03/04/2015 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Biomass Overview | |
| HB87 | |
| Confirmation Hearing(s): Alaska Oil and Gas Conservation Commission | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 87 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 4, 2015
1:05 p.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Craig Johnson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
Representative Mike Hawker, Vice Chair
Representative Bob Herron
Representative Kurt Olson
COMMITTEE CALENDAR
OVERVIEW(S): BIOMASS OVERVIEW
- HEARD
HOUSE BILL NO. 87
"An Act relating to the sale of timber on state land; and
providing for an effective date."
- HEARD & HELD
CONFIRMATION HEARING(S):
Alaska Oil and Gas Conservation Commission
Michael Gallagher - Anchorage
- CONFIRMATION(S) ADVANCED
PREVIOUS COMMITTEE ACTION
BILL: HB 87
SHORT TITLE: TIMBER SALES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/30/15 (H) READ THE FIRST TIME - REFERRALS
01/30/15 (H) RES
02/13/15 (H) RES AT 1:00 PM BARNES 124
02/13/15 (H) Heard & Held
02/13/15 (H) MINUTE(RES)
02/18/15 (H) FIN REFERRAL ADDED AFTER RES
03/04/15 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
DAVID STANCLIFF, Vice President
Tok Chamber of Commerce
Tok, Alaska
POSITION STATEMENT: Presented an overview on biomass energy
together with a slideshow entitled "From Menace to Meals.
JOE YOUNG, Owner
Young's Timber, Inc.
Tok, Alaska
POSITION STATEMENT: Provided a PowerPoint overview of Young's
Timber, Inc.
Chris Maisch, Director
Division of Forestry
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Presented committee substitute changes for
HB 87, Version W.
Kirk Dahlstrom, Stockholder and General Manager
Viking Lumber Company
Klawock, Alaska
POSITION STATEMENT: Testified in support of HB 87.
DAVE STANCLIFF
Tok Chamber of Commerce
City of Tok
Tok, Alaska
POSITION STATEMENT: Expressed concerns regarding HB 87.
JOE YOUNG
Young Timber, Inc.
Tok, Alaska
POSITION STATEMENT: Expressed concerns regarding HB 87.
SHELLY WRIGHT, Executive Director
Southeast Conference
Sitka, Alaska
POSITION STATEMENT: Testified in support of HB 87.
CHELSEA GOUCHER, Executive Director
Greater Ketchikan Chamber of Commerce
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 87.
REBECCA KNIGHT
Petersburg, Alaska
POSITION STATEMENT: Testified in opposition to HB 87.
ERIN McLARNON, Executive Director
Working Forest Group
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 87.
MIKE SALLEE
Ketchikan, Alaska
POSITION STATEMENT: Expressed concerns regarding HB 87.
DAVID BEEBE
City of Kupreanof
Kupreanof, Alaska
POSITION STATEMENT: Testified in opposition to HB 87.
MICHAEL GALLAGHER, Appointee
Alaska Oil and Gas Conservation Commission
Anchorage, Alaska
POSITION STATEMENT: As appointee to the Alaska Oil and Gas
Conservation Commission, discussed his qualifications and
answered questions.
ACTION NARRATIVE
1:05:12 PM
CO-CHAIR DAVID TALERICO called the House Resources Standing
Committee meeting to order at 1:05 p.m. Representatives Seaton,
Josephson, Tarr, Johnson, Nageak, and Talerico were present at
the call to order.
^OVERVIEW(S): Biomass Overview
OVERVIEW(S): Biomass Overview
1:06:28 PM
CO-CHAIR TALERICO announced that the first order of business is
an overview on biomass presented by the Tok Chamber of Commerce.
1:07:05 PM
DAVID STANCLIFF, Vice President, Tok Chamber of Commerce, said
he also worked Alaska Gateway School District in preparing the
presentation. He noted he has also worked with the Alaska Power
and Telephone, the utility looking at providing less expensive
electrical energy possibly through biomass. He advised it took
many years of discussion to bring the Tanana State Forest from a
general land classification to a state forest of 1.8 million
acres along the Tanana River. He advised that at the time the
testimony was being taken there was indication that not everyone
wanted to see land classified in a manner that might shut down
land disposal which was a big topic at the time. He explained
that the winning argument over that period of time was to look
at the economy available through the use of forest products from
the Tanana Valley State Forest.
1:09:13 PM
MR. STANCLIFF referred to the slideshow "Menace to Meals," slide
2, and explained that the young man in the greenhouse, through a
legislative appropriation, learned to plant and grow a carrot.
He noted it wouldn't have happened if Alaska had not
transitioned from menace to meals. Slide 3, is typical of the
33 thousand acres of old growth forest, non-commercial timber,
both black and white spruce, ready to burn. With reference to
slide 4, he stated the legislature spent over $100 million
fighting fires due to Alaska's 100-year old climatic forest that
wants to burn. On a typical summer day, in the Upper Tanana
Valley, there are up to 1,000 lightning strikes. He noted the
aspen are dying as there is not room for trees to grow, and few
animals due to the canopies. He advised that a 30-foot circle
contains energy equal to five gallons of fossil fuel and once
the 30-foot circle is harvested, unlike fossil fuel, it grows
back. He remarked there has never been a question of cutting
trees in Tok, because if they are not cut they will burn anyway.
He referred to the slide and read "5 major fires/million acres
plus/3 major community exits." Slide 5, shows proper forest
management with selective thinning and trimming, and he related
that the animals come back. He explained that carbon capturing
is better as the trees are healthier and the fire doesn't spread
along the ground to ladder fuels because it has been trimmed
away. He highlighted that this photo is close to the Tok
School, which is the emergency gathering place when a forest
fire happens in Tok and the children had an opportunity to watch
the process in making the school fire wise.
1:11:56 PM
MR. STANCLIFF referred to slide 6, and related there is a 25-
year contract, engineered by the Division of Forestry, to help
thin out the 33,000 acres of hazardous fuel. He indicated that
unlike a clear cut that would occur in Southeast or other
places, the cuts in Tok would be checker board cuts leaving
islands of spruce trees, corridors for wild life, and fire
breaks for escape for residents. Slide 7, shows decks of
harvested material and he indicated that once trees are cut they
are "decked" and those decks are converted into fuel. Slide 8,
he explained that the harvest takes place when the ground is
solid, often in the winter, the decks are placed out of beetle
range, and placed for easy access. He explained that the first
step to reduce hazardous fuel to a controllable fuel for
incineration is a chipper. He noted that through a legislative
appropriation the school purchased a chipper that now provides
wood fuel for both the Tok and Delta Schools, and provides it in
the form indicated on slide 9. He remarked that the chipper
will chip 35 tons of fuel an hour, each ton of fuel is equal to
a cord of wood, and each cord of wood is equal to 100 gallons of
fuel oil, and that is what is fed into the boiler.
1:13:24 PM
MR. STANCLIFF referred to slide 10, and stated that the decks
are transported to the fuel yard, bunches of trees go into the
chipper, chips are then put in a heated floor bin. The bin is
heated in the winter otherwise the stored material with moisture
in it starts to freeze. He emphasized that this causes a
problem as the system for this boiler is entirely automated with
cork screw feeders onto a conveyer, it is metered to run
automatically and feed the boiler. Slide 11, shows the 5.5
million British thermal unit (BTU) boiler in the school and, he
mentioned, the energy in one wood match equals 1 BTU. With
reference to slide 12, he advised that the boiler provides
enough heat for the entire school, of which creates steam and
under the foil cover is a low speed steam driven turbine over 80
years old. The turbine produces heat and power for the school
and saves $250,000 by displacing huge amounts of fossil fuel.
He remarked the capacity is currently at 45 KW rather than the
75 KW it is capable of only because there is so much heat it
can't be dissipated fast enough so the capacity has to stay at
45 KW. He said they want to do other things such as, rather
than heat the DOT building with "30 million thousand" gallons of
fuel oil, heat it with the biomass plant. Tok is looking at
taking the state investment that has worked so well for the
school and expanding it outward. He related that slide 13,
indicates the benefits and savings to the Tok School. He
informed the committee that the electrical load utility has
worked with the school for balance so that it does not interrupt
the power with the grid in Tok. He said it is an isolated grid
and not on the main line.
1:15:46 PM
MR. STANCLIFF referred to slide 14, and he related that it
represents their pride and joy, a 100 foot by 40 foot
greenhouse. He said the railing along the soil beds were
donated by the Department of Transportation, and there are
volunteers from the community teaching the children how to turn
fire into food. They are taught how to take heat that would
normally burn in an environmentally normal way and create smoke
in the atmosphere, and burn it cleanly. He explained that the
particle density out of the stack on the biomass plant is
cleaner than fossil fuel, is clean as natural gas with 13 parts
per million. A German made scrubber takes all of the major
particles out that are put back into the ground along with ashes
as fertilizer. He indicated that the building on the right is
the processing plant where the food from the greenhouse is
processed and delivered to six schools in the district. Those
schools no longer have to order their vegetables from Anchorage
in a truck, as the vegetables are grown by the children in the
Tok School to feed their neighboring schools with this food.
Slide 15, shows children being taught by an extension service
from the University of Alaska. He stated that they are still
growing plants green even though it is -20 degrees in October
and November. Slide 16, indicates that the children follow
every part of the process in their learning from the harvesting
of the trees, consuming the fuel, heating of the greenhouse,
growing and processing the food, he said. Slide 17, is the
first campus in the state striving to be net zero with its
energy and able to produce energy all from local energy sources.
He stated that for every acre that burns it costs the Department
of Natural Resources over $20,000 to fight the fire. He opined
they are making homes safer by clearing around elders and
senior's homes, and just by cleaning up the community and making
it fire wise there is more fuel than the school could possibly
burn
1:18:09 PM
MR. STANCLIFF referred to slide 18, and offered this is what a
fire looks like when it runs its natural course, but when
applying his presentation, the energy can also help grow fresh
food when harnessed. Slide 19, depicts tomatoes on the vine.
He pointed to slide 20, and stated that when air quality is
significantly improves, everyone benefits. The slide shows the
processing room where vegetables are cut and ready to serve, he
conveyed. Slide 21, reads, "The people of Tok and our School
District thank the Legislature for their support of our vision,"
which is a model that can be used in other communities as more
biomass heat moves into rural Alaska, he posited. From a social
position, he offered, fire wising communities, protecting them,
saving people's lives, and creating a fossil fuel free
environment, allows that the legislature does not have to
appropriate funds. He remarked that when pellets and wood logs
begin to travel up and down the rivers instead of fossil fuel,
Alaska has a safer and better climate, and an industry for rural
Alaska that makes sense from a socioeconomic and mathematical
point of view. He related that it is an industry that sustains
itself, and young people who want to be trained on fire crews
trained to help communities become fire wise, and go out on fire
calls. In that regard, it offers jobs in the communities that
will eventually put food on plates. Slide 22, reads, "Where
adults and their children understand how to use our natural
forest energy to convert a menace into a meal." He suggested
taking this model on a different scale with varying
applications, employ people in rural Alaska, give them hope and
a local job, rather than responding to fire and spending
millions of dollars on suppression. He further suggested
spending money on training young people to mitigate and prevent
fire, and to also use the trees in a more environmentally
sensible manner.
1:20:55 PM
REPRESENTATIVE JOSEPHSON asked how long the recycle period is to
return the boreal forest to this height of timber.
MR. STANCLIFF opined that if the forest is allowed to regenerate
on its own with no management performed within that area, there
are a lot trees coming back that will choke each other out and
it is a different scenario. Therefore, he said, proper
management allows spruce trees a timeframe of 80-90 years,
regarding aspen trees, which is a more favorable crop when
attempting to fire wise a community because the fire doesn't
race through the aspen forest as quickly, it is a much shorter
time. He advised that planning and management of the forest has
been performed over the years with the Tanana Valley State
Forest group in Fairbanks. He said it involves everyone in the
environmental community to ascertain that there is a sustainable
amount of fuel available in the Tanana Valley State Forest Plan,
and currently they are using approximately two percent.
Although, he remarked, if the utility were to go into action and
generate a mega power it would probably use 15-20 percent of it.
He offered that Jeff Hermanns, Area Forester, Department of
Natural Resources (DNR) made things happen in Tok as he works to
be certain Alaska has sustainable forests of all ages in keeping
with the mission of the Division of Forestry. He highlighted
that there is a longer growing period for spruce trees, but if
the trees are managed well the productivity is much greater for
wildlife and the environment.
The committee took a brief at-ease.
1:24:59 PM
JOE YOUNG, Young's Timber, Inc., referred to Slide 1, and stated
it is an aerial view of Young's Timber, Inc., located
approximately six miles east of Tok. It shows large piles of
slabs, and a large golden pile of sawdust which has been the
driving force of his business. The slide also depicts the
communication tower of Alaska Power & Telephone Company (AP&T).
He noted that slides 2, was taken on top of AP&T's tower. He
pointed to slide 3, and stated that it all started in 1997 when
Senator Georgianna Lincoln was able to obtain $230,000 worth of
funding. Slide 4, indicates the history and timber sales
timeline of the Division of Forestry in Tok, together with the
importance of Jeff Hermanns to "us." Slides 5-12, depict Mr.
Young's various pieces of equipment. Slide 13, shows logs
salvaged from fires in which they cut out the best log parts to
make "D" style house logs for log cabins. These logs are
standing dry and are approximately 15 percent moisture content
so when building log houses they don't shrink and twist or move
around and the rest of the log is then fire wood. Slides 14-17,
are pictures of log homes. He referred to slide 18, and opined
that they tried to set up a good foundation with timber
contracts the Tok Division of Forestry provided. He offered
that they have long term wood fiber contracts in place, 300
acres for the facility, harvesting equipment in place, an
experienced and versatile crew, the value-added facility is up
and operating, and he stated he assembles log homes throughout
the state. Slide 19, reads, "YTI's issue that developed was ...
how to utilize the sawdust, slabs, pole timber, and small ends
of saw logs into a value-added product for total utilization.
The solution is ..." He pointed to slide 20, and indicated that
the solution is a fuel log and pellets company. Slide 21,
indicates that the energy solution was for a biomass burner to
burn the dirty chips and to dry the clean chips for the pellets
and fuel logs. He said he worked with AP&T for an Interrupted
Power Purchase Agreement for a low rate compared to the
commercial rate currently in Tok, and that the Regulatory
Commission of Alaska approved this because he is creating a new
product with more jobs and potentially lower energy costs.
Slide 22, is a schematic of the new power plant to be built.
Slide 23, is a picture of 30 acres of cleared land for the power
plant. Slides 24-34, depicts various machinery used to produce
fuel logs, pellets, and chips.
1:38:52 PM
MR. YOUNG pointed to slide 35 and stated one ton of energy logs
has the BTU equivalent of two cords of firewood at 25 percent.
He said slide 36, shows the entity they sent an 8 pound fuel log
for testing, ash content (0.35 percent), BTU's (68,000) per log,
and the moisture content of the log (8.01 percent.) He referred
to slide 37, and stated the new green pellet plant job
projections are 3 yearly jobs, and 24 seasonal jobs. Slide 38,
relates to the Upper Tanana River Basin Ecosystem and he advised
it is a unique ecosystem in that it is 1500 feet above sea
level, surrounded by mountains, drier climate, and the soils are
mixed differently. He described the Tanana River as eastward
from and including the Johnson Rover watershed to the Canadian
border, it has unique bedrock and surficial geology, topography,
soils and vegetation, with an opportunity to practice ecosystem
management, and use local knowledge and science together. He
noted his family's vision, which includes future generation's
family that is looking for sustainability of the forest and
economy in Tok while being conscious of ecosystem management.
He opined that for Tok to become energy independent and grow
their own food, the forest is where Tok will make its living.
1:42:18 PM
REPRESENTATIVE TARR referred to both projects presented to the
committee, and questioned whether all of the timber he is
harvesting is through negotiated sale on state land.
MR. YOUNG replied "Yes it is." He explained that they are all
negotiated AS 38.05.118(c), which is the forestry law that has
spurred all of this development.
REPRESENTATIVE TARR commented that under the current budget
proposal the Division of Forestry essentially goes away. She
asked what impact it would have on his wood source relative to
what he has available now, and what would be needed in the
future.
MR. YOUNG explained that he is not asking for more money, just
asking to maintain the Division of Forestry office as it is now.
He opined it is important to have a good fire crew in the summer
as Tok is basically the most fire prone community in the state.
At the same time, he pointed out, Tok has approximately 6,000
acres under contract between 12 operators. He said that closing
the office during the winter would be detrimental as that is
when all the activity happens. He offered that currently there
are 12 commercial operators and 420 personal use permit holders
that cut trees in the forest. He expressed that without the
Division of Forestry being the referee there will be conflict.
He said his main focus is to show a positive revenue stream for
the state and in order to accomplish a positive revenue stream
the state needs to maintain the office at the capacity it is
right now. He is aware of the budget deficit but "maybe there
are other places that cuts can be made." He opined that with
the shortfall in the budget, the state would want to promote
areas creating new revenue.
1:45:10 PM
REPRESENTATIVE JOSEPHSON asked each witness to advise the
committee of the amount of investment in hardware they have made
to date.
MR. STANCLIFF advised that the Alaska Energy Authority (AEA)
investment into the school heating system was approximately 3.1
million, the electrical portion as the low speed steam turbine
was $325,000, the greenhouse was approximately $40,000, and the
canopy to cover the chips and a log loading trailer was
approximately $80,000. He said the investment pays off at the
rate it is producing. Therefore, he noted, if they could make
it more efficient with a little bit of help it will pay off in
approximately 13 years, and the life of the equipment is
conservatively 25 years. He expressed that Tok now has a music
teacher and school counselor due to savings in the fossil fuel
convert that allowed funding to happen.
MR. YOUNG advised that he personally has invested approximately
$1.5 million in his business to date, and is prepared to invest
an additional $4 million, with the operators combined investing
$5 million. He offered that between the public and private
sector, there has been over $10 million worth of investment in
the Tok area.
1:46:55 PM
REPRESENTATIVE JOSEPHSON quiered whether there is any process in
the state with an operation as sophisticated as his.
MR. YOUNG replied that there are operations such as, Dry Creek,
Northland Wood Products, operators in the Valley, and Southeast
Alaska and noted he is not the only business producing Alaskan
value added products.
MR. STANCLIFF answered that on the school side he knows it is
the only school of its size in the nation or worldwide that has
both heat and power from chips.
1:47:35 PM
REPRESENTATIVE TARR referred to Mr. Young's current contracts
and asked how many years they will provide a supply for his
business.
MR. YOUNG responded there is a 10 year supply and most small
business administration loans are for 7 years.
1:48:00 PM
REPRESENTATIVE SEATON said he appreciates the presentation
because this committee had gone forward in the past in
recommending the Garn wood heating system boilers which are in
Tok and Port Graham, and several other places. He stated this
presentation was helpful in considering diversifying a
sustainable economy. He asked whether the pellets are the same
as produced by Viking Lumber, and whether the economics of the
pellets coming out of Tok are similar to the economics produced
in other mills, such as Southeastern.
MR. YOUNG answered that he performed quite a bit of marketing
and competition studies. As to economics, he related that he
believes the market is there to be had and will expand rapidly
in the next five years, and noted that he harvests his own
timber and has value added mills with no residue. He pointed
out that Tok sits at the crossroads so the distance they haul
their logs is shorter than in Fairbanks, and they are within
striking distance from Whitehorse, Yukon.
REPRESENTATIVE SEATON stated that approximately three years ago
this committee forwarded a proposal to stimulate the use of peat
throughout the state and offered thousands of tons of free peat
to people who would develop the operation.
1:51:22 PM
CO-CHAIR TALERICO asked the location of where the products from
the greenhouse are going [in Alaska].
MR. STANCLIFF answered that the schools are located in Eagle,
Northway, Dot Lake, Tanacross, Mentasta, Tetlin, and Tok. He
described Tok as a hub for children from the other schools
coming in to be schooled in the greenhouse and the growing
process. He advised the committee that the price of electricity
in Tok is $.51 cents a kilowatt hour, and the Tok grocery store
pays $39,000 a month on its electrical bill. He highlighted
that Mr. Young worked with AP&T to obtain a reduced rate so he
could make the figures work on his investment. He conveyed that
the house rate with Power Cost Equalization (PCE) is $.31 cents
a kilowatt hour, and the average bill on his 1100 square foot
home is $300 per month during this time of year. Combine that
amount with fossil fuel and the committee know why there will be
a big market for some of the wood products available. He
extended that the success in Tok is due to an area forester from
the private sector who understands math, understands how to get
things done, and formed partnerships with Doyon, AUTNA, TCC, and
to some extent with the Department of Labor and created a fire
academy. He explained that the fire academy trained 80 young
people from villages all across Alaska so fire crews could earn
money as Alaskans on a fire rather than flying people to Alaska
at $50,000 a jet load with all of the money leaving the state.
Mr. Stancliff related that the area forester built miles of
roads for access for small operators with pickup trucks and
chain saws and the price of fossil fuel he guaranteed there were
a lot of small operators. He added that the Chamber of Commerce
worked with the school district who worked with the Division of
Forestry, with Joe Young, and AP&T, and described it as a
combined effort. He offered that the portions that made it work
is that the legislature has been willing to advance some money,
and his group has been willing to make it come in on budget, on
time, and always reported back on its success.
1:54:08 PM
The committee took a brief at-ease.
HB 87-TIMBER SALES
1:55:37 PM
CO-CHAIR TALERICO announced that the next order of business is
HOUSE BILL NO. 87, "An Act relating to the sale of timber on
state land; and providing for an effective date."
1:55:44 PM
CO-CHAIR NAGEAK moved to adopt proposed committee substitute
(CS) for HB 87, labeled 29-GH1022\W, Bullard, 2/26/15, as the
working document.
REPRESENTATIVE SEATON objected for discussion purposes.
1:56:24 PM
CHRIS MAISCH, Director of Forestry, Division of Forestry,
Department of Natural Resources, said there was discussion
regarding [Version A, Sec. 1, AS 38.05.110(c)], page 1, lines 4-
6, regarding "best interest," which read:
(c) If a sale of timber may be offered under
multiple provisions of AS 38.05.110-38.05.123, the
commissioner shall determine under which of the
applicable provisions to offer the timber consistent
with the best interest of the state.
MR. MAISCH referred to a 2/17/15, memo directed to Senator Cathy
Giessel from Thomas Lenhart, Senior Assistant Attorney General,
of which Mr. Maisch would paraphrase. He advised that [small
"b"] "best interest" is interpreted by law as a general
statement such as it would be in his best interest to prepare
when speaking to the committee, as opposed to a capital "B" Best
interest which is a best interest finding by law. Subsequent to
speaking with knowledgeable people, Version W was prepared
wherein the last part of the sentence on line 6 is deleted
["consistent with the best interest of the state."]. He then
referred to [Version A, Sec. 2, AS 38.05.118(a), page 1] lines
[8-9], which read:
(a) Notwithstanding AS 38.05.115 and 38.05.120,
and upon a finding that the sale is in the best
interest of the state ...
MR. MAISCH noted that the above reference is where there should
be a finding required under the state's best interest finding
process. He noted that it is the capital "B" Best interest
which is well defined in statute and law and has an important
part of all of the decision making the state does regarding its
natural resources. He opined that the CS fixes potential
confusion identified earlier.
1:58:41 PM
REPRESENTATIVE SEATON withdrew his objection. There being no
further objection, Version W was before the committee.
1:59:04 PM
MR. MAISCH pointed out that the two previous witnesses from the
City of Tok have used the AS 38.05.118 sale authority, and
stressed that by dropping the section he is proposing will make
this authority applicable statewide. Currently, due to the
three criteria, only certain parts of the state can participate
in a timber sale offered under this authority. He noted that
the authority will still be available for the Division of
Forestry to use and it will not minimize its ability to perform
an AS 38.05.118 timber sale statewide if HB 87 passes. He
reminded the committee members that the problem in Southeast
Alaska is that the section currently requires an excess
allowable cut, and in Southeast Alaska after the next two years
there will no longer be the excess allowable cut. He noted that
is the way the Division of Forestry is able to direct some of
the logs off state sales to local manufacturing and mills in
Southeast Alaska, as opposed to being purchased under AS
38.05.120 authority as a log that would go export which receives
no additional manufacturing in the state. He opined that it is
one of the goals of this particular change to allow the Division
of Forestry to continue to choose the negotiated sale option
when it is in the best interest of the state, which will be
addressed in the best interest finding.
2:00:40 PM
REPRESENTATIVE SEATON surmised that with the passage of HB 87
the "get over the hump" of only allowing that if there is excess
cut available, then the Division of Forestry would be able to
offer a negotiated sale with additional value added throughout
the state.
MR. MAISCH replied that Representative Seaton is correct as it
would make it a statewide tool. He reiterated that the earlier
part of the bill clarifies the authority the commissioner
already has to choose the appropriate timber sale authority to
be used when the state offers timber in the State of Alaska. He
noted that the majority of the sales offered statewide are
performed as AS 38.05.120 sales which are competitive sales
either through sealed bid, or outcry. He offered that where it
is in the state's best interest to use one of the other
authorities, it will do that.
2:01:45 PM
REPRESENTATIVE JOSEPHSON noted that he read most of the U.S.
Supreme Court Decision South-Central Timber Development v.
Wunnicke, 104 S.Ct. 2237 (1984), and asked how the Division of
Forestry dealt with the holding which said that essentially the
Congress had not expressly said that this kind of sale could
occur without a competitive process as it violated negative or
dormant commerce.
MR. MAISCH responded that there is some clarity in the
regulations on that which does allow the Division of Forestry to
consider additional things before it offers this timber for
sale, 11 AAC 71.055(b) lists criteria the Division of Forestry
can consider as part of the process, which read:
(b) In determining whether a negotiated sale under
this section is in the best interests of the state, the
commissioner will consider
(1) the local manufacturer's
(A) financial backing and capability;
(B) experience in the proposed
undertaking; and
(C) ability to meet bonding or
insurance requirements; and
(2) any other factors the commissioner
determines to be in the best interests of the state.
MR. MAISCH stated that if there is interest the Division of
Forestry will put together a Request for Proposals (RFP) to give
potential negotiators the opportunity to present the best case
for how they would use the raw material. He said they may
review the number of job created, type of manufacturing
accomplished with the use of the state wood, and the financial
ability of the proposer to actually complete what they are
proposing to do. Essentially, he noted the Division of Forestry
performs due diligence as part of the RFP process and it can
make the process fairly simple, or complex. Historically, he
advised the process has been kept fairly simple because a lot of
process is not necessary in most cases. He opined that it is
addressed in the best interest finding which gives the Division
of Forestry the ability to choose the best applicant to
negotiate with for the rest of the terms of the contract.
2:03:59 PM
REPRESENTATIVE JOSEPHSON surmised it was sort of a negotiated
sale light, or a modified negotiated sale to keep a (small "c")
competitive element to it.
MR. MAISCH answered that basically the RFP is the competitive
piece Representative Josephson referenced in the earlier U.S.
Supreme Court case to not run afoul of the ruling that they made
... that would be interpreted as the competitive part of the
process.
2:04:38 PM
CO-CHAIR TALERICO opened public testimony.
2:05:17 PM
KIRK DAHLSTROM, Stockholder and General Manager, Viking Lumber
Company, said Viking Lumber bought a bankrupt sawmill in
Klawock, Alaska 21 years ago and it has operated steadily since
that time. The Forest Service provided approximately 98 percent
of Viking Lumber's timber supply for the first 10 years of
operation. Subsequently, he noted, the Forest Service became
unpredictable and the Alaska Department of Natural Resources
(DNR) has come through over and over again the past 10 years
supplying timber when Viking Lumber was in dire need. He opined
that Viking Lumber has only negotiated one or two sales as most
have been through the RFP process. On two occasions Viking
Lumber has had temporary restraining orders imposed by a federal
judge on Forest Service timber sales and the state came through
with negotiated sales and kept Viking Lumber operating through
that period. He remarked that Viking Lumber has approximately
22 million feet of logs per year, with annual sales of
approximately $17 million, and the only money that leaves the
state is the stumpage for the Forest Service. He offered that
with the contractors that build the roads, log and cut the
timber, and load barge and ships, the company employs
approximately 140 people year-round. He described Viking Lumber
as the largest supplier of piano stock out of Sitka Spruce in
the world which means if Viking Lumber goes out of business
there will be no grand or baby grand pianos. He further
described the company as the largest supplier of dimension red
cedar lumber in the United States, which might seem funny
because only approximately 8 million feet a year is cut. Most
red cedar mills do not cut dimension, as they cut siding or
boards. He explained that the company also cuts a high grade
hemlock product as all of the hemlock goes into the manufacture
of vertical grain doors, and window stock, as almost no lumber
Viking Lumber cuts goes into the construction of homes as it
goes into finish, decks, gazebos, and pianos. He stated he
supports HB 87, because it works to keep the company alive and
believes it will in the future.
2:08:46 PM
REPRESENTATIVE JOSEPHSON referred to Mr. Dahlstrom's statement
regarding federal stumpage, but this is all state land and he
requested clarification.
MR. DAHLSTROM answered that of the $17 million per year in
revenue involving a Forest Service sale, the stumpage they pay
on that goes into the general fund of the federal government,
and state timber goes to the state.
2:09:24 PM
DAVE STANCLIFF, Tok Chamber of Commerce, City of Tok, said many
years ago an issue of state authority came before the House
Resources Standing Committee. In the 1980s, there were massive
land trades going on and the commissioner at the time asked that
sideboards be put on the land trades. He stated that the
commissioner believed the state was losing value in the land
trades but the statutes were so wide open that there was no way
to get a better handle on it. There is a statute that for land
trades exceeding values of $500,000 or more, legislative
approval was required. He explained that the government is made
up of checks and balances, and HB 87 transfers a much wider
authority to the Division of Forestry and a commissioner who the
committee may trust today, but this bill goes beyond all
administrations. He offered that there is no check or balance
by the legislative branch for this trust factor that is before
the committee. He opined that government works when one branch
or the other might get slightly out of balance, there is another
branch that can bring it back into balance. He related that his
concern is the broad based authority of a state resource without
checks and balances in place. He urged the committee to reach
out and get more of the timber users in the state involved as
his understanding is that this bill was introduced before any of
those people were involved in the deliberative process. He
highlighted that this is a monumental change of authority and
the committee should take it seriously.
2:11:51 PM
REPRESENTATIVE JOSEPHSON asked, in terms of state residents that
could be dissenters, doesn't this enhance the value of an
industry and create a tendency to keep logs in Alaska rather
than sending them to Asia.
MR. STANCLIFF answered that the aforementioned advantages are
there, but he argued that there are always things beyond the
immediate and not necessarily on the surface. Perhaps in
Southeast Alaska, he pointed out, this would be a good solution,
but in the Tok area if a warehouser were to negotiate a sale
under conditions that may or may not seem fair it could wipe a
business like Mr. Young off the map. He related that the
provision put into statute years ago was so exceptions could be
made for small and medium size business and the sideboards would
still be there for larger users. He urged the committee not to
rush and take some time. Although, he said, in the end everyone
may comfortable and move ahead, but it is a big decision and the
users affected should have more involvement.
2:13:32 PM
REPRESENTATIVE TARR surmised that Mr. Stancliff does not have a
suggestion for remedying the situation, other than the committee
engaging affected parties more before moving forward. She asked
whether he could suggest examples of the checks and balances
necessary.
MR. STANCLIFF advised that there are many examples of branches
of government, especially the legislative branch, having those
types of ability. He suggested that rather than the legislature
approving every sale, which could become cumbersome and
political, give the legislature the ability to veto or by two-
thirds majority vote veto. He offered that it can be set up in
any manner including public interest wherein everyone is happy.
Although, in the cases he cited years ago where there was a
concern by the commissioner over what was happening ... concern
enough to ask the legislature for help. He opined that "we"
need to be careful.
2:15:19 PM
JOE YOUNG, Young's Timber, Inc., offered concern that he learned
of this bill approximately two weeks ago and he wondered about
the "new" transparency of this administration. He expressed
concern regarding repeal of AS 38.05.118(c) clause as without it
his business would not be in existence. He stated that to
repeal the clause after it has been a good tool especially in
rural Alaska ... he cannot agree. Another concern is that HB 87
adds more confusion to the patch work of forestry laws. He
offered concern for someone working in the industry attempting
to figure out all the laws. A person can go to the Division of
Forestry who advises that their interpretation is "this," but
the person reads something as "that," is a concern. He
questioned the rush to get the bill pass so fast, not advising
anyone regarding the repeal of AS 38.05.118(c), and the
confusion of all of the laws together is discouraging to him.
2:17:41 PM
REPRESENTATIVE JOSEPHSON offered his understanding that the
language here, with the tweak just made, was taken from the
Susitna Forest bill of which was vetted over the last two years.
He asked Mr. Young whether he was aware of that bill.
MR. YOUNG replied that he knew "they" were trying to establish a
state forest in the Susitna Valley, but that's all he thought it
was for.
REPRESENTATIVE JOSEPHSON referred to AS 38.05.118(c) and posited
that the removal of (c) would be good for Mr. Young as he would
no longer have to prove up that Tok has a bad economy, or that
Mr. Young had underutilized timber, or underutilize allowable
cut. Now, he remarked, the commissioner through the director
can more easily make a negotiated sale.
MR. YOUNG opined that AS 38.95.118(c) is in place and he
believes the bill gives the commissioner or the director too
much power. He questioned a situation where he wanted to do a
negotiated timber sale and the commissioner decides it is not in
the best interest of the state. He asked what recourse he would
have after that determination. He described AS 38.05.118(c) as
checks and balances because if a person makes a request to the
Division of Forestry, of which he has made many requests and
sometimes not received a response, that law is there for Mr.
Young's protection and he does not want to see it go away.
REPRESENTATIVE JOSEPHSON referred to Mr. Young's comment that he
has not always received responses to his requests from the
Division of Forestry, as opposed to Mr. Stancliff praising the
forester as being a great employee bringing pieces together.
MR. YOUNG clarified that upper management, within the Division
of Forestry, did not reply to his requests.
2:20:05 PM
REPRESENTATIVE JOHNSON requested that Mr. Maisch respond to the
prior statements.
MR. MAISCH responded that the three clauses there right now do
not compel the Division of Forestry to actually use this
authority. Currently, the commissioner and Division of Forestry
determines what timber sale authority it will use through the
best interest finding process. He expressed that the Division
of Forestry does not want to be "the referee between two parties
and who really gets to negotiate a timber sale," which is why it
generally uses its AS 38.05.120 authority. For example, he
offered, when the AP&T project (building a power facility using
wood) was first enumerated for Tok, the Division of Forestry
started an AS 38.05.118 negotiated sale process. As it
published the preliminary best interest finding, which is open
to public and agency comment, it became apparent there was
competitive interest by another party that was equally as well
qualified to potentially negotiate a sale with the Division of
Forestry. He explained that rather than continue with a final
best interest finding, the Division backed up and decided it
would offer this sale as an AS 38.05.120 competitive bid sale so
the most appropriate parties could bid on this resource. He
described that as a situation where the Division of Forestry
started down one path and found that it would not work as well
as anticipated, so went back and did it differently. He noted
that a best interest finding has a formal administrative appeal
process as well as a civil appeal process so there are checks
and balances in place to protect parties that have commented on
the preliminary bid, including parties that may not have been
chosen to negotiate with. Another example, he offered, is in
Fairbanks where the Division is performing an AS 38.05.123 sale
for the pellet mill, which is another form of negotiated sales
under the Division's timber sale authority - that's the high
value added negotiated sale authority. He explained that within
the briefing paper is a summary of five different authorities
the Division of Forestry has to negotiate wood. He noted that
it was the same issue there in that a local saw mill was
concerned about not being able to receive the supply of wood it
needed if the Division of Forestry performed a long-term
contract with the pellet mill. Again, he offered, the Division
of Forestry modified, after the preliminary best interest
finding (BIF) process, the final BIF process and took those
comments into consideration. He explained that the Division of
Forestry then structured the proposed sale differently by
withholding any high quality White Spruce saw logs from the AS
38.05.123 contract and offered those competitively.
2:24:02 PM
SHELLY WRIGHT, Executive Director, Southeast Conference, said
the Southeast Conference is the economic development
organization for Southeast Alaska, and it supports HB 87. She
noted that Southeast Alaska does not quite the success stories
that Tok has, as it is not doing well in the timber department.
The State of Alaska Timber Sale Program is important to
Southeast Alaska, and as previously stated, without state timber
140 people on Prince of Wales Island would be out of a job. She
offered that Viking Lumber is hanging on only through the
assistance of private land owners and the State of Alaska Timber
Sales. The federal government has not been able or willing to
provide timber to Southeast Alaska for quite some time and the
federal government owns or manages most of the land in Southeast
Alaska. She remarked that this legislation will give the state
Timber Program more flexibility to determine how timber is sold
and what it is used for. Relaxing the requirements for offering
25-year sales statewide provides a guarantee for investments in
the industry and stability for the work force. Allowing the DNR
commissioner and the [Division of Forestry] the flexibility to
determine which applicable sale method is best is not only good
for the buyer, it also gives the state the advantage of
receiving the best return on the timber. Under the Forest Land
Use Plan it is imperative the best use of timber is used across
the state. She explained that biomass energy processors, wood
product manufacturers, and international trades are all
important economic drivers for the industry and state. This
legislation will increase the option for the industry and allow
the state an even better partner with interested private
investors. As is known, growth in private investment and
resilient communities are the only things that will save the
state in this time of a shrinking budget and uncertainty, she
stated. She offered that the Southeast Conference previously
sent a letter of support for this legislation.
2:27:06 PM
CHELSEA GOUCHER, Executive Director, Greater Ketchikan Chamber
of Commerce, said the Greater Ketchikan Chamber of Commerce
supports HB 87 in that it has worked hard to promote economic
diversities, regional growth, a climate good for business, a
life style that attracts year round residents, and a stable
productive work force. The existence of a timber industry
supports each aspect of this mission unequivocally and for this
reason the Greater Ketchikan Chamber of Commerce encourages the
passage of HB 87. She stated that now, more than ever, is
interest in Biomass energy and a demand for wood fibers that
indicates the State of Alaska should take a proactive stance in
providing timber and access to forest products for this and
other burgeoning value added industries. Additionally, she
pointed out, what remains of the traditional timber industry in
regions like Southern Southeast Alaska is more dependent than
ever on the State of Alaska and continues to face nearly
insurmountable obstacles from the federal government. The
timber offered in negotiated state sales help sustain jobs in
industry across the state, particularly both in Ketchikan and
Prince of Wales Island. Currently, she stated, no opportunity
to better the lives of individuals living in Alaska should be
overlooked. It is inarguable that this bill offers real
opportunities for Alaskans everywhere. She requested the
committee note the support of the Greater Ketchikan Chamber of
Commerce and of Ketchikan's business community for HB 87, and
the potential it possesses to positively impact the lives and
livelihoods of Alaskans.
2:29:11 PM
REBECCA KNIGHT expressed that she just received a copy of the
proposed committee substitute and has had little opportunity to
review it so will offer her prepared testimony. House Bill 87
should be rejected in its entirety as it would suspend the same
yield requirement for large timber sales on state forests. She
said she questions whether private sector landholders like
Weyerhaeuser and Georgia Pacific, and their professional
foresters would undertake an unsustainable business practice as
proposed by this bill. She offered that it is a poster child
for squandering public resources to the detriment of future
generations. This bill will allow long-term 25-year contracts
for timber to be negotiated without advertisement or competitive
bid which is a questionable business practice. She remarked
that given proposed huge state government budget cuts recently
approved by the House Finance Committee it would not be prudent
to support such contracts when there is no assurance that the
funds to administer those contracts would be available down the
road. She said it could leave the state at risk of contract
cancelation and associated compensation costs.
MS. KNIGHT stated that the bill give primacy of the state's
public lands to logging above all other resources, above fish,
wildlife, subsistence needs, recreation, and scenic quality.
She related that her commercial fishing family depends on
quality fish habitat, however, this habitat will not even
receive the minimal protections out on federal lands. She
described 100 foot no cut buffers as the norm on most federal
streams, yet streams on state lands will only receive 66 foot
buffers. She stated that these buffers are routinely granted
exemptions particularly when there is large timber in the
stream-side area. She expressed this is exactly the habitat
that provides shade and stream stability to the state's valuable
fishery sources. She highlighted that she is unconvinced that
essential fish habitat is adequately protected under these
circumstances and that she is also miffed at the rush to push
this bill through committee with little consideration for other
uses. She opined that state timber in Southeast Alaska will be
exported in the round providing few jobs to the very industry
that this bill is supposedly intended to prop up. She described
it as another subsidy with no real payback. The bill would
require a finding that the sale is in the best interest of the
state, however, these findings are made by DNR which, she
described, as the timber extraction arm of state government.
She posited that the Alaska Forest Practices Act is weak and in
serious need of overhaul, and that these findings are heavily
biased toward logging. She expressed that the kind of forest
resources important to most people are fish, wildlife, and the
opportunity for subsistence which only receives cursory
considerations from DNR. She asked that the committee consult
with expert Alaska Department of Fish & Game, Fish and Wildlife
biologists that are free of restrictions of DNR's one voice
timber promotion policy.
2:33:08 PM
ERIN McLARNON, Executive Director, Working Forest Group, said
she is a Board of Forestry member and an executive director of
the Working Forest Group. She advised she is testifying in
support of HB 87 that will enable the commissioner of DNR to
better respond to the economic and geographic realities of the
forest product industry. She stated that who would have guessed
that a primary demand for state timber would be for biomass
energy purposes. The bill will allow DNR to offer negotiated
timber sale for up to 25-years, which is crucial to medium to
large biomass energy projects to get off the ground. The bill
also offers DNR the flexibility to determine which applicable
sale method is in the best interests of the state for each
timber sale. She described it as a win-win not only for the
State of Alaska, but also its fiber users.
2:34:15 PM
MIKE SALLEE said he is a commercial harvest diver and has owned
and operated a small Volkswagen engine powered mobile
dimensioned saw mill close to 35 years. He noted that there are
a couple dozen of these mills in Ketchikan, over 300 in
Southeast, and over 400 statewide. He said he primarily mills
salvage timber that has been carried to salt water by wind
storms or landslides. Secondarily, he has milled neighbors logs
cleared from their shoreline home sites, milled 10,000 board
foot free use timber, and once purchased several thousand feet
of logs at the local U.S. Forest Service yard auction.
Occasionally people will tow logs that he mills in exchange for
some of the lumber from those logs. He stated he does not cut
live trees by himself to feed his mill. He offered that he
mills less than 100,000 board feet annually and has produced
framing lumber, decking, cedar siding, yellow cedar for bentwood
boxes, totems, paddles, house timbers and wooden boat timbers.
His concern with HB 87 is that it creates 25-year contracts and
that sales tailored to large scale operations will result in
local merchantable wood going away. He pointed out that he just
saw this bill yesterday for the first time and hasn't had a good
chance to digest it, but a lot of wood is going away, especially
the yellow cedar that is declining due to allegedly climate
change that results in the loss of snow cover that prevents
freezing of the yellow cedar shallow roots. He noted it appears
there is a partnership between the timber industry and the state
forest manager and that partnership does not appear to address
climate change and the need to keep carbon stored in forests in
Southeast Alaska. In addition, he pointed out that large scale
operations tend to target the most valuable timber and little of
it remains in a local borough for processing. He offered that
he does not know if HB 87 applies to Mental Health Trust lands
and the University of Alaska timber lands but has been sorely
disappointed with the amount of merchantable trees cut down and
left in the woods on Mental Health Trust lands helicopter sales.
He conveyed that they've also left a lot of slash and tops which
it is a mess in a lot of areas that they've logged. He
expressed that much of the Mental Health Trust land timber was
exported. He offered his apprehensive of more discretion being
given to a politically appointed commissioner. He noted it has
been interesting to him how the state can malign the U. S.
Forest Service while saying nothing about private Native
Corporations shipping vast value out of the state with little
impetus to help the rest of the timber industry. He mentioned
that the concept of a working forest also means it has ecosystem
services that the forest performs other than just working for
people. He expressed that the ecosystem services is an
important part of the picture.
2:38:03 PM
DAVID BEEBE, City of Kupreanof, said he is representing the City
of Kupreanof. He commented that while Governor Bill Walker
cites his authority under the Alaska State Constitution, Article
III, Section 18, the Governor's bill is fundamentally at odds
with the Alaska State Constitution, Article VIII, Section 4,
which read:
Fish, forests, wildlife, grasslands, and all other
replenishable resources belonging to the State shall
be utilized, developed, and maintained on the
sustained yield principle, subject to preferences
among beneficial users.
MR. BEEBE commented that sustained yield of these fish and
wildlife resources requires that ecosystem services function
without significant impairment. The State of Alaska has long
known that significant impairment of Southeast forest habitats,
structure, function, and composition, precludes the sustainable
yield of Sitka Black Tailed Deer and other wildlife. He advised
that emergency closures and significant restrictions on deer
hunting presently exist in a 20-mile or more radius surrounding
the City of Kupreanof. He stated that the Department of Fish &
Game (ADF&G) published a statistical summary of the season's
deer hunter harvest in all of Southeast communities in 1961. In
terms of hunter's success, Petersburg ranked the highest of all
communities of Southeast with a hunter success rate of 97
percent, which is an average of 3.5 deer per hunter. Yet, in
2012, 147 hunters on Mitkof Island required 565 deer hunter days
to harvest 22 deer. He noted that the restrictions on Mitkof
Island have just been imposed on Lindenberg Peninsula, where the
City of Kupreanof is located. He stated that the area is the
hunting destination of last resort with regard to weather
protected access to deer. He highlighted that there is glaring
evidence that the state's failure to abide by the sustained
yield principle invoked in the Alaska State Constitution [is
apparent]. He recommended that everyone consider the oath of
office taken to defend the Alaska State Constitution and, he
asked the committee members to uphold the oath they took by
voting no on moving HB 87 out of committee.
2:41:04 PM
CO-CHAIR TALERICO closed public testimony.
2:41:07 PM
REPRESENTATIVE JOSEPHSON referred to a prior statement that the
AS 38.05.118 bill could be used as a backdoor way to ship timber
in the round.
MR. MAISCH advised that he did hear that statement but it is not
a correct assertion.
REPRESENTATIVE JOSEPHSON asked why that statement was incorrect.
MR. MAISCH responded that the Division of Forestry goes through
the best interest finding process to negotiate the sale with the
purpose of trying to keep state timber processed and mills in
Alaska. He referred to the previously mentioned U.S. Supreme
Court case where the state tried to restrict round log export
and explained that this is the authority crafted after that case
was lost to enable Alaska to have an ability to actually keep
logs on shore in Alaska to be processed.
2:42:26 PM
CO-CHAIR TALERICO held over HB 87.
2:42:55 PM
The committee took a brief at-ease.
^CONFIRMATION HEARING(S): Alaska Oil and Gas Conservation
Commission
CONFIRMATION HEARING(S):
Alaska Oil and Gas Conservation Commission
2:43:46 PM
CO-CHAIR NAGEAK announced that the final order of business would
be the hearing on the appointment of Michael Gallagher to the
position on the Alaska Oil and Gas Conservation Commission.
(Committee packets contain biographical information on the
appointee.)
CO-CHAIR NAGEAK opened public testimony.
2:44:58 PM
REPRESENTATIVE JOSEPHSON questioned whether Mr. Gallagher was
seeking the seat under AS 31.05.009(3), which read:
(3) one member who shall have training or experience
that gives the person a fundamental understanding of
the oil and gas industry in the state.
MICHAEL GALLAGHER, Appointee, Alaska Oil and Gas Conservation
Commission, responded to Representative Josephson that he is
correct.
REPRESENTATIVE JOSEPHSON asked Mr. Gallagher's background that
gives him a fundamental understanding of the oil and gas
industry.
MR. GALLAGHER responded that over the last 38 years he has been
involved one way or another in the oil and gas industry in
Alaska. He said he spent 14 years in the field, and the
remainder of the time he worked for the Laborers Union where he
was involved in oil and gas development in the state.
Subsequent to retirement, he worked for Ahtna Construction which
is primarily pipeline work and was the operations manager and
then interim president, CEO, with work at the Valdez Marine
Terminal and "a lot on the pipeline."
2:46:43 PM
REPRESENTATIVE TARR noted that Mr. Gallagher has been on the job
a handful of weeks in a technical position. She requested
information regarding how he is getting up to speed and feeling
prepared going forward.
MR. GALLAGHER answered that during his first week on the job he
"felt like he was drinking from a fire hose," and since that
time he has figured out exactly what is going on within the
commission as the majority of the work is processing permits for
the producers. He advised that he reads plans well and
understands what they are doing there, he has been able to take
a tour of a drilling rig in Kenai, and he feels comfortable
today from what he has seen. He offered that he participated in
his first public hearing on the BLM Legacy Well that the federal
government is considering dismantling and abandoning. He
described it as fun with a real learning curve, but feels
comfortable.
2:48:41 PM
REPRESENTATIVE SEATON noted that during the initial meeting with
Mr. Gallagher he asked how he would balance oil and gas and
preventing wastage of hydro-carbons. He offered Mr. Gallagher
another opportunity to respond to that question.
MR. GALLAGHER responded that his understanding of the Alaska
Statutes is that Alaska needs to get as much hydro-carbon out of
the reservoir as possible. He related that he will listen to
the reservoir engineer to figure out the best way to do that in
order that Alaska can recover as much oil and gas as possible.
REPRESENTATIVE SEATON restated his question in that within Mr.
Gallagher's consideration of wastage whether he is comparing
those on a per molecule per BTU per dollar basis. He asked how
he will go forward in preventing wastage on balancing those two
items.
MR. GALLAGHER answered that he would have to review expert
opinions from the engineers.
2:50:45 PM
CO-CHAIR TALERICO offered his understanding that the committee
is not committing support nor opposition to this appointment,
but rather confirm the committee has met its obligation to have
the hearing for Mr. Gallagher.
CO-CHAIR NAGEAK closed public testimony.
2:51:48 PM
CO-CHAIR NAGEAK announced he will forward the name of Michael
Gallagher to the joint session of the House and Senate for
confirmation. No objections were stated.
2:52:02 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:52 p.m.