Legislature(2013 - 2014)BUTROVICH 205

01/24/2014 03:30 PM Senate RESOURCES


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03:32:42 PM Start
03:33:53 PM Overview: Department of Natural Resources
04:54:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Dept. of Natural Resources TELECONFERENCED
Commissioner Joe Balash
Deputy Commissioner Ed Fogels
Deputy Commissioner Bob Swenson
-- Testimony <Invitation Only> --
Bills Previously Heard/Scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        January 24, 2014                                                                                        
                           3:32 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Peter Micciche                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lesil McGuire                                                                                                           
Senator Anna Fairclough                                                                                                         
Senator Click Bishop                                                                                                            
Senator Hollis French                                                                                                           
Senator Fred Dyson, Vice Chair                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: DEPARTMENT OF NATURAL RESOURCES                                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOSEPH BALASH, Commissioner                                                                                                     
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Presented an overview of the Department of                                                                
Natural Resources.                                                                                                              
                                                                                                                                
FRANI HAVEMEISTER, Director                                                                                                     
Division of Agriculture                                                                                                         
Department of Natural Resources (DNR)                                                                                           
POSITION STATEMENT: Participated in the overview of the                                                                       
Department of Natural Resources.                                                                                                
                                                                                                                                
CHRIS MAISCH, Director                                                                                                          
Division of Forestry (DOF)                                                                                                      
Department of Natural Resources (DNR)                                                                                           
POSITION STATEMENT: Participated in the overview of the                                                                       
Department of Natural Resources.                                                                                                
                                                                                                                                
STEVE MASTERMAN, Acting Director                                                                                                
Division of Geological & Geophysical Surveys (DGGS)                                                                             
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
MARCIE MENEFEE, Executive Director                                                                                              
Mental Health Trust Land Office (MHTLO)                                                                                         
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
BRENT GOODRUM, Director                                                                                                         
Division of Mining, Land & Water                                                                                                
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
BILL BARRON, Director                                                                                                           
Division of Oil & Gas (DOG)                                                                                                     
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
BEN ELLIS, Director                                                                                                             
Division of Parks & Outdoor Recreation                                                                                          
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
TOM CRAFFORD, Director                                                                                                          
Office of Project Management & Permitting (OPMP)                                                                                
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
ALLISON IVERSEN, Acting State Pipeline Coordinator                                                                              
State Pipeline Coordinator's Office (SPCO)                                                                                      
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
JEANMARIE DAVIS, Director                                                                                                       
Support Services Division                                                                                                       
Department of Natural Resources (DNR)                                                                                           
POSITION  STATEMENT:   Participated  in   the  overview   of  the                                                             
Department of Natural Resources.                                                                                                
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:32:42 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:32  p.m. Present at the  call to                                                               
order were  Senators Micciche and Chair  Giessel. Senators Dyson,                                                               
Fairclough,  Bishop,  McGuire,  and   French  were  excused.  She                                                               
referenced Ch.  54 Sec.  613.1 of  Mason's Manual  of Legislative                                                               
Procedure  to   clarify  that  the  quorum   requirements  for  a                                                               
committee  do not  extend to  testimony  taken in  hearings of  a                                                               
public nature.                                                                                                                  
                                                                                                                                
^Overview: Department of Natural Resources                                                                                      
           Overview: Department of Natural Resources                                                                        
                                                                                                                              
3:33:53 PM                                                                                                                  
CHAIR GIESSEL announced the business before the committee would                                                                 
be an overview of the Department of Natural Resources.                                                                          
                                                                                                                                
3:34:03 PM                                                                                                                    
JOSEPH  BALASH, Commissioner,  Department  of Natural  Resources,                                                               
stated that  the presentation  would be an  overview of  what the                                                               
department  accomplished during  2013. He  explained that  DNR is                                                               
the primary  land manager  of 100 plus  million acres  of uplands                                                               
and 45-60 million  acres of tidelands that it  received under the                                                               
Statehood  Act.  A variety  of  divisions  within DNR  carry  out                                                               
different functions to manage different  lands according to their                                                               
resource potential.                                                                                                             
                                                                                                                                
COMMISSIONER BALASH reviewed  the department organizational chart                                                               
and explained  that he asked  each division director to  speak to                                                               
their own accomplishments in 2013. He  reported that a lot of his                                                               
time was spent working on the  "Heads of Agreement" that would be                                                               
discussed starting next week.                                                                                                   
                                                                                                                                
COMMISSIONER  BALASH  relayed that  Acting  Director  of the  Gas                                                               
Pipeline  Project Office  (GPPO), Eric  Hatleberg, was  unable to                                                               
attend  the meeting  because he  was returning  from Texas  after                                                               
completing one  of the monthly  monitoring meetings for  the AGIA                                                               
licensee. These meetings  are to ensure that  Alaska is receiving                                                               
the benefits of the obligations  undertaken by TransCanada Alaska                                                               
under the terms of their AGIA license.                                                                                          
Some of  the key accomplishments  of this office  include hosting                                                               
the Alaska  LNG-17 outreach effort  describing the  advantages of                                                               
Alaska  gas commercialization  opportunities.  Mr. Hatleberg  and                                                               
his  team  were  also  able  to  contribute  technical  expertise                                                               
through  oversight and  review of  the Black  and Veatch  Royalty                                                               
Study.  In  addition,  the  team met  with  numerous  LNG  buyers                                                               
throughout the  year to maintain communication  and readiness for                                                               
future commercial  partnerships. The Gas Pipeline  Project Office                                                               
also signed  a formal,  but nonbinding,  nonexclusive, Memorandum                                                               
of Understanding  (MOU) with Resources Energy,  Inc. (REI), which                                                               
represents  a consortium  of commercial  interests in  Japan that                                                               
are  interested in  purchasing  LNG. The  original  MOU with  REI                                                               
targeted North Slope  gas in 2019, but they  have since refocused                                                               
their effort  for a smaller volume  with a supply center  in Cook                                                               
Inlet.                                                                                                                          
                                                                                                                                
3:41:00 PM                                                                                                                    
FRANI HAVEMEISTER, Director,  Division of Agriculture, Department                                                               
of  Natural Resources  (DNR), stated  that the  division fulfills                                                               
its  mission to  promote and  encourage the  agriculture industry                                                               
through a  variety of components.  She explained that  during the                                                               
summers of 2012  and 2013, the Inspection  Section conducted pest                                                               
surveys on diseases and pests  of concern to agriculture, natural                                                               
resources and international  trade. The presence or  absence of a                                                               
pest determines  treatment that  may or may  not be  necessary to                                                               
exporting a  product such as  timber. Inspections  were conducted                                                               
at  the U.S.  Canada border  in cooperation  with Customs  Border                                                               
Patrol in  an effort  to evaluate pest  pathways and  movement of                                                               
products of  concern. In FY13,  the Inspection  Section performed                                                               
timber  and  agricultural  export   certification  on  over  $143                                                               
million of timber bound for Korea, China, and Japanese markets.                                                                 
                                                                                                                                
The  Land Section  staff continues  to identify  state land  with                                                               
suitable  agriculture soils.  The  agriculture land  designations                                                               
increased  by 35,000  acres in  the Yukon  Tanana Area  Plan, and                                                               
discussions   have  continued   with  farmers   and  stakeholders                                                               
regarding the Agricultural Land Program.                                                                                        
                                                                                                                                
The Plant Materials Center is a  407 acre farm that produces seed                                                               
for grain and  native grass growers and  certified seed potatoes.                                                               
Variety  trials  were  conducted  for  onions,  asparagus,  apple                                                               
rootstock  and potatoes.  The Center  is  currently working  with                                                               
ADF&F and DEC on efforts to control the spread of Elodea.                                                                       
                                                                                                                                
The Marketing  Section increased Alaska Grown  Farm membership by                                                               
13 percent  and has  a robust  Facebook presence.  The Restaurant                                                               
Reward Program  had 21 participating  restaurants in  2013, which                                                               
increased  the  use  of  Alaska  grown by  44  percent  over  the                                                               
previous year. The number of  markets able to accept Supplemental                                                               
Nutrition Assistance Program (SNAP)  doubled in 2013, bringing an                                                               
additional $30,000 to Alaska markets throughout the state.                                                                      
                                                                                                                                
The Farm  to School  program was selected  to receive  the Alaska                                                               
Community  Service  Award for  health  for  making a  significant                                                               
contribution  to improving  the health  of Alaskans.  The program                                                               
has provided on-farm  food safety workshops to  50 producers, and                                                               
three  quarters   indicated  they  would  change   their  farming                                                               
practices  as a  result of  what  they learned  at the  workshop.                                                               
School Food Service directors indicated  that, as a result of the                                                               
Farm to  School Program,  local foods were  served more  often in                                                               
schools throughout  the state. Forty-seven of  Alaska's 54 school                                                               
districts are actively  engaged in this program and  the state is                                                               
recognized as a national leader in the use of this model.                                                                       
                                                                                                                                
The  Alaska  Food  Resources Working  Group  was  formed  through                                                               
Administrative Order 265  and HCR 1. The objective  of this order                                                               
is  to  improve the  health  of  state residents,  increase  food                                                               
security,  strengthen local  economies,  and encourage  community                                                               
development. This  group will provide recommendations  for policy                                                               
changes that will  increase the use of locally  grown food, which                                                               
will provide additional markets for Alaska producers.                                                                           
                                                                                                                                
3:45:53 PM                                                                                                                    
CHRIS MAISCH,  Director, Division  of Forestry  (DOF), Department                                                               
of  Natural Resources  (DNR), reviewed  the core  mission of  the                                                               
division, which  is to serve  Alaskans through  forest management                                                               
and  wild  land  fire  protection. He  directed  attention  to  a                                                               
picture of  Alaska wood pellets  that are produced in  North Pole                                                               
for both  residential and commercial  heating purposes.  The wood                                                               
comes from the Tanana Valley State Forest.                                                                                      
                                                                                                                                
As  a result  of  the  Governor's Alaska  Timber  Job Task  Force                                                               
recommendations, DOF  established a "Roads Office"  and hired two                                                               
logging  engineers to  help with  infrastructure development  and                                                               
access projects on state forest  lands; is promoting the proposed                                                               
Susitna State  Forest; and is using  a $2 million CIP  to develop                                                               
infrastructure to  access state forest parcels  on Gravina Island                                                               
and Edna Bay in Southeast.                                                                                                      
                                                                                                                                
In  Tok, DOF  offered a  25-year, long-term  timber sale  to help                                                               
support a heat and power  project for Alaska Power and Telephone.                                                               
The sale is for 35,000 tons  of green biomass annually, and it is                                                               
currently  available as  an over-the-counter  sale. Additionally,                                                               
DOF  sold  16,422,000  board  feet of  lumber  to  37  businesses                                                               
throughout  the state;  provided direct  and indirect  support to                                                               
105 woody biomass  projects; and continues to work  with the U.S.                                                               
Forest  Service to  implement the  2008  Tongass Land  Management                                                               
Plan  (TLMP)  to  supports  the   remaining  timber  industry  in                                                               
Southeast.                                                                                                                      
                                                                                                                                
3:49:22 PM                                                                                                                    
MR.  MAISCH reviewed  the key  accomplishments of  the Wild  Land                                                               
Fire Program:                                                                                                                   
   · Safely  and successfully  responded  to  the fourth  largest                                                               
     fire season in  the past 10 years and second  largest in the                                                               
     past 5 years. Six hundred  thirteen fires burned 1.3 million                                                               
     acres.                                                                                                                     
   · Continued  build  out  of  the  Integrated  Fire  Management                                                               
     software  tool to  improve initial  attack and  overall fire                                                               
     management.                                                                                                                
   · In  the  area  of  aviation, DOF  procured  one  Aero  Turbo                                                               
     Commander and  will purchase a  second aircraft  this month.                                                               
     These will  provide a safer  air attack platform  and better                                                               
     training opportunities.                                                                                                    
   · At the Wildland  Fire Crewboss Academy, 20  students from 17                                                               
     rural communities received advanced  training. He noted that                                                               
     the two  crew bosses  pictured are  each in  charge of  a 19                                                               
     person emergency firefighter type II crew.                                                                                 
   · DOF partnered with UAF Wildland  Fire Program to deliver the                                                               
     Advanced   Firefighter  training   for  the   2014  Academy.                                                               
     Students  will  receive   university  credit.  The  division                                                               
     offered 14 internships  for past graduates of  the basic and                                                               
     advanced wildland fire academies.                                                                                          
   · The division  competed successfully  for over $1  million in                                                               
     competitive funds for hazard  fuel mitigation projects. Four                                                               
     projects were  awarded in Mat-Su, Fairbanks,  Kenai, and Tok                                                               
     to help reduce high-risk fuels around communities.                                                                         
   · Finally, the division developed  a project and concept paper                                                               
     for the Northern wildland fire  center in Interior. This was                                                               
     done in collaboration with the  Cold Climate Research Center                                                               
     to replace outdated, high-maintenance facilities.                                                                          
                                                                                                                                
3:53:48 PM                                                                                                                    
STEVE  MASTERMAN,  Acting  Director,  Division  of  Geological  &                                                               
Geophysical  Surveys  (DGGS),  Department  of  Natural  Resources                                                               
(DNR),  stated  that  the  DGGS   mission  is  to  determine  the                                                               
potential  of Alaska  land for  production  of metals,  minerals,                                                               
fuels, and  geothermal resources,  the locations and  supplies of                                                               
groundwater   and  construction   material,  and   the  potential                                                               
geologic  hazards   to  buildings,  roads,  bridges,   and  other                                                               
installations.  He briefly  reviewed the  accomplishments of  the                                                               
six sections within DGGS.                                                                                                       
                                                                                                                                
The Mineral  Section was  heavily involved  in the  strategic and                                                               
critical  Minerals  Project in  2013.  They  mapped, sampled  and                                                               
assessed about  2,600 square miles  between Paxson  and Talkeetna                                                               
looking at the potential for  platinum group elements. As part of                                                               
this  project,  the  group  analyzed  over  10,000  samples.  The                                                               
Airborne Geophysical  program acquired or published  4,578 square                                                               
miles  of airborne  geophysical data  in four  surveys statewide.                                                               
DGGS also assessed and mapped 212  square miles in the Styz River                                                               
region, which  has several advanced-stage exploration  copper and                                                               
gold occurrences.                                                                                                               
                                                                                                                                
The  Energy Section  mapped 250  square  miles in  the west  Cook                                                               
Inlet  basin focused  on the  Mesozoic petroleum  system. In  the                                                               
process they  discovered two new  oil-stained sandstones.  On the                                                               
North Slope, the Energy Section  collaborated with the University                                                               
of Alaska, Fairbanks (UAF) and  the U.S. Geological Survey (USGS)                                                               
on  the   shale  oil  potential.  Finally,   the  Energy  Section                                                               
completed a compilation of geothermal  data for Alaska, and it is                                                               
ready to be published both digitally and in hard copy.                                                                          
                                                                                                                                
3:57:12 PM                                                                                                                    
SENATOR  MICCICHE asked  him to  define the  purpose of  airborne                                                               
geophysical data and how it is cataloged.                                                                                       
                                                                                                                                
MR.   MASTERMAN  explained   that  various   types  of   airborne                                                               
information  are  collected,  but   magnetic  data  is  typically                                                               
collected  to  look at  the  magnetite  content  and to  map  the                                                               
various  rock  formations  some   of  which  may  be  subsurface.                                                               
Information is  also collected about the  electrical conductivity                                                               
of the rocks in order to  map the geology. One aspect of airborne                                                               
geophysics is that mineral  deposits commonly have characteristic                                                               
signatures  in both  magnetic  and  resistivity information.  The                                                               
geology and airborne  geophysical data can be used  directly as a                                                               
prospecting  tool. He  noted that  there is  generally a  notable                                                               
spike  in  industry  activity when  DGGS  releases  the  airborne                                                               
geophysical data.                                                                                                               
                                                                                                                                
3:58:40 PM                                                                                                                    
He explained that the Geological  Materials Center is the state's                                                               
repository for its collection of  geological samples from oil and                                                               
gas wells and  mineral properties. The Center  is being relocated                                                               
to an  improved facility  in downtown  Anchorage that  will allow                                                               
industry to review  and study the samples that  are housed there.                                                               
The grand opening is planned for September 2014.                                                                                
                                                                                                                                
The Engineering Geology Section  initiated a hydrogeology program                                                               
to look  at groundwater availability  and use,  particularly with                                                               
regard to  resource development.  The initial  focus will  be oil                                                               
and gas  occurrences on the  North Slope and how  the groundwater                                                               
interacts. They  also completed  engineering and  geology mapping                                                               
for DOTPF at  the Yukon River Bridge;  field investigations along                                                               
the  various pipeline  corridors from  Livengood to  Prudhoe Bay;                                                               
and work on the Susitna-Watana  Dam. Another relevant activity is                                                               
the tsunami  inundation mapping, which is  of particular interest                                                               
to Southcentral  and the coastal  communities. These  reports are                                                               
also available  online. Finally, the Engineering  Geology Section                                                               
worked on coastal hazard assessments,  primarily for storm surges                                                               
and erosion issues in coastal communities in Southwest Alaska.                                                                  
                                                                                                                                
The   Volcanology  Section   is  part   of  the   Alaska  Volcano                                                               
Observatory,  which is  a collaboration  between  USGS, UAF,  and                                                               
DGGS. This group monitors the  volcanic activity in the state and                                                               
reports it to interested parties.                                                                                               
                                                                                                                                
The Geological Communication Section  launched four datasets in a                                                               
new  interactive  online  map  series.   They  published  52  new                                                               
geologic maps  and reports,  distributed 2,579  publications, and                                                               
recorded over  6 million web  page views. DGGS also  has Facebook                                                               
and Twitter accounts and a presence on Linked In.                                                                               
                                                                                                                                
4:02:59 PM                                                                                                                    
MARCIE  MENEFEE, Executive  Director,  Mental  Health Trust  Land                                                               
Office (MHTLO),  Department of Natural Resources  (DNR), reviewed                                                               
the mission  of the MHTLO,  which is  to protect and  enhance the                                                               
value of Alaska's mental health  trust lands, including minerals,                                                               
coal,  oil and  gas, timber,  and real  estate, while  maximizing                                                               
revenues  from those  lands over  time to  support mental  health                                                               
services.  She  explained  that  the Trust  Land  Office  has  16                                                               
professional  staff   who  have   different  expertise   for  the                                                               
different  assets. The  office has  been active  for the  last 19                                                               
years and has  generated over $150 million in  revenue. The Board                                                               
of Trustees  provides input and  is interested in the  Trust Land                                                               
Office  increasing the  annual revenue  goals. As  a result,  the                                                               
Trust  Land  Office  has  spent  time over  the  past  two  years                                                               
planning how to  better maximize the current  programs within the                                                               
Trust Land  Office to look at  a five year and  ten year increase                                                               
in revenue for the beneficiaries  of the Trust. She reviewed some                                                               
of the key accomplishments in 2013.                                                                                             
                                                                                                                                
The  Trust   Land  Office  conducted   two  small   timber  sales                                                               
generating about $1 million in  revenue in Southeast. Significant                                                               
progress was  also made in a  federal exchange of Trust  land for                                                               
Tongass  National  Forest land  to  preserve  the Trust's  timber                                                               
portfolio.  The  other  initiative  is to  collaborate  with  the                                                               
University  of Alaska  and  State  Forestry on  ways  to get  the                                                               
timber resources owned by state agencies in Southeast to market.                                                                
                                                                                                                                
One of the  hallmarks of revenue for the Trust  has been the land                                                               
sale programs,  whether competitive or negotiated.  Less than two                                                               
percent  of the  million acres  that the  state received  for the                                                               
Mental Health  Grant have  been sold,  and those  lands generated                                                               
about $4  million in revenue.  The land section within  the Trust                                                               
Land  Office is  subdividing  larger parcels  and building  roads                                                               
into the subdivisions for additional revenue.                                                                                   
                                                                                                                                
Coal   and  hard   rock   mining   exploration  and   development                                                               
contributed  over  $5 million  in  revenue,  primarily from  Fort                                                               
Knox,  Chuitna, Chickaloon  and  Livengood.  Marketing the  Trust                                                               
mineral  lands has  become  more important  in  the last  several                                                               
years,  and  350,000  acres  are   currently  leased  for  either                                                               
exploration or  production of minerals.  The goal is  to increase                                                               
that  to 450,000  acres,  which  would be  about  half the  Trust                                                               
acreage.                                                                                                                        
                                                                                                                                
Oil &  Gas is a newer  effort that is producing  some revenue for                                                               
the  Trust. The  small gas  sale in  Cook Inlet  along with  some                                                               
other producing  assets netted  over $3  million in  revenue last                                                               
year.                                                                                                                           
                                                                                                                                
The real estate  program is in its second year  and it brought in                                                               
just  over $0.8  million.  Acquisitions include  a warehouse  and                                                               
several  commercial buildings  in Anchorage.  The expectation  is                                                               
that the program will continue to generate revenue.                                                                             
                                                                                                                                
4:11:03 PM                                                                                                                    
SENATOR MICCICHE asked if Trust  timber is a growth industry that                                                               
could possibly  get Alaska back  in the timber industry  in years                                                               
to come.                                                                                                                        
                                                                                                                                
MS. MENEFEE  said it's  a possibility and  the Trust  Land Office                                                               
would like  to be  part of  that goal. If  the exchange  with the                                                               
USFS is  successful, it  will hopefully  result in  a sustainable                                                               
annual cut, but that assumes that the industry is still alive.                                                                  
                                                                                                                                
4:12:45 PM                                                                                                                    
BRENT  GOODRUM,  Director,  Division  of Mining,  Land  &  Water,                                                               
Department of Natural  Resources (DNR), stated that  for the last                                                               
two years the  division has been working in  earnest to eliminate                                                               
the permitting backlog. In 2013  they reduced the backlog by 53.5                                                               
percent  while  issuing 794  authorizations  for  permit and  724                                                               
authorizations for applications for permits  to mine in Alaska. A                                                               
critical  component  of  modernizing the  permitting  project  is                                                               
through  the  Unified  Permit project.  Last  year  the  division                                                               
introduced an electronic  case file for permits and  this year it                                                               
will do the same for water rights.                                                                                              
                                                                                                                                
Statewide projects  the division has  worked on include  the Port                                                               
McKenzie  Rail  Extension,  Roads to  Resources  projects,  North                                                               
Slope Oil  and Gas exploration and  development projects, AIDEA's                                                               
LNG Trucking decision, and the  City and Borough of Juneau cruise                                                               
ship dock decision.                                                                                                             
                                                                                                                                
Last  year  the division  was  successful  in amending  the  2005                                                               
Bristol Bay  Area Plan with significant  public participation and                                                               
input.   The  amended   plan  increased   the  wildlife   habitat                                                               
classifications  by   over  2.6   million  acres   and  increased                                                               
classifications of  1.3 million acres of  public recreation areas                                                               
within those  plans. The  division also  worked closely  with the                                                               
BLM  to come  to a  cooperative  agreement to  help resolve  long                                                               
standing  Native  Allotment  applications.  A  voluntary  program                                                               
allows those applicants to  consider selecting substitute parcels                                                               
on   state-selected  lands.   Finally,  the   division  undertook                                                               
stewardship efforts  in cooperation with DEC  to remove submerged                                                               
vessels in the Homer area that put mariculture farms at risk.                                                                   
                                                                                                                                
4:17:14 PM                                                                                                                    
BILL BARRON,  Director, Division of  Oil & Gas  (DOG), Department                                                               
of Natural Resources  (DNR), stated that he  would highlight just                                                               
a  few interesting  accomplishments and  projects that  have been                                                               
started.  The first  is the  more efficient  processing of  lease                                                               
sales. The  Leasing Section issued  90 leases on the  North Slope                                                               
in  the last  lease sale  and was  able to  process all  of those                                                               
within seven weeks of the  sale; whereas the historical timeframe                                                               
has been upwards of 10-12 months.                                                                                               
                                                                                                                                
Along the same lines, DOG  has used the authority the legislature                                                               
granted  last year  to extend  leases that  are in  their primary                                                               
term but about  to expire. Six applications  were submitted after                                                               
that legislation passed  and the division has  issued five 2-year                                                               
lease  extensions   that  incorporate   bonding  and   firm  work                                                               
commitments.                                                                                                                    
                                                                                                                                
MR.  BARRON  highlighted  the recent  effort  that  the  Resource                                                               
Evaluation Section  has made in  combination with  the Department                                                               
of Energy and the USGS relative  to methane hydrates on the North                                                               
Slope. The  team analyzed  seismic and  well data  and identified                                                               
significant  prospects for  methane  hydrates  on state  acreage.                                                               
That  block was  pulled from  the  lease sale  and dedicated  for                                                               
research and  development in  association with  DOE under  an MOU                                                               
that former commissioner  Sullivan signed at LNG-17.  This is the                                                               
largest area for methane hydrate  research in the country so it's                                                               
a tremendous opportunity.                                                                                                       
                                                                                                                                
Accomplishments in  the Commercial Section  include participation                                                               
in the  DNR study to  understand LNG  markets and the  efforts to                                                               
develop a  method to mitigate the  State's exposure to risk  of a                                                               
lessee's failure  to dismantle,  remove, and restore  an offshore                                                               
platform in Cook  Inlet. He said the latter is  a highly academic                                                               
and well-written white  paper that he would  encourage members to                                                               
read.                                                                                                                           
                                                                                                                                
The Petroleum  Systems Integrity Office (PSIO)  recently provided                                                               
Alyeska  Pipeline Services  with  very  clear technical  guidance                                                               
when they  had a problem  with corrosion coupons that  failed and                                                               
ended  up in  the line.  Finally, the  key accomplishment  of the                                                               
Royalty Section is that it managed $2.5 trillion in royalties.                                                                  
                                                                                                                                
4:21:32 PM                                                                                                                    
SENATOR MICCICHE  asked Mr.  Barron for  help locating  the white                                                               
paper that the Commercial Section published.                                                                                    
                                                                                                                                
MR. BARRON agreed.                                                                                                              
                                                                                                                                
4:21:50 PM                                                                                                                    
BEN  ELLIS, Director,  Division  of Parks  & Outdoor  Recreation,                                                               
Department of  Natural Resources  (DNR), stated that  he recently                                                               
sent a letter  to each legislator highlighting  what is happening                                                               
in the  park units that  they represent. He noted  that statewide                                                               
views were also available. He  said he looks forward to returning                                                               
to Juneau  in February to meet  with each legislator or  staff to                                                               
hear about  constituent perceptions  and thoughts on  state parks                                                               
because that  input helps  guide the  division on  management and                                                               
other  issues facing  state parks.  The division  has a  Facebook                                                               
page for Alaska State Parks and encourages new members.                                                                         
                                                                                                                                
The Division of Parks &  Outdoor Recreation focuses on six areas,                                                               
the largest  of which  is Park  & Outdoor  Recreation Management.                                                               
The  division  oversees 3.5  million  acres  which makes  it  the                                                               
largest state park system in  the nation. Wood-Tikchik State Park                                                               
is the largest  park with 1.6 million acres and  Chugach is third                                                               
with 0.5 million  acres. State Parks has  82 permanent employees,                                                               
23 non-permanent  employees and 800 volunteers.  He described the                                                               
infrastructure that includes 124 park units and 72 campgrounds.                                                                 
                                                                                                                                
MR. ELLIS explained that the  Alaska Trails Office (ATO) oversees                                                               
the federal grant funded Recreational  Trails Program. About half                                                               
of the annual $1.6 million  is dedicated to communities and local                                                               
trail  programs on  a competitive  basis. The  other half  of the                                                               
grant funds support the over  900 miles of developed Alaska State                                                               
Park  trails.  ATO also  oversees  the  Snow Track  Program  that                                                               
receives up to $250,000 each  year from snow machine registration                                                               
fees. The  funds are primarily used  to groom trails and  then to                                                               
conduct safety and  educational programs. He said  the demand far                                                               
outstrips the available funding, but  the program does a good job                                                               
of putting  money on  the ground  in the  areas that  are heavily                                                               
used  by  snow machine  users.  The  First  Day Hike  is  another                                                               
program that ATO  has been involved in for several  years. All 50                                                               
state  parks participate  and  have the  common  goal of  getting                                                               
people outdoors.  He noted that  the program at Hatcher  Pass has                                                               
been very successful and has grown every year.                                                                                  
                                                                                                                                
The  Office of  History  & Archaeology  oversees  a $2.5  million                                                               
budget that is  primarily federal funds. The  staff reviews about                                                               
2,600  projects   a  year  with   the  goal  of   protecting  the                                                               
historical, archaeological,  and cultural aspects of  the state's                                                               
resources.  They  work  with  both the  Corps  of  Engineers  and                                                               
communities.                                                                                                                    
                                                                                                                                
The  Design &  Construction  Section is  an  enterprise staff  of                                                               
engineers, landscape architects, and  interpreters. Only 2 of the                                                               
15 positions are  paid with general funds, and the  rest are paid                                                               
from   project  funds   for  deferred   maintenance  or   capital                                                               
improvements. The division also  generates revenue by contracting                                                               
with state  and federal  agencies to  do design  and construction                                                               
work.                                                                                                                           
                                                                                                                                
The Office  of Boating  Safety has held  nearly 3,000  classes in                                                               
school  rooms  since  it  began  and  has  reached  over  100,000                                                               
students. One  of its very  successful programs is  the federally                                                               
funded "Kids  Don't Float" program.  Working in  conjunction with                                                               
communities, this program has  provided nearly 50,000 lifejackets                                                               
and  has documentation  that 24  Alaskan  children survived  cold                                                               
water immersion  because they were wearing  a lifejacket courtesy                                                               
of this program.                                                                                                                
                                                                                                                                
MR.  ELLIS  highlighted  that the  South  Denali  Visitor  Center                                                               
Complex is the  first developed campground in  Alaska State Parks                                                               
in 30 years. In 2009,  the legislature started to provide funding                                                               
for  this $47  million project.  To  date, about  $20 million  in                                                               
state funds,  $1 million in  corporate donations, and  $1 million                                                               
in federal  grants have  accumulated and been  put to  work. This                                                               
last summer State  Parks broke ground for the  visitor center and                                                               
put in  23 miles  of gravel  road to  the campground  site that's                                                               
been cleared and brushed.  The goal next year is to  put in 35 RV                                                               
campsites  and 15  walk-in campsites.  He pointed  out that  this                                                               
project has improved  economic development along 23  miles of the                                                               
Parks Highway.  He encouraged members  to visit the  complex once                                                               
it opens.                                                                                                                       
                                                                                                                                
4:33:23 PM                                                                                                                    
TOM   CRAFFORD,  Director,   Office  of   Project  Management   &                                                               
Permitting  (OPMP),   Department  of  Natural   Resources  (DNR),                                                               
explained  that  OPMP's  role is  to  coordinate  the  permitting                                                               
process for large  development projects in the  state. The office                                                               
has  no  regulatory authority  but  it  works to  coordinate  the                                                               
participation  of the  different  state  regulatory agencies  and                                                               
tries to  improve permitting efficiencies. OPMP  is also involved                                                               
with  coordination  of  state  agency review  and  comment  on  a                                                               
variety of federal policy initiatives and programs.                                                                             
                                                                                                                                
He  explained that  much of  OPMP's funding  is from  statutorily                                                               
designated program  receipts. Private sector projects  are funded                                                               
through MOUs  that OPMP enters  into with project  applicants. If                                                               
the  applicant   is  a  state   agency,  funding  is   through  a                                                               
reimbursable services agreement.                                                                                                
                                                                                                                                
MR.  CRAFFORD   reviewed  the  key  accomplishments   from  2013,                                                               
starting with  the MOU  agreements that OPMP  signed for  oil and                                                               
gas and mining.                                                                                                                 
                                                                                                                                
Oil and Gas:                                                                                                                    
   · Buccaneer for projects in Cook Inlet.                                                                                      
   · Buccaneer Cosmo for the offshore gas field near Deep Creek.                                                                
   · LINC for their Umiat property in the southeast corner of                                                                   
     NPR-A.                                                                                                                     
   · NORDAQ experimental stage project in the NPR-A.                                                                            
   · ConocoPhillips development permitting for their Greater                                                                    
     Moose's Tooth property in the NPR-A.                                                                                       
                                                                                                                                
Mining:                                                                                                                         
   · Graphite One for the Graphite Creek Project on the Seward                                                                  
     Peninsula northeast of Teller.                                                                                             
   · Free Gold's Golden Summit Project near Cleary Summit and                                                                   
     the Fort Knox Mine.                                                                                                        
                                                                                                                                
OPMP also coordinated:                                                                                                          
   · A  complex,  multi-year  special  use  permit  for  Apache's                                                               
     seismic exploration in the Kenai National Wildlife Refuge.                                                                 
   · State agency  participation and  review of  the U.S.  Fish &                                                               
     Wildlife  Services'  Izembek   Land  Exchange  Environmental                                                               
     Impact  Statement  for  road  construction  to  connect  the                                                               
     community of  King Cove to  the all-weather airport  in Cold                                                               
     Bay, although this was ultimately denied.                                                                                  
   · State agency review of the  final draft of the Environmental                                                               
     Protection Agency's Bristol  Bay Assessment regarding mining                                                               
     and potential impacts on fish  in the Bristol Bay watershed.                                                               
     EPA issued the Final version on January 14, 2014.                                                                          
   · Red Dog  mine's first third-partyenvironmental  audit since                                                               
     it  started  in  1989,  which  will  feed  into  new  permit                                                               
     conditions.  State waste  management  permits for  tailings,                                                               
     waste rock, and reclamation  plan approval now require these                                                               
     audits every five years.                                                                                                   
   · State agency  approval of the  underground expansion  of the                                                               
     Pogo mine  to the East  Deep deposit. OPMP  also coordinated                                                               
     the  final   approvals  for  expanded  dry   stack  tailings                                                               
     storage.                                                                                                                   
   · State agency  participation in the  U.S. Forest  Service led                                                               
     EIS for  the expansion  of the Greens  Creek Mine  dry stack                                                               
     tailings facility.                                                                                                         
   · Continued   review   of   the  application   documents   and                                                               
     initiation  of the  NEPA permitting  process for  the Donlin                                                               
    gold project near Crooked Creek on the Kuskokwim River.                                                                     
                                                                                                                                
4:42:22 PM                                                                                                                    
ALLISON  IVERSEN,   Acting  State  Pipeline   Coordinator,  State                                                               
Pipeline  Coordinator's  Office  (SPCO),  Department  of  Natural                                                               
Resources  (DNR) stated  that the  mission of  this office  is to                                                               
issue  leases  of  state land  for  pipeline  rights-of-ways  and                                                               
implement   state  policy   in   AS   38.35.010  concerning   the                                                               
development,  use,  and  control  of  a  pipeline  transportation                                                               
system within the state.                                                                                                        
                                                                                                                                
She described the following key accomplishments:                                                                                
   · SPCO worked closely with BP  Transportation (Alaska) Inc. to                                                               
     transfer the Badami pipeline  rights-of-way leases to Nutaaq                                                               
     Pipeline, LLC. This  is a conglomerate of  Savant Alaska and                                                               
     ASRC Exploration.                                                                                                          
   · SPCO released  its 2013  Annual Report,  which is  more user                                                               
     friendly. It  lays out  the key functions  of DNR  and other                                                               
     state  agencies that  are co-located  within  SPCO. It  also                                                               
     summarizes the  lessee's annual  reports and  details SPCO's                                                               
     compliance efforts.                                                                                                        
   · SPCO worked with ConocoPhillips to facilitate the change-                                                                  
     of-service  for  the  Oliktok   pipeline  from  natural  gas                                                               
     liquids to  natural gas.  This should  be finalized  by mid-                                                               
     2014.                                                                                                                      
   · SPCO has been working on an amended application from Trans-                                                                
     Foreland Pipeline  Company. This initially was  sponsored by                                                               
     Cook Inlet Energy  and is currently sponsored  by Tesoro. It                                                               
     is  a  28 mile  pipeline  under  Cook Inlet.  A  preliminary                                                               
     decision is anticipated very soon.                                                                                         
   · SPCO has been working closely on several projects for a                                                                    
     North  Slope LNG  facility with  trucking to  Fairbanks. The                                                               
     office  completed the  process  and  issued a  rights-of-way                                                               
     lease  for Spectrum  LNG  and  completed the  commissioner's                                                               
     analysis and  proposed decision for  the Polar  LNG project.                                                               
     An  additional   application  for   the  AIDEA   project  is                                                               
     anticipated.                                                                                                               
   · Last year SPCO adjudicated and finalized five amendments to                                                                
     the TAPS  right-of-way lease  to add  minor amounts  of land                                                               
     for    critical   upgrades,    regular   maintenance,    and                                                               
     improvements to the system.                                                                                                
   · SPCO continues to work with Alyeska on the implementation                                                                  
     of  their corrective  action following  the coupon  failure.                                                               
     This  incident was  a good  example of  utilizing state  and                                                               
     federal expertise and coordinating to speak with one voice.                                                                
   · Last year SPCO continued to work closely with the Alaska                                                                   
     Stand  Alone  Pipeline (ASAP)  sponsored  by  AGDC, and  the                                                               
     Alaska LNG Pipeline coordinating  efforts for the permitting                                                               
     activities  during  the field  season.  A  very large  field                                                               
     season is anticipated for both  projects this coming summer.                                                               
     The office is coordinating and  issuing DNR permits and also                                                               
     coordinating efforts with DOT, ADF&G,  and the DNR Office of                                                               
     History  and Archaeology.  Although  there may  not be  many                                                               
     permits  issued,  they  cover  very  large  activities.  For                                                               
     example,  one permit  for  the ASAP  covered  more than  200                                                               
     boreholes.                                                                                                                 
   · Finally, SPCO spent considerable field time overseeing the                                                                 
     initial construction  of the Point Thomson  Export Pipeline.                                                               
     Last  winter about  2,200  vertical  and horizontal  support                                                               
     members  were  installed. In  the  next  several months  the                                                               
     construction of the pipeline will be finalized.                                                                            
                                                                                                                                
4:47:29 PM                                                                                                                    
JEANMARIE DAVIS, Director, Support Services Division, Department                                                                
of Natural Resources (DNR) explained that SSD provides the                                                                      
administrative  support  necessary  to  keep  all  the  foregoing                                                               
activities going  forward. The department itself  has about 1,000                                                               
employees  in  32  locations  statewide,  which  sometimes  makes                                                               
coordination  challenging.  The  Information  Technology  Section                                                               
provides  IT  infrastructure  required for  managing  state  land                                                               
records.  The  Financial  Services  Section pays  the  bills  and                                                               
records the  revenue for the  state. This amounted to  about $2.6                                                               
billion last year.  The Budget Section helps  develop and support                                                               
the  budget  and  helps with  legislative  presentations  on  the                                                               
budget. The  Procurement Section does everything  from supporting                                                               
small  equipment   purchases  to  complex  contracts.   SSD  also                                                               
provides limited  human resources  support. SSD  also administers                                                               
the state recording offices statewide.                                                                                          
                                                                                                                                
She described the following key accomplishments:                                                                                
   · SSD implemented eRecording in 31 of the 34 recording                                                                       
     districts.  This allows  customers  to  file their  business                                                               
     documentation  electronically.  Last  week  the  last  three                                                               
     recording  districts  implemented eRecording  making  Alaska                                                               
     the fourth state to implement statewide eRecording.                                                                        
   · The IT Section supported, especially in the Division of                                                                    
     Mining  Land  &  Water,  the  efforts  with  the  permitting                                                               
     initiative,   working   with  automation,   installing   the                                                               
     business  process,  management  servers  and  software,  and                                                               
     providing programing support and contract management.                                                                      
   · Finance and procurement staff are spending significant time                                                                
     in collaboration  with the  Department of  Administration on                                                               
     the Integrated  Resource Information System  (IRIS) project.                                                               
     This is  a statewide administrative systems  replacement for                                                               
     accounting,  financial,   procurement,  payroll   and  human                                                               
     resource management.                                                                                                       
                                                                                                                                
4:52:07 PM                                                                                                                    
SENATOR  MICCICHE asked  if the  Support  Services Division  will                                                               
handle the upcoming hunting permit drawings.                                                                                    
                                                                                                                                
MS DAVIS answered no.                                                                                                           
                                                                                                                                
CHAIR   GIESSEL   thanked   Commissioner  Balash   for   a   good                                                               
presentation.                                                                                                                   
                                                                                                                                
COMMISSIONER  BALASH  committed  himself  and  DNR's  world-class                                                               
managers  to do  what  it takes  to help  the  committee get  its                                                               
business  done  on time  this  year.  He  stated  that it  was  a                                                               
pleasure to work with the fine men and women in the department.                                                                 
                                                                                                                                
4:53:28 PM                                                                                                                    
CHAIR GIESSEL asked  how he would manage the cut  in DNR's budget                                                               
that's in the Governor's proposed budget.                                                                                       
                                                                                                                                
COMMISSIONER  BALASH  explained  that the  Gas  Pipeline  Project                                                               
Office is  a line item  that was built  into the DNR's  base, and                                                               
with the  elimination of  that office they're  able to  realize a                                                               
net negative for the agency.  The department was able to maintain                                                               
funding for  all the  other divisions and  in some  cases address                                                               
some   much  needed   requirements   for   personnel  costs   and                                                               
increments, especially in the Division of Parks.                                                                                
                                                                                                                                
CHAIR GIESSEL thanked the presenters.                                                                                           
                                                                                                                                
4:54:52 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Giessel  adjourned the Senate Resources  Standing Committee                                                               
meeting at 4:54 p.m.                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
SRES DNR Overview Balash 20140124.pdf SRES 1/24/2014 3:30:00 PM