Legislature(2009 - 2010)BUTROVICH 205
04/02/2009 01:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Overview: Nenana Basin Gas Exploration Project by Doyon, Ltd. and Rampart Energy | |
| SB159 | |
| SB163 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 159 | TELECONFERENCED | |
| *+ | SB 163 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 2, 2009
1:07 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Chair
Senator Joe Thomas, Vice Chair
Senator Bettye Davis
Senator Kevin Meyer
Senator Con Bunde
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Jay Ramras
Representative Gene Therriault
COMMITTEE CALENDAR
Overview: Nenana Basin gas exploration project by Doyon, Ltd.
and Rampart Energy
HEARD
SENATE BILL NO. 159
"An Act increasing the maximum funeral expenses payable as a
workers' compensation death benefit; and providing for an
effective date."
MOVED SB 159 OUT OF COMMITTEE
SENATE BILL NO. 163
"An Act increasing the allowances for injury, disability, or
heart attack payable from the fisherman's fund; and providing
for an effective date."
MOVED SB 163 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 159
SHORT TITLE: WORKERS' COMPENSATION FUNERAL EXPENSES
SPONSOR(s): SENATOR(s) PASKVAN
03/20/09 (S) READ THE FIRST TIME - REFERRALS
03/20/09 (S) L&C, FIN
04/02/09 (S) L&C AT 1:00 PM BUTROVICH 205
BILL: SB 163
SHORT TITLE: MAXIMUM BENEFIT FROM FISHERMEN'S FUND
SPONSOR(s): SENATOR(s) PASKVAN
03/25/09 (S) READ THE FIRST TIME - REFERRALS
03/25/09 (S) L&C, FIN
04/02/09 (S) L&C AT 1:00 PM BUTROVICH 205
WITNESS REGISTER
JIM MERY
Doyon, Ltd.
POSITION STATEMENT: Presented overview of Nenana Basin gas
development.
JAMES DODSON
Rampart Energy Company
POSITION STATEMENT: Presented overview of Nenana Basin gas
development.
JEFF STEPP
Staff to Senator Paskvan
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 159 for the sponsor.
MIKE MONAGLE, Program Coordinator
Division of Workers' Compensation Benefit Guaranty Fund
Department of Labor and Workforce Development (DOLWD)
POSITION STATEMENT: Answered questions on SB 159.
TRENA HEIKES, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
POSITION STATEMENT: Answered questions on SB 159.
KEVIN DOUGHERTY
Alaska Laborers
POSITION STATEMENT: Supported SB 159.
JAKE HAMBURG
Staff to Senator Paskvan
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 163 for the sponsor.
JERRY MCCUNE
United Fishermen of Alaska (UFA)
POSITION STATEMENT: Supported SB 163.
BOB THORSTENSON
Alaska Seine Boat Owners Association
POSITION STATEMENT: Supported SB 163.
JIM HERBERT
Commercial fisherman from Seward
POSITION STATEMENT: Supported this SB 163.
ACTION NARRATIVE
1:07:25 PM
CHAIR JOE PASKVAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:07 p.m. Present at the call to
order were Senators Davis, Thomas and Paskvan.
^Overview: Nenana Basin Gas Exploration Project by Doyon, Ltd.
And Rampart Energy
Overview: Nenana Basin Gas Exploration Project
by Doyon, Ltd. and Rampart Energy
CHAIR PASKVAN announced the overview of the Nenana Basis gas
exploration project from James Mery with Doyon, Limited and Jim
Dodson with Rampart Energy. He said this project has tremendous
implications for both labor and commerce in the state of Alaska,
and he looked forward to hearing from them.
1:09:37 PM
SENATOR BUNDE joined the committee.
JIM MERY, Doyon, Limited, said they believe the Nenana Basin has
significant gas and maybe some oil resource, as well. He said
they are looking at a 500,000 acre contiguous land package due
west of Nenana and the Parks Highway and consists of mostly
State of Alaska lands, some Mental Health Trust land, some
Doyon, Limited lands which they share with the village
corporation of Toghotthele, and University lands - although
these lands have a question mark in light of a recent Supreme
Court decision as far as their land entitlement. (Those lands
could just remain with the State of Alaska.) Their group has
spent about $5 million already in collecting seismic and doing
other studies. They believe the Basin has the potential of 1-6
tcf/gas. As a frame of reference, Cook Inlet has produced about
7 tcf/gas since the early 60s. So it could be a very significant
resource.
He said Doyon would be drilling a 10,500-ft. well this summer
only four miles from the town of Nenana on Mental Health Trust
lands - mostly on an existing improved right-of-way. It's very
close to infrastructure and the Interties that connect Anchorage
and Fairbanks. It would lend itself to very rapid development
were they to have success. Later in his presentation he would
focus on the job opportunities that are being created all
through the summer and what to expect with success in the coming
years.
MR. MERY explained that Doyon, Limited is an Alaska Native Land
Claim Settlement Act (ANCSA) company and it is the largest
private land owner in the state doing $150 million in business
with profits of about $16 million. They are very active in oil
field contracting, drilling, catering, security, engineering,
construction, government contracting work and a little tourism.
Their other partners are Arctic Slope Regional Corporation,
Usibelli Energy, and Rampart Energy.
1:12:43 PM
JAMES DODSON, Rampart Energy Company, said this company was
formerly known as Babcock and Brown Energy, and was formed in
1990. It's a privately held oil and gas exploration and
production company. They have productions in five states, and
are excited about "the idea that we're going to be drilling out
there in about two months."
He moved on to the graphic of Nenana Basin. Nunivak 1 is their
first location 4.5 miles west of the town of Nenana and it's a
little over 800 sq. miles. The largest single part of it comes
from a State of Alaska exploration license issued in 2002. The
exploration block includes Doyon and Mental Health Trust lands.
They have good pipeline or right-of-way access via the Parks
Highway.
1:15:28 PM
MR. DODSON said they are looking at drilling a 10,500-ft.
exploratory well this summer; it will be manned by Doyon
Drilling using its Arctic Wolf rig. Equipment has already been
pre-positioned across the river. Personnel camps are being
provided through Black Gold and Taiga Ventures; a lot of civil
work is under way by Bryce and Arctic Construction.
The group is looking at providing 100-120 jobs this year at
varying stages of the project - 30 jobs through road
construction, 25 additional jobs hauling the rig from the North
Slope and back to the North Slope later in the year. The
drilling rig will provide around 50-80 jobs. Other positions
will include support personnel like catering, housekeeping and
road maintenance.
1:17:24 PM
The prospect could potentially have "an absolute dry hole up to
as much as 200 bcf/gas," and the median case would be 60
bcf/gas. Mr. Dodson said, "What I want to convey to you with
that is we're just starting out now on a half-million acre-plus
sized block with a 2,000 acre prospect."
MR. MERY said they will use one of the smaller rigs in a fleet
of seven, an Arctic Wolf rig, that is used specifically for
these types of operations - exploration drilling in remote parts
of the state.
SENATOR THERRIAULT asked what might be the upper end of the gas
they would hope to find and if they found it, what steps and
time would it take to delineate it.
MR. DODSON replied that a quick answer would be that they would
have enough reserves and proven gas deliverability by 2013 to
justify building a pipeline into Fairbanks. Shorter term, they
anticipate selling electricity into the Interties from natural
gas fired generators.
1:20:21 PM
MR. MERY again pointed out the great access to bring a pipeline
to Fairbanks, for instance, as well as power generation. Not
having to go through federal lands and parks makes it a lot
easier to develop if they do have early success.
1:20:32 PM
SENATOR MEYER joined the committee.
1:20:53 PM
MR. MERY said the core target market has always been bringing
pipeline gas to the Fairbanks/North Pole area. A critical
element to making gas a reality from a place like Nenana is the
need for industrial users. So, Golden Valley and refineries are
an essential piece. Everything is on distillates in Fairbanks
today; 10-15 bcf/yr. is really the market. Heating, power
generation and refineries are the components, and you need about
a 15-20 supply of gas at 10 bcf/yr. to justify a private sector
pipeline. So 150-200 bcf/total is the resource they would need.
So at 200 bcf they "are swinging for the fence."
Fairbanks today imports 40-70 Mw of power each day; it's
increasingly more expensive, and not as reliable as it used to
be. The Intertie is nearby and has available space; power could
go both north and south. More could go south if the Intertie
were to be upgraded. If they found 50-60 bcf/gas they could be
in the power business very quickly.
1:23:18 PM
Increasing shortages to the Anchorage Southcentral area will be
severe; depending on who you talk to, they will need 30-70
bcf/yr. by 2015 and beyond when it gets worse. So, Nenana could
be an alternative to the bullet line from the North Slope.
Obviously they would need a much larger reserve base, but it
should be much less than the 2-3 tcf that's talked about being
needed for a bullet line from the North Slope through Canada.
Nenana isn't viewed as a long-term solution for Southcentral,
but it could very well be a medium-term, short-term solution to
when the big pipeline comes through.
MR. MERY said they could find enough gas in the next 3 or 4
years to help with that situation even though it is not a focus
today. Enstar is very interested in their project.
1:24:46 PM
He related that ARCO found the possibility of some propane in
the gas stream. Apart from delivery of propanes into the
Railbelt, Nenana is the hub of barge distribution to the entire
Yukon River drainage, and a lot of the communities out there are
part of Doyon. If there is an opportunity to give an alternative
fuel source to those communities, they would hopefully be less
expensive and a little more environmentally sound than moving a
lot of diesel.
1:25:24 PM
MR. DODSON said back in 2005, a $4.5 million 2D seismic program
was generated. The project slowed down after that because of
some production tax issues that the legislature has resolved -
to the point where Rampart has come into the project. Drilling
will start in June of this summer; if gas is found, they would
continue exploring which would entail more seismic work.
1:27:31 PM
CHAIR PASKVAN asked him to define 2D and 3D seismic.
MR. DODSON answered 2D lines are relatively largely spaced - as
much as a mile - more of a reconnaissance basis - and 3D seismic
is typically run with a seismic line every 110 ft., called "bin
sizes" where a lot more data is gathered. You can develop a very
complex 3D model of the Basin with it. 3D is typically more of a
developmental tool; once you have indications of gas, you can
spend a great deal more money on seismic trying to nail down
exactly where you want to put your next well(s).
Assuming a full-fledged development scenario, somewhere in the
2011/12 range they could potentially prove up enough reserves to
build a pipeline into Fairbanks in 2013. As their ability to
deliver gas rises, they would enter into the permitting phase
for pipeline rights-of-way to build a pipeline into Fairbanks.
1:29:44 PM
MR. DODSON said they anticipate using 50-75 people in the winter
of 2010 for the 2D and 3D surveys. They would use PGS Onshore,
CGG Veritas, and various camp services, surveyors, construction
and maintenance workers. The next phase would be the
exploration/development/drilling phase and the number of people
they would need would be a function of how many rigs were being
used. Assuming at least one working rig, they are looking at
probably 110-120 people as early as the winter of 2011.
Anticipate creating 90-100 jobs for facilities construction -
things like pipeline processing facilities and ancillary jobs
for catering and maintenance.
CHAIR PASKVAN asked if these were jobs for Alaskans.
MR. MERY responded that right now it's 100 percent Alaskan hire;
of those 32 jobs, 80 percent were from the Nenana area itself -
100 percent were from the Nenana/Fairbanks area. About half of
those jobs are Alaska Natives who are Doyon shareholders. He has
been assured that both Doyon's drill rig and ancillary services
would be 100 percent Alaska hire.
1:32:47 PM
MR. DODSON said he certainly wouldn't look at bringing in any
one from outside the state. "Right now to this point in the
project we've certainly found that people in Alaska can do
everything that this project requires." Multiple pipeline firms
will help with pipeline construction, and they anticipate at
least 50-100 people for that.
1:33:46 PM
CHAIR PASKVAN asked what size the feeder line into Fairbanks
would be.
MR. MERY replied it would be a 12-inch line costing about $110
million to get it all the way to North Pole where the industrial
users are - with stop offs in Fairbanks. They look for a 30-50
year life on a project like this.
CHAIR PASKVAN asked him to expand on the history of finding oil
in the basin.
MR. MERY replied in the 80s the state had a lease sale that was
taken up by the major oil companies. Analog studies of their
data have indicated that these are all very "gasy" basins and
some of them have significant oil production associated with
them.
CHAIR PASKVAN noted that this "drill" would go down to 10,500
ft. and asked what the prior depth of drilling was.
MR. DODSON replied that 3,000 ft. was the deepest penetration
previously in the basin. They are now focused on the deepest
core area of the basin just west of the town of Nenana.
1:37:28 PM
MR. MERY said Totek Hills wells clearly had "gas shows" that
encourage possibilities of propane.
CHAIR PASKVAN asked if there is a geological comparison of this
site as opposed to Cook Inlet, which has produced about 7 tcf
since the 60s.
MR. DODSON replied they are very correlatable strategraphically
and in terms of age. They are both tertiary-aged interior, non-
marine basins. It's important to note that the 9-10 tcf/gas
known in Cook Inlet are predominantly what they call biogenic
gas - from microbial action - basically digesting coals infused
with fresh water and releasing methane as an end product. Their
model is based on thermogenic generation of natural gas, which
is caused by shales deep enough to cause thermo-chemical
reactions that generate natural gas releases. They haven't tried
to quantify what the biogenic resource potential is in the
Nenana Basin because they really can't. The Cook Inlet Basin is
three times the size of the Nenana Basin; so if that one is
going to produce 9 tcf, then Nenana might produce 3 tcf.
1:39:57 PM
MR. MERY showed a spread of jobs they might anticipate through
developing power generation based on 40-70 MW of simple cycle
base load power. The construction phase would take about 18
months and create up to 180 jobs. Moving into operations would
create about 17 good paying jobs that would probably all be
located in Nenana.
1:40:42 PM
MR. MERY explained that this project would reduce the range for
wood bison, which is an endangered species under federal
Endangered Species Act (ESA). The Alaska Department of Fish and
Game wants to put them right in the middle of where they want to
explore and they are working with the department to locate other
more suitable places in the state to put them that are not in
conflict with impending development or get congressional action
removing them from ESA jurisdiction.
He said there was a notion that Fairbanks Natural Gas was going
to attempt to get special legislation that would pre-authorize
AIDEA to basically bond and own $250 million worth of facilities
for them to truck gas down from the North Slope. Their position
on that today is that Fairbanks Natural Gas needs to go the
AIDEA and AIDEA needs to do its due diligence process. If AIDEA
wants to advance that project, they can come back to the
legislature next year and have a fuller discussion about what is
the best use of state funds. They would have more information
then, as well, including results from their wells.
1:42:55 PM
In summary, he said, there is the possibility of a very large
gas resource in the Nenana basin and maybe oil, although a large
gas resource is not needed for several types of viable Fairbanks
projects. Infrastructure and access would allow them to move
quickly to development. Power generation by 2012 and pipeline
gas to Fairbanks by 2014; gas for Southcentral is not beyond the
realm of possibilities, and there would be a lot of job
opportunities for Alaskans.
1:43:45 PM
SENATOR THOMAS asked what if their first well is dry.
MR. DODSON answered that would be very disappointing. But, they
would reinterpret their sonic data, then go ahead and look at
other wells and other projects such as the bullet line from the
North Slope. It wouldn't condemn the project just like a
producing well wouldn't guarantee it.
SENATOR THOMAS asked why he wasn't planning on drilling the
second well in the same season.
MR. DODSON replied they thought about it, but that wouldn't be
giving themselves the benefit of knowledge gained from the first
well.
1:47:02 PM
CHAIR PASKVAN asked how many wells would have to be drilled to
prove up the field.
MR. DODSON replied getting to the point of enough reserves and
deliverability would require the ability on a daily basis to
hand gas off to a market and that is a function of rock
properties (porosity and permeability). They would have to find
permeable enough rock and put a well into a reservoir to do a
pressure draw down - flaring gas for 30 days to see what that
does to deliverability and reservoir pressure. Assuming they
could get 6 mcf/day out of a well, they could start off with 40
mcf/day of deliverability which would decline - but you only
need 20 mcf/day to serve Fairbanks - it's reasonable to say you
could start with seven wells.
1:49:06 PM
SENATOR MEYER asked the cost per well.
MR. DODSON replied the first one would cost $15 million -
multiple wells - below $10 million/ea., because a lot of one-
time costs for a drill rig would get spread over more wells.
1:50:19 PM
SENATOR MEYER said that some people think that it should be
relatively inexpensive because they have a shallow well, but the
biggest cost is mobilizing and demobilizing the rigs.
MR. DODSON responded that the 3,000 ft. Totek Hills well was a
stratigraphic test well done by Arco in the early 1980s. Doyon's
first well is designed to go to 10,500 ft., and because they are
the first deep well in this basin, they have things like a
10,000 lb. blowout preventer even though they may not need it.
They use it out of an abundance of caution.
1:51:36 PM
SENATOR MEYER asked if they just bought seismic data from Arco.
MR. MERY answered the seismic was not available for license
because it was a "group shoot," but Doyon got all the internal
Arco information.
SENATOR MEYER asked if Arco discovered gas.
MR. MERY replied that there were gas caps, that information is
also public according to the AOGCC.
SENATOR MEYER asked how the federal government can say they have
to take the wood bison.
MR. MERY replied that most of the land in the Nenana Basin was
licensed several years ago from the State of Alaska under an
exploration license, but the ADF&G is proposing to put the wood
bison out there.
SENATOR THERRIAULT said a resolution on the wood bison issue was
introduced several months ago and he hoped the hearings would
determine a different area for them or clarify what the ESA
means for Alaska. Someone suggested a 10J exemption would
protect us.
SENATOR BUNDE asked what kind of Environmental Impact Statement
(EIS) he anticipates.
1:55:42 PM
MR. MERY answered that the road building they are doing now is
all on Mental Health Trust lands. The location of the well is
probably a quarter mile from state land. Most of this access
route is along an existing right-of-way that has some prior
improvement as a winter trail.
1:57:00 PM
CHAIR PASKVAN asked him to describe what kind of mcf pricing
mechanism would make this project work, and what that success
would mean to the average Fairbanks resident and what economic
activity would that bring to Interior Alaska.
MR. DODSON replied that price at which you can sell gas is
really to a large degree a function of the rock. If he can drill
a well and it can drain because of the tremendous permeability
of the reservoir 30 bcf from one well, that's a completely
different cost structure than a situation in which he would have
to drill to get 5 bcf. Both are in the realm of possibility. If
he has to drill six wells to get the same 30 bcf/gas, his
capital costs are six times higher.
MR. MERY said at the end of the day gas would have to be priced
substantially lower than what Fairbanks residents pay for the
btu equivalent in fuel oil, which is anywhere between $15-
$20/mmbtu.
SENATOR THERRIAULT said he mentioned the changes made in the
ACES bill that gave them the same tax structure for instate use
and how that tipped the economics of their project. He asked how
much of the $20-million risk capital they will spend on their
first well be borne by the state treasury under ACES.
MR. DODSON replied that the state is an active partner in this
project at 40 -50 percent.
SENATOR Therriault said about one month ago the Governor told
Representative Kelly and him that she had asked AIDEA to start
the due diligence process and that is that process that is being
played out.
2:01:22 PM
SENATOR PASKVAN asked for closing statements by Mr. Dodson or
Mr. Mery.
MR. MERY thanked the committee for allowing them to speak and
said this is a project they are very excited about.
SENATOR PASKVAN said it holds a lot of promise for the state as
a whole and he looks forward to the results of their Juno 9
drilling process.
2:02:08 PM
SENATOR THERRIAULT asked Mr. Mery, if they were successful in
getting an informational hearing to build a record on the ESA
issues, what would he be looking for specifically with regard to
any kind assurances that there will be no problems with the wood
bison.
MR. MERY replied that the issue with 10J rule and anything
related to the ESA is that it is still subject to litigation,
which means expense and delays. Not that they disagree with
ADF&G, even if they had a 10J non-essential population status
categorization, even if there were challenges in the process you
might win, it would take time and money. Part of what Nenana is
all about is how fast it can be developed. So litigation is
their concern. They don't disagree with ADF&G on fundamentals,
but his group risks their time and money.
2:04:29 PM
SENATOR PASKVAN asked if one of the concepts relative to the
wood bison is its introduction in the Yukon Basin as compared to
the Nenana Basin.
MR. MERY replied that it's the same problem. They've encouraged
ADF&G to look at Western Alaska and the Lower Yukon as places
that could work well for wood bison. A lot of Doyon lands are in
that area.
2:05:14 PM
MR. DODSON noted that they are in contractual privity with the
State of Alaska, the Alaska Mental Health Trust and with Doyon
for their state leases and exploration license. But, their
concern would be that with the introduction of endangered
species into that basin, control of that ground could be lost to
the federal government. It could be deemed critical habitat and
subject to the Endangered Species Act. There is a limit to the
duration of their license. If they get several wells into the
project and get stopped, they will have spent $40 million for
nothing.
2:06:36 PM
SENATOR THOMAS said it might be helpful for them to explain the
nature of the state's (40-50 percent) participation in the
project.
MR. MERY responded that laws of general application apply to
people that are exploring in the more remote areas of the state
- exploration incentive credits, a program through certain types
of work that you do in certain parts of the state, and earning
production tax credits that can be cashed out with the state or
can be sold or transferred.
2:07:56 PM
SENATOR PASKVAN thanked them for the overview.
At ease from 2:08 p.m. to 2:10 p.m.
SB 159-WORKERS' COMPENSATION FUNERAL EXPENSES
2:10:47 PM
CHAIR PASKVAN announced SB 159 to be up for consideration.
JEFF STEPP, staff to Senator Paskvan, said that SB 159 makes one
simple change to AS 23.30.215(a), which refers to the death
benefit in workers' compensation (WC) that says:
If the injury causes death, the compensation known as
a death benefit is payable in the following amounts to
or for the benefit of the following persons:
This bill addresses section one saying that reasonable and
necessary funeral expenses are increased from $5,000 to a more
appropriate level of $10,000 based on 2009 funeral costs.
2:12:48 PM
SENATOR BUNDE asked how many workers have been killed on the job
and received a death benefit in the past few years.
JEFF STEPP replied that the established cases of workers'
compensation fatalities varied from a high of 39 in 2002 to a
low of 15 in 2006 over the 10-year period in his chart. Last
year it was 29.
2:15:13 PM
MIKE MONAGLE, Program Coordinator, Division of Workers'
Compensation Benefit Guaranty Fund, further clarified the report
saying he puts these reports together every year. A fatality
includes funeral costs as well as death benefits being paid to
the survivors. The cases on the top are actual fatalities that
occurred during that fiscal year; the number on the bottom are
those fatality cases that the insurance companies continue to
pay death benefits on.
2:17:09 PM
SENATOR BUNDE asked the fiscal impact to the premium of doubling
funeral benefits.
TRENA HEIKES, Director, Division of Workers' Compensation, said
she would look into getting those figures, but multiplying the
additional $5,000 times the number of deaths would give them the
impact on the insurance company. She said, "Given that small
number, I think that would be negligible...."
2:18:39 PM
SENATOR MEYER asked if it would depend on the type of business.
MS. SCAVARA replied that it would depend on the business,
because Workers' Compensation premium is based on the risk
associated with that industry times the payroll.
2:19:25 PM
KEVIN DOUGHERTY, Alaska Laborers, supported SB 159. He clarified
that 26 fatalities happened in FY 2000, and that works out to
$120,000-$130,000. The system cost $226 million, and that works
out to less than 1000th of 1 percent. So, they are probably
talking about negligible impact. Everyone would probably agree
that when a family has a fatality, they want to have a good
funeral. He faxed specific costs to the committee of funeral
costs in various areas; in Fairbanks for example, a traditional
funeral costs $7,940 plus a headstone for about $1400 to $7000;
so the $10,000-figure is certainly reasonable.
2:22:52 PM
CHAIR PASKVAN closed public testimony.
SENATOR THOMAS moved to report SB 159 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried.
At ease from 2:23 p.m. to 2:25 p.m.
SB 163-MAXIMUM BENEFIT FROM FISHERMEN'S FUND
2:25:47 PM
CHAIR PASKVAN announced SB 163 to be up for consideration.
JAKE HAMBURG, staff to Senator Paskvan, said SB 163 updates the
Alaska Fishermen's Fund limit to $10,000, which would bring the
program back to providing a meaningful level of assistance as
the payer of last resort for commercial fishermen and crew that
sustain injuries while fishing.
The Alaska Fishermen's Fund was established in 1951 to provide
for the treatment and care of Alaska licensed commercial
fishermen and crew who are injured while fishing onshore or
offshore. The upper limit on claims in the fund has remained
$2,500 since 1959. If this had been adjusted for the CPI it
would be worth about $18,229 today. Health care costs have
steadily risen and the fund is financed from revenue from each
resident and non-resident commercial fishing license and permit
fee. In 2008 there were 13,706 commercial fishing permit holders
including 135 in the Fairbanks North Star Borough. The account
has grown to $11.5 million due in part to continuing
improvements in fishing industry safety.
2:28:00 PM
SENATOR BUNDE asked if the limit was $18,229 adjusted for
inflation why they are only asking for $10,000.
MR. HAMBURG replied that typical claims were looked at as well
as a sustainable number for the fund to maintain and $10,000
seemed to be that number.
2:28:53 PM
JERRY MCCUNE, United Fishermen of Alaska, said this is a
dedicated fund on program receipts that go the Department of
Revenue and is administered by Fishermen's Fund board and the
Department of Labor and Workforce Development (DOLWD). The
$10,000 is a place to start while looking at how many claims
come in. He remarked that the previous amount of $2,500 was only
worth $345 in today's prices. This would give a little certainty
to the fishermen, the clinics and the hospitals to not have to
go the appeals process to get funds. He explained that fishermen
pay up to 39 percent or $50 as a permit holder, a crewman would
pay $23.40 out of their crew license for a total of about $1
million per year. Administrative costs run $307 per claim.
2:31:13 PM
SENATOR BUNDE said it seems like this is a trial balloon, and he
asked if it doesn't negatively impact the fund, would they ask
for a greater increase.
C
MR MCUNE replied that he would have to sit down with the board
again and negotiate those numbers. Permit holders used to pay a
bigger amount, for instance. He would have to look at ways of
supplementing the fund more. It's true; they want to look at it
for a couple of years first.
2:32:16 PM
BOB THORSTENSON, Alaska Seine Boat Owners, supported SB 163. He
illustrated the need for the increase by pointing out that he
lost his front teeth when a big block hit him in the face a few
years ago. Fixing it cost about $6,000 and there was a $2,500
cap. While he was able to make up the difference, a younger
skipper with no savings would be badly burdened. Five years ago
he lost part of his finger in another accident which cost
another $6,000. He said the $2,500 as a limit is becoming more
obsolete.
He said they are working with the DOLWD and the Fishermen's Fund
board on some other regulatory and administrative changes to
make this an even better program. Commercial fishermen pay their
own way, he pointed out.
2:35:33 PM
JIM HERBERT, commercial fisherman from Seward, supported this
bill. He served on the Fishermen's Fund Board for 12 years and
thought this was a wise change. The essence of the program is
fishermen helping fishermen. Over time they may see some changes
but given his experience with the fund, he didn't think the
changes would be drastic. It doesn't take much to spend $2,500
in the ER; this is something that can really benefit people.
2:37:01 PM
CHAIR PASKVAN closed public testimony.
2:37:29 PM
SENATOR THOMAS moved to report SB 163 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried.
2:38:11 PM
SENATOR PASKVAN said he felt it appropriate today on the 50th
anniversary of statehood, that the committee should pass this
bill, making the first change to the statute since statehood.
There being to further business to come before the committee
Chair Paskvan adjourned the meeting at 2:38 p.m.
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