Legislature(1995 - 1996)

01/31/1995 10:03 AM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
              HOUSE SPECIAL COMMITTEE ON OIL & GAS                             
                        January 31, 1995                                       
                           10:03 a.m.                                          
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative Scott Ogan, Vice Chair                                         
 Representative Gary Davis                                                     
 Representative Bill Williams                                                  
 Representative Tom Brice                                                      
 Representative Bettye Davis                                                   
 Representative David Finkelstein                                              
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 None                                                                          
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HJR 7:Opposing the ban on the export of Alaska North Slope                   
 crude oil; endorsing federal legislation to remove                            
 restraints on the export of Alaska North Slope oil;                           
 requesting the Congress of the United States to pass                          
 legislation to permit the export of Alaska North Slope                        
 crude oil; and urging the President of the United States                      
 to support the legislation to lift the ban on the export                      
 of Alaska North Slope crude oil.                                              
                                                                               
 PASSED OUT OF COMMITTEE                                                     
                                                                               
 HJR 19:Supporting the lifting of the ban on the export of Alaska             
 North Slope crude oil; requesting the President of the                        
 United States to present to the United States Congress a                      
 recommendation that it is both in the national interest                       
 to lift the ban on the export of Alaska North Slope crude                     
 oil and discriminatory to the state to maintain the ban,                      
 and endorsing passage of H.R. 70 and S. 70, companion                         
 federal legislation to remove restraints on export of                         
 that oil.                                                                     
                                                                               
 REMOVED FROM AGENDA                                                         
                                                                               
 WITNESS REGISTER:                                                             
                                                                               
 KEITH BURKE                                                                   
 The Alliance-General Manager                                                  
 4220 B St., Suite 200                                                         
 Anchorage, AK  99513                                                          
 Telephone: (907) 563-2226                                                     
 POSITION STATEMENT:  Supported CS HJR 7 and urged rapid passage               
                                                                               
 JIM PALMER, Director                                                          
 External Affairs                                                              
 BP-Alaska                                                                     
 7154 Lowell Circle                                                            
 Anchorage, AK  99502                                                          
 Telephone: (907) 243-7464                                                     
 POSITION STATEMENT:  Supported HJR 7                                          
                                                                               
 CHUCK LOGSDON, Chief Petroleum Economist                                      
 Department of Revenue                                                         
 550 W. 7th Ave, Suite 750                                                     
 Anchorage, AK  99501                                                          
 Telephone: (907) 277-5627                                                     
 POSITION STATEMENT:  Supported HJR 7, and the removal of the export           
  ban                                                                      
                                                                               
 BEVERLY WARD, Director                                                        
 Government Relations                                                          
 ARCO Alaska, Inc.                                                             
 134 N. Franklin St.                                                           
 Juneau, Alaska  99801                                                         
 Telephone: (907) 586-3680                                                     
 POSITION STATEMENT:  Provided written statement in support of                 
  HJR 7                                                                    
                                                                               
 PREVIOUS ACTION:                                                              
                                                                               
 BILL:  HJR  7                                                               
 SHORT TITLE: EXPORT OF ALASKA OIL                                             
 SPONSOR(S): REPRESENTATIVE(S) FINKELSTEIN, Rokeberg, Navarre,                 
 Grussendorf, Brown, B.Davis, Porter, Davies, Kubina                           
                                                                               
 JRN-DATE      JRN-PG              ACTION                                      
 01/16/95        17    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        17    (H)   O&G, RES, FIN                                     
 01/18/95        73    (H)   COSPONSOR(S): DAVIES                              
 01/19/95        86    (H)   COSPONSOR(S): KUBINA                              
 01/31/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
                                                                              
 BILL:  HJR 19                                                                
 SHORT TITLE: EXPORT OF ALASKA OIL                                             
 SPONSOR(S): SPECIAL COMMITTEE ON OIL AND GAS                                  
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 01/20/95       100    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/20/95       100    (H)   O&G, FIN                                          
 01/31/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
                                                                               
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-2, SIDE A                                                             
 Number 000                                                                    
                                                                               
 The House Special Committee on Oil & Gas was called to order by               
 CHAIRMAN NORMAN ROKEBERG at 10:03 a.m.  Members present at the call           
 to order were Representative(s) Rokeberg, Brice, G. Davis,                    
 Finkelstein, Ogan and Williams.  Members absent were Representative           
 B. Davis.                                                                     
                                                                               
 CHAIRMAN ROKEBERG stated there is a quorum present.  He then                  
 announced that the meeting was on teleconference with Anchorage and           
 Valdez.                                                                       
 HO&G - 01/31/95                                                               
 HJR 7 - EXPORT OF ALASKA OIL                                                
                                                                               
 Number 029                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked Representative Ogan if he would move to               
 adopt a Committee Substitute for HJR 7.  Representative Ogan so               
 moved.  Committee Substitute for HJR 7(O&G) is now before the                 
 committee for discussion.                                                     
                                                                               
 Number 044                                                                    
                                                                               
 CHAIRMAN ROKEBERG declared that public testimony was now open.  The           
 Chairman then asked if the sponsor of HJR 7 would like to make any            
 statements.                                                                   
                                                                               
 Number 055                                                                    
                                                                               
 REPRESENTATIVE DAVID FINKELSTEIN stated this issue has been a point           
 of controversy for several years.  There is a new interest for this           
 issue in the Congress of the United States and the Federal                    
 Administration.  He said with this new interest he believed that we           
 have a unique opportunity to change this law.  The increased                  
 position of Alaska's Congressional delegation helps to strengthen             
 our position as well.  He mentioned there have been several new               
 studies conducted on this issue and they have been favorable to our           
 position.  All of these factors provide us a very favorable                   
 position from which to lift the ban of Alaska North Slope crude               
 oil.                                                                          
                                                                               
 Number 076                                                                    
                                                                               
 CHAIRMAN ROKEBERG thanked Representative Finkelstein for his                  
 comments and noted that Representative Bettye Davis joined the                
 committee at 10:07 a.m.  Chairman Rokeberg then asked if there was            
 any testimony from Anchorage via teleconference.                              
                                                                               
 Number 090                                                                    
                                                                               
 KEITH BURKE, General Manager of "The Alliance,"  testified via                
 teleconference and stated that Alaska needs to continue to move               
 forward on development and improve the economics of marginal fields           
 in Alaska.  He said this resolution is an important piece of that             
 puzzle and I encourage you to pass this resolution and send it on             
 to the Congress of the United States so that Alaska can become more           
 competitive in a global market.  I applaud you for the position               
 that you are taking on this issue and I support you completely.               
                                                                               
 CHAIRMAN ROKEBERG thanked Mr. Burke for his statement and called              
 for testimony from Jim Palmer.                                                
                                                                               
 Number 107                                                                    
                                                                               
 JIM PALMER, Director of External Affairs, BP-Alaska, thanked                  
 Chairman Rokeberg for the opportunity to testify via                          
 teleconference.  Mr. Palmer indicated that he had prepared written            
 remarks that he would not read due to the time constraint, but he             
 wished them to be included in the record.  Mr. Palmer stated the              
 removal of the export ban on Alaskan North Slope crude oil is                 
 extremely important to the future of the oil industry in Alaska.              
 He stated he was very pleased that the issue has moved to the point           
 that it is currently at, and there is a very real chance that the             
 export ban will be lifted.  Mr. Palmer then stated he believes that           
 the Clinton Administration is looking very favorably towards                  
 removal of the ban, and that the current position of Alaska's                 
 Congressional delegation can be of great help.  Mr. Palmer then               
 stated he would be available to answer any questions that the                 
 members of the committee may have.                                            
                                                                               
 The following statement by BP Alaska was submitted by Mr. Palmer              
 for the record:                                                               
                                                                               
 Good morning, Mr. Chairman and members of the House Oil and                  
 Gas Committee.  My name is Linda Adamany and on behalf of BP,                 
 I am pleased to provide the following testimony to the Alaska                 
 State Legislature.  This testimony discusses the future of oil                
 production on Alaska's North Slope, and how artificial federal                
 constraints, such as the ban on its export, affect our ability                
 to market it efficiently.                                                     
                                                                               
 The history of Alaska North Slope oil production is one of                   
 remarkable achievement.  In the past two decades, the oil                     
 industry has invested more than $50 billion (in today's money                 
 terms) in realizing the Alaska North Slope's hydrocarbon                      
 potential.                                                                    
                                                                               
 We've nearly doubled the volume of oil we expect to recover                  
 from the region through a combination of technological                        
 advances and massive capital investment.  In 1977, we expected                
 to recover less than 10 billion barrels of oil from a single                  
 Alaska North Slope field.  Today we're producing oil from a                   
 number of fields surrounding Prudhoe Bay.  The industry has                   
 just produced our 10 billionth barrel of oil, yet we have a                   
 similar amount in booked and likely reserves.  We postponed                   
 Prudhoe's inevitable decline by nearly four years, and today                  
 based on the State of Alaska's own forecasts, the North Slope                 
 is producing some 600,000 barrels more per day than were                      
 projected less than a decade ago.                                             
                                                                               
 These achievements are particularly remarkable given the                     
 competitive disadvantages of Alaska's North Slope --                          
 disadvantages stemming primarily from harsh climatic                          
 conditions, remoteness, and federal restrictions on access to                 
 world crude oil markets imposed by the ANS export ban.                        
 But today, the future of this critical domestic resource is in               
 double jeopardy.  Production is in decline, and margins that                  
 are the lifeblood of the ongoing investments that sustain                     
 production are being squeezed as never before by upward                       
 pressure on Alaska North Slope costs.                                         
                                                                               
 BP, along with our industry partners, have been at the                       
 forefront of the industry in doing everything we can to enable                
 Alaska North Slope oil to compete effectively for investment                  
 capital in a fiercely competitive world oil market. We've left                
 no stone unturned in searching for new ways to do more for                    
 less, and we've stemmed the tide of soaring costs in the late                 
 `80s and `90s.                                                                
                                                                               
 We've completely retooled our relationships with contracts and               
 field partners.  We've reduced our staff levels and overhauled                
 the way we do business within BP.  These efforts have reduced               
 our operating costs and enabled us to actually reduce per                   
 barrel operating costs in an atmosphere of declining                          
 production without sacrificing safety or our environmental                   
 performance.                                                                 
                                                                               
 Because of Alaska's high field development costs, as well as                 
 restricted access to world crude oil markets, netbacks on                     
 Alaska North Slope production are disproportionately low                      
 vis-a-vis those of lower-cost hydrocarbon areas of the world                  
 that have unrestricted access to crude oil markets.                           
                                                                               
  Much of the Alaska North Slope production we currently project               
 for the year 2000 depends on investments yet to be made.                     
  More than ever before, the environment dictates that                         
 investments be directed to areas offering the highest margins                
 at the lowest risks.  With the end of the Cold War and so much                
 of the world now competing for energy investment, returns on                  
 those investments have become the prime consideration as                      
 companies allocate increasingly scarce capital resources.                     
  The competitiveness of these investments is crucial not only                 
 to BP and the Alaskan oil industry.                                          
                                                                               
  Many of the individual states also hold large stakes in the                  
 health of the domestic industry.  Those with significant oil                 
 production, like Alaska and California, realize substantial                   
 tax and royalty revenues.  They also benefit from a                           
 significant number of jobs both directly and indirectly linked                
 to oil industry investment.                                                   
                                                                               
 Much has been said and written about the hydrocarbon potential               
 of Alaska's North Slope.  There's a general consensus that the                
 potential significantly exceeds reserves already produced of                  
 both existing and potential resources and remove cash from the                
 system, making investments more difficult even in potentially                 
 profitable opportunities.                                                     
                                                                               
 It is important to understand that noncompetitive margins have               
 two effects.  First, they reduce production of both existing                  
 and potential resources and remove cash from the system,                      
 making investments more difficult even in potentially                         
 profitable opportunities.                                                     
                                                                               
  It's no longer enough that BP and the rest of the industry,                  
 through hard work and innovation, are reducing our costs. In                 
 order to maintain the competitiveness of Alaskan investments,                 
 it's critical that everyone with a stake in the future of the               
 Alaskan oil industry does his and her part to help ensure its                 
 long-term health.                                                             
                                                                               
 Federal restrictions on our ability to market Alaska North                   
 Slope oil where it will generate the highest possible returns                 
 hurt producers and the State of Alaska by reducing netbacks on                
 North Slope oil.  These restrictions are costly and an                        
 unnecessary burden on our ability to compete.  Lifting these                  
 restrictions will help to restore Alaska's competitiveness for                
 future investment by boosting the wellhead value of ANS crude.                
                                                                               
 The world has changed dramatically from the days when export                 
 restrictions on ANS crude were first imposed...days of real                   
 and perceived supply shortages and an energy crisis mentally.                 
 Today, with open markets, improved trade flows, access to new                 
 oil and gas provinces and significant discoveries throughout                  
 the world, the supply-demand balance has reversed itself.                     
                                                                               
 Restrictions on ANS exports that were based on fears of supply               
 shortages are no longer appropriate.  But failure to maintain                 
 investment because of loss of competitiveness will not help.                  
 Removing the restrictions and providing incentives will                       
 maximize domestic production if supply crises should occur in                 
 the future.                                                                   
                                                                               
 BP and the Alaskan oil industry will continue to do our part                 
 by doing all we can to make Alaska North Slope investments                    
 competitive. But we can no longer do it alone.                                
                                                                               
 By directly or indirectly relieving the burden of unnecessary                
 restrictions on our ability to compete, the federal government                
 will not only demonstrate its commitment to do its part to                  
 enhance the competitiveness of Alaska North Slope oil, but                    
 also to help ensure the long-term health of this critical                     
 domestic resource.                                                            
                                                                               
 BP strongly encourages the State of Alaska to support lifting                
 the ANS export ban.                                                           
                                                                               
                                                                               
 Thank you for this opportunity to address these important                    
 issues.                                                                       
                                                                               
 Number 134                                                                    
                                                                               
 CHAIRMAN ROKEBERG thanked Mr. Palmer and called upon Chuck Logsdon            
 to provide the committee with his testimony.                                  
                                                                               
 Number 140                                                                    
                                                                               
 CHUCK LOGSDON, Chief Petroleum Economist, Department of Revenue,              
 testified via teleconference and stated he would like to strongly             
 endorse the resolution urging that the export ban on Alaska North             
 Slope crude oil be lifted.  He stated that lifting the ban would              
 not only reduce the cost of marketing Alaska North Slope crude, it            
 will also increase the sales price as well, and both of these will            
 greatly increase the value of the resource.   Mr. Logsdon stated              
 this higher value will not only directly increase the state's oil             
 revenues but it will also make investment in Alaska's oil industry            
 more attractive to members of the oil companies themselves.  Mr.              
 Logsdon then stated he would be available to answer any questions             
 the committee may have about the technical aspects of the oil                 
 industry.                                                                     
                                                                               
 Number 154                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Logsdon for his comments on the $700              
 million to $1.6 billion of potential increases to state revenues,             
 and there is a fiscal note which shows an impact of about $80                 
 million in fiscal year 1996.                                                  
                                                                               
 Number 167                                                                    
                                                                               
 MR. LOGSDON, in response to Chairman Rokeberg's question stated the           
 difference between the price that we are getting for the oil on the           
 Gulf Coast and the West Coast is due to the fact that there has               
 been an artificial surplus generated by the installation of the oil           
 export ban.  Mr. Logsdon commented that as production has come down           
 to the current level of 1.6 million barrels per day in January, and           
 demand increases on the West Coast, our oil does become more                  
 attractive to the buyers and we are getting a better price for it.            
 Mr. Logsdon further stated there is still a modest discount between           
 the two markets which will no longer exist if the oil export ban is           
 lifted.  Mr. Logsdon said if the oil export ban is lifted, the                
 state should pick up between $50 million and $55 million in                   
 additional revenue due to higher realization for our West Coast               
 sales.  The other impact this would have would be on the cost of              
 transportation.  Mr. Logsdon stated the cost of shipping oil to               
 destinations in Japan or Korea was far less than shipping it to the           
 West Coast.                                                                   
                                                                               
 Number 232                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Logsdon if he was familiar with the               
 U.S. Department of Energy study that was published in June of 1994            
 noting that the numbers provided by Mr. Logsdon were more                     
 conservative than those given in the report.                                  
                                                                               
 CHAIRMAN ROKEBERG then asked if there were any questions from the             
 committee.  Hearing none, he thanked Mr. Logsdon for his testimony            
 and called for other witnesses.                                               
                                                                               
 Number 251                                                                    
                                                                               
 REPRESENTATIVE TOM BRICE asked to pose a few questions to the                 
 sponsor of the bill if there were no more witnesses to be heard.              
                                                                               
 Number 255                                                                    
                                                                               
 CHAIRMAN ROKEBERG then stated he would like to read into the record           
 a statement prepared by Beverly Ward, Director of Government                  
 Relations, ARCO Alaska, Inc.  Chairman Rokeberg explained that Ms.            
 Ward was unable to attend due to another commitment.  The following           
 letter read was submitted for the record:                                     
                                                                               
 Mr. Chairman, members of the House Oil and Gas Committee, my                 
 name is Beverly Ward.  Thank you for the opportunity today to                 
 add ARCO's voice to the chorus of those asking that the oil                   
 export ban be lifted.                                                         
                                                                               
 Prior to the 1994 election, we judged passage of legislation                 
 lifting the export ban unlikely.  It now appears passage is                   
 possible.                                                                     
                                                                               
 ARCO will not benefit from elimination of the export ban.  But               
 because of the potential benefit to the state -- and at the                   
 request of the Knowles Administration -- we reevaluated our                   
 long standing neutral position on this issue and decided the                  
 time had come to join the state in working to open Pacific Rim                
 markets to Alaska oil.                                                        
                                                                               
 We will make clear to members of Congress our support for                    
 legislation elimination the export ban.  We will also work                    
 closely with the Alaska Congressional delegation, the                         
 legislature and the Knowles Administration on this issue in                   
 whatever way appropriate.                                                     
                                                                               
 We applaud your efforts through HJR 7 and HJR 19 to lift the                 
 oil export ban.                                                               
                                                                               
 Number 283                                                                    
                                                                               
 CHAIRMAN ROKEBERG noted the change of position by ARCO and the                
 importance of this statement.  Chairman Rokeberg asked for any                
 further public testimony.  Hearing none, Chairman Rokeberg closed             
 public testimony on HJR 7.  Chairman Rokeberg then called for                 
 further discussion by the committee.                                          
                                                                               
 REPRESENTATIVE BRICE asked for a comparison between the Committee             
 Substitute and the original resolution.                                       
                                                                               
 Number 295                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated that most of the changes in the original             
 resolution are updated statistics.                                            
                                                                               
 Number 300                                                                    
                                                                               
 REPRESENTATIVE BRICE then asked Chairman Rokeberg if he had the               
 Committee Substitute introduced and not the sponsor.                          
                                                                               
 Number 302                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated that Representative Brice was correct.               
                                                                               
 Number 307                                                                    
                                                                               
 REPRESENTATIVE BRICE then asked Chairman Rokeberg to explain the              
 process by which an Executive Order can extend the sunset date on             
 a statute, and questioned the reference in statute, citing the                
 Export Administration Act of 1979, as well as the Tax Authorization           
 Act.  He also stated from his understanding of the first WHEREAS,             
 the President of the United States is the one who is currently                
 banning the export of North Slope oil.  Representative Brice then             
 asked Chairman Rokeberg who was really banning the export of North            
 Slope oil, and stated he thought there were some inconsistencies in           
 the legislation.  Representative Brice then pointed out in the                
 first WHEREAS on Page 1, Line 8, that "the President of the United            
 States has by Executive Order, continued the ban on the export of             
 Alaska North Slope crude oil contained in 50 U.S.C.S.  Appx.                  
 2406(d) (sec. 7(d) Export Administration Act of 1079) that                    
 prohibits, with tightly restrictive exceptions, the export of                 
 domestically produced oil transported by pipeline over the                    
 right-of-way granted by 43 U.S.C. 1652 (sec. 203 of the                       
 Trans-Alaska Pipeline Authorization Act); and asked Chairman                  
 Rokeberg if the President of the United States by Executive Order             
 is banning the export of North Slope crude oil, or is it the                  
 statutes that ban the export of North Slope crude oil.                        
                                                                               
 Number 339                                                                    
                                                                               
 CHAIRMAN ROKEBERG suggested that the sponsor of the bill could                
 answer these questions, stating that the first WHEREAS is the same            
 as the sponsor's.                                                             
                                                                               
 Number 341                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN thanked Chairman Rokeberg and stated               
 that in general, the Committee Substitute has a number of                     
 improvements.  Representative Finkelstein then answered                       
 Representative Brices's question with reference to Executive Orders           
 by stating that in certain areas like trade and national defense,             
 Executive Orders can be equivalent to a law.  He then stated there            
 were two laws that kept the ban in place; one was the law that kept           
 expiring each year, and the law that is in the Export                         
 Administration Act.                                                           
                                                                               
 Number 360                                                                    
                                                                               
 REPRESENTATIVE BRICE then asked if that was the law that gave the             
 President the power by Executive Order to extend the ban.                     
                                                                               
 Number 364                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN stated he did not know the answer to               
 that question because he did not know if the power of Executive               
 Orders came from that Act.  He then stated he thought that the                
 power of Executive Orders comes from much broader laws, that are              
 unrelated to this, that give the President certain powers in the              
 area of trade pre-existing any of this debate.                                
                                                                               
 CHAIRMAN ROKEBERG stated he believed the President of the United              
 States has unilaterally extended the ban by Executive Order.  He              
 then stated this issue is what we are focusing on, but there was              
 also some statutory language that built this up.  Chairman Rokeberg           
 then made a reference to the Trans-Alaska Pipeline Act.                       
                                                                               
 REPRESENTATIVE BRICE stated he would look into where the President            
 receives the power of Executive Order.                                        
                                                                               
 Number 386                                                                    
                                                                               
 CHAIRMAN ROKEBERG called for other comments or testimony of the               
 issue at hand, noting that Representative Brice wanted to examine             
 some of the comparative differentials between the Committee                   
 Substitute and the original resolution.  He then stated there was             
 some input from the witnesses, and the U.S. Energy study from June            
 1994, trying to update some of the statistics.  He stated in the              
 sponsor's original bill, there were some outdated numbers, so we              
 focused on changing those, as they related to the transportation              
 costs.  He then stated, from the study we used the first WHEREAS on           
 Page 2, $2-$4 dollars per barrel on the transportation charge.  The           
 differential there is that as Mr. Logsdon indicated he was using              
 $1.60 right now which may explain some of the lower numbers, but              
 the problem is that these are all speculative numbers.  Chairman              
 Rokeberg then stated they were trying to be straightforward and               
 honest using the Energy Department numbers.  Chairman Rokeberg                
 stated the key number from Alaska's standpoint is that over a seven           
 year period, Alaska gained $700 million-$1.6 billion in state taxes           
 and royalties.  At this time the committee meeting was interrupted            
 when the building fire alarm sounded.  It was quickly determined              
 that there was no fire in the building and the meeting resumed.               
                                                                               
 Number 428                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated he thought the revenue projections to the            
 state were very conservative, although the timing factor could come           
 in to play, and he wished they would stay that way due to the fact            
 that over the coming seven years the revenue would help us close              
 the gap.  One of the major things of that study was the impact on             
 the development of further marginal fields on the North Slope in              
 that area, that could generate additional lift in the job market              
 not only in Alaska , but in the entire United States.  He then                
 stated the fundamental economic theory is that the greater amount             
 of profit that can be generated by the lift of the ban, the more              
 money the industry will have to put back into investment in the               
 field and development, even marginal fields.                                  
                                                                               
 Number 456                                                                    
                                                                               
 REPRESENTATIVE BRICE mentioned that it seems that once you remove             
 the ban you are taking off a tax.                                             
                                                                               
 Number 458                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated the energy department's reserve additions            
 could be between 200 and 400 million barrels and that is an                   
 economic result of greater investment.  He stated there is also a             
 change in the delivery transportation prices from $2-$4 down to               
 $2.70.  He stated the primary differences here are a result of the            
 use of American labor and American shipping to transport the oil to           
 the Pacific Rim.  He stated this has the result of raising the cost           
 and lowering the wellhead price so that we don't get as much                  
 benefit as we would have gotten otherwise.  It is, however,                   
 politically expedient to do this and I believe that we will get               
 support from labor groups, such as the United Auto Workers, who               
 have historically been opposed to lifting the ban.  This is due to            
 the major impact on the balance of payments, and the decrease in              
 the trade deficit that this would help bring about.  The auto                 
 workers are worried that this would allow the U.S. to import more             
 Japanese automobiles.  The Chairman asked if Representative Brice             
 had any further questions.  Hearing none, he called for further               
 discussion.                                                                   
                                                                               
 Number 490                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN offered two amendments to the                      
 resolution.  Amendment 1:  Page 2, Line 12, delete "reinvested" and           
 insert "will be available for reinvestment".  Representative                  
 Finkelstein stated these amendments were designed to make the                 
 language more understandable.  He then stated with regard to the              
 amendment that, we can't say for certain that money saved on                  
 transportation costs will be reinvested in domestic exploration,              
 this is because they are a private company and we can't control               
 what they do.  He then stated this will be money that will be                 
 available for reinvestment.                                                   
                                                                               
 Number 508                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated that he understood the point being made by           
 Representative Finkelstein and asked if there was any further                 
 discussion of this topic.  The Chairman then took a brief at-ease.            
 When Chairman Rokeberg resumed the meeting he asked if                        
 Representative Finkelstein would like to move to vote on the first            
 amendment to HJR 7.                                                           
                                                                               
 Number 511                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN so moved the first amendment.                      
                                                                               
 Number 514                                                                    
                                                                               
 CHAIRMAN ROKEBERG, hearing no objection, so ordered the motion and            
 the first amendment was adopted.                                              
                                                                               
 Number 520                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN asked to correct his second amendment.             
 The amendment was handwritten and there were two mistakes.  First             
 he pointed out that on the third line down, the word `available'              
 came up twice, and he asked to delete one of them.  The second                
 correction on that line, change the word `discovery' to                       
 `development'.  After the corrections were made the amendment read:           
 Page 2, Line 16, delete "reserve additions in Alaska alone could be           
 as large as" and insert "the additional capital available could               
 lead to the development of up to an additional".  The explanation             
 of the amendment is that, in the WHEREAS there are some technical             
 terms that he was not aware of.  He stated that people who are                
 aware of economic theory of oil would understand the concept of               
 reserve additions so he was trying to say the same thing in a way             
 that would make sense.  The reserve addition is the theoretical               
 value of having additional capital available, and what this would             
 mean in terms of additional areas that could be found because this            
 capital is available to look for it is a very complex thought and             
 he wanted to make it easier to understand.                                    
                                                                               
 Number 542                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked if Mr. Logsdon if he had any comments.                
                                                                               
 Number 548                                                                    
                                                                               
 MR. LOGSDON said the theory that Representative Finkelstein put               
 forth is correct.                                                             
                                                                               
 Number 560                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN stated he was not trying to add or take            
 away from the theory, but his intent was just to clarify the                  
 meaning.                                                                      
                                                                               
 Number 566                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated he appreciated the efforts of                        
 Representative Finkelstein, but he had no problem understanding the           
 original draft and invited other comments.                                    
                                                                               
 Number 570                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN stated that reserve additions is a                 
 concept that isn't self-explanatory, and that it is just a theory.            
                                                                               
 Number 574                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated his appreciation for Representative                  
 Finkelstein's concerns, and said the language cites the energy                
 study that it comes from in case there is a question.                         
                                                                               
 Number 580                                                                    
                                                                               
 REPRESENTATIVE GARY DAVIS stated because it cites the study is the            
 most valid reason for leaving the language the way it is, then he             
 stated he agrees with Representative Finkelstein stating that we              
 should make these understandable as much as possible; however, when           
 you cite statutes, you can't always use everyday language.                    
                                                                               
 Number 590                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN stated the reason that he is concerned             
 is that he wants the 500 members of Congress to be able to                    
 understand the language being used.  He then stated if the audience           
 is not ourselves then the language should be self-explanatory.                
                                                                               
 Number 600                                                                    
                                                                               
 REPRESENTATIVE BRICE stated he tends to agree with Representative             
 Finkelstein and stated that our main objective should be clarity              
 with an issue like this one.                                                  
                                                                               
 CHAIRMAN ROKEBERG asked if there were any further comments on this            
 issue.  He then took a moment to review the material once again.              
                                                                               
 Number 635                                                                    
                                                                               
 CHAIRMAN ROKEBERG called the committee to order and asked if there            
 was any further discussion.  Hearing none, the Chairman called for            
 a vote on the second amendment.                                               
                                                                               
 Number 638                                                                    
                                                                               
 The vote on amendment number 2 was recorded as follows:                       
   YES: Representative(s) BRICE, B. DAVIS, FINKELSTEIN,                        
    NO: Representative(s) ROKEBERG, G. DAVIS, OGAN, WILLIAMS                   
                                                                               
 The amendment was defeated by a vote of 4 to 3.                               
                                                                               
 CHAIRMAN ROKEBERG asked for any other points of discussion or                 
 amendments.  Hearing none, he stated that he would entertain a                
 motion to move CS HJR 7 as amended from the committee with                    
 individual recommendations                                                    
                                                                               
 Number 655                                                                    
                                                                               
 Representative Gary Davis so moved.  Chairman Rokeberg asked if               
 there was an objection.  Hearing none, it was so ordered.                     
 HO&G - 01/31/95                                                               
                                                                               
 HJR 19 - EXPORT OF ALASKA OIL                                               
                                                                               
 Number 658                                                                    
                                                                               
 CHAIRMAN ROKEBERG declared that HJR 19 is now before the committee.           
 The Chairman then stated that the language of the resolution has              
 been incorporated into the resolution previously before the                   
 committee, therefore consideration of HJR 19 is not necessary, and            
 HJR 19 is removed from the agenda.                                            
 Number 663                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated the next order of business is the                    
 selection of a Vice Chair and nominated Representative Ogan.                  
 Hearing no objections, it was so ordered.                                     
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 665                                                                    
                                                                               
 CHAIRMAN ROKEBERG adjourned the meeting at 10: 46 a.m.                        
                                                                               
                                                                               

Document Name Date/Time Subjects