Legislature(1993 - 1994)
03/01/1994 04:10 PM Senate O&G
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE SPECIAL COMMITTEE ON OIL & GAS
March 1, 1994
4:10 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Bert Sharp
Senator Judith Salo
MEMBERS ABSENT
Senator Rick Halford
Senator Al Adams
COMMITTEE CALENDAR
Confirmation Hearing for Tuckerman Babcock to the Alaska Oil
and Gas Conservation Commission
HOUSE BILL NO. 384
"An Act eliminating the temporary character of alternative
procedures available to persons who must show evidence of
financial responsibility before conducting noncrude oil
operations; and providing for an effective date."
SENATE BILL NO. 169
"An Act authorizing an extension of the exemption from the
levy and collection of the tax imposed on certain oil and gas
pipeline transportation property during the period of pipeline
construction, and amending the definition of `construction
commencement date' applicable to that tax; and providing for
an effective date."
PREVIOUS ACTION
HB 384 - No previous action to record.
SB 169 - See Community & Regional Affairs minutes dated
4/20/93.
WITNESS REGISTER
Tuckerman Babcock
Anchorage, Ak.
POSITION STATEMENT: Confirmation Hearing.
Larry LaBolle
c/o Representative Foster
State Capitol
Juneau, Ak. 99801-1182
POSITION STATEMENT: Commented on HB 384.
Ray Gillespie
Petro Marine, Crowley Marine, Delta Western
9478 Riverbend Court
Juneau, Ak. 99801
POSITION STATEMENT: Supported HB 384.
Clyde Benson
Oil and Gas Property Tax Assessor
Department of Revenue
550 W 7th Ave.
Anchorage, Ak. 99501
POSITION STATEMENT: Commented on SB 169.
Doug Griffin, City Manager
Valdez, Ak.
POSITION STATEMENT: Opposed SB 169
Donna Fisher
Valdez City Council
Valdez, Ak.
POSITION STATEMENT: Opposed SB 169.
ACTION NARRATIVE
TAPE 94-4, SIDE A
Number 001
SENATOR LEMAN called the Special Committee on Oil and Gas
meeting to order at 4:10 p.m. and announced they would first
have the confirmation hearing for Tuckerman Babcock to the
Alaska Oil and Gas Conservation Commission.
MR. BABCOCK said the Commission's responsibilities relate to
the prevention of waste and protection of correlative rights,
improving ultimate recovery, and protection of fresh water
aquifers.
He said he brings to the Commission a general government
background. He said his role is to be a judge rather than a
technician with the primary qualifications of fairness and
discretion.
SENATOR LEMAN asked if he thought the non-technical member
position was important to the Commission. MR. BABCOCK thought
it was important to have one member whose background was with
public fairness, in general, and government.
Number 163
SENATOR LEMAN asked how the role of the public member impacted
decisions like gas flaring. MR. BABCOCK responded that the
oil companies themselves have definitions for the categories
they use. The Department of Revenue and the Oil and Gas
Conservation Commission have statutes and regulations. He
would try to bring a uniform approach that wouldn't increase
paper work and that everyone would understand. With the gas
flaring issue the Commission was mainly concerned with waste
and noted they were not dealing with a large percentage of
volume.
SENATOR LEMAN apologized for interrupting Mr. Babcock's
testimony and said the Committee needed to take action on a
bill while there was a quorum present. He announced HB 384
(FINANCIAL REQMTS: NONCRUDE OIL OPERATIONS) to be up for
consideration.
REPRESENTATIVE RICHARD FOSTER, sponsor, said his Aide, Mr.
LaBolle, would explain HB 384.
LARRY LABOLLE, Aide for Representative Foster said HB 384
eliminated the sunset clause in current statute that requires
direct action insurance for non-crude operators. He said DEC
did support this concept.
RAY GILLESPIE, Petro Marine, Crowley Marine, Delta Western,
testified that this legislation is essential to continue their
non-crude operations in Alaska. They unanimously support the
legislation.
Number 284
SENATOR SALO moved to pass HB 384 from Committee with
individual recommendations. There were no objections and it
was so ordered.
SENATOR LEMAN announced they would continue now with Mr.
Babcock's testimony.
SENATOR SALO asked if he was familiar with the key oil and gas
legislation and if he had thoughts regarding it.
MR. BABCOCK said the Chairman was their official spokesman and
declined to comment on any legislation. He said, however,
their concern was with reservoir management. He hoped the
legislature would fund their budget to cover hiring an
engineer who was an expert in co-mingling issues and the rest
of their funding for the CIP who could analyze the impact of
gas sales from Prudhoe Bay and surrounding fields which was
only partially funded last year.
MR. BABCOCK asked a philosophical question if they thought not
developing gas that was in the ground, because of federal or
other agency constraints constituted "waste." SENATOR LEMAN
answered that he would consider it waste if they brought it
to the surface, but couldn't utilize it.
MR. BABCOCK said the Oil and Gas Conservation tax is 4 mills
per barrel. It raises more money than the budget of the
Commission by about $400,000 to $500,000. He suggested the
legislature consider appropriating the full amount of the tax
to the Commission, but only authorizing that which they
predict they will need so the rest of the money would be
available for an emergency. Now there is no leeway to
investigate reservoir issues.
SENATOR LEMAN thanked him for the suggestion and said the
legislature would take up confirmations probably in April.
SENATOR LEMAN announced SB 169 (TAX EXEMPTION: CERTAIN
PIPELINE PROPERTY) to be up for consideration.
SENATOR DONLEY said SB 169 was an incentive to get oil and gas
pipelines started. It makes sense to exempt oil and gas taxes
earlier as this bill does, because of the nature of the oil
and gas property tax, he said. When you start stockpiling
materials to do the project, you immediately incur tax
liability on that property which has to be financed, because
there is no revenue stream.
Number 459
CLYDE BENSON, State Oil and Gas Property Tax Assessor,
explained the fiscal note. Page 1 stated there is no revenue
impact, since passage of the bill would not require them to
do anything. The second page deals with the amount of tax
revenue lost.
SENATOR LEMAN noted that Senator Donley contended that the
bill would encourage development which could conceivably
offset the loss of revenue to the state. MR. BENSON said that
might be the case, but they have no way of measuring it.
SENATOR DONLEY explained that the guidelines for the
Department to approve this exemption require the economic
activity attributed to the earlier construction due to the
approved exemption would have to be greater than the loss of
revenue to the state for them to even consider granting it.
DOUG GRIFFIN, City Manager for the City of Valdez and DONNA
FISHER, member of the City Council, testified that the city
of Valdez passed a resolution in opposition to SB 169. MR.
GRIFFIN explained that Valdez has been the beneficiary of an
earlier pipeline and would be very supportive of a gas
pipeline, but they are concerned with the impacts that would
occur on municipal services during a construction phase and
their inability, perhaps, to raise adequate revenues to
provide necessary public safety and health facilities. He
suggested the state could forego its revenues, but not take
on the power to exempt municipal ability to raise revenues.
MS. FISHER concurred with Mr. Griffin's testimony. She added
that one thing they did experience during the pipeline days
was the loss of revenue from people moving out. She noted
that other funding sources were being cut back, as well.
SENATOR SALO asked if Valdez had a sales tax. MS. FISHER said
it doesn't.
MR. GRIFFIN said they were concerned with the state mandating
exemptions and not providing any kind of reimbursement.
SENATOR DONLEY suggested that a sales tax would give them a
more diverse economy.
TAPE 94-4, SIDE B
Number 585
SENATOR DONLEY explained that the system is really unfair to
the state as it is now, because it doesn't get appropriate
revenue for doing some of the functions it does in regulating
the industry in their city and the City of Valdez is getting
the money from the oil and gas property tax.
MR. GRIFFIN replied that argument would have a lot of merit
if it didn't go back to the fact that Governor Sheffield
entered into this agreement which provided that Valdez would
loose its tax base faster without any input from the City of
Valdez.
He compared their situation to other communities that also
rely on one industry, like the fisheries industry. They are
not singled out or treated the same way as the oil and gas
industry is handled in Valdez.
SENATOR LEMAN said they should be able to tax any additional
property values resulting from increased population and
development.
Number 543
SENATOR DONLEY said he was not unsympathetic to their
situation and it seems like there should be some middle ground
where they could allow for some local taxation, maybe at a
reduced level.
SENATOR LEMAN said they would look favorably upon something
like that. He said they would hold SB 169 in Committee and
continue to work on it. He then adjourned the meeting at 5:03
p.m.
| Document Name | Date/Time | Subjects |
|---|