Legislature(2013 - 2014)BUTROVICH 205
02/26/2013 03:30 PM Senate SENATE SPECIAL COMM ON TAPS THROUGHPUT
| Audio | Topic |
|---|---|
| Start | |
| SB59 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 59 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE SPECIAL COMMITTEE ON TAPS THROUGHPUT
February 26, 2013
3:31 p.m.
MEMBERS PRESENT
Senator Mike Dunleavy, Co-Chair
Senator Peter Micciche, Co-Chair
Senator Anna Fairclough
Senator Lesil McGuire
Senator Berta Gardner
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Cathy Giessel
COMMITTEE CALENDAR
SENATE BILL NO. 59
"An Act relating to approval for oil and gas or gas only
exploration and development in a geographical area; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 59
SHORT TITLE: OIL & GAS EXPLORATION/DEVELOPMENT AREAS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/19/13 (S) READ THE FIRST TIME - REFERRALS
02/19/13 (S) TTP, RES, FIN
WITNESS REGISTER
DAN SULLIVAN, Commissioner
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Provided information related to SB 59.
WILLIAM C. BARRON, Director
Division of Oil and Gas (DOG)
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Provided information related to SB 59.
WENDY WOOLF, Petroleum Land Manager
Division of Oil and Gas
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Provided information related to SB 59.
ACTION NARRATIVE
3:31:30 PM
CO-CHAIR PETER MICCICHE called the Senate Special Committee on
TAPS Throughput meeting to order at 3:31 p.m. Present at the
call to order were Senators Gardner, Dunleavy, Fairclough,
McGuire, and Chair McGuire.
SB 59-OIL & GAS EXPLORATION/DEVELOPMENT AREAS
3:32:33 PM
CO-CHAIR MICCICHE announced that the only order of business
would be a presentation on SB 59 by the Department of Natural
Resources (DNR). He noted that the committee would hear SB 59
again on March 5.
DAN SULLIVAN, Commissioner, Department of Natural Resources,
began a presentation on Statewide Permitting Reform, which is
part of the Governor's permitting reform efforts from last year
and the current year. He said it was important to include SB 59
in the broader context of the administration's permitting reform
efforts. He pointed out that SB 59 is the third bill the
Governor has introduced during this legislative session that
focuses on different elements of permitting reform
modernization.
COMMISSIONER SULLIVAN discussed the importance of permitting
reform for Alaska's competitiveness. It has bipartisan,
national, and local recognition and support. Former presidents
and magazines are focused on the need for permitting reform
modernization. Politically diverse states are fully engaged in
modernizing their permitting processes. He stressed that
permitting reform relates to the idea that economic development
can be strangled by over-regulation.
He stated that permitting reform is also a national issue that
affects U.S. competitiveness.
COMMISSIONER SULLIVAN emphasized that permitting reform does not
detract from the state's focus on high environmental standards.
Jobs and the environment are undermined by permitting delays and
overregulation.
He said that timely, predictable, and efficient permitting is
critical to other statewide strategies. It is critical to
turning around TAPS throughput in order to secure Alaska's
future oil. Ensuring the permitting process is structured and
efficient will increase production by making Alaska more
competitive.
CO-CHAIR MICCICHE asked why the Senate Special Committee on TAPS
Throughput was the first committee to hear SB 59.
COMMISSIONER SULLIVAN explained that the administration believes
that the competitiveness of Alaska is critical for increasing
investment and turning around throughput decline. He added that
competitiveness comes in different forms: oil tax reform is the
cornerstone, but all four strategies are important.
COMMISSIONER SULLIVAN said that significant progress has been
made on permitting reform, including statutory changes made,
budget increments received, and IT overhauls implemented. There
was a focus over the last two years to reduce permitting backlog
and to create a system that does not produce backlog.
He showed a graph on Division of Mining, Land & Water backlog
authorizations and said the goal is to eliminate the backlog
within three years. The impetus to do so began two years ago
with the start of the administration's focus on permitting
reform.
3:40:03 PM
SENATOR GARDNER asked if part of that effort was to develop an
on-line permitting process.
COMMISSIONER SULLIVAN explained the addition to DNR of the
Unified Permit Project and Document Management system funded
from a capital budget request. He shared a goal to have the
ability to track a permit in process. He stressed bi-partisan
support for significant budget requests to update permitting
abilities.
COMMISSISONER SULLIVAN referred to HB 361 which was introduced
last year and passed with strong bi-partisan support. He said
that this session the Governor will introduce SB 26, and SB 27
was heard by Senate Finance this morning. SB 59 is the third
bill that relates to permitting reform and modernization.
COMMISSIONER SULLLIVAN stressed that within the focus of
permitting reform on the North Slope and TAPS, is working with
the various entities throughout the state and federal
government. He spoke of signing a Memorandum of Understanding
(MOU) with the North Slope Borough in order to brief them on the
permitting process. He admitted that the administration should
have approached the North Slope Borough sooner with a much more
detailed "pre-brief" because, even though it will not affect
their Title 19 responsibilities, they are an important partner.
3:44:03 PM
CO-CHAIR MICCICHE asked if there was an annual evaluation or
survey of permitees, partners, and stakeholders in order to
request ideas about streamlining the permitting process.
COMMISSIONER SULLIVAN referred to DNR's strategy to seek input
from the public about the permitting process that includes input
from municipalities, industry, and non-governmental
organizations. He said DNR held public hearings all throughout
the state. He agreed that permitees have some of the best ideas
about permitting reform.
He noted that permitting reform is a multi-year process.
CO-CHAIR MICCICHE commended DNR for involving Alaskans in the
process.
3:45:41 PM
SENATOR GARDNER asked about the process of assessing mineral or
resource potential. She inquired who does the surveys and where
the results are kept.
COMMISSIONER SULLIVAN referred to the strategic and critical
minerals strategy that the Governor launched at DNR's Summit in
Fairbanks in 2011. The first part of the strategy involves a
three-year geological survey by DNR. It involves a statewide
survey of Alaska's mineral potential. The department has been
working with the federal government, Native corporations, local
governments and potential new entrants to encourage domestic
exploration and development by making mineral potential
information public.
He said the Geological Minerals Center contains all core
samples. He stressed that the legislature has been very
supportive of the three-year, statewide geological assessment.
3:48:12 PM
WILLIAM C. BARRON, Director, Division of Oil and Gas (DOG),
Department of Natural Resources, introduced Wendy Woolf, the
Petroleum Land Manager for the Division of Oil and Gas in the
Department of Natural Resources. He reported that Ms. Woolf did
outreach to clients to seek information about permitting reform
needs and ideas. He stated DOG's belief that companies and
citizens are customers and are needed in the partnership to
progress oil and gas development in a more progressive manner.
MR. BARRON said that Ms. Woolf worked on the project by
dialoguing with companies and stakeholders in order to develop a
better, more holistic approach toward what activities are going
to take place in certain geographic areas. The goal was to
dialogue up front, rather than piecemeal, as projects and
programs come to the DOG table.
MR. BARRON explained that DOG took a hard look at how it handles
area-wide leasing. The division has a very strong program of
company and stakeholder involvement up front that establishes
areas of activities for oil and gas exploration and disposal of
properties, but also mitigation efforts associated with those.
He said DOG is taking that same concept in establishing broad
views in geographic areas for exploration and development, in
order to identify areas so companies can plan, receive approval,
and move through the plan of operation. It's not about what
programs will take place, but how the programs will take place.
3:51:40 PM
WENDY WOOLF, Petroleum Land Manager, Division of Oil and Gas,
Department of Natural Resources, related that SB 59 says that
DNR can authorize oil and gas exploration and development
activities within a geographical area. It preserves public
notice and review at the beginning of an exploration or
development phase. It ensures certainty when an approval has
been granted for exploration or development activities. It
clarifies that DNR can review each phase across a geographic
area, rather than conducting finite reviews on each individual
project, which the way it is currently done.
She noted that "project" is oil and gas development, in general.
The phases are exploration, development, and pipeline
transportation. The initial leasing phase is when the department
does the best interest sale, which is a separate public process.
It is during the leasing phase that the department determines
that oil and gas development will occur. The subsequent analyses
are how that exploration will occur.
She continued to say that SB 59 allows DNR and the public to
look across a broader geographical area when it's evaluating the
"how" oil and gas development should occur on state land. SB 59
clarifies that DNR can review exploration development activities
holistically in a geographic area and preserves public
participation. This benefits the public because it allows them
to look at exploration and development across a broader area and
provide input about how particular areas are going to be
developed before development occurs - a proactive stance.
MS. WOOLF stated that SB 59 benefits the industry because a
company knows, going into a project, what parameters they need
to design around and they can prepare their plans of operations
according to stipulations and conditions that are the result of
this planning process. It provides certainty that plans of
operations can proceed and ensures predictable project approvals
for subsequent exploration or development activity.
3:54:13 PM
MS. WOOLF showed a map of oil and gas lease sale areas on the
North Slope and Cook Inlet. She said DNR offers five areas of
oil and gas lease sales - area-wide lease sales. They consist of
the North Slope, the Beaufort Sea, the North Slope Foothills,
Cook Inlet, and the Alaska Peninsula.
MS. WOOLF described the oil and gas lease sale process. It
begins with a preliminary decision to offer one of the lease
sale areas. She used the North Slope as an example. There is an
extensive public review process, which SB 59 does not affect.
The lease sale culminates in a comprehensive, final best
interest decision that is signed by the director and is called
the Final Finding of the Director. She explained that the best
interest finding is a comprehensive multi-year review process
that includes broad public notice and extensive public and
agency participation. There is a thorough evaluation of impact
associated with oil and gas development based on statutory
criteria which results in concrete mitigation measures that
protect state lands and address environmental concerns. Leases
that are issued subsequent to a lease sale decision are subject
to all mitigation measures.
She added that during the leasing phase DNR has made the
decision to allow oil and gas development on its land. It
specifies the lease terms and mitigation measures and provides
that public notice will be provided at the beginning of the
exploration phase, the development phase, and the transportation
phase.
MS. WOOLF described the life of an oil and gas lease. She gave
an example of how the public notice process works. She listed
the steps as the lessee develops exploration plans and a
development plan. She concluded with the production phase. She
described the process if there are additional discoveries.
3:59:06 PM
She showed a map of geographical areas for exploration
activities. She described the steps taken for exploration,
including public process, which would lead to a decision by DNR.
She turned to a map of geographical areas for development
activities that listed current fields. She provided a variety of
hypothetical examples.
She went through the steps of the life of an oil and gas lease
on the North Slope. She described the exploration plans and the
development plans, both of which have public notice and comment
periods. She said there is no change to the way pipeline
applications would be processed.
4:03:33 PM
MS. WOOLF summarized that SB 59 provides for comprehensive
review before exploration or development. It preserves public
participation in the process. It allows stipulations to be
approved before a company develops site specific plans for
exploration or development activities.
MR. BARRON commented that the approach included input from
clients. He said DOG did a self-assessment in order to discover
unnecessary repetition in the process of approving plans of
operation and exploration. The goal was to mitigate the use of
time without limiting access to the public and allowing for
protection of state lands. The bill would provide the statutory
authority to allow this to be done.
4:05:45 PM
SENATOR FAIRCLOUGH asked if designated areas have been defined
or will be defined in the future.
MR. BARRON said they will be established at a later date.
SENATOR FAIRCLOUGH asked how large that area might be.
MS. WOOLF replied that the division is currently in the process
of developing regulations. The area-wide lease sale areas would
be the maximum size an exploration area could be. It is coupled
with the lease sale decision.
SENATOR FAIRCLOUGH said once the area is defined, the allowable
exploration activities are designated, taking public input into
consideration. She asked if that was correct.
MR. BARRON said yes.
SENATOR MCGUIRE asked how much time will be saved in the average
project. She also inquired about the "time value of money."
MR. BARRON replied that each step is a 60-to-90-day process. He
said looking at exploration and development holistically within
a broader area will save time.
4:08:38 PM
SENATOR MCGUIRE asked how many steps have been consolidated.
MR. BARRON said seven or eight steps have been consolidated over
a period of time. Companies would know of the streamlined plan
approval process.
SENATOR MCGUIRE asked if it would save a year and a half.
MR. BARRON said yes, in theory.
SENATOR MCGUIRE suggested using that fact as a talking point.
She emphasized that saving time is saving money. She referred to
Australia as an example.
4:09:55 PM
CO-CHAIR MICCICHE spoke of the reputation of Alaska's being
difficult to work with. He suggested that reducing the marginal
cost of a project, which is an ultimate goal towards becoming
competitive with oil taxes, could change that.
MR. BARRON agreed.
CO-CHAIR MICCICHE pointed out that he looks at both sides of an
issue. He asked, assuming that no license is awarded that
restricts environmental requirements, if a geographic area could
be evaluated prematurely at an unnecessary cost to the state, if
there is no activity within the lease area.
MR. BARRON used the Foothills and the Alaska Peninsula as
examples that did fall into that category. He explained that the
evaluation effort has been done the Foothills and it was
discovered that the area is more gas-prone than oil-prone. He
opined that the potential of the gas lease sales in Foothills
will be robust in the future. Once the state is ready to go, all
permitting will have been done. He suggested, from a project
management and organizational standpoint, that is a good thing.
CO-CHAIR MICCICHE talked about the importance of timing in the
lease process.
4:13:09 PM
SENATOR FAIRCLOUGH referred to page 1, line 11, which describes
the method of notifying the public. She said it is found under
AS 38.05.945(b) and (c). She related that one of the places
information is posted is Alaska's on-line public notice system,
and it would be posted for 30 days. She asked where public
service announcements for remote areas are placed.
MS. WOOLF replied that the division puts notices in local post
offices, newspapers, radio stations, and regional papers. The
division also notifies the local government, village
corporations and city corporations. She said it is an extensive
outreach.
SENATOR FAIRCLOUGH clarified that the state would personally
reach out to municipalities, councils, regional and village
corporations, post masters, and non-profits, in this bill.
MR. BARRON said yes.
CO-CHAIR MICCICHE spoke of his experience as a small-town mayor
and the numerous notifications he received from DNR. He said DNR
does a good job with notifications.
4:15:57 PM
CO-CHAIR MICCICHE asked what would happen if DNR evaluates a
geographic area for oil and gas potential and finds a mining
activity. He asked if DNR would re-evaluate.
MR. BARRON said SB 59 does not address mining activity; it is
exclusively for oil and gas.
CO-CHAIR MICCICHE asked what would happen.
MR. BARRON said it would be a re-look from a different agency
and from a different perspective.
CO-CHAIR MICCICHE suggested that DNR review MOC software by a
company named KMS for web-based permitting solutions. He spoke
highly of its capabilities.
MR. BARRON thanked Co-Chair Micciche for the information.
4:17:17 PM
CO-CHAIR MICCICHE commended the testifiers for their
presentation.
He opened public testimony.
CO-CHAIR MICCICHE said the next meeting would be on March 5.
CO-CHAIR MICCICHE held SB 59 in committee.
4:18:09 PM
Chair Micciche adjourned the Senate Special Committee on TAPS
Throughput at 4:18 p.m. and then brought it back to order.
[LIO system was turned off]
4:19:26 PM
CO-CHAIR MICCICHE brought the meeting to order briefly and
closed public testimony. He stated public testimony would be
taken up on March 5.
4:19:40 PM
There being no further business to come before the committee,
Chair Micciche adjourned the Senate Special Committee on TAPS
Throughput at 4:19 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 59 ver A.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59 Transmittal Letter.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59 Sectional Analysis.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59 Briefing Paper.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59 Fiscal Note-DNR-DOG-1-14-13.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59_STTP_DNR Presentation of Bill_2 26 2013.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |
| SB 59_STTP_Permitting Overview_2-26-13.pdf |
STTP 2/26/2013 3:30:00 PM |
SB 59 |