02/18/1997 01:13 PM House RES
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HOUSE RESOURCES STANDING COMMITTEE
February 18, 1997
1:13 p.m.
MEMBERS PRESENT
Representative Bill Hudson, Co-Chairman
Representative Scott Ogan, Co-Chairman
Representative Beverly Masek, Vice Chair
Representative Ramona Barnes
Representative Fred Dyson
Representative Joe Green
Representative William K. ("Bill") Williams
Representative Reggie Joule
MEMBERS ABSENT
Representative Irene Nicholia
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 9 am
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 SJR 9 am OUT OF COMMITTEE
* HOUSE BILL NO. 128
"An Act relating to water quality; directing the Department of
Environmental Conservation to conduct water quality research;
establishing the Water Science Oversight Board; and providing for
an effective date."
- BILL POSTPONED TO 2/20/97
(* First public hearing)
PREVIOUS ACTION
BILL: SJR 9
SHORT TITLE: ENDORSING ANWR LEASING
SPONSOR(S): SENATOR(S) PEARCE, Adams, Green, Parnell, Taylor,
Miller, Mackie, Donley, Sharp, Leman, Phillips, Halford, Wilken,
Torgerson, Kelly, Ward; REPRESENTATIVE(S) Rokeberg
JRN-DATE JRN-PG ACTION
01/29/97 160 (S) READ THE FIRST TIME - REFERRAL(S)
01/29/97 160 (S) RESOURCES
02/10/97 (S) RES AT 3:30 PM BUTROVICH ROOM 205
02/10/97 (S) MINUTE(RES)
02/11/97 282 (S) RES RPT 5DP 1AM
02/11/97 282 (S) DP:GREEN, TAYLOR, TORGERSON, LEMAN,
02/11/97 282 (S) DP: SHARP; AM: LINCOLN
02/11/97 282 (S) ZERO FISCAL NOTE (S.RES)
02/13/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
02/13/97 (S) MINUTE(RLS)
02/13/97 334 (S) RULES TO CALENDAR 2/13/97
02/13/97 334 (S) READ THE SECOND TIME
02/13/97 335 (S) AM NO 1 WITHDRAWN
02/13/97 335 (S) AM NO 2 OFFERED BY LINCOLN
02/13/97 335 (S) AM NO 2 ADOPTED UNAN CONSENT
02/13/97 336 (S) AM NO 3 OFFERED BY LINCOLN
02/13/97 336 (S) AM NO 3 FAILED Y4 N14 E2
02/13/97 336 (S) ADVANCED TO THIRD READING
UNAN CONSENT
02/13/97 336 (S) READ THE THIRD TIME SJR 9 AM
02/13/97 336 (S) COSPONSOR(S): WILKEN, TORGERSON,
02/13/97 336 (S) KELLY, WARD
02/13/97 336 (S) PASSED Y17 N- E2 A1
02/13/97 341 (S) TRANSMITTED TO (H)
02/14/97 354 (H) READ THE FIRST TIME - REFERRAL(S)
02/14/97 354 (H) RESOURCES
02/14/97 362 (H) CROSS SPONSOR(S): ROKEBERG
02/18/97 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
SENATOR DRUE PEARCE
Alaska State Legislature
Capitol Building, Room 518
Juneau, Alaska 99801
Telephone: (907) 465-4993
POSITION STATEMENT: Testified as sponsor of SJR 9 am.
DALE BONDURANT
P.O. Box 1197
Soldotna, Alaska 99669
Telephone: (907) 262-0818
POSITION STATEMENT: Testified against SJR 9 am.
VERNITA HERDMAN
2075 Campbell Place
Anchorage, Alaska 99507
Telephone: (907) 562-1740
POSITION STATEMENT: Testified on SJR 9 am.
ACTION NARRATIVE
TAPE 97-13, SIDE A
Number 0001
CO-CHAIRMAN SCOTT OGAN called the House Resources Standing
Committee meeting to order at 1:13 p.m. Members present at the
call to order were Representatives Ogan, Hudson, Masek, Dyson and
Green. Representatives Williams, Joule and Barnes joined the
meeting at 1:15 p.m., 1:16 p.m. and 1:18 p.m., respectively.
Representative Nicholia was absent.
SJR 9 am - ENDORSING ANWR LEASING
Number 0059
CO-CHAIRMAN OGAN said the calendar included SJR 9 am, 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. He said the sponsor
of SJR 9 am was not in the committee room and asked Representative
Green to present the bill.
Number 0089
REPRESENTATIVE JOE GREEN said SJR 9 am sends another message to the
President, his cabinet and Congress that Alaska is interested in
opening up the Arctic National Wildlife Refuge (ANWR), at least the
1002 coastal plain area which represents about 1 percent of the
total refuge; he added that there would not be massive development.
He said concern had been expressed that SJR 9 am could interrupt
the caribou migration and reminded the committee that Alaska has
the second largest oil field in the north American continent, the
Kuparuk field. This field is right in the way of the coastal zone
herd caribou migration, and that herd has increased nearly seven-fold since oil
environmental and industry issues can be handled in a cooperative
manner.
Number 0199
REPRESENTATIVE GREEN said according to United States Geological
Survey (USGS) figures, there could be as much as ten billion
barrels of commercial oil from the coastal zone area. He said oil
wells have been drilled north, east and west of the 1002 area, and
in every case they have discovered hydrocarbon, albeit not always
in commercial quantities; but there has been oil. He said in all
likelihood there are traps, perhaps not huge anticlinal traps like
there are in Prudhoe Bay. There is the strong possibility of traps
similar to those in the Kuparuk River field.
Number 0253
REPRESENTATIVE GREEN said there has been a concerted effort over
the last several years in lobbying back in Washington, D.C., to
open ANWR, at least the 1002 area, for exploration. It would be
good to have exploration and development, but it needs to be opened
up to see if there is anything there at all. He said the benefits
to the state of Alaska could be anywhere from a high of 90 percent
to the low of 50 percent of royalties. He said on a ten billion
barrel reserve, the math bodes very well.
REPRESENTATIVE GREEN said an environmental consideration would have
to be given. He added that Alaska would not only benefit in
royalties, but that the pipeline coming from the coastal zone would
pass Point Thompson, Badami, and other known accumulations of oil.
This would allow the transportation of that oil to the existing
infrastructure at Pump One.
Number 0345
REPRESENTATIVE GREEN said this oil would prolong the life of the
existing Trans-Alaska Pipeline System (TAPS). He mentioned the
Prudhoe Bay fields which are reaching their economic limit. He
said that with additional oil coming through the pipeline, the
economic limit would be extended several years, perhaps as many as
ten years because the pipeline costs would be allocated to other
barrels of oil. It costs to have that 48-inch line going, but if
you can reduce those costs because of increasing amounts of oil
coming from ANWR then the per-barrel cost that comes from Prudhoe
Bay decreases and the economic life of the field is extended.
Number 0420
REPRESENTATIVE GREEN said the operations of oil fields in the North
Slope, including Prudhoe Bay, have been able to operate in an
environmental satisfactory manner. He said each step of major
development, since the first day, has reduced the footprint
dramatically. It is estimated that if there are ten billion
barrels of commercial oil discovered in ANWR, the footprint would
be no larger than Dulles Airport near Washington, D.C. He said
larger mammals co-exist beautifully, as has been proven, in at
least two of the oil fields. He said opening up ANWR would provide
an economic benefit to the state, including jobs for Alaskans, and
it is environmentally sound. He said opening up ANWR would provide
jobs for every state in the union, but mostly in Alaska. He said
development creates long-term jobs and provides opportunities which
encourages our children to stay in the state.
Number 0552
CO-CHAIRMAN BILL HUDSON said over the years, we have heard about
the through-put capacity which makes operating the pipeline
profitable. He asked what was the least amount of through-put
necessary in order to remain profitable.
Number 0580
REPRESENTATIVE GREEN said there is a fairly wide latitude with the
through-put. He said some estimates are as low as 200,000 barrels
a day, but many people feel it is closer to 300,000. He said
various factors drive the through-put, such as price of oil, labor
costs, operating costs, and so forth. He said those fluctuations
or an edict coming from Washington D.C., things that can't be
foreseen, would put the through-put at 250,000 barrels a day, plus
or minus 10 percent.
Number 0638
CO-CHAIRMAN HUDSON said getting into ANWR or the "Naval Petroleum
Reserve" is necessary to add to that through-put so as to obtain
the barrels we know currently exist in the North Slope. He said if
you don't add to the current reserve, many barrels would probably
remain in the ground. Once they are shut in, they remain.
Number 0682
REPRESENTATIVE GREEN said this is a fair assessment. He said even
if you were to put that pipeline in mothballs, maintenance would be
excessively high because it must be maintained in absolutely tip-top shape. He
fields to be brought on line.
CO-CHAIRMAN OGAN announced that Senator Pearce, sponsor of SJR 9
am, joined the committee meeting.
Number 0771
REPRESENTATIVE RAMONA BARNES said the pipeline enabling act says
that when it is no longer economically feasible, which
Representative Green says he thinks is around 250,000 barrels of
oil, whereas she always thought it was around 6,000 barrels of oil,
the pipeline then must be dismantled and the area returned to the
state it was prior to the building of the pipeline. She asked if
that was Senator Pearce's understanding as well.
Number 0808
SENATOR DRUE PEARCE, sponsor of SJR 9, said the pipeline act, the
same as the North Slope leases, says that there has to be a
dismantling at the decision of the state and the federal
government. If the state and the federal government decided that
on the state and federal lands we wanted the haul road, pads, roads
or the right-of-way left, then Alyeska would leave them in whatever
condition was asked for by the state and federal government. She
said this decision-making process has not really begun on the
pipeline, but it has already begun on some of the leases regarding
abandoned areas. She said Congress will need to re-authorize the
entire pipeline act within the next few years, possibly four or
five.
SENATOR PEARCE said the number she was given by the Alaska
Department of Natural Resources, in terms of the number of barrels
of oil needed to make the pipeline economic, is somewhere between
250,000 and 300,000 barrels.
Number 0904
CO-CHAIRMAN OGAN referred to the oil embargo which occurred in the
1970s and the national security concern over importing oil. He
asked what the United States was importing now.
Number 0953
SENATOR PEARCE said for calendar year 1996, the United States
imported almost 53 percent of its oil, a number which is growing
each year. For any country, particularly the United States, to be
more than half dependent on foreign sources of oil should be
frightening. She said Venezuela has acted as a friend to the
United States, but the Middle East continues to be a powder keg.
A tremendous amount of federal defense dollars and federal state
department dollars go into those area in order to allow the United
States to keep getting that oil.
Number 1013
REPRESENTATIVE REGGIE JOULE said he supports SJR 9 am.
Number 1082
DALE BONDURANT testified next via teleconference from Kenai. He
said the committee discussed the argument that if we open up ANWR
the United States will be less dependent on foreign oil. He added
that this argument was a no-brainer as we have worked so hard to
export that oil. Companies who want to export our oil all have
foreign oil. The sooner they can get rid of Alaskan oil, the more
dependant the United States is going to be on that foreign oil. He
said there are some real problems regarding the environment and
mentioned an article about a well being poisoned. People are being
fired because they are trying to do it right and industry has had
a pretty bad black eye in some cases. They are dumping toxins in
Cook Inlet.
MR. BONDURANT said the main reasoning for all of this is bottom-line profits an
never given up what they have actually contracted for and these
deals are played for the public's benefit. He said the public owns
the oil, but are never allowed to know exactly how much is being
paid for it. He would argue for a reduction of 90 percent down as
we are going to give it to industry anyway. Maybe some of the
public would be less willing to give away the oil as compared to
the legislature and the Administration.
Number 1243
REPRESENTATIVE GREEN asked him if he had been to the North Slope.
MR. BONDURANT said he has not been there, but he has been reading
about it. He is leery of a company that has the power to get rid
of whistle blowers who have enough guts to come forward and point
out the problems and the state goes along with this. He referred
to a case in Valdez.
Number 1283
REPRESENTATIVE GREEN said when you have a private industry that
hires and discharges, based on the quality of a person's work
rather than on longevity or union affiliation, there will be
casualties. He said to condemn the whole industry because somebody
got fired is about the same as condemning environmental actions on
the North Slope when you've never been there.
Number 1310
REPRESENTATIVE GREEN referred to Mr. Bondurant's testimony about
why the United States would import oil and then appear to want to
export oil. He asked if he was familiar with supply and demand and
the transportation costs associated with oil. Since the 1920s,
when there was a large expansion within the oil industry in the
United States, an exchange of crude oils from one company to
another began occurring. If a company operates in Louisiana and
has a refinery in Texas, they might make an exchange of oil in
Louisiana for more oil in Texas nearer their refinery. He said
this is not unlike what we would be doing in this country. Oil
going from the Middle East to the Far East would be traveling a
much longer route than if oil came to this country on the Gulf of
Mexico and then we discharged or sold our oil from Alaska to the
Far East. He said it may appear that we are doing rather a foolish
thing in importing oil and exporting oil, but it has to do with the
net use of it at the lowest possible cost.
Number 1404
MR. BONDURANT said we are continuing to be fed this type of
propaganda, but the bottom line clause is a profit for the oil
companies not a profit for Alaska. We are shipping oil in and out
and no one seems to be concerned that, in the case of a real
problem, these options are not going to be available to us.
Industry takes the position of bottom line profit in every thing
they do. He said regarding the employee question, maybe if we had
a good union there might be some results. The oil companies were
happy to have unions when they first came into Alaska. Now there
is a company union called VECO and the people don't have any
representation.
Number 1471
REPRESENTATIVE BARNES said she has been to Prudhoe Bay on four
separate occasions at different times of the year and observed that
it is operated in an environmentally safe manner. Things are done
open and above board, it is clean, well-kept, with animals and
birds all over that enjoy being there. Regarding the use of
American flag vessels versus foreign bottom boats, her
understanding is that we ship our oil to Taiwan in American flag
vessels. She encouraged him to support SJR 9 am and resolutions
like this so that his grandkids and hers can have a job in Alaska.
Number 1541
MR. BONDURANT said he had problems with some of her actions and
referred to the $5 million that was left on the table. As to the
future, when the oil is finished in the state there will not be an
on going allegiance. He said the quicker we get rid of them, the
(indisc.).
CO-CHAIRMAN OGAN mentioned that Representative Green told him he
would be able to discuss these issues with him after the meeting.
Number 1592
VERNITA HERDMAN said she traveled in the 1980s to the North Slope
and has been to Kaktovik a couple of times, to Prudhoe Bay many
times and to Barrow. She also has been to the Gwich'in villages of
Fort Yukon, Arctic Village and Beaver on the American side and to
Fort McPherson, Arctic Red River and Old Crow on the Canadian side.
She has been to Inuvik and Aklavik which are Eskimo villages,
albeit Canadian.
MS. HERDMAN said she wanted to take issue with some of the comments
based on her observations and a great deal of reading. She just
spoke a couple of days ago with a resident from the North Slope
Borough who had previously been on record in support of oil
development. This resident said he is having second thoughts. He
noticed after a period of oil exploration activities that the
birds, land mammals and the marine mammals disappeared for two and
a half months.
MS. HERDMAN said the porcupine caribou herd is very different from
the herd around the Prudhoe Bay area. This herd migrates extreme
distances across the United States and Canadian borders. The area
of concern to the Gwich'in people, who use that caribou herd
extensively for food, is the land that is of most interest to the
oil industry is on the calving grounds of the porcupine caribou
herd. Caribou who are calving have a different behavior from non-calving carib
disturbed and the footprint area would be in the calving grounds.
MS. HERDMAN said her observations differed, respectively, from
Representative Barnes's observations. She had been to Prudhoe Bay
at all different seasons of the year and remembered flying from
Prudhoe Bay to Kaktovik where there was plume of smoke that came
from the burning of gases from the industry area. She said it was
no small plume, it paralleled the plane for miles and miles and
added that the impact on air quality is of great concern.
Number 1764
MS. HERDMAN said, for many years when it was the Soviet Union,
there were activities in Siberia that were non-environmentally
regulated and that we are just beginning to see the fall out as a
result of those activities. She concluded that this might be the
single issue that both she and Mr. Bondurant agree on.
Number 1824
REPRESENTATIVE BEVERLY MASEK asked when Ms. Herdman had traveled to
the North Slope.
Number 1836
MS. HERDMAN said the oil development was well under way when she
traveled up to the North Slope, she thought oil had been going
through the pipeline for about nine years at the time she traveled
up there. She said she had not been up there recently, but the
comments made by the resident from the North Slope Borough were
made over the past weekend.
REPRESENTATIVE MASEK asked her where she was from.
MS. HERDMAN said she was originally from Unalakeet, but lives in
Anchorage currently.
REPRESENTATIVE MASEK asked her when her last trip was up to the
North Slope.
MS. HERDMAN said her last trip was in 1989 and added that she hoped
that progress had been made since then.
Number 1871
REPRESENTATIVE GREEN said he shared Representative Masek's concern
about the time frame in which she visited that area. He said the
large footprints which were done to separate the wells far enough
apart so, that if something would happen, the drilling rig wouldn't
fall over and hit another well head. He said this has long since
been done away with. Every possibility was taken into
consideration when they begin working in a new environment. Prior
to the development of Prudhoe Bay, the oil industry was really not
that familiar with permafrost. Now the industry has had 20 years
of experience and so have been able to reduce the size of the
footprint to the point that it doesn't contain large drill pads.
REPRESENTATIVE GREEN said, in the spring, the best place to view
birds is along the roads in Prudhoe Bay and Kuparuk River fields.
He said the reason for this is that there is a little amount of
dust and when you discolor snow it melts faster, so the first place
that the birds can see tundra is near the roads. He said you can
also see geese, swans. He said perhaps the person who said you
could not see birds and animals was ill advised or he was talking
about a specific two month period that was anomalous to the norm.
REPRESENTATIVE GREEN said the caribou migration for the central
caribou herd migration is greater than the migration for the
porcupine herd. He said those caribou occasionally calve in the
oil fields themselves.
Number 1987
MS. HERDMAN said the information she received wasn't in the form of
gossip or rumor, it was from a member of the Alaska Eskimo Whaling
Commission. She believed that the commission had done its own
independent research in environmental investigations. She did not
believe that the distance migrated was the factor she mentioned,
she referred to the nature of the calving grounds and added that
the behavior during calving times is very different from migrating
caribou.
Number 2015
MS. HERDMAN admitted that eight years is a long time to have passed
since she visited the North Slope. She hoped things had changed.
She is glad that the industry is getting environmentally sensitive.
She said Representative Green's remarks give her hope because he
seemed to be very knowledgeable and at least appeared to have been
up there.
Number 2033
REPRESENTATIVE FRED DYSON said most of the vapor from the burning
of natural gas is water.
Number 2045
MS. HERDMAN said the smoke she referred to was quite dark, slate
grey. She had seen the Anchorage power plant and said there is a
lot of steam with that, but this smoke was different.
Number 2052
REPRESENTATIVE DYSON said as part of the safety procedure, an oil
field has flares, and with that the air-fuel ratio is not
controlled because of a safety measure from the vent piping. He
referred to a person who worked up in Prudhoe Bay and said she
could call him if she had any questions about the oil field
operations.
Number 2109
SENATOR PEARCE said certainly the industry and the state are
sympathetic to the people of Kaktovik, Arctic Village and the
Canadian villages who depend on the caribou herd. The porcupine
herd is not the largest herd, but it is healthy herd with just
under 200,000 animals. She said exploration takes place in the
winter on the North Slope and no members of the porcupine herd
remain on the coastal plain in the winter. The herd is there for
a very short period of time in the summer. They calve, gather and
then leave. They are there for six weeks or less, each and every
summer with the calving grounds moving from year to year. The
choice of calving grounds is probably snow-dependent, depending on
bad the winter is and how far they get before they calve.
SENATOR PEARCE said exploration can be done to determine what sort
of hydrocarbons there are, if any. The next part would be the
permitting system for development which occurs long before you get
to production. She said at that time, when we know more about
where the areas are where oil is located versus the areas where
there has been calving, when we will be able to mitigate for the
impacts of that calving. The only way this can be done is to do
the exploration and see what is really there. She said the state
fully intends to work to make sure that we mitigate those impacts.
She reiterated that the caribou and most of the other animals
mentioned are not in or active in the coastal plains area in the
winter.
Number 2192
CO-CHAIRMAN OGAN said the wolves are probably harassing the caribou
more than the oil development is.
Number 2225
REPRESENTATIVE BARNES made a motion to move SJR 9 am with a zero
fiscal note and individual recommendations. She asked for
unanimous consent. There being no objection, SJR 9 am moved from
the House Resources Standing Committee.
Number 2231
CO-CHAIRMAN OGAN called for a recess at 1:53 p.m. The committee
would reconvene with the Senate Resources Committee to hear timber
overviews at 2:00 p.m.
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