01/30/2001 10:02 AM House O&G
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
January 30, 2001
10:02 a.m.
MEMBERS PRESENT
Representative Scott Ogan, Chair
Representative Hugh Fate, Vice Chair
Representative Fred Dyson
Representative Mike Chenault
Representative Vic Kohring
Representative Gretchen Guess
Representative Reggie Joule
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 7
Urging the United States Congress to pass legislation to open
the coastal plain of the Arctic National Wildlife Refuge,
Alaska, to oil and gas exploration, development, and production.
- MOVED HJR 7 OUT OF COMMITTEE
HOUSE BILL NO. 83
"An Act relating to natural gas pipelines, providing a statutory
definition for the portion of the constitutional statement of
policy on resource development as applicable to the development
and transportation of the state's natural gas reserves, amending
Acts relating to construction of natural gas pipelines to
require conformance to the requirements of the statutory
definition, and amending the standards applicable to determining
whether a proposed new investment constitutes a qualified
project for purposes of the Alaska Stranded Gas Development Act;
and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 9
"An Act amending the standards applicable to determining whether
a proposed new investment constitutes a qualified project for
purposes of the Alaska Stranded Gas Development Act; and
providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HJR 7
SHORT TITLE:ENDORSING ANWR LEASING
SPONSOR(S): MASEK
Jrn-Date Jrn-Page Action
01/16/01 0089 (H) READ THE FIRST TIME -
REFERRALS
01/16/01 0089 (H) O&G, RES
01/16/01 0089 (H) REFERRED TO O&G
01/30/01 (H) O&G AT 10:00 AM CAPITOL 124
BILL: HB 83
SHORT TITLE:NATURAL GAS RESOURCES DEVELOPMENT
SPONSOR(S): SPECIAL COMMITTEE ON OIL & GAS
Jrn-Date Jrn-Page Action
01/19/01 0130 (H) READ THE FIRST TIME -
REFERRALS
01/19/01 0130 (H) O&G, RES
01/19/01 0130 (H) REFERRED TO O&G
01/30/01 (H) O&G AT 10:00 AM CAPITOL 124
BILL: HB 9
SHORT TITLE:STRANDED GAS DEVELOPMENT PROJECT
SPONSOR(S): GREEN
Jrn-Date Jrn-Page Action
01/08/01 0026 (H) PREFILE RELEASED 12/29/00
01/08/01 0026 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0026 (H) O&G, RES
01/08/01 0026 (H) REFERRED TO O&G
01/30/01 (H) O&G AT 10:00 AM CAPITOL 124
WITNESS REGISTER
EDWARD GRASSER, Staff
to Representative Beverly Masek
Alaska State Legislature
Capitol Building, Room 128
Juneau, Alaska 99801
POSITION STATEMENT: Presented HJR 7 on behalf of sponsor.
CAM TOOHEY, Executive Director
Arctic Power
(no address provided)
POSITION STATEMENT: Testified in support of HJR 7.
LARRY PERSILY, Deputy Commissioner
Department of Revenue
P.O. Box 110405
Juneau, Alaska 99811-0400
POSITION STATEMENT: Testified about possible changes to
deadline for applications relating to HB 83 and HB 9.
MARK MYERS, Director
Division of Oil & Gas
Department of Natural Resources
550 West 7th Avenue, Suite 800
Anchorage, Alaska 99501-3560
POSITION STATEMENT: Testified on technical aspects of HB 83.
KEVIN BANKS, Petroleum Market Analyst
Division of Oil & Gas
Department of Natural Resources
550 West 7th Avenue, Suite 800]
Anchorage, Alaska 99501-3560
POSITION STATEMENT: Answered question relating to HB 83.
JEFFREY LOGAN, Staff
to Representative Joe Green
Alaska State Legislature
Capitol Building, Room 403
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 9 on behalf of sponsor.
ACTION NARRATIVE
TAPE 01-7, SIDE A
Number 0001
CHAIR SCOTT OGAN called the House Special Committee on Oil and
Gas meeting to order at 10:02 a.m. Present at the call to order
were Representatives Ogan, Fate, Dyson, Chenault, and Kohring.
Representatives Joule and Guess arrived as the meeting was in
progress.
HJR 7 - ENDORSING ANWR LEASING
Number 0074
CHAIR OGAN announced the first order of business would be HOUSE
JOINT RESOLUTION NO. 7, urging the United States Congress to
pass legislation to open the coastal plain of the Arctic
National Wildlife Refuge, Alaska, to oil and gas exploration,
development, and production.
Number 0103
EDWARD GRASSER, Staff to Representative Beverly Masek, Alaska
State Legislature, came forward on behalf of the sponsor to
explain HJR 7. He said the opening of the coastal plain to
exploration and development of oil and gas is supported by a
vast majority of Alaskans, including those who live on or near
the coastal plain.
MR. GRASSER noted that one leading argument by environmental and
other groups against the opening of the Arctic National Wildlife
Refuge (ANWR) concerns the health of the Porcupine caribou herd.
Recently published records about the Central Arctic caribou
herd, however, indicate it has done fairly well since Prudhoe
Bay was developed and the pipeline was built.
MR. GRASSER recalled his experience with the Porcupine caribou
herd, from spending about 24 years guiding in ANWR. Emphasizing
that his testimony was anecdotal, he said caribou herds in most
of the state are fairly resourceful at adapting to different
conditions. One of the few Alaskan species that seems to
propagate to the point of overgrazing, caribou change their
range as it becomes depleted. Although there may be drilling in
part of the caribou calving grounds if ANWR is opened, his own
experience indicates the animals will probably either ignore it
or just move a little farther away.
MR. GRASSER said production in Prudhoe Bay is starting to
decline, and ANWR may represent one of the best opportunities to
locate and recover sizable reserves of oil. It is in the
financial best interest of the state to extend oil production
and use of the existing infrastructure. Specifically, it is in
the state's best interest to keep the pipeline full of oil.
MR. GRASSER suggested that President Bush's election and
continued control of Congress by Republicans probably give
Alaska its best chance right now to persuade the federal
government and the American public to open ANWR; this
opportunity should be taken advantage of. It probably doesn't
hurt that California is currently experiencing energy problems,
he noted.
MR. GRASSER urged legislators to send this message to
Washington, D.C., as soon as possible, especially considering
the newly changed political climate there. He pointed out that
although the content of HJR 7 pretty much copies legislation
that passed the Alaska State Legislature by an overwhelming
majority in prior years, there have been some changes due to
changes in administration, for example.
Number 0436
REPRESENTATIVE JOULE referred to the "whereas" clause regarding
the residents of the North Slope Borough. He suggested that it
may be helpful to have the supporting documentation.
MR. GRASSER said he had a letter from the mayor of the City of
Kaktovik and a survey [both in packets]; he affirmed that those
would be in the accompanying materials. [Question 10] on the
survey says, "The coastal plain of the Arctic National Wildlife
Refuge should be open to oil and gas exploration," with five
options for responses. Only 9 percent of the respondents either
disagreed or strongly disagreed, he noted, whereas 78 percent
either agreed or strongly agreed.
Number 0582
CHAIR OGAN referred to page 2, line 20, of HJR 7, which began a
paragraph that read:
WHEREAS the oil and gas industry and related state
employment have been severely affected by reduced oil
and gas activity, and the reduction in industry
investment and employment has broad implications for
the state's work force and the entire state economy;
and
He suggested that language may be a bit dated, no longer
reflecting the North Slope environment. When this was first
written, for example, oil was selling for $10 or less a barrel.
MR. GRASSER agreed that it probably needs to be changed.
CHAIR OGAN asked members to look at that and possibly amend it.
He emphasized that he didn't want to hold the legislation in
committee, however, and suggested that it would be acceptable to
work on the language before the resolution goes to the House
Resources Standing Committee.
Number 0775
CHAIR OGAN also suggested adding language after page 2, line 6,
similar to the following: "Further restrictions on oil and gas
exploration and development forces development offshore in
countries with poor environmental records." He explained that
the North Slope provides the world's environmental example for
oil technology. As heard in a recent presentation, coil tube
drilling now allows coverage of a 50-square-mile area from one
drilling pad. Furthermore, if oil isn't developed in the United
States - and ANWR in particular - it will be developed in areas
of the world that are environmentally unfriendly and where the
same standards aren't used. Chair Ogan said he didn't want to
hold HJR 7 in committee for such an addition, however.
MR. GRASSER replied that he didn't think it would be a problem
to work on that language and have it inserted in the House
Resources Standing Committee.
CHAIR OGAN offered to work with Mr. Grasser in that regard. He
then shared his own experience with caribou, which aren't bright
and don't get nervous unless one tries to sneak up on them like
a bear or wolf would, for example. He noted that caribou herds
have increased sixfold in Prudhoe Bay since development occurred
there, although some studies show that the cows move away from
the oil development a bit when calving. He asked whether Mr.
Grasser was aware of any mortality studies regarding calves and
related effects of oil development in Prudhoe Bay.
MR. GRASSER answered that he wasn't aware of such specific
studies. However, the Central Arctic caribou herd has increased
dramatically. From 1970 to 1994, on many occasions in Prudhoe
Bay he had witnessed caribou grazing alongside the oil pipeline,
which didn't seem to affect use of the area by caribou.
Number 1025
REPRESENTATIVE DYSON recalled that in the 10 or 12 years he
himself spent at Prudhoe Bay, it seemed the caribou enjoyed the
gravel pads and airport runways, away from mosquitoes and flies.
He suggested that a factor in the herd expansion may have been
that predators tended to move away. He also recalled that he
had hired a couple of engineers who had worked on the trans-
Siberian pipeline; when asked what problems they'd had with
caribou [in Siberia], the workers said, "We didn't have any
problem with caribou - the workers killed 'em all and ate 'em."
Representative Dyson suggested that in addition to more
responsible development, [those developing in Alaska] probably
will treat the wildlife significantly better than most other
populations would.
Number 1153
REPRESENTATIVE JOULE referred to page 1, line 13, which read:
WHEREAS the residents of the North Slope Borough,
within which the coastal plain is located, are
supportive of development in the "1002 study area";
and
REPRESENTATIVE JOULE requested, if HJR 7 is amended in the House
Resources Standing Committee, an amendment to say those
residents include the Inupiat population, because the aboriginal
people of that area support the development.
MR. GRASSER announced that since this is legislation from a
previous time, he would be happy to work with any members of
this committee before bringing up HJR 7 in the House Resources
Standing Committee.
CHAIR OGAN indicated it was okay if members agreed, but he
didn't want to hold this resolution up.
REPRESENTATIVE JOULE suggested that the resolution probably
should be carried to Washington, D.C., for the Energy Council
meetings in April or March. He proposed working on the changes
before the next meeting of the current committee instead.
CHAIR OGAN indicated the resolution had been noticed the week
before and there had been time for amendments.
REPRESENTATIVE JOULE said if the chair wished to move out the
resolution, that was fine; he himself could work with the
sponsor.
Number 1402
CAM TOOHEY, Executive Director, Arctic Power, testified via
teleconference, noting that Arctic Power is a nonprofit group
working to open ANWR to oil and gas development. He said this
year's census of the Central Arctic caribou herd, which
surrounds Prudhoe Bay, shows growth to 27,000 animals from 5,000
in the early 1970s; there has been a 37 percent increase since
the last count, in 1998. Of note, in the year 2000 not one
animal from the Porcupine caribou herd entered the coastal
plain; they stayed in Canada. Verified by the Alaska Department
of Fish and Game (ADF&G) and others, this is further evidence
that over the last 20 years, the caribou don't necessarily use
the coastal plain on a regular basis; they use the entire Arctic
and whichever areas that they happen to migrate to, for their
calving period.
MR. TOOHEY pointed out that the more new fields there are that
are roadless and have a smaller "footprint" - such as Alpine and
Badami on the North Slope - the more it helps to sell the idea
that ANWR can be opened safely.
MR. TOOHEY noted that a poll of Alaskans the previous month
showed that 70 percent supported development. Support is
stronger in the coastal plain community of Kaktovik, where more
than 78 percent of residents [polled] support it. He believes
that Alaskans stand behind this project and the resolution. In
addition, Mr. Toohey said support for [opening] ANWR has also
grown tremendously nationwide; including ANWR in the
presidential debates helped to educate the nation about energy,
Alaska's contribution to that energy mix, and the benefits and
potential for development of ANWR. National polling
demonstrating in the final weeks of the campaign that a clear
majority of Americans supported development of ANWR, he added.
MR. TOOHEY touched on nationwide energy problems, including home
heating oil supplies in the Northeast, the rise in natural gas
costs in the Midwest, truckers' consumption of diesel, and
recent power blackouts in California. All focus attention
nationally on energy, including where it comes from, who
consumes it, and how the dependence on foreign sources can be
lessened. Mr. Toohey offered the following quotation from the
Anchorage paper [quoting President Bush], "I campaigned hard on
the notion of having environmentally sensitive exploration at
ANWR, and I think we can do so."
MR. TOOHEY said this resolution is important and timely. It is
also important to realize that energy issues will be foremost in
coming sessions in Congress, as people look at ways to reduce
[dependence] or remove themselves from the current energy
situation.
Number 1661
CHAIR OGAN expressed the hope that [legislators] will be able to
set up some high-level meetings with the Bush administration
when attending the Energy Council this year. Recently appointed
to the executive committee for that, Chair Ogan said he believes
the coming Energy Council meetings will be some of the most
important that Alaskan legislators have attended. He thanked
Mr. Toohey for his work in Washington, D.C., on behalf of
Alaskans.
Number 1716
REPRESENTATIVE JOULE suggested it will be important that people
in Washington, D.C., know that Alaskans are working on this in a
bipartisan way. He encouraged having a member of the minority
be on the Energy Council, which is currently not the case.
CHAIR OGAN agreed it would be a good idea, suggesting that
Representative Joule would be a good candidate. Chair Ogan said
he would let his own wishes be known on that. He asked whether
anyone else wished to testify on HJR 7; there was no response.
Number 1791
REPRESENTATIVE DYSON made a motion to move HJR 7 from committee
[with individual recommendations and the zero fiscal note].
There being no objection, HJR 7 was moved from the House Special
Committee on Oil and Gas.
HB 83 - NATURAL GAS RESOURCES DEVELOPMENT
[Contains testimony relating to HB 9]
Number 1832
CHAIR OGAN announced the next order of business would be HOUSE
BILL NO. 83, "An Act relating to natural gas pipelines,
providing a statutory definition for the portion of the
constitutional statement of policy on resource development as
applicable to the development and transportation of the state's
natural gas reserves, amending Acts relating to construction of
natural gas pipelines to require conformance to the requirements
of the statutory definition, and amending the standards
applicable to determining whether a proposed new investment
constitutes a qualified project for purposes of the Alaska
Stranded Gas Development Act; and providing for an effective
date."
CHAIR OGAN noted that HB 83 was sponsored by the House Special
Committee on Oil and Gas. He informed members that he didn't
intend to move the legislation from committee anytime soon.
Instead, he wished to get the issue before the public and have a
thorough discussion before moving any legislation relating to
the gas pipeline.
CHAIR OGAN explained that HB 83 interprets Article VIII,
Sections 1 and 2, of the Constitution of the State of Alaska.
Section 1 of the constitution reads:
It is the policy of the State to encourage the
settlement of its land and the development of its
resources by making them available for maximum use
consistent with the public interest.
Section 2, the general authority section, reads:
The legislature shall provide for the utilization,
development, and conservation of all natural resources
belonging to the State, including land and waters, for
the maximum benefit of its people.
CHAIR OGAN informed members that Section 1 of HB 83 articulates
those sections of the constitution. It provides a development
strategy and some policy guidance for the administration, to
ensure that the transportation of natural gas is designed and
located to be responsive to those requirements, by talking about
both short- and long-term job opportunities in the state.
CHAIR OGAN pointed out that subparagraph (C) [page 2, beginning
at line 22] talks about significant long-term property value to
the tax base and other things to provide for local government
support. Under paragraph (2) [page 2, beginning at line 26], it
says that the gas pipeline from the state to North American
markets does not foreclose any other options. This is to keep
the options open, not only for a pipeline route but also
possibly for an LNG [liquefied natural gas] line to Valdez or
Anchorage.
CHAIR OGAN referred to testimony at another meeting about the
availability of natural gas reserves in Anchorage; he said the
known reserves are estimated to last about 12 years. Despite
optimism that there is more gas out there, nobody has really
drilled for it yet or found it. "And 90 percent of those gas
reserves were found in the 1960s," he added.
CHAIR OGAN said the bill addresses environmental concerns.
However, it also says the commissioner shall issue a written
finding that this project will comply with the overall strategy
for development, use, and control of the project or projects to
develop and transport the state's natural gas resources. In a
nutshell, this says that the gas pipeline must be developed for
the maximum benefit of the people. He asked: What does that
mean? Does it mean a northern route and simply generating
revenues? Or a southern or Alaskan Highway route by which
Alaskans can not only get the jobs to build it, but also get
access to the gas to enhance lifestyles and keep low-cost energy
for Alaskans? Chair Ogan indicated his own interpretation of
maximum use would be the latter.
Number 2143
LARRY PERSILY, Deputy Commissioner, Department of Revenue, came
forward to testify on both HB 83 and HB 9. He noted that when
the Alaska Stranded Gas Development Act (HB 393) was passed
three years ago, a section in that bill set a deadline for
applications under the law: June 30, 2001. The two bills
before the committee [HB 83 and HB 9] would not change that
deadline. He pointed out that the governor's legislation [HB
38] suggests extending that deadline to December 2001, which may
be something the committee might want to consider. Mr. Persily
added that he doesn't think anyone realistically expects a
project application by June. He offered to give input as to
what an appropriate deadline would be.
[Tony Braden and Jim Cowan of the Department of Natural
Resources informed the chair via teleconference that they were
available to answer questions.]
Number 2291
MARK MYERS, Director, Division of Oil & Gas, Department of
Natural Resources (DNR), testified via teleconference regarding
the technical analysis. In terms of the commissioner's
findings, he said a couple of things would be of interest.
First, the division believes a study should be done in Cook
Inlet to determine the demand for gas in the future; that
relates to the development strategy and requirements under
subparagraph (A) [page 2] of the bill.
MR. MYERS discussed the second issue: placement of a pipeline.
A route depends on alternate gas fields that might be found
along that route. Therefore, the division believes additional
work would be well warranted in terms of looking at the pipeline
route and what additional resources might be available to put
into the system later.
CHAIR OGAN asked whether that was a capital request for the
study in Cook Inlet.
MR. MYERS said the division is submitting a fiscal note with
that in there. It duplicates a capital request already in the
governor's gas line CIP [capital improvement project].
CHAIR OGAN noted that a sectional analysis for HB 83 was being
handed out to members [see memorandum from Jack Chenoweth dated
January 22, 2001].
Number 2379
REPRESENTATIVE GUESS asked whether there was a positive fiscal
note because of those two things that the division wants to do.
MR. MYERS answered that in looking at the commissioner's
finding, [the commissioner] is required to determine that there
is, under this bill, sufficient gas for a low-cost domestic and
industrial source; that is the demand side. The second part is
the routing. That issue is directly involved with the language
in the bill, but is also generic to the pipeline routes in other
gas bills, which is why the governor's CIP gas line (indisc.).
Number 2424
CHAIR OGAN asked Mr. Myers what the governor's position is on
this bill.
MR. MYERS responded that it wasn't appropriate for him to
comment on that; he was there to provide technical support. He
added, however, that he had heard that the governor is very
supportive of a gas line.
CHAIR OGAN asked Mr. Myers about the part of the legislation
that would require enough capacity to be provided to whatever
point where this [pipeline] might "Y" for either Valdez or
Anchorage. He mentioned a recent newpaper article by Ken
Thompson (ph) about a gas hub.
MR. MYERS answered that the concept of a gas hub itself is a
sound idea, but it depends on the implementation. There are
many issues, including the best use of the state royalty oil,
which he indicated were also mentioned in the article. He said:
We're certainly not opposed to looking at the issues.
But ... I think we actually have to have some
proposals on the table by the producers as to ... how
much gas they're selling, in what form they're all
offering it for sale, et cetera. ... So, at this
point, ... conceptually it sounds great. But how it
would be implemented and the sources of all that gas,
again, would be issues that ... we would need to work
out .... I guess I'm basically being fairly vague
until we have a little more on the markets and the
supplies.
MR. MYERS mentioned the "Alliance" meeting and discussion of gas
demand. He said demand is a real part of it, as well as the
costs of various versions and of producing the gas. The gas-to-
liquids (GTL) process at this point is a lot less efficient
internally than producing and shipping gas farther up the
pipeline. One must compare the price for the GTL process versus
a straight gas line. For numerous issues there aren't yet
answers.
Number 2560
REPRESENTATIVE CHENAULT asked Mr. Myers what he hopes to
accomplish out of this $88,000 to study the demand for gas and
the declining Cook Inlet reserves.
MR. MYERS answered that it is basically to understand what the
demand is and how much that demand can be met locally, within
Cook Inlet. He deferred to Kevin Banks for details.
Number 2591
KEVIN BANKS, Petroleum Market Analyst, Division of Oil & Gas,
Department of Natural Resources, spoke via teleconference. He
indicated the division proposed a study last summer to examine
the market - specifically, the potential growth of demand - for
gas in the Cook Inlet and Southcentral regions. On the supply
side of this study has been considerable research by the
producers in Cook Inlet. There doesn't seem to be a lot of
dissention among those producers as to how much in potential
reserves is now in place in Cook Inlet.
MR. BANKS said there may be some issues relating to
deliverability that the division would like to examine. On the
other hand, the division doesn't have a very good handle yet on
what kind of demand growth will be seen in Cook Inlet, which
depends on the future price of gas; the division wants to look
at that because it shows how the North Slope gas might fit into
meeting that demand in another couple of decades.
Number 2670
CHAIR OGAN asked whether there were further questions or
additional testifiers; there was no response. He announced that
HB 83 would be held for further consideration.
HB 9 - STRANDED GAS DEVELOPMENT PROJECT
CHAIR OGAN announced the final order of business would be HOUSE
BILL NO. 9, "An Act amending the standards applicable to
determining whether a proposed new investment constitutes a
qualified project for purposes of the Alaska Stranded Gas
Development Act; and providing for an effective date."
Number 2740
JEFFREY LOGAN, Staff to Representative Joe Green, Alaska State
Legislature, presented HB 9 on behalf of Representative Green,
sponsor. He explained that HB 9 proposes to amend the Alaska
Stranded Gas Development Act (ASGDA), enacted in 1998. Section
1, page 1, lines 9 and 10, proposes to delete current statutory
language that restricts the Act to projects for the export of
liquefied natural gas [LNG].
MR. LOGAN explained that the ASGDA establishes a framework for a
sponsor or group of sponsors - who seek to develop North Slope
natural gases and transport it - to approach the commissioner of
the Department of Revenue with a proposal for a system of
payments to the state in lieu of other taxes. It is a way for
the state to extract its economic "rent" outside of current tax
statutes. Before the commissioner considers such a project,
there has to be a threshold so that the commissioner knows that
the proposal is viable; this was agreed upon, by the
commissioner and the legislature, when this particular statute
was written. Therefore, these specifications were established.
MR. LOGAN noted that the first specification, which is being
proposed for deletion, states that the project must be for the
export of LNG. At the time, he explained, it was anticipated
that a transportation system for the gas would be to tidewater,
where the gas would be liquefied and exported overseas. Since
then, however, a tremendous upheaval in the natural gas market
has indicated to many people - including the sponsor - that the
market for Alaska's North Slope gas may be found in North
America or the northern United States. Representative Green
proposes deleting the language on lines 9 and 10 to allow the
other two standards in statute to apply without restricting the
applicability of the ASGDA to a project for the export of LNG.
MR. LOGAN referred to Mr. Persily's comments regarding the
deadline for applications made during the hearing this date on
HB 83. Mr. Logan stated:
We, indeed, had considered that. Representative Green
is still speaking with some of the producers and
others who might be potential sponsors to see if,
indeed, December 31 would be a better date than the
current date in statute, or a date extended past that,
so we don't have to come back every year or every
other year and extend that thing out until someone is
ready to step up to the plate. So, he is still
considering the date. It may be a later time than
December 31.
MR. LOGAN noted that Representative Green is a member of the
House Resources Standing Committee, where HB 9 is referred next;
he anticipates taking care of it there, but obviously it is the
current committee's prerogative to address that.
TAPE 01-7, SIDE B
Number 2950
REPRESENTATIVE JOULE referred to the section that talks to
payment in lieu of taxes. He asked whether another way of
interpreting that is as a kind of incentive for the producers to
develop it.
MR. LOGAN responded that HB 9 doesn't speak to that section of
the Alaska Stranded Gas Development Act. He said he thinks,
however, that it would be a fair characterization.
REPRESENTATIVE JOULE stated his understanding that it was based
on prices prior to the current situation. He asked for more of
that kind of information to be provided to the committee.
Number 2890
CHAIR OGAN said the existing legislation, in his opinion,
delegates legislative duties to the governor. The constitution
is pretty clear that the legislature has the oversight
responsibility for the development of the resources. The
administration is charged with carrying out the policies that
the legislature sets in statute. He indicated Alaska's
governor, whoever is elected, has a lot of power compared to
governor's in other states. Although he supported this
legislation in the past, it essentially says to the governor,
"The legislature doesn't want to deal with this. We're going to
let you deal with this, but then you come back to us and let us
vote it up or down, basically." Chair Ogan asked for
confirmation that the legislative approval is a "yes" or "no"
vote on whatever the governor negotiates.
MR. LOGAN emphasized that HB 9 doesn't address any other section
of the Act. However, he agreed to come back before the
committee with more information on the rest of what was then HB
393. He said he didn't want to get too far afield.
CHAIR OGAN indicated a thorough discussion of the former bill
and current law is imperative for committee members, in order to
make a good judgment about HB 9; he suggested scheduling that
for a future date. Although HB 9 looks simple, he said, the
original legislation was not. This would expand not only for
LNG, but also for gas-to-liquids and an overland pipeline route,
for example. Chair Ogan stressed the need for discussion of
gas-to-liquids and the related process, in order to make a good
policy call. He said it is a major shift in policy, as well as
a major delegation of legislative authority to the executive
branch, which he always wants to do cautiously.
MR. LOGAN noted that he had saved his materials from the debate
on HB 393.
CHAIR OGAN asked whether anyone else wished to testify; there
was no response. He indicated there would be numerous other
meetings relating to these policy calls. [HB 9 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at 10:57
a.m.
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