Legislature(2019 - 2020)BARNES 124
03/25/2019 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s):|| Alaska Oil and Gas Conservation Commission | |
| Presentation(s): Pebble Mine Status and Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 25, 2019
1:02 p.m.
MEMBERS PRESENT
Representative John Lincoln, Co-Chair
Representative Geran Tarr, Co-Chair
Representative Grier Hopkins, Vice Chair
Representative Sara Hannan
Representative Ivy Spohnholz
Representative Chris Tuck
Representative Dave Talerico
Representative Sara Rasmussen
MEMBERS ABSENT
Representative George Rauscher
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Alaska Oil and Gas Conservation Commission
Jessie Chmielowski - Anchorage, Alaska
CONFIRMATION (S) ADVANCED
PRESENTATION(S): PEBBLE PROJECT STATUS AND UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JESSIE CHMIELOWSKI, Appointee
Alaska Oil and Gas Conservation Commission
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: Testified as appointee to the Alaska Oil
and Gas Conservation Commission, Department of Administration.
TOM COLLIER, Chief Executive Officer
Pebble Limited Partnership
Anchorage, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation
entitled, "A Clear Path Forward."
JOHN SHIVELY, Chairman
Board of Directors
Pebble Limited Partnership
Anchorage, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation
entitled, "A Clear Path Forward."
JAMES FUEG, Vice President of Permitting
Pebble Limited Partnership
Anchorage, Alaska
POSITION STATEMENT: Co-Provided a PowerPoint presentation
entitled, "A Clear Path Forward."
ACTION NARRATIVE
1:02:14 PM
CO-CHAIR JOHN LINCOLN called the House Resources Standing
Committee meeting to order at 1:02 p.m. Representatives Hannan,
Talerico, Spohnholz, Rasmussen, Hopkins, Tarr, Tuck, and Lincoln
were present at the call to order.
^CONFIRMATION HEARING(S):
^Alaska Oil and Gas Conservation Commission
CONFIRMATION HEARING(S):
Alaska Oil and Gas Conservation Commission
1:02:42 PM
CO-CHAIR LINCOLN announced the first order of business would be
a confirmation hearing for the appointee to the Alaska Oil and
Gas Conservation Commission.
1:03:24 PM
JESSIE CHMIELOWSKI, Appointee, Alaska Oil and Gas Conservation
Commission (AOGCC), informed the committee she wished to serve
as the petroleum engineering commissioner for AOGCC in order to
use her experience and skills to protect the public interest in
Alaska's oil and gas resources. She said she has lived in
Alaska for almost 20 years and has worked with AOGCC in her
profession. Ms. Chmielowski gave a brief personal and
educational history, noting the following qualifications: her
experience; she is a registered professional petroleum engineer
with the state; she has nineteen years of work experience, with
three years of work as an engineer on the North Slope in all
facets of oil field operations; she has government regulatory
experience as senior petroleum engineer with the Alaska office
of the Bureau of Land Management (BLM), Department of the
Interior, performing regulatory oversight functions; she has
reviewed drilling permits and metering, unit agreements, and
development obligations; she was the main point of contact at
BLM pertaining to the ConocoPhillips Alaska, Inc. development in
the National Petroleum Reserve-Alaska (NPR-A).
1:06:27 PM
REPRESENTATIVE RASMUSSEN asked if Ms. Chmielowski is aware of
areas in the regulatory process that could be made more
efficient for the oil and gas industry.
MS. CHMIELOWSKI was unsure; however, she suggested cooperative
joint federal and state oversight may be one area of
improvement.
CO-CHAIR TARR asked Ms. Chmielowski to discuss subsidence issues
related to BP wells, her work at Milne Point, and bonding.
MS. CHMIELOWSKI recalled in the matter of BP well integrity, on
2/28/19, AOGCC released an order that required BP to undertake
specific actions; the order remains under investigation,
although she said she is well prepared to handle surface
subsidence issues. Related to bonding on idle wells that are on
state land, she advised if an operator is unable to shut in a
well that has been closed for over one year, the state ends up
with the obligation to plug the abandoned well. Therefore,
AOGCC seeks to update its regulations to create a tiered system
of bonding for operators across the North Slope, which would
mitigate the state's potential liability should an operator
claim bankruptcy.
CO-CHAIR TARR asked Ms. Chmielowski to elaborate on the
"California proposal."
MS. CHMIELOWSKI explained another method to address state
liability for shut-in wells entails AOGCC meeting annually with
each operator to identify idle wells that are ready to be
plugged and abandoned; a third option is enacting legislation to
establish "predecessor liability," in which the state holds the
prior operator liable should the current operator claim
bankruptcy.
1:10:16 PM
CO-CHAIR LINCOLN inquired as to other issues coming before AOGCC
and the legislature.
MS. CHMIELOWSKI restated the top issues before AOGCC are: the
idle and long-term shut-in wells; ensuring new and smaller
operators - that are unfamiliar with state regulations and
standards - follow regulations; new exploration activity
workload for staff; unknown issues that arise.
CO-CHAIR LINCOLN asked whether permafrost problems are
widespread on the North Slope.
MS. CHMIELOWSKI acknowledged the subsurface subsidence issue
occurs across the North Slope including Prudhoe Bay, Milne, and
Kuparuk; however, how the operators respond will vary due to
differences in well construction. For example, the BP wells
were completed with the outer surface casing anchored within the
permafrost zone. She opined subsidence is an issue that would
benefit from study by all of the industry on the North Slope
because it is a regional problem.
CO-CHAIR LINCOLN surmised a taskforce on this issue would be
organized by AOGCC.
MS. CHMIELOWSKI said AOGCC has suggested organizing a taskforce
to hold a knowledge-sharing session.
CO-CHAIR LINCOLN questioned whether the aforementioned well
designs were approved and permitted by AOGCC.
MS. CHMIELOWSKI advised the aforementioned wells were the
earliest wells drilled at Prudhoe Bay and are no longer
permitted under current regulations; in fact, there are 14 wells
of a similar design and all have [shut-in] plans. In further
response to Co-Chair Lincoln, she said she would provide a
timeline for the completion of the identified wells; it will
take at least through 2019.
1:14:49 PM
CO-CHAIR TARR asked Ms. Chmielowski to disclose any potential
conflict of interest.
MS. CHMIELOWSKI responded AOGCC is an independent, quasi-
judicial body and thus she disclosed she formally held BP stock
and her husband works at Oil Search Limited.
REPRESENTATIVE HANNAN stated her support for Ms. Chmielowski's
appointment. She noted AOGCC has a vacant position and asked
whether AOGCC is functioning without a chair, or if the governor
will appoint a chair.
MS. CHMIELOWSKI was unsure of the process or the timing [for the
appointment of a chair].
1:16:37 PM
CO-CHAIR LINCOLN will inquire.
1:16:48 PM
REPRESENTATIVE HANNAN observed two commissioner positions are
filled by petroleum engineering and geologist professionals and
the third commissioner fills a public member seat. She asked
whether AOGCC would face limitations in fulfilling its mission
were the third position not filled.
1:17:43 PM
MS. CHMIELOWSKI expressed her understanding a quorum for the
commission is two, thus AOGCC can function.
1:18:09 PM
CO-CHAIR LINCOLN opened public testimony; after ascertaining no
one wished to testify, public testimony was closed.
CO-CHAIR TARR paraphrased from the following statement:
The House Resources Standing Committee has reviewed
the qualifications of the governor's appointee, Jessie
Chmielowski, to the Alaska Oil and Gas Conservation
Commission, [Department of Administration] and
recommends that the name be forwarded to a joint
session for consideration. This does not reflect the
intent by any of the members to vote for or against
this individual during any future sessions for the
purpose of confirmation.
1:18:58 PM
The committee took an at-ease from 1:18 p.m. to 1:21 p.m.
^PRESENTATION(S): PEBBLE MINE STATUS AND UPDATE
PRESENTATION(S): PEBBLE MINE STATUS AND UPDATE
1:21:04 PM
CO-CHAIR LINCOLN announced the final order of business would be
an update on the Pebble Project related to its permitting status
and the draft environmental impact statement (EIS) process.
1:21:19 PM
TOM COLLIER, Chief Executive Officer, Pebble Limited
Partnership, gave brief professional background information. He
said his career in permitting brings a perspective - broader
than simply a mining perspective - of environmental protection
and how natural resource development and environmental
protection can go hand-in-hand. Further, principles learned
from his earlier experience in government are: it is a false
choice between development and environmental protection;
development and environmental protection can coexist; hard and
intense scientific analysis through the National Environmental
Policy Act of 1969 (NEPA), EIS will determine how natural
resource development and environmental protection coexist. Mr.
Collier directed attention to a PowerPoint presentation
entitled, "A Clear Path Forward," and informed the committee the
importance of mining begins with a [positive] economic impact
for the state, but mining is also essential for modern life and
particularly for green technology: wind turbines, solar panels,
and electric vehicles require enormous amount of copper; in
fact, green transportation requires much more copper than other
transportation options. Beginning in 2021, there will be a
significant gap in the supply of copper; the base supply from
existing mines will begin to decrease, demand will increase, and
"Pebble fits right into that ... gap." Mr. Collier advised
copper will be needed for green energy, and it can be sourced in
the third world, where there are poor environmental protections,
or it can be mined in Alaska, under the strictest environmental
regimen found in the world (slides 1-8).
1:26:12 PM
MR. COLLIER said Pebble is a copper mine with other minerals
including silver, gold, molybdenum, and rhenium, and is located
on state land that was acquired by the state for its mineral
potential (slides 9-13). Slide 14 was a picture of the site of
the Pebble deposit.
REPRESENTATIVE TUCK asked for more information on the land
acquisition.
MR. COLLIER explained there was a three-way land trade with the
state, Cook Inlet Region, Incorporated (CIRI), and the federal
government to expand the boundary of Lake Clark National Park
and Preserve. The state relinquished timberland to CIRI, CIRI
relinquished land needed for Lake Clark National Park and
Preserve, and the federal government relinquished land to the
state that had mineral potential. He said the trade was
recognized in federal statute; if the land is not developed the
state will not benefit from the trade.
REPRESENTATIVE HANNAN asked when the trade occurred.
1:28:11 PM
JOHN SHIVELY, Chairman, Board of Directors, Pebble Limited
Partnership, recalled the trade occurred in 1977, as part of
agreements related to the Alaska National Interest Lands
Conservation Act (ANILCA); CIRI traded land that became part of
Lake Clark National Park and Preserve.
REPRESENTATIVE HANNAN surmised all of the land was part of the
original Lake Clark National Park and Preserve proposal.
MR. SHIVELY clarified [the land] was part of ANILCA negotiations
that went on for four years, "and this took place I think
relatively early on during those negotiations as a way to sort
of make Lake Clark National Park more complete."
REPRESENTATIVE TUCK questioned whether the land trade was an
amendment to ANILCA.
MR. SHIVELY said, "It was approved as part of ANILCA."
MR. COLLIER further explained the Pebble Partnership worked from
2013-2014 to reassess and redesign the project in response to
concerns about the project. The plan has the following changes:
the project has a smaller footprint; a proposed 20-year mine
plan; the footprint has been moved away from the Upper Talarik
and Kvichak River systems; no cyanide will be used to recover
gold; there will be no waste rock piles at closure; there are
enhanced environmental safeguards regarding water treatment and
the tailings facilities (slide 15).
REPRESENTATIVE SPOHNHOLZ asked whether the smaller project is
economic.
MR. COLLIER said yes.
REPRESENTATIVE SPOHNHOLZ expressed her understanding the present
design of the project would leave a majority of the mineral
resource in the ground.
1:31:41 PM
MR. COLLIER agreed. In further response to Representative
Spohnholz, he said a decision to reduce the size of the project
was in response to concerns by opponents that the project was
too large. He remarked:
We tried to find the exact sweet spot where a mine
could be built, including the infrastructure, that
would be economically profitable, and yet one that
would have the smallest footprint out in Bristol Bay
as we could find, and we think we found that.
REPRESENTATIVE SPOHNHOLZ inquired as to how long it will take
the proposed project to recover its capital investment.
MR. COLLIER explained the project moves into profitability
within the 20-year course of the project.
REPRESENTATIVE SPOHNHOLZ asked, "What's the percentage of
capital outlay versus the total ... gross revenue you'd expect
to earn?"
MR. COLLIER was unable to comment on the specific financial
aspects of the project because of the [National Instrument 43-
101 for the Standards of Disclosure for Mineral Projects], which
prevents Canadian mining companies from disclosing financial
information about a project except under certain conditions; the
project has completed internal analyses that cannot be
disclosed.
REPRESENTATIVE HANNAN questioned how, after 20 years, with
mineral resource still in the ground, "you're done with
business, [and] Pebble shuts up and goes away, and that's the
end."
MR. COLLIER acknowledged - with the amount of mineral resources
that are known - a permit may be filed for an expansion of the
project and more mining. However, Pebble Partnership seeks a
permit for the project as proposed, and to build the project as
proposed; later, if an expansion is proposed, permits would be
required for the existing project and for the expansion.
1:35:35 PM
REPRESENTATIVE HANNAN said it is odd that a project that was
described as a large 100-year gold mine is now described as a
small 20-year copper mine.
MR. SHIVELY pointed out Pebble Partnership never intended to
obtain a permit to mine the entire resources. When Anglo
American was a partner in the project, the mine life was
projected to be 20-25 years; although it was a bigger project,
is not reasonable to permit for [100 years] because of changes
in technology and regulations. Regarding leaving resources in
the ground, he said that has always been an aspect of Pebble.
MR. COLLIER added in his experience, the aforementioned
permitting plan is exactly the way the oil and gas industry
"opens up" a new field, and he provided details. Further, he
noted many mines in Alaska have been expanded by this process.
He directed attention to slide 16, which illustrated the
footprint that was analyzed by the U.S. Environmental Protection
Agency (EPA) in its Bristol Bay watershed assessment. He said
the footprint shows the current project is about one-fifth the
size of the original project.
REPRESENTATIVE TUCK remarked:
... when you said that the Canadian statutes limits
your ability to disclose information, how ... does
that affect the operations on U.S. soil, on Alaska
state land, ... that carries over - international
orders?
MR. COLLIER clarified the aforementioned is a disclosure
obligation: [Pebble Partnership] is not allowed to disclose
certain information, and it does not affect the proposed
operation of the project in the U.S.; operations on U.S. land
are controlled by federal and state law. In further response to
Representative Tuck, he remarked:
It's a disclosure obligation, and so we're out in the
stock market, we're listed on the Canadian
[Securities] Exchange and the New York Stock Exchange,
we are controlled by both laws of both of those two
federal entities in terms of disclosure, disclosing
financial information only.
REPRESENTATIVE TUCK opined without knowing the project's
expected return on investment, one cannot determine what the
state's revenue will be from the project. He asked for the
timeline for getting minerals to market.
MR. COLLIER related the current plan is that the project will
take five years to build and an additional two years to obtain a
permit, thus it will be six to seven years before minerals would
be available to market.
1:40:14 PM
CO-CHAIR LINCOLN acknowledged there are standards for the public
disclosure of "financials" and observed, typically, operators
and developers provide financials at a certain point, for
example, as a prefeasibility study. He asked whether the
project is currently working on a prefeasibility study.
MR. COLLIER said the Pebble Partnership plans to publish
financial data in a manner consistent with statutes.
CO-CHAIR LINCOLN remarked:
But in terms of the timeline of a typical mining
project like this, would you normally have ...
permitting before you did a pre-FEAS, or does a pre-
FEAS normally come first ...?
MR. COLLIER agreed normally a project would have a
prefeasibility study prior to permitting, but it is not unusual
to not do so. In further response to Co-Chair Lincoln, he
pointed out a prefeasibility study is not required to obtain
permits.
CO-CHAIR TARR observed other projects have departed from a
typical schedule and expressed concern that as a result,
investors have been misled, because the project looks better
economically, which may also influence those issuing permits.
MR. COLLIER disagreed, noting that the pertinent statute is
designed to protect investors and has no impact on permitting;
furthermore, it is not unusual for a mine to obtain a permit and
subsequently make a final decision to advance the project.
CO-CHAIR TARR opined permitting could be influenced by public
comment in support of a project because of its potential
positive impact to economics and jobs, even though financial,
cost-benefit analysis, and environmental information would be
incomplete.
MR. COLLIER stated economic impact data is available on the
project; however, certain financial data is constrained by
reasons previously discussed.
1:45:52 PM
MR. SHIVELY pointed out almost $800 million has been spent on
the project; this investment would not have been made without
some conviction of a positive economic outlook. Furthermore,
the investment that has been made has garnered the information
needed to advance the project to permitting.
CO-CHAIR TARR posited parties are looking at the investment in
the project and questioning how a 20-year project will allow
sufficient return on the investment that has been made. She
suggested multiple phases of the project would be required to
recover $800 million.
MR. SHIVELY said the permitting process does not reflect whether
a project is economic. He cautioned there is no guarantee the
project will advance to [multiple phases]. Furthermore, some of
the money spent by Anglo American does not need to be recovered
as part of the economics of the project.
REPRESENTATIVE HOPKINS asked for elaboration of the footprint
illustrated on slide 16.
MR. COLLIER explained the footprint is one of three alternatives
considered by EPA within the Bristol Bay watershed analysis
published in 2014. He remarked:
And at the time that they did that analysis, Pebble
had not put a specific plan on the table, and so EPA
looked at some of our earlier financial data and tried
to determine what were the three alternatives that we
might be considering taking forward, and this was one
of those alternatives. The one that I've shown here,
the smaller one, is the one that we took into
permitting.
REPRESENTATIVE HOPKINS said, "So, theoretically, the next four
phases would look similar to the previous iteration, the
previous slide."
MR. COLLIER said, "Perhaps. There are lots of different ways
you can come at this project in terms of an underground mine, a
larger pit mine, all kinds of things that could be future
alternatives. This is something that ... we never proposed, but
that EPA thought we might consider ...."
MR. COLLIER, in further response to Representative Hopkins, said
the exact location of the ore is known [shown as a red circle on
slide 16].
1:50:01 PM
REPRESENTATIVE HOPKINS asked for the location of mine
infrastructure such as the mill, roads, and the [natural] gas
pipeline.
MR. COLLIER said he would provide a map of the transportation
corridor that includes a direct transportation corridor to Lake
Iliamna, a ferry across the lake, another road to Cook Inlet,
and a natural gas pipeline to the [ferry] port.
REPRESENTATIVE RASMUSSEN opined hypotheticals are irrelevant at
this point in time and urged the committee to consider the
information as it is currently presented.
MR. COLLIER continued, noting Pebble is an asset to Alaska that
will bring thousands of jobs and hundreds of millions [of
dollars] in tax revenue, and the debate is how to safely develop
a mine in Bristol Bay without significate damage to fish (slides
17 and 18). For 12 years, developers have sought to ensure a
safe process, and developers now have answers from the NEPA
process, which must be followed to advance a project (slides 19-
21). He explained the NEPA process is an independent,
scientific analysis that requires approximately 60 categories of
permits and is the right way to evaluate the project; further,
the NEPA process is supported by an environmental organization
(slides 22-24). As part of the NEPA process, a draft EIS was
prepared by the U.S. Army Corps of Engineers (USACE) a major
independent agency of the federal government (slides 25-27).
Slide 28 illustrated other agencies involved in the preparation
of the draft EIS, including federal and state agencies.
CO-CHAIR TARR expressed her concern that the current federal
administration has directed that all environmental impact
statements must be completed in less than one year, which
"sidesteps the scientific process." She opined the process is
no longer independent and scientifically sound.
1:55:26 PM
MR. COLLIER said environmental impact statements issued by USACE
are unaffected by the one-year timeline directed by the federal
administration. He related in his professional experience,
USACE is not an agency easily subject to political whims; he
described in detail the rank and education of various USACE
personnel. Mr. Collier stressed USACE approaches its work with
rigor, and its work is subject to judicial review. In fact, the
Pebble Partnership expects the record of decision and permit to
be challenged in court as related to whether the process was
thorough, scientific, and independent.
REPRESENTATIVE HANNAN asked whether the USACE EIS process allows
for dissenting opinions to be included in its final report.
MR. COLLIER said all comments filed by federal and state
agencies are part of the record.
REPRESENTATIVE HANNAN directed attention to slide 29 and asked
whether the Tribal governments and councils listed have local
government authority over lands that are affected by the current
proposal.
1:58:37 PM
JAMES FUEG, Vice President of Permitting, Pebble Limited
Partnership, said the land falls within the Lake and Peninsula
Borough. In further response to Representative Hannan, he said
Lake and Peninsula Borough is a cooperating agency that is
participating in the development of the EIS, and which will
issue a development permit before the project can proceed.
REPRESENTATIVE HANNAN advised in state permits, the permitting
agency usually references dissenting views; she asked if
dissenting views are attached or excluded in the EIS process.
MR. COLLIER said comments from agencies or governments with
dissenting views are "made very clear in the comments they file
in response to this draft EIS."
CO-CHAIR TARR characterized the Section 404 [of the Clean Water
Act] issue as a political hot potato; she said there are reasons
to believe politics can influence a permitting process.
2:01:02 PM
MR. COLLIER disagreed adding, in his experience as a federal
regulator "at a pretty high level," he never knew USACE to be
subjected to political influence. Mr. Collier returned
attention to slide 29 which listed 35 Tribal governments that
were contacted by USACE during the draft EIS process. Slide 30
illustrated the Pebble EIS schedule: application filed in
December 2017; the scoping period began in April [2018] with the
final draft EIS released in February [2019]; the public review
process extends to [5/30/19]; the target date for the final EIS
is early in 2020; a record of decision is expected mid-2020. To
address questions about whether the [draft EIS] was rushed, he
provided several examples of permitting periods for other
projects such as the Point Thomson oil facility (slide 31).
Slide 32 listed comment periods for several projects; he pointed
out a 45-day public comment period is required by statute, and
this project has a "quite a reasonable" public comment period of
90 days.
REPRESENTATIVE HANNAN returned attention to slide 32 and asked
whether the Bristol Bay watershed assessment was related to
Pebble project permitting.
MR. COLLIER said yes.
2:04:11 PM
MR. SHIVELY disagreed; he clarified at that time Pebble had not
submitted an application for a project to any federal agency.
He said the assessment was a process by EPA that was not part of
a permitting process, but was a biased effort to stop the
project and led to legal action.
MR. COLLIER agreed. In further response to Representative
Hannan, he said EPA initiated the Bristol Bay watershed
assessment.
REPRESENTATIVE HANNAN remarked:
So, the EPA can ... ask for an assessment to be done
and they did, with the Bristol Bay, in response to
probably 13 years of inquiries and discussions about
Pebble.
MR. COLLIER opined EPA does not have the statutory authority to
do so; in fact, a preliminary injunction to stop the report was
issued. However, the case was settled thus the issue was never
finally resolved by the court system. In further response to
Representative Hannan, the injunction stopped EPA from making a
decision to await litigation, which was ultimately settled,
allowing Pebble to advance to the USACE permitting process.
REPRESENTATIVE HANNAN questioned whether the document was
released.
MR. COLLIER said the document was published, followed by several
public comment periods; this is the fifth public comment period
held on the project, two of which were related to the EPA
process.
REPRESENTATIVE HOPKINS asked for the length of the draft EIS.
MR. COLLIER said the draft EIS is approximately 1,600 pages.
There followed brief discussion related to the Donlin Gold mine
project permitting process.
2:07:57 PM
REPRESENTATIVE HOPKINS observed the applicants and projects at
Point Thomson are not similar to Donlin Gold or the Pebble
Partnership project, based on their long-term impacts and
reclamation projects.
MR. COLLIER pointed out the public comment period for the very
controversial Arctic National Wildlife Refuge Coastal Plain Oil
and Gas Leasing project is 45 days.
REPRESENTATIVE HOPKINS stated [the difference is] oil and gas
projects are "pipes and rigs."
MR. COLLIER said the public comment period for Pebble is
appropriate because most of the controversial issues are out of
the project as follows: one-fifth the size of the original
announcement; no cyanide; redesigned tailings facilities; no
waste rock. The major issue with a mine project is the quality
and quantity of water affected by the project, therefore, the
redesign removes all of the facilities from "the Upper Talarik"
(slides 34-36). Slide 37 illustrated the current design;
cyanide will not be used for gold recovery; all water affected
by the mine will be captured, treated, and strategically
released to optimize fish habitat, for example, at time
necessary for salmon to spawn (slides 37-39). Slide 40
illustrated two water treatment plants, water storage, and water
release points.
2:12:13 PM
REPRESENTATIVE TUCK returned attention to slide 37 and asked for
the diameter of the open [ore pit shown in orange].
MR. FUEG said approximately one mile by one mile.
REPRESENTATIVE TUCK observed the redesign eliminated waste rock
piles and questioned what concerns are raised by waste rock.
MR. COLLIER explained waste rock piles increase the impact of
the mine site to wetlands; the intent is to reduce the footprint
on the site by eliminating waste rock piles.
REPRESENTATIVE TUCK asked how the project will dispose of waste
rock.
MR. COLLIER said the mine is designed for the lowest strip ratio
possible for 20 years, thus there is not much waste, and the
waste will be treated as potentially acid-generating rock (PAG)
tailings instead of stored separately as waste rock.
[Mr. Collier pointed out the main water management pond and
other aspects of the mine shown on slide 37 are also shown on
slide 40 larger and in grey with blue arrows.]
2:16:39 PM
MR. FUEG, in response to Representative Hopkins, explained the
project mines little waste rock thus waste rock cannot be used
to build the infrastructure. So, during construction, rock will
be quarried for building materials, and the quarries are shown
in brown on slide 37.
REPRESENTATIVE HOPKINS asked whether the quarried rock would be
used for the tailings pond.
MR. FUEG said the tailings dams would be built from the quarried
rock.
MR. COLLIER stated one conclusion of the draft EIS is to have a
management plan to discharge water into three nearby streams to
benefit fish habitat; there will be no downstream impacts from
the pit in post closure at reclamation (slides 41 and 42).
REPRESENTATIVE TUCK surmised the main water management pond
would be created to collect water that normally courses in three
streams, and then the water would have to be discharged.
MR. COLLIER said the facility would be built to handle extreme
precipitation thus normally [water storage] would not be needed
except in a year with too much rain. He added that all water in
contact with the site must be treated.
REPRESENTATIVE TALERICO returned to slide 40 which illustrated
settlement ponds and treatment plants, and asked whether the
blue arrows indicated the project has the capacity to
recirculate water prior to discharge.
MR. FUEG explained the primary purpose of the [main water
management pond shown on slides 37 and 40] is to store excess
water, although water can be recirculated. Recent tailings dam
failures are associated with too much water building up in the
tailings facility; the pond is there to store excess water, so
it does not have to be stored in the tailings facility. After
storage, the water is treated to meet all the water quality
standards prior to discharge. He pointed out the applicants
have 75 years of precipitation data from the region and have
included allowances for multiple years of wet or dry weather.
2:22:33 PM
MR. COLLIER, in response to Representative Hannan, said the
streams affected are Upper Talarik Creek, North Fork Koktuli
River, and South Fork Koktuli River.
REPRESENTATIVE HANNAN asked how discharging water would benefit
fish habitat.
MR. COLLIER explained many streams near the mine site do not
have an annual flow, and "what we can do is bring back annual
flow to the streams."
REPRESENTATIVE HANNAN remarked:
... if they don't have flow, then they are unlikely to
have salmon that spawn in them because, naturally,
salmon don't go to streams that don't have flow that
could hold their spawn, at least in the case of
sockeye.
MR. COLLIER suggested creating annual flow is a benefit to
habitat.
REPRESENTATIVE HANNAN advised the only method of introducing
salmon stock is salmon enhancement via hatcheries and asked
whether there is a plan to do so.
MR. COLLIER restated the habitat would be enhanced to create
more options for salmon to spawn. Mr. Collier turned attention
to tailings and said the tailings facilities are designed for
maximum safety (slides 45-47). Slide 48 illustrated a bulk
tailings facility with a minimum amount of water, which drains
into a containment pond and an embankment [with a slide ratio
of] 2:1, with buttresses. The design, construction, and
operation of the facility would be certified by the Alaska Dam
Safety Program, Division of Mining, Land and Water, DNR (slide
49).
REPRESENTATIVE SPOHNHOLZ inquired as to the importance of the
embankment 2:1 ratio.
MR. COLLIER explained the ratio is a height to width ratio and
"the better that ratio is the ... less likely it is that you'll
have a failure of the facility." In further response to
Representative Spohnholz, he gestured to indicate the slope of
the embankment.
REPRESENTATIVE HANNAN returned attention to slide 37 and asked
how deep the bedrock is beneath the mine site and for the
relative location of the tailings dam.
2:29:40 PM
MR. FUEG described the dam as a valley with the dam across the
end. The rendering [on slide 48] shows the component of the dam
wall. The depth of the bedrock is not constant and varies from
zero to over 50 feet. Overburden will be thickest at the center
of the valley; all of the overburden will be excavated prior to
placement of rock on "competent" bedrock.
REPRESENTATIVE HANNAN restated her question as to the location
of the tailings dam.
MR. FUEG said one embankment is on the north side and one is on
the south, shown [in purple] "in a relatively straight area
right at the bottom that is the south embankment, and then there
is a straight area .... and that would be the north embankment,
the bigger one we showed the rendering of." In response to
Representative Tuck, he said the tallest point would be on the
north end.
MR. FUEG, in response to Representative Spohnholz, said the blue
lines are the boundaries of the watersheds and the primary
rivers in the watersheds are lighter blue and labeled (slide
37).
CO-CHAIR TARR asked for the expected life of the storage
facility.
MR. FUEG responded both of the tailings facilities are designed
for a 20-year life.
2:32:55 PM
MR. COLLIER continued to pyritic tailings storage that holds PAG
tailings. By separating the facilities, the PAG storage
facility is smaller and fully lined; at closure, the pyritic
tailings will be returned to the mine pit and covered with water
to prevent contact with oxygen. He opined the closure plan is a
significant environmental enhancement over the previous plan
(slides 50-54).
CO-CHAIR TARR asked whether the design of the pyritic tailings
dam is specific to conditions in Alaska, such as at the [Hecla
Mining Company Greens Creek mine located in Southeast Alaska].
MR. FUEG advised Greens Creek mine uses a dry stack facility.
Separating bulk and pyritic tailings is planned in order to
address Alaska conditions, such as a lot of water during
operations and mine closure. The design will keep bulk tailings
in a desired dry state; however, the pyritic tailings are
covered with water and lined to prevent contact with ground
water. At closure, the pyritic tailings will be put into the
mine pit 2,000 feet down in a gravity well that cannot fail, and
covered with a pit lake.
REPRESENTATIVE HANNAN asked for the depth of water needed to
prevent oxidization.
2:36:29 PM
MR. FUEG said as little as a few feet.
REPRESENTATIVE HANNAN inquired as to the effect of the oxygen
that is found in water, and the problem caused should the water
drain away.
MR. FUEG said the [atmospheric] condition everywhere in Alaska
and at the mine site is a net positive rainfall.
REPRESENTATIVE HANNAN questioned the effect of climate change to
the amount of rainfall in Alaska and whether the risk of
acidification remains in perpetuity.
MR. FUEG said "models" for the project indicate an increase in
rainfall; importantly, the [location of the tailings] will be
below the ground water level.
REPRESENTATIVE HANNAN restated her question as to the perpetuity
of acidification.
MR. COLLIER said the tailings must be covered with water in
perpetuity.
CO-CHAIR TARR observed Greens Creek mine uses a liner beneath
its bulk tailings facility but the Pebble project does not.
MR. FUEG stated using a liner prevents drainage and the project
seeks a free-draining facility to prevent the risk of a tailings
dam failure.
2:39:53 PM
MR. COLLIER directed attention to slide 54 which illustrated the
pit lake. He said according to the draft EIS, catastrophic
failure of the tailings facilities is extremely unlikely and
there are no population impacts to fish from the evaluated
tailings release scenarios (slide 53-56). Turning to supporting
salmon, Mr. Collier said Pebble has completed more than a decade
of environmental studies, at a cost of over $150 million, on
wetlands, groundwater, surface hydrology, migration patterns,
fish habitat and more (slides 57-60). The sockeye escapement in
the mine area is small: 0.08 percent of the South Fork Koktuli
River and North Fork Koktuli River drainages escapement to
Bristol Bay.
REPRESENTATIVE HOPKINS returned attention to slide 60 and
expressed his understanding the affected groundwater table is at
the surface of the ground; therefore, water would need to be
constantly pumped out of the pit.
MR. FUEG acknowledged there are isolated areas where the
groundwater comes to the surface, and other areas where the
groundwater is deeper. Like other mines, the project will have
to dewater by drilling wells around and in the pit, which is
then treated to water quality standards and discharged into the
rivers.
REPRESENTATIVE HOPKINS surmised the project will need to empty
the water table surrounding the mine.
MR. FUEG assured the committee the project has drilling and
modeling to assess changing water levels.
MR. COLLIER read from slides 64-72. He stated a significant
finding of the draft EIS is that - following 12 years of debate
- Pebble will not harm the Bristol Bay fishery. He read from
slides 72-75.
2:45:18 PM
MR. SHIVELY gave a history of his professional experience with
the Red Dog mine project. He said [the Pebble project] would
benefit the economy and the culture of the region when
opportunities come to local residents; in fact, he has seen
lives changed and benefits will be statewide (slides 76-78). In
the region, the project will increase the Lake and Peninsula
Borough budget by two or three times for the benefit of local
education. State revenue will depend on the value of the
minerals extracted and the mining industry more than pays for
itself; further, mining industry tax revenue is third behind oil
and gas tax revenue and insurance tax revenue (slides 79 and
80). There is also the benefit of 750-1,000 direct jobs, with
an average mining wage of $100,000 or more (slides 82-83). Mr.
Shively noted the draft EIS indicated the project will benefit
small communities by providing a transportation system and lower
cost power with minimal impact to subsistence resources and no
impact to the abundance of resources (slides 84-85). The draft
EIS also noted there will be substantial benefits to the overall
health of the region and the state due to funds spent by the
project on support services, including benefits to nonprofits
(slide 86).
2:50:02 PM
REPRESENTATIVE RASMUSSEN has heard from her constituents that
there is "a declining quality of life in the village." She
asked for Pebble Partnership Ltd.'s view on local hiring.
MR. SHIVELY related Cominco and Teck, owners of the Red Dog
mine, are Canadian companies and have made a commitment for
local hire.
CO-CHAIR TARR pointed out the state does not have credits or
incentives [against] mining taxes; however, the state has a
three-year tax holiday for mines, thus once a mine is
operational, it has three years for cost recovery before any
revenue is due to the state, although Lake and Peninsula Borough
may collect local revenue at the outset.
MR. SHIVELY stressed the project has helped the [Lake and
Peninsula Borough] deal with current impacts; in addition, the
project may negotiate a payment in lieu of taxes (PILT) in a
manner similar to the Red Dog mine. He pointed out there is no
tax holiday for corporate income tax or royalties.
REPRESENTATIVE SPOHNHOLZ asked for detailed information related
to the local hire provision.
MR. SHIVELY advised the project has an outline for a workforce
development plan; at the Red Dog mine, job training began during
the construction phase. He recalled former partners in the
project supported educational programs and provided
scholarships.
REPRESENTATIVE TUCK asked whether the projected revenue to the
Lake and Peninsula Borough is based upon the redesigned project.
MR. SHIVELY indicated yes.
REPRESENTATIVE HOPKINS asked whether there has been support or
opposition from local governments and villages.
2:54:36 PM
MR. SHIVELY said support and opposition is varied. The
strongest support comes from those closest to the project due to
the economic benefits garnered during the exploration programs.
He acknowledged there is a majority of opposition in the region;
however, he recalled last year 150 elders attended a conference
and no one expressed a negative comment. The elders have two
top priorities: protect subsistence resources and ensure
villages survive.
REPRESENTATIVE HOPKINS asked whether any of the governments
closest to the project have taken an official or unofficial
stance in support of the project.
MR. SHIVELY opined the applicants have not sought support prior
to this time.
MR. COLLIER stated the draft EIS indicates a clear path forward
and revealed: Alaska's resource projects coexist with fishing;
Pebble will use industry's best practices; benefits include
increased revenue, employment, and education; there will be no
downstream impacts from the pit post closure; there will be no
long-term change to the health of the Bristol Bay and Cook Inlet
fisheries; Alaska knows how to develop its resources
responsibly. He concluded the project is the right mine for the
right time (slides 87-96).
REPRESENTATIVE HANNAN expressed her support for a state income
tax and asked if Mr. Collier is a resident who would pay a state
income tax.
MR. COLLIER said he has been an Alaska resident for six years.
MR. SHIVELY spoke in support of a personal income tax.
REPRESENTATIVE HANNAN asked whether Pebble corporate officers
are residents of Alaska.
MR. COLLIER said of seven or eight officers, one is not a
resident.
REPRESENTATIVE TUCK inquired as to whether the project would be
expanded.
MR. COLLIER said there are no plans for expansion of the 20-year
project.
3:02:11 PM
ADJOURNMENT
The House Resources Standing Committee meeting was recessed at
[3:02] p.m. to be reconvened on 3/25/19 at 6:30 p.m. The
meeting was reconvened and adjourned on 3/25/19 at 6:30 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Jessie Chmielowski_Redacted.pdf |
HRES 3/25/2019 1:00:00 PM |
Alaska Oil and Gas Conservation Commission |
| HRES Pebble Partnership Presentation 3.25.19.pdf |
HRES 3/25/2019 1:00:00 PM |
Pebble Mine |
| Alaska Oil and Gas Conservation Commission Fact Sheet and Roster 3.25.19.pdf |
HRES 3/25/2019 1:00:00 PM |
Alaska Oil and Gas Conservation Commission |