Legislature(1997 - 1998)
02/03/1997 03:30 PM Senate RES
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SENATE RESOURCES COMMITTEE
February 3, 1997
3:30 P.M.
MEMBERS PRESENT
Senator Rick Halford, Chairman
Senator Lyda Green, Vice Chairman
Senator Loren Leman
Senator Bert Sharp
Senator Robin Taylor
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator John Torgerson
COMMITTEE CALENDAR
CS FOR HOUSE CONCURRENT RESOLUTION NO. 1(WTR)
Relating to a new Alaska liquefied natural gas project.
- MOVED CSHCR 1(WTR) FROM COMMITTEE
SENATE BILL NO. 7
"An Act reducing certain resident sport fishing, hunting, and
trapping license fees, increasing certain nonresident sport fishing
license and tag fees, and relating to nonresident sport fishing,
hunting, and trapping licenses; and providing for an effective
date."
- MOVED CSSB 7 FROM COMMITTEE
SENATE BILL NO. 8
"An Act relating to the noise levels of airports and sport shooting
facilities."
- SCHEDULED, BUT NOT HEARD
PREVIOUS SENATE COMMITTEE ACTION
HCR 1 - No previous action to consider.
SB 7 - See Resources minutes 1/29/97.
SB 8 - See Senate Transportation Committee minutes dated 1/28/97.
WITNESS REGISTER
Representative Ramona Barnes
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of HCR 1.
Mr. Jeff Lowenfels, President and CEO
Yukon Pacific Corp
1049 W. 5th Ave.
Anchorage, AK 99501
POSITION STATEMENT: Supported HCR 1.
Commissioner John Shively
Department of Natural Resources
400 Willoughby
Juneau, AK 99811-1724
POSITION STATEMENT: Supported HCR 1.
Mr. George Findling
Government and Public Affairs Advisor
ARCO Alaska, Inc.
P.O. Box 100360
Anchorage, AK
POSITION STATEMENT: Supported HCR 1.
Mr. Mark Bendersky, Commercial Manager
Gas Division
British Petroleum
Anchorage, AK
POSITION STATEMENT: Supported HCR 1.
Ms. Beverly Mentzer, Business Development Manager
Exxon
P.O. Box 2180
Houston, TX
POSITION STATEMENT: Supported HCR 1.
Senator Dave Donley
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of SB 7.
Mr. Kevin Delaney, Director
Division of Sport Fish
Department of Fish and Game
333 Raspberry Rd.
Anchorage, AK 99518-1579
POSITION STATEMENT:
ACTION NARRATIVE
TAPE 97-6, SIDE A
Number 001
CS HCR 1 NORTH SLOPE NATURAL GAS PROJECT(WTR)
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:30 p.m. and announced CS HCR 1 (WTR) to be up for
consideration.
REPRESENTATIVE RAMONA BARNES, Sponsor, said CSHCR 1 urges the
establishment of a stable fiscal and regulatory environment in
order to provide the best opportunity for a new LNG project to be
economically viable and attractive. She explained that to be
viable, 14 million metric tons of gas must be sold per year and the
proposed project would transport and market the North Slope gas
resources in the Asian Far East Market. It is believed there is an
opportunity in 2005 when demand in that market will rise enough to
accept the volume of gas which this project will provide.
Alaska's huge volume of gas could be displaced from the market if
smaller more easily placed projects come on line first.
SENATOR LEMAN thanked her for the work in this area and he asked if
identification of the leaseholders of rights-of-way or holders of
permits could be included. REPRESENTATIVE BARNES replied that this
resolution is directed to the holders of the gas of which the State
owns 12 1/2%. The leaseholders spoken to in this bill are those
major producers and some minor one who hold the lease for the gas
in the Prudhoe Bay fields. She thought it inappropriate to
identify Yukon Pacific in this particular resolution, although they
support the bill, because they don't own a lease at Prudhoe Bay.
Number 123
SENATOR LEMAN asked her to clarify why the terms North Slope and
Prudhoe Bay were used. REPRESENTATIVE BARNES explained that
Prudhoe Bay referred to all the fields in that area and included
the surrounding fields as well, like Pt. Thompson.
SENATOR SHARP stated in some of the meetings on this issue there
was focus on the advisability of State equity ownership in a
pipeline and he thought that it was deliberately left as one of the
options for the Governor to study. He thought that was covered in
lines 28 - 29 on page 4. REPRESENTATIVE BARNES agreed with that
and added that all of the State's participation needed to be
evaluated.
CHAIRMAN HALFORD asked if other benchmarks could be used before the
year 2005. He questioned by what date the contracts between the
parties were to be drawn up by the Governor and by what date were
they to be submitted to the legislature. REPRESENTATIVE BARNES
replied that she intentionally did not put a date there, because
she didn't want to appear inflexible or unreasonable. She restated
that she thought the year 2005 was important because of outside
competition and the support they receive when certain parties try
delaying tactics like wanting a new route opened up or
technological requirements.
SENATOR LINCOLN said that Senator Murkowski and others had used the
date 2007 and she would like to see an earlier date because it
would be better for all Alaskans. She asked how she defined 2005
as the magic date. REPRESENTATIVE BARNES replied that the only
people who say 2010 are the oil producers. No one in the
marketplace has said that. No one in foreign governments has said
that to her. They have all said between 2005 and 2007.
Number 279
JEFF LOWENFELS , President and CEO, Yukon Pacific Corporation, said
they hold permits to transport North Slope natural gas to tide
water at Valdez and hold an export license from the federal
government to export 14 million metric tons of LNG over a 25 - 30
year period starting at a date the project begins. He said they
support the resolution 100%. He said it was important to move
quickly and that 2005 is a crucial date. To suggest that it should
be later would be suicide as far as a gas project from Alaska is
concerned.
CHAIRMAN HALFORD asked when they would actually have to start
construction in order to keep the 2005 date. MR. LOWENFELS replied
that they had to start in about the next 18 months. He said it
would be very difficult, but Yukon Pacific had done a tremendous
amount of advance planning.
COMMISSIONER JOHN SHIVELY, Department of Natural Resources, said
the administration has its own working group with the producers and
they have been working with Representative Barnes. They think it
is an important step to reach an important goal.
CHAIRMAN HALFORD asked if he felt it was important to be in the
ground within 18 months in order to reach the 2005 goal.
COMMISSIONER SHIVELY responded that he didn't think Mr. Lowenfels
meant that we had to be in the ground in 18 months, but that we had
to have letters of intent for purchase in 18 months. We should be
in the ground between 2000 - 2002. Mr. Lowenfels nodded agreement.
SENATOR LINCOLN asked if 2005 was a realistic date that this
administration would also push for. COMMISSIONER SHIVELY answered
that he didn't think they were as committed to the exact 2005 date
as Representative Barnes, although there is no question that a
market opportunity starts around then. There is no question, also,
that the sooner we get to the market, the better off we are.
Number 346
GEORGE FINDLING, ARCO, supported HCR 1. He said that expeditious
passage of this resolution will help advance the project.
CHAIRMAN HALFORD asked for the ownership breakdown on the gas
reserves. REPRESENTATIVE BARNES replied 30, 30, 22.
SENATOR LINCOLN asked if 2005 was a realistic date for having the
gas line in place and into the market. MR. FINDLING replied if you
project everything going well, he thought production wouldn't
happen before 2007. But he thought that 2005 was a good target
date.
Number 376
MARK BENDERSKY , BP, said the interim work done by Representative
Barnes was very thorough and comprehensive and they are in full
support of the Resolution.
SENATOR LINCOLN asked if he thought 2005 was a realistic date. He
replied that 2005 is an excellent goal to work toward. He said
there is a lot of competition for gas supply and it will be
somewhat of a buyers market. Their job would be to make sure
Alaska's gas will be as high in the queue of supply projects as
possible.
Number 395
BEVERLY MENTZER, Business Development Manager, Exxon, said she is
responsible for commercialization of the Alaska gas reserves. She
emphasized that Exxon is very committed to commercializing Alaska's
gas reserves on the North Slope. They are very supportive of this
resolution. It is exactly what the project needs for it to move
forward at this point.
SENATOR LINCOLN asked what she thought about the 2005 date. MS.
MENTZER replied that they agree with the statement that there is an
opportunity opening up in the marketplace beginning in 2005. They
believe the opportunity continues to grow as there is economic
development in the far east. In shooting for a date she thought
there were two things to remember. One is that it's not currently
economically viable and we need to make it economically viable.
The work on fiscal terms and cost reductions will help that and
continued growth in the market will help. So they are not in total
control. Two, the market will ultimately decide which projects go
forward and which are developed. They are moving forward and they
accept that date as a target.
SENATOR LINCOLN asked what she defined as a start-up date. MS.
MENTZER replied first gas down the pipeline.
SENATOR SHARP asked if she agreed that the critical movement here
is to go forward and obtain the consumptive contracts for that
period of time as the window opens up as early as possible. MS
MENTZER replied that it is critical because the purchasers also
have quite a bit of investment to make on their side of the ocean.
They need the long lead time, too.
SENATOR LEMAN asked her about using Pt. Thompson in the earliest
stages as part of the ramp-up recognizing there is a cost to oil
left behind. MS. MENTZER replied that they had not done a rigorous
relook at Pt. Thompson since August. They have their estimates of
impact on oil recovery that are in the financial model that the
State currently uses and the economics of it are not significant to
the timing of the gas project. They plan to reevaluate it in 1997
and will be getting a new estimate. The key issue to them is if
Prudhoe Bay gas can't make the project economic now with all the
existing field infrastructure, if you take that same thing and
layer all the wells that need to be drilled at Pt. Thompson, you
are going in the wrong direction as far as trying to reduce cost.
She said they expect that the infrastructure they build would need
to support future gas sales from Pt. Thompson and other fields and
they are planning that into their design basis.
SENATOR TAYLOR noted that the Governor was being requested to do a
number of things, but was not getting a copy of the resolution.
REPRESENTATIVE BARNES responded that it does address the Governor
over and over again, and it is a House Concurrent Resolution which
means it is a message to the executive.
Number 512
SENATOR SHARP moved to pass the CSHCR 1(WTR) from Committee with
individual recommendations. There were no objections and it was so
ordered.
CHAIRMAN HALFORD called an at-ease from 4:10 - 4:15 p.m.
SB 7 HUNTING SPORT FISH TRAPPING FEES/LICENSES
CHAIRMAN HALFORD announced SB 7 to be up for consideration.
SENATOR DONLEY, Sponsor, said SB 7 is an attempt to bring our
sportfishing fees more in line with national averages, to create
some additional options in non-resident sportfish fees, and to no
longer offer a sportfish license for non-residents that's for an
entire year. The primary reason behind that is because some people
are abusing our annual non-resident sportfish licenses. It has
become somewhat of a serious problem in that a person can camp out
in Alaska throughout the fishing season and sport harvest fish and
then sell those fish when they go home. This is not a wide-spread
problem, but was the subject of a series of newspaper reports
regarding abuses on the Kenai Peninsula.
The longest license a non-resident could purchase under this
legislation would be 14 days instead of the current annual license.
Additionally, it gives a slight cut to residents who chose to buy
combination hunting, fishing, and trapping licenses. Current fee
structure offers no discount at all for a combination license.
Section 5 is a technical section which adds back something that was
deleted in another section. He said the bill before the committee
has a provision that was requested by ADF&G that allows an
intermediate license for people who had been here for six months,
but the Enforcement Division said it would be difficult to enforce.
So he has a CS that takes it out again.
Number 565
SENATOR TAYLOR moved to adopt the CS to SB 7. There were no
objections and it was so ordered.
SENATOR LINCOLN asked regarding section 5 that if you buy a tag for
a bear and change your mind, can you go for a bison or something
else instead. SENATOR DONELY replied that was right and that is
currently in law also.
KEVIN DELANEY, Director, Division of Sport Fish, said the fee
structure for licensing sport fishermen in Alaska has a history of
stability with the last significant change in 1992.
TAPE 97-6, SIDE B
Number 590
Licenses, particularly sales to non-residents, over the past decade
have increased steadily. Money received from the sale of sport
fishing licenses is deposited into the State's Fish and Game
account, a constitutionally dedicated fund, which can only be
expended for projects that provide benefits primarily for sport
fishermen.
MR. DELANEY said that adopting of SB 7 would result in a
substantially larger contribution to the State's Fish and Game fund
on an annual basis due specifically to the increase in the non-
resident sport fishing licenses and tags. He cautioned that their
ability to model a market reaction to significant changes in sport
fish license fees is very limited. Other states have increased
these fees and it has resulted in, at least, a temporary decrease
in total sales. Non-resident fees comprise about 75% of the total
annual income from license sales across the State while non-
resident sport fishing effort is only about 35% of the total angler
days expended in the State.
Our sport fish program is unique because participation in the sport
fisheries in the State is paralleled with increased sales of
licenses and also with increased federal aid funds that come into
the program. There are excise taxes on fishing equipment that are
generated at the manufacturer level and parcelled out to the
states, he explained. That has allowed them to roughly keep pace
with the increases in participation.
Number 535
MR. DELANEY said the Board of Fisheries has agreed to put out a
call for proposals to create seasonal limits for non-residents
across the State through their next cycle. They have found that
for both residents and non-residents about 3% harvest about 20 -
25% of the total harvest of salmon and halibut. A small segment of
both the resident and non-resident population takes large numbers
of fish. The challenge is to affect the behavior of that 3% and
reduce their exploitation of fish and not create something that's
onerous to the other 97%. Their recommendation (ADF&G and Fish and
Wildlife Protection) is to adopt seasonal limits which would create
a backdrop of regulation that would not affect the preponderance of
non-residents who come to Alaska to fish. Another thing they have
done on a regulatory level since they last saw this issue is to add
intent to sell or barter sport fish to the prohibitive language.
Fish that are in transit, then, in commercial quantities would be
subject to this regulation.
He said ADF&G has worked together with Fish and Wildlife Protection
and in the FY 98 Governor's budget, under Division of Sport Fish,
requests funding for an enforcement demonstration project. This
will be the first time ever they have made Fish and Game funds
available through a contract RSA with Fish and Wildlife Enforcement
to work on specific sport fish issues that they jointly designate.
He said the very first place the enforcement officers will be
utilized is on the Kenai Peninsula to look into the illegal sale of
sport caught sockeye salmon.
MR. DELANEY said he could see little else that can be done in
statute that can address this until they see the results of their
efforts. They do think the addition of a seven-day license for
non-residents would be beneficial, but for the non-resident annual
license they suggest rather than eliminating it, to price it at
approximately two and a half times the 14-day license. He said
that most of our fishing seasons for salmon are less than a month
long except for Southeast where it is a marine fishery. He agreed
with Senator Donley that people who come up here and spend extended
periods of time participating in our sport fisheries get one heck
of a bargain. He did not think they would be affected at all by
making an additional contribution. He said two and a half times
works out to about $75. This would also address the issue of the
new people who come to the State and intend to become residents and
a number who come up seasonally.
SENATOR LEMAN asked Senator Donley if he considered raising the
one-day license fee which would still be a bargain for sport
fishermen especially in light of the new information about Canada's
bag limits.
Number 478
CHAIRMAN HALFORD announced at 4:37 p.m. that he was going to
another meeting and Vice Chairman Green would chair the meeting
now. He added that he thought Senator Donley was going in the
right direction.
SENATOR DONELY said he thought if they were going to increase the
one-day fee, it might be a good idea to just eliminate it because
currently we charge only $15 for a three-day license and he
proposes to raise that to $20 which is pretty insignificant to an
individual.
SENATOR LEMAN asked how we compare with other states for one-day
licenses. KAR EN BRAND , staff to Senator Donley, replied that th
found that every state has a different set-up and it was impossible
to make a comparison. She said they had the same difficulty trying
to compare with Canada.
SENATOR SHARP said he thought it would be very difficult to enforce
a seasonal limit. MR. BROOKS responded that nothing works without
enforcement on the ground. However, he pointed out that 90% of the
people do go along with well-reasoned regulations. Ones who aren't
inclined to do that are only going to respond to enforcement
activities in the field. He explained that they would furnish
people who are going to fish in fisheries subject to a seasonal
limit a harvest record card on which they are required to record
time, place, date, and species in ink immediately upon landing and
killing that fish. If they don't, they are subject to the fine. He
said they have had relatively good luck with that regulation. He
noted that it helps that most are short seasons of 10 days to three
weeks.
SENATOR TAYLOR remarked that if the Board is seriously talking
about changing seasonal bag limits, he hoped they would call
Deborah Lyons and Bob Penny and talk to them about it, because he
saw Ms. Lyons thrown of the Board of Fish for even bringing that
subject up on the Kenai River. He personally doubted that the
Board would have the courage to do it, but hoped they would.
He was concerned that they are attacking every non-resident coming
into the State for the bad acts of what may be a few. He gave an
example of a son and wife coming up to visit their resident parents
and having to pay $240 for two weeks of fishing and maybe not being
able to fish most of those days because of bad weather. He thought
we might be reaching a point in the economics of these things where
people say why are we wasting our time here where for $235 I can
get an airplane fare out of Seattle, three nights lodging in
British Columbia, and I can catch four king salmon a day in British
Columbia, but only one in Southeast Alaska.
VICE CHAIRMAN GREEN asked in the past did they get feedback from
visitor groups who were worried the fees would be a detriment to
visiting. SENATOR DONELY replied that there was a limited amount
of that and there have been adjustments made in the non-resident
hunting where there was most concern.
SENATOR LINCOLN asked if the Alaska Sports Fishing Association is
supporting this. MS. BRAND replied yes. SENATOR LINCOLN wanted
clarification on how the military would be treated as a resident or
non-resident. SENATOR DONLEY replied that this does not change
treatment of the military which was an annual king salmon tag of
$20 with their annual license being less than the non-resident.
SENATOR LINCOLN asked what percentage of the fees we get now are
from the military versus the non-resident/non-military. MR. BROOKS
said it was a fairly small percentage and he wasn't sure if they
were lumped in with the non-residents.
SENATOR LINCOLN wanted clarification on the fiscal notes. The one
from Public Safety is $0 impact and yet the analysis says the bill
will impact the department's enforcement programs. She also wanted
to know about the Division of Wildlife Conservation expecting
$140,000 annual loss in revenues. Her third concern was the
Division of Sport Fisheries anticipating an increased revenue of
$1.5 million for the first year. MR. BROOKS replied that the
legislation proposes to reduce the combo licenses. It's their
estimate that the $5 decrease in the combo license would result in
the loss from the Division of Wildlife. The increase for Division
of Sport Fish is very difficult to quantify.
SENATOR LINCOLN said she didn't think that the proposed increases
were out of line. About Senator Taylor's concern with buying a two
week license and not being able to use it because of bad weather
she thought wasn't that serious because if there was bad weather,
a person could buy a one day license for $10.
MR. BROOKS said the original SB 7 makes a provision for a non-
resident who's been here the preceding six consecutive months and
maintained a permanent place of abode in the State to get a non-
resident license that's good for the remainder of the year. The
reason for that was that they would have to spend some time to
research whether, in fact, people had been here six months. They
don't anticipate any additional man power to do that, because they
will leave something else undone.
MR. BROOKS said other states that don't have the opportunities we
have, have made significant changes in their license fees. The
results have been everything from very favorable to very
unfavorable. There is a lot at stake, but it is hard to project
the effects in the marketplace. He is cautious because we have a
very good program today.
Number 178
SENATOR SHARP moved to pass CSSB 7 from committee with individual
recommendations with the new fiscal notes. There were no
objections and it was so ordered.
Number 161
SB 8 AIRPORT/SHOOTING FACILITY NOISE LEVELS
VICE CHAIRMAN GREEN said they would hold SB 8 and adjourned the
meeting at 5:00 p.m.
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