Legislature(1997 - 1998)

03/31/1998 10:04 AM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
       HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                  
                   March 31, 1998                                              
                     10:04 a.m.                                                
                                                                               
                                                                               
MEMBERS PRESENT                                                                
                                                                               
Representative Mark Hodgins, Chairman                                          
Representative Scott Ogan                                                      
Representative Norman Rokeberg                                                 
Representative Joe Ryan                                                        
Representative Tom Brice                                                       
Representative J. Allen Kemplen                                                
                                                                               
MEMBERS ABSENT                                                                 
                                                                               
Representative Con Bunde                                                       
                                                                               
COMMITTEE CALENDAR                                                             
                                                                               
SENATE CONCURRENT RESOLUTION NO. 20                                            
Relating to support of the State of Alaska's areawide leasing                  
program.                                                                       
                                                                               
     - MOVED SCR 20 OUT OF COMMITTEE                                           
                                                                               
*HOUSE BILL NO. 469                                                            
"An Act approving the sale of Prudhoe Bay Unit royalty oil by the              
State of Alaska to Mapco Alaska Petroleum, Inc.; and providing for             
an effective date."                                                            
                                                                               
     - SCHEDULED BUT NOT HEARD                                                 
                                                                               
(* First public hearing)                                                       
                                                                               
PREVIOUS ACTION                                                                
                                                                               
BILL: SCR 20                                                                   
SHORT TITLE: STATE Areawide LEASING PROGRAM                                    
SPONSOR(S): SENATOR(S) PEARCE                                                  
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 1/13/98      2181     (S)  READ THE FIRST TIME - REFERRAL(S)                  
 1/13/98      2181     (S)  RESOURCES                                          
 2/04/98               (S)  RES AT  3:30 PM BUTROVICH ROOM 205                 
 2/06/98               (S)  RES AT  3:30 PM BUTROVICH ROOM 205                 
 2/06/98               (S)  MINUTE(RES)                                        
 2/09/98      2450     (S)  RES RPT      4DP                                   
 2/09/98      2450     (S)  DP:  GREEN, TAYLOR, TORGERSON, SHARP               
 2/09/98      2450     (S)  ZERO FISCAL NOTE (S.RES)                           
 2/10/98               (S)  RLS AT          FAHRENKAMP RM 203                  
 2/10/98               (S)  MINUTE(RLS)                                        
 2/12/98      2497     (S)  RULES TO CALENDAR  2/12/98                         
 2/12/98      2504     (S)  READ THE SECOND TIME                               
 2/12/98      2504     (S)  PASSED Y17 N- E2 A1                                
 2/12/98      2506     (S)  TRANSMITTED TO (H)                                 
 2/16/98      2324     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 2/16/98      2325     (H)  OIL & GAS                                          
 3/31/98               (H)  O&G AT 10:00 AM CAPITOL 124                        
                                                                               
WITNESS REGISTER                                                               
                                                                               
KRISTY TIBBLES, Researcher                                                     
  to Senator Drue Pearce                                                       
Alaska State Legislature                                                       
Capitol Building, Room 518                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-4747                                                     
POSITION STATEMENT:  Testified on SCR 20.                                      
                                                                               
JOHN SHIVELY, Commissioner                                                     
Department of Natural Resources                                                
400 Willoughby Avenue, 5th Floor                                               
Juneau, Alaska 99801                                                           
Telephone:  (907) 4532400                                                      
POSITION STATEMENT:  Testified on SCR 20.                                      
                                                                               
ACTION NARRATIVE                                                               
                                                                               
TAPE 98-29, SIDE A                                                             
Number 0001                                                                    
                                                                               
CHAIRMAN MARK HODGINS called the House Special Committee on Oil and            
Gas meeting to order at 10:04 a.m.  Members present at the call to             
order were Representatives Hodgins, Rokeberg, Ryan and Brice.                  
Representatives Ogan and Kemplen arrived at 10:05 a.m.                         
                                                                               
SCR 20 - STATE AREAWIDE LEASING PROGRAM                                        
Number 0012                                                                    
                                                                               
CHAIRMAN HODGINS announced the committee would hear SCR 20,                    
"Relating to support of the State of Alaska's areawide leasing                 
program."                                                                      
                                                                               
KRISTY TIBBLES, Researcher to Senator Drue Pearce, stated that                 
Senator Pearce sponsored SCR 30 at the request of the support                  
industry, The Alliance.  She stated that in 1996 the legislature               
created the state's areawide leasing program with unanimous support            
by all 60 legislators and the governor.  The current program has               
been implemented successfully by the Department of Natural                     
Resources and has provided a cost and labor savings approach to                
offering lease sales in areas of Alaska, already subjected to                  
extensive leasing.  She stated that the oil and gas industry                   
operates in a very contentious environment in Alaska and by passing            
this the legislature would lend its unwavering support for this                
practical approach to leasing the state's oil and gas land.  She               
stated that this resolution further emphasizes the benefits of this            
program for all Alaskans.                                                      
                                                                               
Number 0047                                                                    
                                                                               
REPRESENTATIVE JOE RYAN stated that according to the letter from               
The Alliance, the opposition claimed they did not have sufficient              
time to express their opinions on the legislation.  He asked who               
the opposition is.                                                             
                                                                               
MS. TIBBLES replied that she did not know and stated that a member             
from The Alliance was supposed to be here to also testify.                     
                                                                               
Number 0065                                                                    
                                                                               
JOHN SHIVELY, Commissioner, Department of Natural Resources, stated            
that the administration supports the resolution and is in the                  
process of implementing the law and will have the first areawide               
sale on June 24th.  He asserted that the preliminary best interest             
finding for the Cook Inlet areawide sale will be out shortly, the              
sale is scheduled for April 1999.  He stated that there are two                
other areawide sales scheduled for the future.  He stated that this            
is a better way to lease as it allows the public to understand                 
where they are leasing, for the government to do one best interest             
finding for ten years, and the industry to understand which land is            
going to be available for the leasing and when.                                
                                                                               
Number 0101                                                                    
                                                                               
REPRESENTATIVE NORMAN ROKEBERG asked what was the plan in Cook                 
Inlet after the follow up of the initial plan.                                 
                                                                               
Number 0111                                                                    
                                                                               
COMMISSIONER SHIVELY responded that the first sale is scheduled for            
April of 1999 and then each April for the next ten years "Cook                 
Inlet areawide will take place.  He stated that there would be a               
comment period prior to the sale where the best interest finding               
could be amended if so needed.                                                 
                                                                               
Number 0123                                                                    
                                                                               
REPRESENTATIVE ROKEBERG asked what the name of the sale is.                    
                                                                               
COMMISSIONER SHIVELY stated that they changed the name to Cook                 
Inlet Areawide Lease Sale as it is not as important now to have                
numbered sales.                                                                
                                                                               
REPRESENTATIVE ROKEBERG asked if he was starting with new baseline             
findings for each of the four sales described or are there findings            
in place because the 10 year renewal.                                          
                                                                               
Number 0150                                                                    
                                                                               
COMMISSIONER SHIVELY stated that they are building on the existing             
findings and making the appropriate findings as information comes              
available but they do not start from scratch.                                  
                                                                               
Number 0161                                                                    
                                                                               
REPRESENTATIVE ROKEBERG stated that he inserted into the bill the              
10 year window and asked how he was determining the ten year                   
window.                                                                        
                                                                               
Number 0164                                                                    
                                                                               
COMMISSIONER SHIVELY stated that he misunderstood his previous                 
question.  He stated that what happens is that they will do a full             
blown best interest finding and that final finding will stand for              
the 10 years.  However, each year they will ask for significant new            
information that might cause an amendment of the best interest                 
finding.  He stated that the best interest finding would stand for             
the ten years but it is possible to have some amendments to it.                
                                                                               
Number 0180                                                                    
                                                                               
REPRESENTATIVE ROKEBERG asked how much money the department is                 
going to be saving in developing investments and findings for the              
next ten years.                                                                
                                                                               
Number 0200                                                                    
                                                                               
COMMISSIONER SHIVELY responded that he could not answer that,                  
although there will be some savings as there will be fewer sales to            
deal with.  He stated that there is no question that there will be             
a definite work load savings for the department.                               
                                                                               
Number 0215                                                                    
                                                                               
REPRESENTATIVE ROKEBERG asked what an estimate would be to put                 
together a full blown best interest finding. Would it be in the                
$300,000 to $400,000 range.                                                    
                                                                               
COMMISSIONER SHIVELY replied that he did not want to guess.                    
                                                                               
Number 0227                                                                    
                                                                               
REPRESENTATIVE ROKEBERG asked him to guess or make some                        
assumptions.  He stated that it would be supportive of the                     
resolution and it would stroke his ego a little bit.                           
                                                                               
CHAIRMAN HODGINS stated that the chair recognizes the job that                 
other legislatures have done on this and Representative Rokeberg is            
noted.                                                                         
                                                                               
Number 0252                                                                    
                                                                               
REPRESENTATIVE KEMPLEN asked what have been the major concerns                 
raised with the areawide leasing program and how has the department            
met those concerns.                                                            
                                                                               
Number 0255                                                                    
                                                                               
COMMISSIONER SHIVELY responded that the major concern is that there            
is too much acreage offered at one time and that people think a                
best interest finding cannot be done in a place like Cook Inlet to             
cover 5 million acres but of which we will be leasing 2.8 million              
acres.  He stated they have leases all but 6 percent of this land              
in the previous lease sales, so it is not like this is new area.               
He stated that the previous lease sale program with multiple leases            
for sale at the same time causes a huge amount of confusion for the            
public.  He stated that his answer to people that feel they are too            
much is that this program makes more sense.                                    
                                                                               
Number 0278                                                                    
                                                                               
REPRESENTATIVE TOM BRICE stated that in the analysis section of the            
fiscal note resolution is mis-spelled.  He offered an amendment to             
correct the mis-spelling.                                                      
                                                                               
CHAIRMAN HODGINS asked if there was an objection.  Hearing none, it            
was so ordered.                                                                
                                                                               
Number 0300                                                                    
                                                                               
REPRESENTATIVE OGAN made a motion to move SCR 20 with the corrected            
zero fiscal note attached.                                                     
                                                                               
CHAIRMAN HODGINS asked if there was an objection.  Hearing none,               
SCR 20 was a moved out of the House Special Oil and Gas Committee.             
                                                                               
ADJOURNMENT                                                                    
                                                                               
CHAIRMAN HODGINS adjourned the House Special Committee on Oil and              
Gas meeting at 10:20 a.m.                                                      
                                                                               
                                                                               

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