more  closely reflects the                                                               
state's  processing costs.   [Section  4]  increases annual  fees                                                               
from 50  cents an acre  to $1 an acre.   Second, the  bill lowers                                                               
administrative costs [in Section  4] by eliminating a requirement                                                               
that the Department of Natural  Resources (DNR) notify lessees by                                                               
certified mail  when rental fees  are due.   It also  removes the                                                               
deadlines  for   issuing  leases;   the  deadlines   have  proven                                                               
unworkable  and  don't recognize  the  work  required by  DNR  in                                                               
processing  leases in  populated  areas that  [may have]  complex                                                               
land-ownership patterns.                                                                                                        
                                                                                                                                
SENATOR TORGERSON explained that  third, the bill provides better                                                               
reservoir management and  increased value to lessees.   The depth                                                               
limitation of  3,000 feet  has been  replaced with  a requirement                                                               
that some portion  of the field must be within  3,000 feet of the                                                               
surface.   The total  acreage that  may be held  by a  lessee has                                                               
been increased [in  Section 2] from 46,080 acres  to an aggregate                                                               
of  100,000 acres;  he  said DNR  believes  the acreage  increase                                                               
reflects  the greater  amount that  may  be necessary  to have  a                                                               
viable shallow gas leasing program.                                                                                             
                                                                                                                                
Number 1230                                                                                                                     
                                                                                                                                
SENATOR  TORGERSON  noted  that  fourth,  the  bill  removes  the                                                               
requirement that the  applicant conduct a title search.   He said                                                               
DNR routinely conducts a title  search for land before leases are                                                               
issued;  furthermore, no  title company  will conduct  a thorough                                                               
title search  of the  subsurface estate and  warranty title.   In                                                               
addition, there is improved protection  for surface estate owners                                                               
through bonding.   However, the  lessee must  secure a bond  as a                                                               
precondition of  obtaining the lease.   If damages occur  and the                                                               
lessee and landowner  cannot reach an agreement on  the amount of                                                               
damages, either  party may  seek relief in  the courts,  he said,                                                               
and DNR would  release the bond as directed by  the court.  These                                                               
proposed  new  bonding  provisions  would  help  protect  surface                                                               
owners by ensuring  that substantial bonds are in  place prior to                                                               
the exploration and development of the leases.                                                                                  
                                                                                                                                
SENATOR TORGERSON specified  that the fifth change  is actually a                                                               
timeline for converting  the existing leases to  the new program,                                                               
giving them through September 30 [2002] to do that.                                                                             
                                                                                                                                
Number 1309                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON noted  that  this is  an  area about  which                                                               
Chairman Ogan has expressed a lot  of interest.  He asked whether                                                               
it would be possible to talk with him by telephone.                                                                             
                                                                                                                                
VICE CHAIR FATE,  after consulting with the  committee aide, said                                                               
Chairman  Ogan  [who  was  absent  for  medical  reasons]  wasn't                                                               
available.                                                                                                                      
                                                                                                                                
REPRESENTATIVE DYSON  asked whether delaying passage  of the bill                                                               
until  the  next  hearing,  in  order  to  receive  comment  from                                                               
Chairman Ogan, would cause a problem with the timeline.                                                                         
                                                                                                                                
Number 1361                                                                                                                     
                                                                                                                                
SENATOR TORGERSON  reported that  Chairman Ogan  is aware  of the                                                               
bill, which he  said they'd discussed earlier.   "I don't believe                                                               
he  has any  problems  with it,"  Senator  Torgerson offered;  he                                                               
acknowledged, however,  that he  wasn't sure whether  changes had                                                               
been  made  since  Chairman  Ogan  last reviewed  it.    He  told                                                               
Representative Dyson  that the key  is passage this year,  and he                                                               
said  it wouldn't  hurt to  hold it  for a  period of  time.   He                                                               
indicated  his understanding,  however,  that  Chairman Ogan  has                                                               
been most interested in Evergreen  [Resources], which is in favor                                                               
of the bill.                                                                                                                    
                                                                                                                                
Number 1408                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE called an  at-ease at 9:27  a.m.  He  called the                                                               
meeting back to order at 9:28 a.m.                                                                                              
                                                                                                                                
Number 1417                                                                                                                     
                                                                                                                                
REPRESENTATIVE   KOHRING   expressed  appreciation   to   Senator                                                               
Torgerson for what  he is trying to do with  the legislation.  He                                                               
remarked on the  mention of Evergreen Resources'  support for the                                                               
legislation   and  surmised   that  the   fee  increases   aren't                                                               
objectionable  to that  company or  others in  the industry.   He                                                               
added that  he couldn't help  notice the tenfold increase  in the                                                               
annual rental  fees, as well  as the increase in  the per-acreage                                                               
rental fees.   He requested that Senator  Torgerson address that,                                                               
as well  as the [portion of  the sponsor statement that  says the                                                               
fees  aren't  to]  discourage parties  of  genuine  interest  and                                                               
ability from  developing [shallow  natural gas]  resources, given                                                               
that companies will be paying more money.                                                                                       
                                                                                                                                
SENATOR TORGERSON noted that before  being asked to consider this                                                               
bill, he  was "going down a  parallel path on how  to convert the                                                               
shallow gas  leasing into a  more conventional  leasing program."                                                               
At $500  a lease, he said,  he'd been concerned that  some of the                                                               
300 lessees  were just betting  on possible success and  tying up                                                               
the land for $500 because nothing was required to happen.                                                                       
                                                                                                                                
SENATOR  TORGERSON indicated  DNR personnel  had said  going from                                                               
[$500]  to   $5,000  more  closely   reflects  costs,   which  he                                                               
understood  to  be  perhaps  $3,500  a lease.    He  referred  to                                                               
discussion  about   "pure  rural  users,"  for   which  this  was                                                               
originally  intended.   He remarked,  "I committed  to revisiting                                                               
this  program  so   that  we  could  have,   basically,  a  rural                                                               
development kind  of a  community-by-village lease  program where                                                               
it would still  be available."  He added, "Other  than that, none                                                               
of the  companies oppose the  current increases, or at  least not                                                               
that I'm aware of."                                                                                                             
                                                                                                                                
Number 1594                                                                                                                     
                                                                                                                                
VICE CHAIR FATE noted that Mark  Myers of DNR's Division of Oil &                                                               
Gas was online  to answer questions.  He referred  to the acreage                                                               
[in Section 2], pointing out  that 46,080 acres is two townships,                                                               
whereas 100,000, the new amount in  the bill, is between four and                                                               
five townships.  Although he had  no objection to the new amount,                                                               
he suggested perhaps it could be  a multiple of a whole township.                                                               
He asked Senator Torgerson whether he'd considered that.                                                                        
                                                                                                                                
SENATOR TORGERSON  replied no.   He said the increase  was worked                                                               
out between DNR and the  producers, "in recognition that it takes                                                               
a lot of acreage and a lot  of wells to produce the shallow gas."                                                               
He added that the reservoirs  don't necessarily follow boundaries                                                               
or straight  lines; he suggested perhaps  the particular increase                                                               
recognizes that also.  He suggested  it would be a great question                                                               
for Mr. Myers.                                                                                                                  
                                                                                                                                
Number 1685                                                                                                                     
                                                                                                                                
MARK  MYERS,  Director, Division  of  Oil  & Gas,  Department  of                                                               
Natural   Resources  (DNR),   testified  via   teleconference  in                                                               
response.  He said:                                                                                                             
                                                                                                                                
     Typically, we  don't end up  with totally  even numbers                                                                    
     when  we do  the work  because, again,  in these  large                                                                    
     blocks  there's typically  other  subsurface owners  as                                                                    
     well, particularly  in the areas where  the leases have                                                                    
     been.    So  the  numbers end  up  being  not  directly                                                                    
     related.                                                                                                                   
                                                                                                                                
MR. MYERS  further explained  that with  the 100,000  acres, "the                                                               
thought  process was  that that's  a  very large-size,  coal-bed-                                                               
methane-type  unit, where  they  would depressurize  ... a  large                                                               
unit."   Regarding  the existing  [46,080 limit],  he said  there                                                               
have been clear examples of  units larger than that, which needed                                                               
to  be   that  large  for  "economy-of-scale   production."    He                                                               
concluded:                                                                                                                      
                                                                                                                                
     We  were trying  to  get a  number significantly  large                                                                    
     enough, that  was as  large or larger  than any  of the                                                                    
     largest coal-bed-methane units we  knew.  That's not to                                                                    
     say an  individual company might  not need to  have two                                                                    
     or three  units, again, for ...  their total production                                                                    
     scenarios.                                                                                                                 
                                                                                                                                
     So, the  100,000 acres wasn't  a magical number.   It's                                                                    
     simply  a number  to recognize  the commercial  size of                                                                    
     development.    And we  recognize  that  in the  filing                                                                    
     program; ... people will file  for a full township, but                                                                    
     not  get that  full amount  of acreage.   So  the even-                                                                    
     versus-odd  number didn't  make much  difference to  us                                                                    
     because, again,  that's something that's sorted  out in                                                                    
     the  title search,  ultimately,  at the  time of  lease                                                                    
     issuance.   But,  again, we  would have  no problem  in                                                                    
     rounding  those  numbers  ...  if  the  committees  and                                                                    
     Senator Torgerson were comfortable with that.                                                                              
                                                                                                                                
Number 1740                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE clarified that  he wasn't  anticipating rounding                                                               
it,  but had  wondered whether  there was  a desire  to keep  the                                                               
acreage at a multiple of a  [township].  He said the question had                                                               
been answered adequately.   He thanked Senator  Torgerson and Mr.                                                               
Myers for their testimony.                                                                                                      
                                                                                                                                
Number 1795                                                                                                                     
                                                                                                                                
CHARLOTTE  MacCAY,  Senior  Administrator  of  Environmental  and                                                               
Regulatory  Affairs,  Teck  Cominco Alaska  Inc.,  testified  via                                                               
teleconference, noting that Teck  Cominco Alaska operates the Red                                                               
Dog Mine north of Kotzebue.  Ms. MacCay offered the following                                                                   
testimony:                                                                                                                      
                                                                                                                                
     I'm here today to talk  about a potential energy source                                                                    
     we're  looking  at  to replace  our  extensive  use  of                                                                    
     diesel fuel.   Briefly, the  Red Dog Mine  employs some                                                                    
     400 Alaskans,  of which 60  percent are  NANA [Regional                                                                    
     Corporation] shareholders.   The  mine produces  over a                                                                    
     million tons  of zinc and lead  concentrates each year,                                                                    
     and ships  it out  through our  port for  a three-month                                                                    
     period.   To  crush the  ore and  make the  concentrate                                                                    
     requires   some    28   megawatts   of    power   using                                                                    
     approximately 18 million gallons of diesel each year.                                                                      
                                                                                                                                
     In the area where we  have found indications of shallow                                                                    
     gas, the terrain is rolling  hills to rugged mountains,                                                                    
     much  different than  either  the  Matanuska Valley  or                                                                    
     Prudhoe Bay.  The rugged  nature of the region presents                                                                    
     a  need to  have  a more  flexible  definition for  the                                                                    
     depth limitation  for a shallow  gas lease.   The depth                                                                    
     language suggested in this  legislation will assist the                                                                    
     state and  the leaseholder  in knowing which  areas are                                                                    
     part of the  lease and in allowing us  to fully utilize                                                                    
     a reservoir once it's been tapped.                                                                                         
                                                                                                                                
Number 1870                                                                                                                     
                                                                                                                                
MS. MacCAY continued:                                                                                                           
                                                                                                                                
     Currently, Teck  Cominco holds  four state  shallow gas                                                                    
     leases, for a  total of 23,000 acres, and  NANA has the                                                                    
     adjoining land  to the east, for  nearly 100,000 acres,                                                                    
     which  also has  shallow gas.   To  adequately cover  a                                                                    
     target or  a concept  takes considerable acreage.   The                                                                    
     current  lease  has  an acreage  limitation  of  46,000                                                                    
     acres  to  any  one  company; this  is  not  sufficient                                                                    
     acreage  for a  project.    The suggested  100,000-acre                                                                    
     limit offered in this legislation  is supported by Teck                                                                    
     Cominco.                                                                                                                   
                                                                                                                                
     Surface ownership  in this portion of  Alaska is fairly                                                                    
     straightforward,   with  three   major  owners:     the                                                                    
     National  Park  Service,  whose land  we  know  is  off                                                                    
     limits;  the  State of  Alaska  land;  and the  private                                                                    
     lands of  NANA.   So the  issues of  addressing surface                                                                    
     owners separately is not an issue for Teck Cominco.                                                                        
                                                                                                                                
     The  fee  change  requested by  the  administration  is                                                                    
     considerably  more than  the initial  legislation -  in                                                                    
     fact, double for rentals and  ten times for application                                                                    
     fees.   We  understand the  administration's desire  to                                                                    
     generate more  revenue to  administer the  program, and                                                                    
     Teck  Cominco  can support  the  fee  increases if  the                                                                    
     monies  are  directed  to   the  shallow  gas  program.                                                                    
     Otherwise, the  increase is a significant  [added] cost                                                                    
     to  an  already cost-sensitive  business,  particularly                                                                    
     for rural Alaskan development.                                                                                             
                                                                                                                                
Number 1941                                                                                                                     
                                                                                                                                
MS. MacCAY continued:                                                                                                           
                                                                                                                                
     Development of a shallow gas  field in Northwest Alaska                                                                    
     has many  impediments [that] some areas  share and some                                                                    
     don't.   Location is a  major impediment due  to access                                                                    
     and the  ability to  bring large  equipment in  and out                                                                    
     during the  summer months only.   The lack of  roads in                                                                    
     the  area  and  the  desire to  maintain  the  pristine                                                                    
     nature  of  the   region  is  a  high   cost  and  time                                                                    
     impediment.                                                                                                                
                                                                                                                                
     It  is very  difficult, if  not impossible,  to test  a                                                                    
     shallow gas  lease within the  three years  provided in                                                                    
     the  current lease  when work  is so  seasonal.   Logic                                                                    
     would say a  lease should be at least five  years for a                                                                    
     primary  term,   with  renewal  options   as  provided.                                                                    
     Although  not provided  in this  legislation, we  would                                                                    
     support a five-year term with renewal options.                                                                             
                                                                                                                                
     Development of  a shallow gas  field is  much different                                                                    
     than  a conventional  field  in Cook  Inlet  or on  the                                                                    
     Slope.   Instead  of  2 to  5 holes  to  develop a  gas                                                                    
     field,  it will  take  50  to 100  holes  to develop  a                                                                    
     shallow  gas  field.    A longer  lease  is  needed  to                                                                    
     accommodate this work,  and the cost per  hole needs to                                                                    
     be kept  at a  minimum, or  a field  becomes uneconomic                                                                    
     very quickly.                                                                                                              
                                                                                                                                
Number 1989                                                                                                                     
                                                                                                                                
MS. MacCAY continued:                                                                                                           
                                                                                                                                
     To  date,   Teck  Cominco  has  followed   the  mineral                                                                    
     exploration effort  in the  Red Dog area  as a  tool to                                                                    
     help defray costs and delineate  areas of potential gas                                                                    
     resource.    The methane  gas  we  have found  is  low-                                                                    
     pressure, and is located lateral  to and underlying our                                                                    
     ore zones.  Extensive work  has been completed to date,                                                                    
     but the  next phase  is to  conduct a  flow test.   The                                                                    
     flow  test cannot  be supported  until the  depth below                                                                    
     surface  of a  field is  better defined,  as this  bill                                                                    
     proposes to do.                                                                                                            
                                                                                                                                
     Arctic   operations   will  always   present   numerous                                                                    
     challenges not present elsewhere.   Teck Cominco Alaska                                                                    
     addresses many of these each  and every day at Red Dog.                                                                    
     By passing this legislation,  you will have addressed a                                                                    
     major challenge and impediment  that we otherwise could                                                                    
     not address.                                                                                                               
                                                                                                                                
VICE CHAIR  FATE thanked  Ms. MacCay and  requested that  she fax                                                               
her written testimony.                                                                                                          
                                                                                                                                
Number 2054                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOULE   asked  whether  any  benefits   would  be                                                               
realized by the people who live in the area.                                                                                    
                                                                                                                                
MS. MacCAY replied:                                                                                                             
                                                                                                                                
     At  this point,  our  exploration has  been limited  to                                                                    
     just  following our  own mineral  exploration.   But it                                                                    
     appears  that  there's  probably a  greater  gas  field                                                                    
     potential   than  what   we've  already   defined.  ...                                                                    
     Currently,  we've defined  enough to  replace Cominco's                                                                    
     18  million gallons.   But  if we  continue exploration                                                                    
     and find further gas, then  it's possible that we could                                                                    
     transmit power to the villages of Kivalina and Noatak.                                                                     
                                                                                                                                
MS.  MacCAY noted  that  for Noatak,  in  particular, the  barges                                                               
cannot get there  to deliver fuel "at this time,"  and fuel costs                                                               
for both  villages are quite  high.  The  power would have  to be                                                               
transmitted,  not  the  gas, because  neither  village  is  large                                                               
enough to support the power generation itself.                                                                                  
                                                                                                                                
Number 2112                                                                                                                     
                                                                                                                                
REPRESENTATIVE JOULE  asked, "And should  this all come  to pass,                                                               
the other thing  that you would free up  is the 18-million-gallon                                                               
storage capacity?"                                                                                                              
                                                                                                                                
MS. MacCAY  responded, "If  we were able  to convert  from diesel                                                               
fuel to  shallow gas, not  only would we  eliminate a lot  of the                                                               
risk of shipping in the 18  [million gallons] of gas each summer,                                                               
[but] it would also cut the  air emissions and many pollutants to                                                               
about half."                                                                                                                    
                                                                                                                                
Number 2158                                                                                                                     
                                                                                                                                
KEVIN A.  TABLER, Manager of  Land and Government  Affairs, Union                                                               
Oil Company of California  (Unocal), testified via teleconference                                                               
in support of SB 319,  noting that Unocal is currently conducting                                                               
an aggressive gas exploration program  in the Cook Inlet area and                                                               
is very  interested in any  legislation dealing with gas  and gas                                                               
exploration.  He said:                                                                                                          
                                                                                                                                
     The shallow  gas leasing program augments  the existing                                                                    
     areawide leasing  program and  enhances the  access to,                                                                    
     and development of, the state's natural gas resources.                                                                     
     We  are  very  supportive  of this  program  and  other                                                                    
     leasing  programs  providing   access  to  the  state's                                                                    
     mineral wealth.                                                                                                            
                                                                                                                                
     I have participated in hearings  on the Senate side and                                                                    
     have  listened   today  to   the  remarks   of  Senator                                                                    
     Torgerson and the few remarks  of director [Mark] Myers                                                                    
     of the Division  of Oil & Gas and others  in support of                                                                    
     this  bill,  and  wish  to  lend  Unocal's  support  in                                                                    
     passage  of this  legislation, for  the varied  reasons                                                                    
     already articulated.   The amendments identified  in SB
     319    provide    for   better    administration    and                                                                    
     clarification of  the shallow  gas leasing  program and                                                                    
     are  certainly in  the best  interest of  the State  of                                                                    
     Alaska.                                                                                                                    
                                                                                                                                
VICE CHAIR FATE thanked Mr. Tabler  and requested that he fax any                                                               
written comments.                                                                                                               
                                                                                                                                
Number 2232                                                                                                                     
                                                                                                                                
JOHN  TANIGAWA,  Special  Projects Manager,  Evergreen  Resources                                                               
Alaska Corporation,  testified via  teleconference in  support of                                                               
SB 319, noting  that his company is a wholly  owned subsidiary of                                                               
Evergreen Resources, Inc.  He told members:                                                                                     
                                                                                                                                
     Last  December,  I  moved to  Wasilla  to  oversee  our                                                                    
     operations, and I am the  person who is accountable and                                                                    
     responsible for our activities up  here.  Currently, we                                                                    
     have [46,080]  acres of shallow gas  lease applications                                                                    
     near Willow.   These applications are  pending with the                                                                    
     Division of Oil & Gas.                                                                                                     
                                                                                                                                
     Today, I  testify in  support of Senate  Bill 319.   SB
     319 removes  obstacles [to] our ability  to explore for                                                                    
     and  to   develop  shallow  natural  gas.     Evergreen                                                                    
     Resources  Alaska's specialties  extend  to Alaska  the                                                                    
     main focus  of Evergreen  Resources, which is  coal bed                                                                    
     methane,  unconventional gas,  and shallow  natural gas                                                                    
     development.                                                                                                               
                                                                                                                                
     These  activities require  at least  100,000 acres,  or                                                                    
     roughly  four  townships,  to establish  the  necessary                                                                    
     economies  of scale  for initial  development.   Due to                                                                    
     the challenges  of operating in an  arctic environment,                                                                    
     however, increasing that  acreage limitation to 138,240                                                                    
     acres,  or six  townships, increases  the ...  economic                                                                    
     viability of shallow natural gas.                                                                                          
                                                                                                                                
     We strongly support increasing  the depth limitation to                                                                    
     one  that  relies  on  science   and  geology  for  the                                                                    
     specific play.   And we are certain that  we can drill,                                                                    
     complete, and  produce natural gas [wells]  below 3,000                                                                    
     feet  in a  safe,  environmentally responsible  manner,                                                                    
     using already  existing technologies that  we currently                                                                    
     employ.                                                                                                                    
                                                                                                                                
     Finally,  ... the  shallow natural  gas program  is the                                                                    
     primary  reason why  Evergreen is  in Alaska.   We  are                                                                    
     grateful that  the legislature  is making  this program                                                                    
     possible  and for  improving it.   Changes  proposed in                                                                    
     this bill provide us the  necessary latitude to operate                                                                    
     in  an  economically  sound  and  environmentally  safe                                                                    
     manner.  We  acknowledge the Division of Oil  & Gas for                                                                    
     collaborating  with us  and  other [stakeholders],  and                                                                    
     this is an excellent example  of how state agencies and                                                                    
     industry  can   work  together  to  benefit   not  just                                                                    
     government and industry, but particularly the public.                                                                      
                                                                                                                                
Number 2359                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING  remarked, "I want  to thank you  guys for                                                               
all the  exploration and prospective  development in  the Mat-Su.                                                               
It's certainly going  to translate to some  economic activity out                                                               
there."   He then asked  whether Mr. Tanigawa sees  the [increase                                                               
in] fees as a problem for his company.                                                                                          
                                                                                                                                
MR. TANIGAWA said no.  He explained:                                                                                            
                                                                                                                                
     We believe that  in this time of  fiscal challenges for                                                                    
     both the state  and the industry, it  is important that                                                                    
     this program be  ... self-funding.  And  I believe that                                                                    
     the oil and gas industry  has a long history of funding                                                                    
     its  own  regulations  at the  borough  and  state  and                                                                    
     federal  levels.   And  we  believe  that this  program                                                                    
     should  be no  different  [and] not  seek any  taxpayer                                                                    
     support to comply with this proposed regulation.                                                                           
                                                                                                                                
VICE CHAIR FATE thanked Mr. Tanigawa and called on Dana Olson.                                                                  
                                                                                                                                
Number 2423                                                                                                                     
                                                                                                                                
DANA OLSON  testified via  teleconference on her  own behalf.   A                                                               
property owner  in a  potentially affected  area, Ms.  Olson said                                                               
she was  testifying with regard  to the socioeconomic  impacts of                                                               
the program  upon communities.   She  expressed concern  that the                                                               
definition  of  "rural" is  too  broad  because there  are  well-                                                               
defined communities  in the Matanuska-Susitna Borough.   She said                                                               
this activity could potentially  displace people and have impacts                                                               
on communities.                                                                                                                 
                                                                                                                                
MS. OLSON further said DNR's land-use  plans are out of date, and                                                               
Title 38 requires revision when  necessary.  She pointed out that                                                               
land-use  plans  go  through  a   public  process  [beyond]  just                                                               
testifying to  the legislature.   She cited AS  46.03.040, saying                                                               
it   is  "a   requirement  for   environmental  plans   that  DEC                                                               
[Department of Environmental Conservation]  has not done, nor has                                                               
it been approved  by the governor."  She  suggested the committee                                                               
may want to repeal it, if it is no longer relevant.                                                                             
                                                                                                                                
MS. OLSON  further suggested the fees  are too low when  it comes                                                               
to impacting communities.  Remarking  that the amount in the bill                                                               
seems rather  arbitrary, Ms.  Olson said she'd  like to  see some                                                               
"factual  basis  for what  the  effects  will be  on  communities                                                               
before a generalized fee is required."                                                                                          
                                                                                                                                
MS. OLSON turned attention to a  proposed Knik Arm power plant in                                                               
Cook Inlet;  she indicated one  provision is utilization  of both                                                               
oil  and  natural gas.    She  suggested power  plants  generally                                                               
should  be required  to use  cleaner fuel  sources.   "It doesn't                                                               
make much  sense to  go in  and do all  this development  and not                                                               
require industry to use it," she concluded.                                                                                     
                                                                                                                                
Number 2569                                                                                                                     
                                                                                                                                
VICE CHAIR FATE  thanked Ms. Olson and asked  whether anyone else                                                               
wished  to testify;  there was  no  response.   He closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
Number 2585                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON expressed  appreciation  for the  sponsor's                                                               
bringing this  bill forward.  He  said it sounds as  though there                                                               
is  no downside.   He  suggested there  is a  great advantage  to                                                               
having the administrative  costs covered by the fees  paid by the                                                               
industry.   If  the  fees are  more  than enough,  Representative                                                               
Dyson  remarked, it  is  a  public resource  being  used and  can                                                               
support public  services, which is  good public policy  and helps                                                               
to  get public  support  for the  industry.   He  added that  his                                                               
former concerns  about showing deference  to Chair Ogan  had been                                                               
assuaged.                                                                                                                       
                                                                                                                                
Number 2628                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON   moved  to   report  CSSB   319(FIN)  from                                                               
committee  with  individual   recommendations  and  the  attached                                                               
fiscal note.   There being no objection, CSSB  319(FIN) was moved                                                               
out of the House Special Committee on Oil and Gas.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 2649                                                                                                                     
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee  on Oil and  Gas meeting was adjourned  at 9:50                                                               
a.m.                                                                                                                            
                                                                                                                                

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