02/05/1998 10:08 AM House O&G
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HOUSE SPECIAL COMMITTEE ON OIL AND GAS
February 5, 1998
10:08 p.m.
MEMBERS PRESENT
Representative Mark Hodgins, Chairman
Representative Scott Ogan
Representative Norman Rokeberg
Representative Con Bunde
Representative J. Allen Kemplen
MEMBERS ABSENT
Representative Joe Ryan
Representative Tom Brice
COMMITTEE CALENDAR
* HOUSE BILL NO. 274
"An Act relating to the qualifications of the members of the Alaska
Oil and Gas Conservation Commission; and providing for an effective
date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 274
SHORT TITLE: OIL & GAS CONSERVATION COMMISSION
SPONSOR(S): REPRESENTATIVES(S) GREEN
Jrn-Date Jrn-Page Action
05/08/97 1656 (H) READ THE FIRST TIME - REFERRAL(S)
05/08/97 1656 (H) O&G, RES
01/15/98 (H) O&G AT 10:00 AM CAPITOL 124
01/15/98 (H) MINUTE(O&G)
01/22/98 (H) O&G AT 11:00 AM CAPITOL 124
01/22/98 (H) MINUTE(O&G)
02/05/98 (H) O&G AT 10:00 AM CAPITOL 124
WITNESS REGISTER
JEFF LOGAN, Legislative Assistant
to Representative Green
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
Telephone: (907) 465-6841
POSITION STATEMENT: Presented HB 274.
REPRESENTATIVE JOE GREEN
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
Telephone: (907) 465-6841
POSITION STATEMENT: Provided sponsor testimony on HB 274.
CATHERINE REARDON, Director
Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811
Telephone: (907) 465-2534
POSITION STATEMENT: Testified on HB 274.
ACTION NARRATIVE
TAPE 98-8, SIDE A
Number 0001
CHAIRMAN MARK HODGINS called the House Special Committee on Oil and
Gas meeting to order at 10:08 a.m. Members present at the call to
order were Representatives Hodgins, Ogan, Bunde and Kemplen.
Representative Rokeberg arrived at 10:10 a.m. Members absent were
Representatives Ryan and Brice.
HB 274 - OIL & GAS CONSERVATION COMMISSION
Number 0056
CHAIRMAN HODGINS announced the committee would hear HB 274,
"An Act relating to the qualifications of the members of the Alaska
Oil and Gas Conservation Commission; and providing for an effective
date."
REPRESENTATIVE CON BUNDE made a motion to move HB 274 before the
committee.
CHAIRMAN HODGINS asked Representative Bunde if he was referring to
the proposed CSHB 274.
REPRESENTATIVE BUNDE replied yes, CSHB 274, 0-LS0998\H, 12/5/97.
CHAIRMAN HODGINS asked Representative Green or his staff member
Jeff Logan, to present the bill.
JEFF LOGAN, Legislative Assistant to Representative Green, stated
that Alaskans are blessed with resources on a world class scale of
hydro-carbons, oil and gas. These resources are owned by the
people of Alaska. He stated that there is a demand for these
hydro-carbons, therefore Alaska has entered into agreements with
the companies that produce the hydro-carbons to bring oil and gas
to the surface and put it into the pipeline. He explained that the
companies have sophisticated technology and processes to implement
the activities on Alaska's behalf with Alaska's agreement. He
stated that relationships entered into with the companies are
beneficial to both parties. He quoted President Reagan to say.
"Trust but verify." He stated that the legislature needs to verify
what the companies are doing. He pointed out that the legislature
is empowered by the people to manage and conserve the resources.
The Alaska Oil and Gas Conservation Commission (AOGCC) has been
empowered to oversee these duties. The professional qualifications
of the people empowered on the AOGCC are important. The bill will
address these qualifications.
Number 0344
MR. LOGAN stated that up until now there has not been a need for
this bill. He referred to the committee members' packets and
stated they contained the history of the commission and appointed
people. He explained that up until now the commission had always
had a qualified petroleum engineer. The proposed committee
substitute to HB 274 will clarify the qualifications needed to hold
the petroleum engineer's position on the AOGCC.
Number 0475
REPRESENTATIVE GREEN stated that he wanted to stress that since
before statehood there has always been a registered petroleum
engineer on the commission or on the commission's predecessors.
Every governor until the present governor has seen fit to have a
registered petroleum engineer in that position because it is in the
statute. He stated that the Governor has sought to bring in a
mechanical engineer to fill this position. He stated that there is
an absolute need for someone well versed in hydro-carbon
production, development and containment. He explained that the two
prime functions of the AOGCC, albeit police power to force
unitization for conservation, is the correlative right protection
and the prevention of waste.
Number 0596
REPRESENTATIVE GREEN asserted that a mechanical or civil engineers
do not understand what correlative rights or prevention of rights
in a sub-surface reservoir mean. Therefore, the completion
techniques, the operations of the fields and maximum efficient
rates are unknown to people who have not had to work with them. He
stated that it is his intent to be sure that the Governor and his
staff understand the importance of the technical expertise, by
making the statute is so clear that it cannot be avoided.
Number 0690
REPRESENTATIVE GREEN stated that the Governor's staff did not say
why they had relieved the current holder of that position and his
predecessor; as they were capable of holding the position under the
two prior governors. He said, "But now, all of a sudden, this is
a broadened political horizon position rather than a technical
position." He asserted that the AOGCC is a technical commission
and it should be maintained that way. He indicated that they have
been dealing with the industry because the industry feels that by
trying to stay technical, the field may have been narrowed. The
industry would like to broaden the field so that there are
qualified people without necessarily having to be registered in the
state of Alaska. He stated that he has a set of guidelines from
the industry to use, which the need for creates another committee
substitute. He asked for a few days time in order to incorporate
the guidelines into the committee substitute. He indicated that it
would alleviate some of the comments made by Attorney General
Robert Mintz.
Number 0784
REPRESENTATIVE CON BUNDE stated that he is realizing that there are
some serious differences between, mechanical, civil and petroleum
engineers.
Number 0825
REPRESENTATIVE NORMAN ROKEBERG asked Representative Green if he is
a registered engineer in the state of Alaska.
Number 0835
REPRESENTATIVE GREEN responded that he is not. He informed the
committee that he is a registered engineer in two states but not in
the state of Alaska. He stated that he would not qualify under the
current version of the bill.
Number 0843
REPRESENTATIVE ROKEBERG asked if he, at one time, served as the
director of the Division of Oil and Gas.
REPRESENTATIVE GREEN responded that he served as director of the
Division of Minerals and Energy Management which was the forerunner
of the current Oil and Gas Commission and the Bureau of Mines as
they were combined at that time.
Number 0874
REPRESENTATIVE ROKEBERG stated that he wanted to establish
Representative Green's credentials for carrying the bill. He asked
Representative Green if he cared to elaborate any more.
Number 0885
REPRESENTATIVE GREEN stated that at one time he worked for what is
now the AOGCC doing reservoir modeling. He stated that it was back
in the late 70s when there was a concern of what might happen with
the Prudhoe Bay gas cap. He explained that he did a three
dimensional reservoir simulator model to determine various off
takes of gas development modes.
Number 0927
REPRESENTATIVE ROKEBERG stated that there are some comments in the
fiscal note and a reference to the comments in a letter from the
assistant attorney general, regarding salary levels. He asked if
the existing AOGCC salary compensation level makes any distinctions
between the three members in regards to compensation.
REPRESENTATIVE GREEN responded that the chairman has a slightly
higher compensation which would not necessarily be the petroleum
engineer's compensation.
REPRESENTATIVE ROKEBERG asked if there was a distinction based on
the professional qualifications of the members.
REPRESENTATIVE GREEN responded that there was not. He stated that
prior to the current chairman, a registered petroleum engineer was
always the chairman before but it was not a requirement.
Number 0981
REPRESENTATIVE ROKEBERG stated that he had been perusing the Alaska
statutes in regards to engineering. He pointed out that he did not
see a distinction other than in the practice of engineering itself.
He asked how, in the list of architects, engineers, land surveyors
and landscape architects, a distinction is made between types of
engineers.
Number 1029
REPRESENTATIVE GREEN stated that in the registration process the
examinations are significantly different. He stated that they all
take an engineering training exam first, unless they already have
the experience from another state, which states that the person
understands basic engineering principles. The next test is a
specific examination in the particular field that they are trying
to register in.
Number 1062
REPRESENTATIVE ROKEBERG stated that in the proposed committee
substitute for HB 274 there are references on page 2 to the
accreditation by the Engineering Accreditation Commission and the
Accreditation Board for Engineering and Technology and he asked for
an explanation.
Number 0174
REPRESENTATIVE GREEN stated that it is a national accreditation
board that says that certain schools meet the qualifications both
with the number of Doctorate professors they have and the courses
that they teach and require for a degree in that particular field.
Number 1090
REPRESENTATIVE ROKEBERG asked if that means that anyone who has
the academic background under this method of accreditation, has
received education in that particular discipline within the field
of engineering.
REPRESENTATIVE GREEN stated that it would indicate that the school
was accredited in that particular department and that person would
have received a degree from them. He clarified that the
accreditation goes to the college or the university rather than the
individual. A graduate meets the requirement of the accredited
school.
Number 1138
REPRESENTATIVE ROKEBERG informed the committee that there is no
definition in Alaska Statutes on petroleum engineering, only on
engineering generically and asked if that is correct.
REPRESENTATIVE GREEN replied that is correct.
REPRESENTATIVE ROKEBERG stated that this bill would take care of
that by defining what a petroleum engineer is.
Number 1165
REPRESENTATIVE GREEN stated that this version of the bill intends
to state that an engineer would have to be proficient in a litany
of things to be qualified for the job.
Number 1178
REPRESENTATIVE ROKEBERG referred to the issue on incumbency and how
it would work. He asked if he was going to address that in the
committee substitute and if it would have any impact on the
existing incumbency.
REPRESENTATIVE GREEN responded that it should not have an impact on
the existing incumbency with one respect, those who have been
accepted by the legislature.
Number 1222
REPRESENTATIVE ROKEBERG asked if there has been any legal action
taken in regards to the disagreement between the branches of
government.
Number 1237
REPRESENTATIVE GREEN responded that there has not been any legal
action taken between the two branches of government and there has
not been any action taken against the state for not fulfilling its
obligation under statute.
Number 1253
REPRESENTATIVE ROKEBERG asked what happens.
Number 1260
REPRESENTATIVE GREEN replied what would continue to happen because
of the propensity of the Governor to continue to nominate people
who are unqualified along the legislature's non-confirmation of
those appointments; would result in a two commissioner membership.
He stated that it would be a bad situation because there would not
be a deciding vote. In effect the commission would be in limbo and
should there be a disaster the state could be vulnerable. He
stated that he is trying to fix this situation with this bill.
Number 1319
CHAIRMAN HODGINS referred to the last year's meeting on
confirmations where the current person was confirmed. He stated
that it was his understanding that they confirmed him as being
qualified to the seat that the legislature appointed him to. He
explained that he understood that it is the Governor's prerogative
to say which seat was filled but it was made clear at the hearing
that he was to fill the at-large seat. He stated that he was
qualified for this seat and that he wanted to correct
Representative Green on that point.
Number 1371
REPRESENTATIVE GREEN stated that he thought he corrected himself in
that the legislature confirmed the non-technical seat and not the
engineering seat.
Number 1383
REPRESENTATIVE SCOTT OGAN stated that he is supportive of the
proposed committee substitute to HB 274, as he shares the same
concerns as Representative Green. The AOGCC is one of the most
important commissions as they are the policemen of the oil fields.
He asserted that they need to have expertise. He explained that
during the confirmation hearings, he asked the person presently in
the technical seat of the commission if he would characterize his
education and background to be of a petroleum engineer.
Representative Ogan asked Representative Green if he remembered
what his response was.
Number 1428
REPRESENTATIVE GREEN stated that in essence the response was no, he
did not consider himself qualified.
Number 1440
CHAIRMAN HODGINS stated that he would like to stick to the bill. He
asked Representative Green if the committee could expect another
committee substitute and stated that the committee could then hear
this bill next week.
Number 1465
REPRESENTATIVE OGAN stated that with all due respect to the
gentleman in question he thought it was relevant to bring it up
because that is the issue. He asked if the bill has a House
Resources Standing Committee referral.
CHAIRMAN HODGINS responded that it did.
Number 1509
REPRESENTATIVE ROKEBERG asked what areas the committee substitute
is going to be looking at.
Number 1575
REPRESENTATIVE GREEN replied that it would modify the stringent
requirements of being a registered petroleum engineer in the state
of Alaska. He stated that by requiring there to be a registered
engineer there then would be no question of the requirements.
The committee substitute would require that the person be qualified
to perform subsurface work and be a graduate engineer of an
accredited college. He informed the committee that the person
could be a mechanical or chemical engineer by education with ten
years of work experience in subsurface activities, he would
qualify. The committee substitute will increase the prior work
experience from five to ten years.
Number 1595
REPRESENTATIVE ROKEBERG referred to the issue of the talent pool
salary level and asked if that was going to be addressed in the
committee substitute.
Number 1617
REPRESENTATIVE GREEN stated that will fall out because the pool
will be expanded, as there no longer would be the requirement to be
a petroleum engineer in the state of Alaska. He stated that is
what the attorney general was complaining about, as there are too
few of petroleum engineers in the state.
REPRESENTATIVE ROKEBERG stated that because the expiration of the
chairman's term is coming up, the geology seat will be vacant, so
there could be the possibility that the commission may be in a
position of not having a person with any subsurface petroleum
knowledge.
Number 1663
REPRESENTATIVE GREEN stated that is absolutely true.
Number 1680
CATHERINE REARDON, Director, Occupational Licensing, Department of
Commerce and Economic Development, stated that she would like to
talk about the licensing of engineers. She stated that the
division licenses engineers in conjunction with the Board of
Registration of Architects, Engineers and Land Surveyors. She
referred to Assistant Attorney General Mintz's memorandum from the
Department of Law. She stated that there are 71 licensed petroleum
engineers of whom, 35 have Alaska mailing addresses and 25 of those
have a B.S. or M.S. in petroleum engineering from an accredited
school. She continued that by law the appointees are required to
be registered voters in Alaska. If the pool was to be broadened
the non-residents would have to establish residency for thirty days
and register to vote in order to be appointed. She pointed out
that Alaskan hire has been a concern to Alaskans.
Number 1789
MS. REARDON stated that the bill requires five years professional
experience. She indicated that she was not sure if that meant
experience after having obtained a petroleum engineering license or
that they might qualify for the professional experience prior to
obtaining the license. She explained that if it meant five years
of having held a petroleum engineer's license, of the 25 Alaska
licenses only nine have held the license for five years or more.
She added that it may be that the others had held a license in
another state working in Alaska based on their credentials and
therefore would have the five years of holding a petroleum
engineer's license.
Number 1831
MS. REARDON referred to Representative Rokeberg's question of where
the petroleum engineer qualifications were set out because they are
not in statute. She informed him that they are in the regulations
and the bill does refer to being qualified by statutory
regulations. She stated that in order to be an Alaska licensed
petroleum engineer, in addition, to passing the petroleum engineer
examine, the person has to have a responsible charge of experience
working under a licensed petroleum engineer.
Number 1863
REPRESENTATIVE ROKEBERG asked for what period of time is the person
required to work under the responsible charge supervision.
MS. REARDON replied that she thought it is for two years but would
get back to the committee on that.
Number 1879
REPRESENTATIVE ROKEBERG asked if she thought the expansion of the
hiring pool would eliminate some of her concerns.
Number 1895
MS. REARDON stated that it sounds like one would not have to
specifically have a petroleum's engineer's license specifically but
one could have several other specialities of engineering licenses
along with petroleum work experience. She declared that she would
not be able to say how many of Alaska's other types of engineers
would have that type of experience.
Number 1905
REPRESENTATIVE ROKEBERG asked if she would be willing to work with
the bill sponsors on the area of work experience.
Number 1923
MS. REARDON stated that she would be happy to look in the files
about the types of experience that people have had.
Number 1964
CHAIRMAN HODGINS stated that it was his intent to hold the proposed
committee substitute on HB 274 until the next meeting in order to
look at the new committee substitute.
ADJOURNMENT
Number 1978
CHAIRMAN HODGINS adjourned the House Special Committee on Oil and
Gas meeting at 10:45 a.m.
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