Legislature(1995 - 1996)
04/15/1996 03:55 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
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SENATE RESOURCES COMMITTEE
April 15, 1996
3:55 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Drue Pearce, Vice Chairman
Senator Robin Taylor
Senator Georgianna Lincoln
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Rick Halford
Senator Steve Frank
COMMITTEE CALENDAR
SENATE BILL NO. 318
"An Act authorizing, approving, and ratifying the amendment of
Northstar Unit oil and gas leases between the State of Alaska and
BP Exploration (Alaska) Inc.; and providing for an effective date."
SENATE BILL NO. 180
"An Act authorizing the commissioner of the Department of Natural
Resources to negotiate and enter into timber sale contracts that
provide for local manufacture of high value-added wood products;
and establishing an Alaska Forest Products Research and Marketing
Program within the Department of Commerce and Economic
Development."
CS FOR HOUSE BILL NO. 447(RES)
"An Act relating to traditional means of access for traditional
outdoor uses and to the classification and the sale, lease, or
other disposal of state land, water, or land and water."
PREVIOUS SENATE COMMITTEE ACTION
SB 318 - See Resources minutes dated 3/29/96, 3/30/96, 4/3/96,
4/11/96, and 4/13/96.
SB 180 - See Resources minutes dated 4/10/96.
HB 447 - See Resources minutes dated 4/12/96.
WITNESS REGISTER
Jerry Hood
Teamsters Local 959
43000 Boniface Parkway
Anchorage, AK 99510
POSITION STATEMENT: Commented on SB 318.
Jerry McCutchon
121 W. 11th Ave.
Anchorage, AK 99501
POSITION STATEMENT: Commented on SB 318.
Mike Bruner
341 E 23rd Street
Anchorage, AK 99503
POSITION STATEMENT: Commented on SB 318.
Gary Ackerman
P.O. Box 72079
Fairbanks, AK 99707
POSITION STATEMENT: Commented on SB 318.
Duane Anderson
General Delivery
Palmer, AK 99645
POSITION STATEMENT: Testified in opposition to SB 180
Erik Holland
427 First Ave., #915
Fairbanks, AK 99701
POSITION STATEMENT: Testified in opposition to SB 180
ACTION NARRATIVE
TAPE 96-55, SIDE A
Number 001
SB 318 NORTH STAR OIL & GAS LEASE AMENDMENT
CHAIRMAN LEMAN called the Senate Resources Committee meeting to
order at 3:55 p.m. and announced that there wasn't yet a quorum.
However, he said they would continue to take public testimony on SB
318 .
The following is a verbatim transcript of the public testimony
taken on SB 318.
JERRY HOOD:
Thank you, Mr. Chairman. First of all I'd like to thank
Senator Pearce, I believe, for reading a letter that I sent down
into the record on Saturday and I just wanted to make a few
additional comments. I'll be as brief as possible.
Our main concern is in the AFLCIO and also my own
organization, the Teamsters Union, is the issue of Alaskan hire.
And some reports over the weekend have indicated that the
administration has formed a working group to help solve these
problems with the industry. We have heard from the industry for
years that it is going to strive to improve its local hire record.
The numbers coming out of the Department of Labor do not support
that record has in fact been improved and we would only request the
committee and the legislature that until we see those numbers go up
and we see the proof in the pudding that relief not be granted in
any further areas until we see Alaskans benefiting directly from
employment opportunities in the oil patch before the industry is
granted relief.
In some hearings I have attended in the past two or three
weeks with this committee and with Labor and Commerce we're hearing
some new buzz words called competitive hire - Alaskan competitive
hire. Those of us in the labor community interpret that to mean
that if Alaskans are willing to work for less, then they will be
hired. If they're not willing to work for less, then we will
continue to go to Oklahoma, Louisiana, Mississippi, or Texas to
find employees that will. That, to say the least in our opinion,
if our interpretation is correct, is repulsive. We have heard
testimony in front of committees that says that while in some areas
we cannot find skilled employees to perform the duties that we need
to have performed and the two instances that were given were
electrical workers and welders. Well, we do have skilled
electricians in this State that are more than competent to provide
the work that is needed and we have competent welders in this
State. They happen to be union electricians and union welders and
if that's the problem then the industry needs to sit down with the
respective unions and crafts and work out a deal where we can make
those people available on a "competitive basis."
But competitive for Alaskan standards, not lower 48 standards.
That's the additional comments that I would have at this time. And
just urge this committee and the legislature to weigh this very,
very carefully, because as we all know there is a lot at stake here
and I find myself in a very difficult position. Because many of
people sitting behind me are my friends and on four different
occasions those within the industry and I and the other
representatives of organized labor have worked together to
accommodate both sides. So it's difficult for me to sit here and
take a rather hard line position with regard to relief being sought
on North Star, but we have no other choice until our concerns are
met and rather than bet on the come, if you will, we want to see
those concerns met and then we can support relief in that area.
CHAIRMAN LEMAN:
I have a couple questions. One is is labor willing to
negotiate in good faith about those rates. I mean, that's what I
heard in your testimony. I mean if you're willing to do more than
just talk about Alaska hire and say well, these are our rates and
then if you're told you can't compete at those rates, you're
actually willing to go with a package deal or however...
MR. HOOD:
One, you've opened up and avenue here. We have not used the
P word yet, and when I say that we're talking about project labor
agreements. That is one avenue that we believe constitutionally
the legislature could require a PLA for Northstar and other leases
throughout the State which would enhance Alaska hire
constitutionally. You can put certain provisions in legislation
that calls for project labor agreement and then mandate through
that legislation that the project labor agreements call for certain
things.
One of the things that I personally think needs to be
contained in any project labor agreement that we negotiate in the
future is to enhance native recruitment and native hire and rural
hire and rural recruitment for jobs in the oil patch. But I think
with regard to negotiating with employers, whether they be oil
related or not, I think the record speaks for itself. In the last
North Slope agreement some great accommodations were reached with
regard to productivity efficiencies and safeties, namely in the
area of composite crews. And we think that the productivity
numbers since 1994 when that agreement was entered into have
increased greatly.
So, yes, I can say that organized labor is more than willing
to sit down and negotiate with employers for a competitive labor
package. Now that is not to say that we are going to crawl in the
gutter with nonunion and go to those rates. Because if you want
skilled trades and craftsmen, you're going to have to pay for that
skill and ability.
One of the things that I read in a press release by the
administration when they formed this working group was that the
State was going to throw some money at training and the oil
industry was going to throw some money at training and the question
I had with regard to that was we've got a tight budget now. Why is
the State going to throw more money at it and why are the oil
companies going to throw more money at it. The pipefitters have a
training school, the electricians have a training school, the
laborers have a training school, the Teamsters do and so do the
rest of the skilled crafts. We can bring that avenue to the party
to help reduce costs and get skilled and trained craftsmen for
those jobs up there. So, yes, to answer your question. I'm sorry
to take so long, but yeah, we're willing to sit down and negotiate
a fair deal with the industry.
CHAIRMAN LEMAN:
Do you have any informal agreements with this administration
or with industry regarding PLA's on this project?
MR. HOOD:
No. Today? There has been discussion that organized labor
would receive about, we understand, 40 percent of the work with
regard to Northstar. We have a written agreement in talking with
the AF of L president with regard to North Slope work for 50
percent of new construction. We're having some difficulty
understanding whether this is new construction or because the
number we've been quoted is lower than 50 percent because it's off
shore. We don't know where we stand. There was a meeting that
occurred in Anchorage today. It did not go well in a discussion
with the industry and....We're attempting to make inroads as best
we can and we're not meeting with a lot of success.
CHAIRMAN LEMAN:
Commissioner Shively on Saturday just said that the
administration hadn't taken a position on that and I was just
wondering if you had had those discussions and if your
understanding was any different from that with anybody else in the
administration.
MR. HOOD:
I'm sorry, what did Commissioner Shively say?
CHAIRMAN LEMAN:
He said that the administration had not taken a position on
PLA's.
MR. HOOD:
I believe that to be true.
CHAIRMAN LEMAN:
That's consistent with your understanding?
MR. HOOD:
Yes.
CHAIRMAN LEMAN:
O.K. any further questions? In Anchorage, Jerry McCutchon.
JERRY MCCUTCHON:
Thank you, Mr. Chairman. For the record, my name is Jerry
Mccutchon.
I have a lot of questions on this. One was the labor and two
was the fact of what it does to the state's contracting. It throws
everything in a trash basket. It says, you know, a contract with
the state of Alaska is meaningless. A guy can go throw an awful
lot work and get a bid, and somebody will make a crazy bid, then
somebody else will buy him out, and they'll negotiate something for
a lot less. Thought that's kind of dumb
BP has refused to hand out or give out what the original oil
in place is. There's no reason for withholding that information.
That information should be available. We should know the depth of
what the oil is in place. We should know the depth of the pay
stream. We should know where it's at. We should know the GOR; I
understand it's around 4,100 - 4,200 cubic feet of gas per barrel
oil. We should know how much gas is in the gas cap, but they want
to withhold that. We should know the composition of the gas. We
should know how much gas they're going to flare, but they want to
withhold that. We want to know where the gas is going to go. Is
it going to reinjected, and, if so, where, but they withhold that.
They have said that the oil is around 43 [indisc.] oil. That's
like back up your truck and we'll pour it in straight. Why do they
need 60 square miles for only 130,000,000 barrels of recovery.
There was a group shoot in the late 1970's and they found 12
structures larger than Prudhoe Bay offshore Alaska. Is the North
Star one of them? Where are the 12 structures? We don't know.
Don't you think we ought to find out before we start giving things
away.
And now BP hasn't been straight. These are the people who
lied and said there were 9.6 billion barrels of recoverable oil
when they told Congress it was 15 billion barrels of recoverable
oil, and the difference between the two was the gas line, so they
hid 5 billion barrels of recoverable. You know, it's their
corporate responsibility to lie to us, you know, and it's our
responsibility to see that we don't get lied to, that we find out
what the facts are.
This is the company that was going direct from Cold Bay when
after they first started production, and except for a state
contractor who had been hired through the president of the Senate,
at that time Chancy Croft, they wouldn't have done it. But he blew
the whistle and said, "Hey, you've got to water flood it, and,
okay, so they water flooded. We've could have got less than 5
billion barrels of oil, or around 5 billion barrels of oil.
There's 17 billion barrels of recoverable oil in that reservoir,
right now 9 of it's gone by now, and somewhere somebody should say
"Hey, how come you guys are only telling us 13?"
CHAIRMAN LEMAN:
Does that complete your testimony?
MR. MCCUTCHON:
No, I'd like to go on, if I might.
CHAIRMAN LEMAN:
Please proceed.
MR. MCCUTCHON:
Well, I think this contracting business and what a contract
means and doesn't mean is extremely important. So is the labor
issue, and I don't know who you have down there, but you raised the
question about, you know -- they keep telling us over and over it's
going to be Alaska hire, but the most closest you get to it, they
hire somebody from outside, he's there 30 days and then they call
it Alaska hire.
And we really do need to know: where are those 12 structures
at, what are the size of the structures, was this area covered in
that group shoot? We should know these things. It seems very,
very strange that we would give this thing away and decrease the
amount of oil, but we show know what is the contract between
Amerada Hess and BP. And if we do get to see a contract between
Amerada Hess, is that the only contract, or could there be another
somewhere else where Amerada Hess' large refinery in the Caribbean
will be fed by BP's oil coming out of Columbia, and we'll never
know what's going on. There is just question after question that
is out there, and I'd like to know.
There was $1.6 billion worth of cost overruns on this
pipeline. BP was owed more than 50 percent of Alyeska Pipeline
committed it. They got cap cuts red-handed, you know, with letters
read and destroy in it, and we got stuck paying for it. You know,
it's their corporate responsibility to get away with whatever they
can, and they got away with a pipeline tariff, which the APUC staff
estimated that we had lost $5 billion by 1987 and would lose $40
billion by 2010. Well, the Maynard, Bob Maynard, who negotiated
the deal for the State of Alaska said that's not true. He said we
only lost $2.5 billion by 1987. Well, that's still $20 billion by
the year 2010. Now we keep giving this stuff away and we then we
can't say we can't afford this and we can't afford that. It seems
life the first thing we can take money away from it is the people
who monitored the oil industry, both on the legal end, the tax end,
and from the people over in the Oil and Gas Conservation
Commission.
They've got brand new $500,000 3-dimensional model in probably
around 19 years, around that period of time. And what do they do
with? They've barely turned it on. They never once bothered to
turn it on to find out how to maximize production on Prudhoe Bay.
They never once turned it on to confirm the $15 billion that BP and
Exxon admitted to Congress was principal. They just didn't do any
of that. We got had.
And now they're out doing it and I understand another computer
model for Prudhoe Bay. I don't know where it's at or what its
status is, but they've been going to do it now for about the last
year. And that was a $900,000 model. Nobody knows. Did anybody
turn it on? Did anybody turn it on to this particular reservoir?
How did we get the information on this reservoir. BP won't talk
about it and we go to the Oil and Gas Commission and they say it's
privileged information. BP doesn't want us to release it.
I think I've made my point. We've taken nothing but a beating
from these people and it's their corporate responsibility to beat
up on us. We have got to sit back and say, hey, no. We have to
know all the facts.
Is Northstar, that 60 square miles of Northstar, is that one
of those small structures that's larger than Prudhoe Bay? If not,
then what happened to all structures and what's the size of the
structure that Northstar is sitting on.
Thank you, Mr. Chairman.
CHAIRMAN LEMAN:
Thank you, Mr. McCutchon, I'll note that we have been joined
by Senator Pearce.
MIKE BRUNER :
I was doing some research at the library and I was wondering
if people were aware that we're within the, say, one or 200,000
barrels a day of the same oil production as Kuwait? I think theirs
is 1.8; ours is about 1.6 or .7 million barrels a day. And another
interesting point like in the information on there - is that Kuwait
has like approximately 2 million population, but 39 percent are
international. So that's 600,000 and that just coincides with the
population of Alaska.
But then reading more information about Kuwait they all work
for their government. I they import people to do their blue collar
jobs and they free medical, free dental, free legal. Their
permanent fund, I think that's where Hammond got the concept for
ours with like 80,000. Ours is like a 23,000. They have free
college and all we ever hear about in our newspapers is that we
have to cut back the budget and we have to give up this, we have to
privatize Pioneer Homes, we have to raise the prices at the Pioneer
Homes to $6,000 a month and I just wanted to make people aware of
that.
Thank you.
CHAIRMAN LEMAN:
Thank you, Mr. Bruner. Is there anyone else on the
teleconference network who wishes to testify on SB 318?
GARY ACKERMAN:
This is Gary Ackerman from Fairbanks. I'm in favor of this
bill. I've been a resident of Fairbanks since 1946 and a real
property tax payer since 1960. The main thing I'm in favor of on
it is the construction of the modules in State and resident hire on
the work. I think we need these. These are base jobs. These are
the jobs that support the economy and the retail businesses and
food industry. The money kind of circulates. Our taxes just keep
going up and up and jobs like this, you know, it wouldn't be so bad
if we had a way to pay them. I think it should be a requirement,
not just a willingness on BP's part, to do this work instate.
CHAIRMAN LEMAN:
Gary, does that complete your testimony?
MR. ACKERMAN:
Those are most of the things...We did this in our right-of-way
leasing bill out at [indisc]. That was a provision on that, you
know, we use Alaska hire to the maximum extent possible. It was
considered part of the lease regs. You know, jobs created within
the state. This is something that a lot of states do on their
resource development. They consider the value of the jobs as part
of the value received for the resources. I think we should
consider it. Also, I don't have any objection to leases of this
type getting the same treatment. I think we should develop and I
think it is a good concept.
CHAIRMAN LEMAN:
Thank you, is there anyone else in Fairbanks who wishes to
testify on SB 318?
[END OF VERBATIM TESTIMONY]
There being no further testimony, CHAIRMAN LEMAN closed the hearing
on SB 318.
Number 350
SB 180 VALUE-ADDED TIMBER SALES; MARKETING
CHAIRMAN LEMAN brought SB 180 before the committee as the next
order of business. He noted there was a proposed Resources CS,
however, there were not enough committee members present to adopt
the committee substitute.
DUANE ANDERSON, testifying from the Mat-Su Legislative Information
Office in opposition to SB 180, said part of continuing problem
the lack of boreal forest knowledge, expertise and experience
within almost any level of state management of the timber industry.
When people are put into the upper levels of decision making and
regulatory creation, etc., that have almost no knowledge of this
area so things continue to go from bad to worse. He commented that
Governor Knowles recently created a resource marketing group, and
the people on that group that had any timber experience were very
marginally capable or familiar with most of the industry.
Mr. Anderson said the state timber sale program is not effective,
and, additionally, we are not very quick to realize what we can do
to close the gap. He said the legislation is intended to provide
wood for the value-added industry within the state, but he believes
this proposal will accomplish exactly the opposite.
He noted the legislation provides that a timber sale contract may
provide for a harvest of up to 20,000,000 board feet of timber,
which, he said, is a whopping big sale that requires a tremendous
amount of infrastructure expense for a logger or anybody proposing
to take on the sale. He suggested there isn't more than maybe one
or two current operators in Alaska who could even handle a sale of
that size.
In closing, Mr. Anderson said he lauds what the governor is trying
to do, but this is not the way to go. He sees very little of the
bill that he considers constructive, and he urged that it not be
passed out of committee.
Number 526
CHAIRMAN LEMAN noted the committee adopted a version "c" committee
substitute in February, but a new version "g" was now before the
committee for its consideration.
Number 537
ERIK HOLLAND, testifying from Fairbanks, voiced his agreement with
the previous speaker's comments. He said he conducted an informal
poll in Fairbanks which indicates that the public in Fairbanks is
not in support of a large scale timber harvest. He also suggested
that the export of raw logs should be stopped before increasing
timber harvest.
There being no further testimony on SB 180, CHAIRMAN LEMAN closed
the public hearing on SB 180 and stated it would be set aside until
the committee had a quorum and could take action on it.
Number 584
CSHB 447(RES) PROTECT ACCESS FOR TRADIT'NL OUTDOOR USES
CHAIRMAN LEMAN brought CSHB 447(RES) before the committee. He
pointed out that the legislation is similar to SB 230 (MANAGEMENT
OF PARKS & RECREATIONAL AREAS). However, because the committee
lacked a quorum, he stated the bill would be held over for final
action.
There being no further business to come before the committee,
CHAIRMAN LEMAN adjourned the meeting at 4:55 p.m.
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