Legislature(2015 - 2016)BUTROVICH 205

10/31/2015 09:00 AM RESOURCES

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Audio Topic
08:57:27 AM Start
08:57:57 AM SJR301
09:19:07 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SJR301 SUPPORT O&G LEASES ON ARCTIC OCS TELECONFERENCED
Moved CSSJR301(RES) Out of Committee
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        October 31, 2015                                                                                        
                           8:57 a.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator John Coghill                                                                                                            
Senator Bert Stedman                                                                                                            
Senator Bill Stoltze                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Peter Micciche                                                                                                          
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 301                                                                                                 
Opposing the  recent decisions  to cancel  future lease  sales in                                                               
the  Chukchi and  Beaufort Seas  and  to deny  the suspension  of                                                               
Shell and  Statoil's leases; urging the  United States Department                                                               
of the  Interior to  continue to promote  oil exploration  in the                                                               
Chukchi and  Beaufort Seas;  urging the  United States  Bureau of                                                               
Safety and  Environmental Enforcement  to reconsider  and approve                                                               
requests  from Shell  and Statoil  for lease  suspensions in  the                                                               
Chukchi Sea  Planning Area  and Beaufort  Sea Planning  Area; and                                                               
urging the  ongoing efforts  to develop offshore  oil and  gas in                                                               
the Arctic Outer Continental Shelf.                                                                                             
                                                                                                                                
     - MOVED  CSSJR 301(RES) OUT OF COMMITTEE                                                                                   
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR301                                                                                                                  
SHORT TITLE: SUPPORT O&G LEASES ON ARCTIC OCS                                                                                   
SPONSOR(s): SENATOR(s) STOLTZE                                                                                                  
                                                                                                                                
10/30/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
10/30/15       (S)       RES                                                                                                    
10/31/15       (S)       RES AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KARA MORIARTY, President/CEO                                                                                                    
Alaska Oil and Gas Association (AOGA)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SJR 301.                                                                         
                                                                                                                                
BARBARA HUFF TUCKNESS, Director                                                                                                 
Governmental Teamsters Local 959                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SJR 301.                                                                         
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:57:27 AM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 8:57  a.m. Present at the  call to                                                               
order  were Senators  Stoltze,  Stedman,  Coghill, Costello,  and                                                               
Chair Giessel.                                                                                                                  
                                                                                                                                
            SJR 301-SUPPORT O&G LEASES ON ARCTIC OCS                                                                        
                                                                                                                                
8:57:57 AM                                                                                                                    
CHAIR GIESSEL  announced the consideration  of SJR 301.  She said                                                               
this resolution is  an expression of the will of  the body in the                                                               
context of the oil and gas  development issue, which is the topic                                                               
of the  third special  session. She solicited  a motion  to adopt                                                               
the proposed committee substitute (CS).                                                                                         
                                                                                                                                
SENATOR  COSTELLO  moved  to  adopt CSSJR  301(  ),  version  29-                                                               
LS1164\H, as the working document.                                                                                              
                                                                                                                                
CHAIR GIESSEL  objected for purposes  of discussion  and welcomed                                                               
Senator Stoltze to introduce the resolution.                                                                                    
                                                                                                                                
SENATOR  BILL STOLTZE,  sponsor of  SJR 301,  stated that  the CS                                                               
makes three  minor changes  to clarify  the message:  1) language                                                               
was  added  on  page  1,  line 12,  regarding  the  Arctic  Outer                                                               
Continental Shelf resource potential that would ensure the long-                                                                
term success of the project; 2)  language was expanded on page 3,                                                               
line 15,  to include all  local governments in the  Arctic region                                                               
in a  strategic alliance with  the state  as opposed to  only the                                                               
North Slope  Port Authority; and  3) adds the  term "responsibly"                                                               
to the final  resolve on page 4, line 1,  to clarify that efforts                                                               
to develop offshore  oil and gas in the  Arctic Outer Continental                                                               
Shelf will be done responsibly.                                                                                                 
                                                                                                                                
CHAIR  GIESSEL   removed  her   objection.  Finding   no  further                                                               
objection,  she  announced  that   version  H  was  adopted.  She                                                               
expressed  appreciation that  the  sponsor included  in the  bill                                                               
packets  an October  25,  2015 article  from  the Petroleum  News                                                               
about the cancellation of the  lease sales by the U.S. Department                                                               
of Interior.                                                                                                                    
                                                                                                                                
9:01:40 AM                                                                                                                    
SENATOR COSTELLO asked for an  expanded explanation of the second                                                               
change.                                                                                                                         
                                                                                                                                
SENATOR   STOLTZE  explained   that  the   North  Slope   Borough                                                               
recommended the change  so that all the  Arctic communities would                                                               
be part  of the strategic alliance  with the state as  opposed to                                                               
only the  North Slope Port  Authority. He characterized  the more                                                               
inclusive language as a good idea.                                                                                              
                                                                                                                                
CHAIR GIESSEL opened public testimony.                                                                                          
                                                                                                                                
9:03:04 AM                                                                                                                    
KARA  MORIARTY, President/CEO,  Alaska  Oil  and Gas  Association                                                               
(AOGA),  Anchorage, Alaska,  stated that  AOGA, the  professional                                                               
trade association  for the industry, appreciates  Senator Stoltze                                                               
introducing SJR 301  and the committee taking up  the matter. She                                                               
said the resolution  talks about the mega potential  of the Outer                                                               
Continental Shelf  oil and  gas resources.  She opined  that just                                                               
because  Shell did  not  have a  commercial  discovery this  last                                                               
summer from the one well does  not mean that there isn't interest                                                               
in the offshore  or that the resource is not  there. Shell simply                                                               
needs the opportunity  to do more exploration and  the first step                                                               
in that  process is the leasing  program. She said AOGA  was very                                                               
disappointed that the administration  decided to cancel the lease                                                               
sales for 2016 and 2017.  She described the state leasing program                                                               
as  better  than  the  federal  government's  because  the  state                                                               
program  is predictable  and area-wide.  Companies  rely on  that                                                               
predictability  and   consistency  for  planning  and   it's  not                                                               
available from the federal government, she said.                                                                                
                                                                                                                                
MS.  MORIARTY   concluded  saying   that  AOGA   appreciates  the                                                               
legislature  officially asking  the administration  to reconsider                                                               
cancelation  of the  two  lease sales,  because  the resource  is                                                               
important for  Alaskans and to  supply the nation's  energy needs                                                               
for the future.                                                                                                                 
                                                                                                                                
9:06:06 AM                                                                                                                    
BARBARA  HUFF TUCKNESS,  Director,  Governmental and  Legislative                                                               
Relations, Teamsters  Local 959, Anchorage, Alaska,  testified in                                                               
support of SJR 301 on behalf  of Teamsters Local 959. She pointed                                                               
out that  the Outer Continental  Shelf is  huge in size  and will                                                               
likely  generate   an  additional  54,000  jobs   throughout  the                                                               
country. Local 959  has enjoyed a good  working relationship with                                                               
oil and  gas companies in  Alaska for 40  years and hopes  to see                                                               
continued growth  and expansion to  include rural areas  as well.                                                               
Development  in  those outer  areas  will  result in  growth  for                                                               
communities, better jobs, and better marketing opportunities.                                                                   
                                                                                                                                
CHAIR  GIESSEL  commented that  she  worked  in two  North  Slope                                                               
communities  so  she  knows  what those  jobs  and  the  economic                                                               
development would mean.                                                                                                         
                                                                                                                                
SENATOR STEDMAN  asked Ms.  Moriarty if she  knew the  rough cost                                                               
that Shell expensed for the  one well because he understands that                                                               
it was the most expensive well that's been drilled anywhere.                                                                    
                                                                                                                                
MS. MORIARTY  reported that  since the  leases were  purchased in                                                               
2008, Shell  has spent close to  $7 billion and has  been able to                                                               
complete  one  well. She  agreed  that  when  all the  costs  are                                                               
tallied, it is by far the most expensive well ever drilled.                                                                     
                                                                                                                                
SENATOR STEDMAN  said the point  in support of the  resolution is                                                               
that  one  way  to  hinder   economic  development  is  to  drive                                                               
regulatory costs  so high and  a project can't be  successful. He                                                               
opined that that  is one of the game plans  for groups that don't                                                               
want the Arctic developed. He  expressed hope that Shell would do                                                               
some cost  analysis and come forward  to show what it  would cost                                                               
for permits  in the  Gulf of  Mexico relative  to the  Arctic. He                                                               
expressed  hope to  make development  of  the Arctic  competitive                                                               
without dropping environmental controls.                                                                                        
                                                                                                                                
SENATOR  STEDMAN stated  the concern  that if  the U.S.  does not                                                               
move forward  with development  of the  Chukchi Sea  and Beaufort                                                               
Sea and there is an environmental  issue off Siberia or Norway or                                                               
northern Canada, it will be  in Alaska's backyard and there won't                                                               
be a  response system  nearby. The Port  of Nome  development was                                                               
put on  hold with the cancellation  of future lease sales  in the                                                               
area so  the response system  for Alaska  will be located  in the                                                               
Gulf of Mexico. That is not prudent.                                                                                            
                                                                                                                                
9:11:22 AM                                                                                                                    
SENATOR  STEDMAN suggested  keeping  that in  mind going  forward                                                               
because neighbor  nations will  develop their  offshore resources                                                               
with or  without the  U.S. He  pointed out  that China  will most                                                               
likely be working  in the open pie area north  of Alaska's shores                                                               
and  he'd  prefer   to  rely  on  American   technology  and  its                                                               
regulatory environment than China's.                                                                                            
                                                                                                                                
CHAIR  GIESSEL  thanked  Senator   Stedman  for  the  well-stated                                                               
comments.                                                                                                                       
                                                                                                                                
SENATOR COSTELLO  asked Ms. Moriarty if  the federal government's                                                               
recent action  to cancel  future lease sales  in the  Chukchi Sea                                                               
and   Beaufort  Sea   will   affect   the  Alaska   Congressional                                                               
delegation's  efforts related  to  the  offshore revenue  sharing                                                               
legislation.                                                                                                                    
                                                                                                                                
MS. MORIARTY  answered she didn't  know, but  Senator Murkowski's                                                               
staff  indicated they  would continue  to push  ahead on  revenue                                                               
sharing because it  is a very important component  for people who                                                               
live  in the  Arctic. The  hope is  that a  future administration                                                               
will support lease sales in that region.                                                                                        
                                                                                                                                
9:14:02 AM                                                                                                                    
CHAIR GIESSEL closed public testimony.                                                                                          
                                                                                                                                
SENATOR  STOLTZE stated  that this  resolution was  undertaken in                                                               
this special  session because it  is relevant, timely  and within                                                               
the purview  of this legislative body.  He expressed appreciation                                                               
of Governor Walker's forceful reaction  when the cancellation was                                                               
announced because  it forecloses economic opportunity  for Alaska                                                               
and the  nation to  benefit from the  gas reserves.  He concluded                                                               
that   the   resolution   enhances  the   special   session   and                                                               
demonstrates concern about the issue.                                                                                           
                                                                                                                                
CHAIR  GIESSEL   said  the  committee  appreciates   the  sponsor                                                               
bringing this  timely and relevant resolution  forward. She noted                                                               
the zero fiscal note.                                                                                                           
                                                                                                                                
SENATOR COSTELLO  moved to report  CSSJR 301 from  committee with                                                               
individual recommendations and attached fiscal note(s).                                                                         
                                                                                                                                
CHAIR  GIESSEL  found  no objections  and  announced  that  CSSJR                                                               
301(RES) moves from the Senate Resources Standing Committee.                                                                    
                                                                                                                                
9:19:07 AM                                                                                                                    
The Senate Resources Standing Committee adjourned at 9:19 a.m.                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SJR301H.PDF SRES 10/31/2015 9:00:00 AM
SJR301
SJR 301-Fiscal Note-Version W-10-31-2015.pdf SRES 10/31/2015 9:00:00 AM
SJR301
SJR301-H.PDF SRES 10/31/2015 9:00:00 AM
SJR301
CS for SJR 301 - Explanation of Changes ver H.pdf SRES 10/31/2015 9:00:00 AM
SJR301