Legislature(2013 - 2014)BUTROVICH 205

04/08/2014 03:30 PM Senate SPECIAL COMM ON TAPS THROUGHPUT


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03:35:49 PM Start
03:36:52 PM Presentation: the Alaska Oil & Gas Conservation Commission Mission Overviews & Outstanding Issues.
04:22:04 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Presentation from Alaska Oil and Gas Conservation
Commission: Mission Overview and Outstanding
Issues
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE SPECIAL COMMITTEE ON TAPS THROUGHPUT                                                                         
                         April 8, 2014                                                                                          
                           3:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Peter Micciche, Co-Chair                                                                                                
Senator Anna Fairclough                                                                                                         
Senator Lesil McGuire                                                                                                           
Senator Berta Gardner                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Mike Dunleavy, Co-Chair                                                                                                 
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
SENATOR CATHY GIESSEL                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: THE ALASKA OIL & GAS CONSERVATION COMMISSION                                                                      
MISSION OVERVIEW & OUTSTANDING ISSUES.                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CATHY FOERSTER, Chair & Engineering Commissioner                                                                                
Alaska Oil & Gas Conservation Commission (AOGCC)                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Presented information on AOGCC's mission and                                                              
outstanding issues.                                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:35:49 PM                                                                                                                    
CO-CHAIR PETER  MICCICHE called the  Senate Special  Committee on                                                             
TAPS  Throughput meeting  to order  at 3:35  p.m. Present  at the                                                               
call  to order  were Senators  Gardner, Fairclough,  McGuire, and                                                               
Chair Micciche. He also noted the presence of Senator Giessel.                                                                  
                                                                                                                                
                                                                                                                                
^PRESENTATION:  The  Alaska  Oil &  Gas  Conservation  Commission                                                               
Mission Overviews & Outstanding Issues.                                                                                         
   PRESENTATION: The Alaska Oil & Gas Conservation Commission                                                               
             Mission Overview & Outstanding Issues.                                                                         
                                                                                                                              
3:36:52 PM                                                                                                                    
CO-CHAIR MICCICHE  announced a presentation  by the Alaska  Oil &                                                               
Gas Conservation  Commission (AOGCC).  He related that  the state                                                               
is seeing increased activity in  oil and gas business. Cook Inlet                                                               
has  new jack-up  rigs and  a new  platform that  is about  to be                                                               
installed.   Cook   Inlet   Energy  is   operating   two-to-three                                                               
conventional  rigs.  Repsol  and  ConocoPhillips  are  conducting                                                               
winter exploration activities.                                                                                                  
                                                                                                                                
CO-CHAIR MICCICHE  noted a 20  percent increase  in AOGCC-related                                                               
activities.   He  voiced   concerns  about   not  having   enough                                                               
inspectors. He requested  AOGCC educate Alaskans on  what they do                                                               
and suggested  the possibility of providing  future assistance to                                                               
them.                                                                                                                           
                                                                                                                              
3:38:24 PM                                                                                                                  
CATHY FOERSTER,  Chair & Engineering  Commissioner, Alaska  Oil &                                                               
Gas   Conservation   Commission   (AOGCC),   Anchorage,   Alaska,                                                               
presented information on AOGCC's  mission and outstanding issues.                                                               
She  explained that  AOGCC is  an independent  and quasi-judicial                                                               
body located  in downtown Anchorage. Although  located within the                                                               
executive branch,  by statute AOGCC  is independent and  does not                                                               
report to any  department but is held to  the same administrative                                                               
requirements. This is so that when  DNR comes before AOGCC, it is                                                               
not held any  higher than any other applicant.  AOGCC must remain                                                               
fair and unbiased in nature.                                                                                                    
                                                                                                                                
MS. FOERSTER  related that statute requires  three commissioners;                                                               
one  must be  a  petroleum  geologist, one  must  be a  petroleum                                                               
engineer, and one must be  a public member with relevant training                                                               
and  experience. The  public position  is  currently vacant.  She                                                               
listed the remaining staff: two  geologists, six engineers, seven                                                               
field   inspectors,   and   several  IT   data   management   and                                                               
administrative   support  positions.   There  is   currently  one                                                               
engineer  vacancy  and an  effort  to  add one  additional  field                                                               
inspector.                                                                                                                      
                                                                                                                                
She noted that  staffing is one of the biggest  issues AOGCC has.                                                               
She said the industry is very  active and the technical staff are                                                               
drawn from the  same talent pool as the  industry. The industry's                                                               
compensation  is more  competitive so  it  is hard  for AOGCC  to                                                               
compete for staff. She related  that the last two engineers AOGCC                                                               
lost left  for a 10  percent signing  bonus, a 20  percent raise,                                                               
and an all-expense trip back to Texas.                                                                                          
                                                                                                                                
3:42:40 PM                                                                                                                    
SENATOR GARDNER  asked how  long the  positions have  been vacant                                                               
and  if  AOGCC  can  exempt positions  from  normal  compensation                                                               
schedules.                                                                                                                      
                                                                                                                                
MS.  FOERSTER replied  that the  field  inspector positions  have                                                               
been  filled  and  another  field  inspector  position  has  been                                                               
recently added. With the increased  activity, more inspectors are                                                               
needed. The  engineer position has  been vacant for close  to two                                                               
years.  For   a  while  there   was  a  geologist   vacancy.  The                                                               
commissioner vacancy  occurred at  the end  of January.  She said                                                               
AOGCC has sought  and achieved an exemption  for technical staff.                                                               
She  said  AOGCC  and  DNR's  technical  staff,  geologists,  and                                                               
engineers  receive an  exempted  salary status.  This year  AOGCC                                                               
budgeted  for a  raise  for commissioners,  also,  and will  make                                                               
those positions competitive with the  director of the Division of                                                               
Oil and Gas at DNR.                                                                                                             
                                                                                                                                
3:46:48 PM                                                                                                                    
CO-CHAIR  MICCICHE  said AOGCC  used  to  compete with  Lower  48                                                               
positions  of  similarly  qualified  and  adequately  experienced                                                               
field engineers,  but they don't  come close to  competing within                                                               
Alaska.                                                                                                                         
                                                                                                                                
MS.  FOERSTER agreed.  She said  field inspectors  have difficult                                                               
work and  must travel to  remote sites.  On the North  Slope they                                                               
are on  call 24/7. She gave  examples of the types  of calls they                                                               
receive. She  said inspectors  try to respond  to those  calls as                                                               
quickly as  possible due to  potential cost to the  industry, but                                                               
with a shortage of inspectors,  a balance between having adequate                                                               
coverage of inspections and not  slowing projects down is needed.                                                               
Inspectors  in Cook  Inlet,  off  slope, are  on  call even  when                                                               
they're on vacation.                                                                                                            
                                                                                                                                
CO-CHAIR MICCICHE requested more about AOGCC's mission.                                                                         
                                                                                                                                
3:49:28 PM                                                                                                                    
MS.  FOERSTER  recounted  AOGCC's  mission:  prevent  hydrocarbon                                                               
waste,  protect  correlative  rights,  promote  greater  ultimate                                                               
recovery,  protect underground  fresh  water,  and protect  human                                                               
safety. She  related that  AOGCC exercises  the police  powers of                                                               
the State  of Alaska and  has jurisdiction throughout  the state,                                                               
including  offshore state  waters for  conventional oil  and gas,                                                               
coalbed methane,  shale gas, shale, oil,  and geothermal resource                                                               
exploration  and development.  In addition,  if a  well is  being                                                               
drilled for other  purposes, but there is reason  to suspect that                                                               
it will  encounter unanticipated hydrocarbons or  other hazardous                                                               
substances, AOGCC  has the authority to  assert jurisdiction. She                                                               
said   in  2013   when  CIRI   was   drilling  underground   coal                                                               
gasification  wells,  AOGCC  asserted jurisdiction  preventing  a                                                               
blow-out.                                                                                                                       
                                                                                                                                
She  explained that  their authority  covers resource  management                                                               
and  conservation,  drilling  and   well  work  operations,  well                                                               
integrity  and well  safety systems,  custody transfer  metering,                                                               
and, eventually, well abandonment.                                                                                              
                                                                                                                                
3:51:17 PM                                                                                                                    
MS.  FOERSTER described  the typical  AOGCC approvals:  drilling,                                                               
sundry wellwork, underground  injection, conservation orders, and                                                               
others.  She said  all wells  drilled  in Alaska  must receive  a                                                               
drilling  permit. All  remedial  or recompletion  wellwork on  an                                                               
existing  well  requires a  permit.  The  AOGCC has  primacy  for                                                               
administering the  EPA's Class  II underground  injection control                                                               
program in Alaska, and has  its own independent review, approval,                                                               
and monitoring  of injection into  Class I wells. She  said there                                                               
are statewide  rules covering all  requirements, but  whenever an                                                               
operator  wants pool-specific  rules,  they submit  a request  to                                                               
AOGCC and those  rules are addressed in  conservation orders. She                                                               
gave an example from the Cook Inlet fields.                                                                                     
                                                                                                                                
She related  that AOGCC addresses  a variety of  other approvals,                                                               
such as  granting exceptions and  variances from  existing rules.                                                               
She shared that in the  new millennium, AOGCC has approved almost                                                               
3,000  drilling  permits,  and  almost  6,000  sundry  well  work                                                               
permits, over  1,200 injection  orders, conservation  orders, and                                                               
other decisions and orders.                                                                                                     
                                                                                                                                
3:53:03 PM                                                                                                                    
MS. FOERSTER listed the major  issues before the AOGCC: increased                                                               
Cook Inlet  activity, increased  North Slope  activity, hydraulic                                                               
fracturing regulation,  suspended, orphaned, and BLN  legacy well                                                               
clean-up,  and North  Slope gas  sales.  She addressed  increased                                                               
Cook Inlet activity, stating that  offshore drilling in the post-                                                               
Macondo  world is  one of  the hottest  topics before  AOGCC. New                                                               
operators  are coming  to  the field.  Furie  and Buccaneer  have                                                               
brought jack-up  rigs to  the Inlet and  have been  exploring for                                                               
the  past few  seasons.  Both  of these  companies  have come  to                                                               
Alaska  with  a  lower  standard of  regulatory  compliance  than                                                               
Alaska is used  to and have required more  than normal regulatory                                                               
oversight.  Both  companies  are making  meaningful  discoveries.                                                               
Also, Hilcorp  has purchased Unocal and  Marathon's interests and                                                               
is very  aggressively investing in restoring  production in these                                                               
fields.  She referred  to  a  graph that  depicts  the uptick  in                                                               
production  in  Trading Bay  Field  due  to Hilcorp's  aggressive                                                               
wellwork and drilling program.                                                                                                  
                                                                                                                                
3:54:48 PM                                                                                                                    
SENATOR  GARDNER  recalled  that  several  years  ago  AOGCC  was                                                               
concerned  with lack  of  office  space. She  asked  if that  was                                                               
resolved.                                                                                                                       
                                                                                                                                
MS. FOERSTER  said they requested and  received additional budget                                                               
to expand the office space.                                                                                                     
                                                                                                                                
SENATOR GARDNER asked if new  developers have a lower standard of                                                               
regulatory  compliance  and are  less  compliant,  or if  they've                                                               
historically practiced in a place with differing regulations.                                                                   
                                                                                                                                
MS. FOERSTER  explained that she  could not speak to  their prior                                                               
operations, but most states are  fairly similar. She said AOGCC's                                                               
experience with new developers is  that they are cutting corners,                                                               
making  mistakes, and  not knowing  Alaska's regulations,  all of                                                               
which require  greater vigilance  and more  frequent inspections.                                                               
She used Hilcorp  as an example of a company  that is striving to                                                               
be the best operator, but has a way to go.                                                                                      
                                                                                                                                
MS.  FOERSTER  showed increased  production  in  Trading Bay  and                                                               
Swanson  River Field,  noting it  is worth  AOGCC's time  to work                                                               
with  Hilcorp and  bring them  up to  regulatory compliance.  She                                                               
added that Cook  Inlet Energy also shows  increased production in                                                               
Redoubt Shoal Field.                                                                                                            
                                                                                                                                
3:57:27 PM                                                                                                                    
MS.  FOERSTER continued  to explain  that increased  activity has                                                               
kept AOGCC  very busy. She  said they are reviewing  an unusually                                                               
high  number  of  custody   transfer  metering  applications  for                                                               
companies wanting  to bring new  production on.  Field inspectors                                                               
are  conducting more  inspections  and safety  system tests.  New                                                               
operators are  having difficulties complying with  regulations so                                                               
inspections  and incident  investigations are  also up.  AOGCC is                                                               
currently involved  in adjudication of some  very heated disputes                                                               
among operators and  land owners. The modest  inspection staff is                                                               
being  stretched to  the  max and  more are  needed.  In the  big                                                               
picture the increased activity is very positive.                                                                                
                                                                                                                                
CO-CHAIR MICCICHE commented that the  impact of not having enough                                                               
inspectors is  a key issue  that the legislature will  be working                                                               
on.                                                                                                                             
                                                                                                                                
SENATOR MCGUIRE  asked if  it is  in the  budget to  include more                                                               
inspectors.                                                                                                                     
                                                                                                                                
CO-CHAIR  MICCICHE noted  that the  positions are  funded by  the                                                               
industry.   He  shared   consequences  of   decreased  regulatory                                                               
oversight,  delays to  the  industry,  mandatory tests,  overtime                                                               
costs, and risk of an accident or injury from exhaustion.                                                                       
                                                                                                                                
MS. FOERSTER  said AOGCC has put  in a request for  an additional                                                               
field inspector.                                                                                                                
                                                                                                                                
MS.  FOERSTER described  the increase  in  North Slope  activity:                                                               
winter  exploration  drilling,  increased  work  in  oil  fields,                                                               
viscous oil, CD-5, and Pt.  Thomson. It is the winter exploration                                                               
season and Conoco is drilling  one exploratory well and Repsol is                                                               
drilling  five wells,  which is  putting a  regulatory strain  on                                                               
field inspectors, engineers, and geologists.                                                                                    
                                                                                                                                
She said activity  in the legacy fields is also  up. For example,                                                               
over  the past  year, Prudhoe  Bay  has experience  a 35  percent                                                               
increase in well work activity  and Kuparuk has experienced an 18                                                               
percent increase.  The annual  decline rate  for Prudhoe  Bay and                                                               
Kuparuk  appears to  be slowing  with  Prudhoe at  2 percent  and                                                               
Kuparuk  at 4  percent,  compared  to their  usual  decline of  6                                                               
percent. Both  Conoco and  BP continue to  work at  unlocking the                                                               
enormous potential  of viscous  oil on the  slope, and  Conoco is                                                               
working toward development of CD-5,  an expansion of its Colville                                                               
development. She  said AOGCC expects renewed  well work activity,                                                               
possibly next  year, from  Exxon as it  moves toward  start-up of                                                               
its  Pt. Thomson  gas cycling  pilot. Finally,  AOGCC is  hopeful                                                               
that, as Great  Bear completes its evaluation  of the exploratory                                                               
data it gathered,  they will be back with positive  results and a                                                               
plan to bring Alaska into the shale business.                                                                                   
                                                                                                                                
4:02:05 PM                                                                                                                    
MS. FOERSTER  addressed hydraulic fracturing, which  has become a                                                               
nationwide topic  of interest. It is  not new to Alaska  where it                                                               
has been done  for over 40 years. Right now,  about 24 percent of                                                               
Alaska's wells  have been hydraulically fractured  and the number                                                               
is  increasing.  She said  AOGCC  has  been regulating  hydraulic                                                               
fracturing since  the beginning and  has just completed  a multi-                                                               
year  effort to  modify its  regulations, first  to keep  up with                                                               
technology   advances,  second   to  address   fracturing  fluids                                                               
disclosure  and water  quality monitoring,  and third,  to gather                                                               
all regulatory requirements into one  section in order to make it                                                               
easier  for the  public to  understand hydraulic  fracturing. She                                                               
asked  legislators  to  refer their  constituents  to  AOGCC  for                                                               
information.                                                                                                                    
                                                                                                                                
4:03:31 PM                                                                                                                    
SENATOR  GARDNER  asked whether  an  impediment  to expansion  of                                                               
hydraulic fracturing is access to water.  She asked if it will be                                                               
a problem for Great Bear's expansion.                                                                                           
                                                                                                                                
MS. FOERSTER said it is not an issue in Alaska.                                                                                 
                                                                                                                                
CO-CHAIR  MICCICHE  inquired  how  to provide  a  best  practices                                                               
program  due to  the  change from  traditional  producers to  new                                                               
players.                                                                                                                        
                                                                                                                                
MS. FOERSTER explained  that AOGCC reaches out to  new players in                                                               
order  to  explain  regulations   to  engineering  and  operating                                                               
management and refers them to mentors, informally.                                                                              
                                                                                                                                
CO-CHAIR  MICCICHE  suggested  the   legislature  might  want  to                                                               
provide formal training for new operators.                                                                                      
                                                                                                                                
MS. FOERSTER  related that when  DNR gives someone a  lease there                                                               
is  no vetting  to demonstrate  solutions and  money if  problems                                                               
arise  or if  the  company  has the  ability  to avoid  potential                                                               
problems. She  suggested asking DNR  to vet operators new  to the                                                               
state.                                                                                                                          
                                                                                                                                
4:06:34 PM                                                                                                                    
CO-CHAIR MICCICHE  said he has been  in the field with  large and                                                               
small companies.  He opined that large  companies bring expertise                                                               
that should be shared with newer players.                                                                                       
                                                                                                                                
MS. FOERSTER  agreed. She addressed suspended,  orphaned, and BLM                                                               
well  clean-up. She  said  states like  Texas  and Oklahoma  have                                                               
thousands of  orphaned wells;  Alaska has  only a  handful. AOGCC                                                               
has a constant effort to  hold operators accountable for properly                                                               
plugging and abandoning  wells that have no  further utility. The                                                               
only  operator   AOGCC  has  a   problem  with  is   the  federal                                                               
government's BLM  travesty wells. She  said the bad news  is that                                                               
those wells  are still a problem.  The good news is  that, thanks                                                               
to the  legislature and Senator Murkowski,  Congress has provided                                                               
$50 million  to BLM  for their clean-up.  BLM is  working closely                                                               
and cooperatively with  AOGCC and ADEC to ensure  that the clean-                                                               
up  meets state  standards, which  are significantly  higher than                                                               
their own.                                                                                                                      
                                                                                                                                
4:08:37 PM                                                                                                                    
SENATOR FAIRCLOUGH  said Ms. Foerster  has reported that  BLM has                                                               
done the right thing, but  the Senate Resource Committee has been                                                               
not happy with BLM's past practice.  She thanked those at BLM who                                                               
are  responding to  Alaska's  concerns and  looked  forward to  a                                                               
future with better relationships.                                                                                               
                                                                                                                                
MS. FOERSTER turned  to AOGCC's role in North Slope  gas sales in                                                               
order to  prevent hydrocarbon waste  and ensure  greater ultimate                                                               
recovery of total  hydrocarbons. She said those  two charges have                                                               
enormous implications for North Slope  gas sales. In the world of                                                               
petroleum  engineering, it  is a  simple truism  that taking  gas                                                               
from an  oil field  puts ultimate oil  recovery at  risk. Prudhoe                                                               
Bay is an oil field with  about 2 billion barrels left to produce                                                               
and Pt.  Thomson is also  an oil  field, so AOGCC  is responsible                                                               
for determining  when and how  much gas  can be taken  from those                                                               
oil  fields so  that waste  does not  occur and  greater ultimate                                                               
recovery is achieved.                                                                                                           
                                                                                                                                
MS.  FOERSTER referred  to the  white papers  AOGCC developed  to                                                               
describe its role  in gas offtake determination  and the concerns                                                               
it has with Prudhoe Bay and  Pt. Thomson. She said it is possible                                                               
that the best  use of the Pt.  Thomason gas will be  to inject it                                                               
into  the Prudhoe  Bay  gas  cap to  get  an  added half  billion                                                               
barrels out of  the Prudhoe Bay reservoir. As Conoco  and BP work                                                               
to  find  ways  to  unlock  the huge  potential  of  viscous  oil                                                               
resource,  it is  highly  likely that  gas will  be  part of  the                                                               
solution. The  USGS estimates roughly 150TCF  of undiscovered gas                                                               
on the North Slope. If there is  the reality of a market for that                                                               
gas,  then   the  exploration  work   needed  to   realize  those                                                               
discoveries will likely result.                                                                                                 
                                                                                                                                
She said  the question was asked  whether the gas that  is burned                                                               
off  is wasted.  She  reminded  the committee  that  the gas  BTU                                                               
content,  out until  2028, is  producing a  more valuable  field-                                                               
burning product than the product being  used to get it out of the                                                               
ground.  It won't  be until  2028, on  a BTU  basis, "that  we're                                                               
using as much  gas as we're getting oil." She  concluded that the                                                               
dollar value to those two products is off the graph.                                                                            
                                                                                                                                
4:13:13 PM                                                                                                                    
CHAIR MICCICHE asked for a copy of  the graph. He asked if it was                                                               
based on current decline rates.                                                                                                 
                                                                                                                                
MS. FOERSTER said it uses the  6 percent decline rate. She handed                                                               
out the BTU graph. She stressed  that the operators are doing the                                                               
best thing for the state by using gas to produce more oil.                                                                      
                                                                                                                                
CO-CHAIR MICCICHE  noted there are  other options of  lifting the                                                               
hydrocarbons.                                                                                                                   
                                                                                                                                
MS. FOERSTER  agreed. She  concluded that,  "The monkey's  on the                                                               
operator's backs to  demonstrate to us, and to  you, that selling                                                               
the gas from  Prudhoe Bay and Pt. Thomson is  the best answer for                                                               
preventing  waste  and   ensuring  greater  ultimate  hydrocarbon                                                               
recovery." She said AOGCC is looking  to BP and Exxon to do that.                                                               
She continued  to say, "I guarantee  they are not going  to spend                                                               
big bucks to build a line, if  they don't think they are going to                                                               
be able to prove  to us that it's the right thing  to do. If it's                                                               
the right thing  to do for them,  it's the right thing  to do for                                                               
us."                                                                                                                            
                                                                                                                                
CO-CHAIR MICCICHE  said it  is an interesting  comment and  not a                                                               
lot of people realize that.                                                                                                     
                                                                                                                                
4:15:29 PM                                                                                                                    
SENATOR MCGUIRE thanked  Ms. Foerster for her work.  She asked if                                                               
there is anything  the committee needs to know about  oil and gas                                                               
development. She  reflected on the  debate over AGIA  where AOGCC                                                               
was  not  contacted  or  asked  to  participate.  She  asked  Ms.                                                               
Foerster  to comment  on that.  She  also asked  Ms. Foerster  to                                                               
comment on the proposed gas line bill or any other bills.                                                                       
                                                                                                                                
4:17:12 PM                                                                                                                    
MS.  FOERSTER  said  she respects  the  legislative  process  and                                                               
recognizes that  they reach out  when necessary. She  opined that                                                               
with the  gas line, in  general, "the later  it is and  the lower                                                               
the rate,  the less  the losses  will be." The  less oil  that is                                                               
left  in the  ground,  the lower  the losses  will  be. The  more                                                               
things  that the  operator plans  and puts  in place  to mitigate                                                               
those  losses, such  as their  current process  of gas  cap water                                                               
injection, looking  to see if CO2  can be used as  EOR, and other                                                               
tried  and proven  tactics, the  better off  Alaska will  be. She                                                               
reiterated the statement  that the large companies  are not going                                                               
to go  forward if it  is not  financially beneficial to  them. If                                                               
they  make  more money,  the  state  will  make more  money.  She                                                               
concluded that AOGCC's job will  be to ensure that companies have                                                               
"dotted the i's and crossed the t's."                                                                                           
                                                                                                                                
4:18:50 PM                                                                                                                    
SENATOR  GARDNER referred  to an  article in  Petroleum News  and                                                             
asked if gas will be needed  to develop heavy oil and viscous oil                                                               
more than is used currently.                                                                                                    
                                                                                                                                
MS.FOERSTER  said  there  will  likely  be  a  greater  need  for                                                               
gas/fuel for  reduction of viscosity.  AOGCC has  communicated to                                                               
BP and  Conoco that  they are  looking to them  to see  where gas                                                               
fits  into their  viscous oil  development. Gas  is likely  to be                                                               
instrumental to viscous oil recovery.                                                                                           
                                                                                                                                
SENATOR   GARDNER   summarized   that  viscous   oil   would   be                                                               
instrumental  in increasing  production, as  opposed to  reducing                                                               
the decline. She asked if  that adversely impacts options for gas                                                               
export.                                                                                                                         
                                                                                                                                
MS.  FOERSTER maintained  that viscous  oil will  never stop  the                                                               
decline.                                                                                                                        
                                                                                                                                
SENATOR  FAIRCLOUGH wished  people  to  know that  there  is a  2                                                               
percent decline, rather than a 6 percent decline in Prudhoe Bay.                                                                
                                                                                                                                
MS. FOERSTER pointed  out that the legislature has done  a lot to                                                               
incentivize the increase in production.                                                                                         
                                                                                                                                
CO-CHAIR MICCICHE thanked AOGCC for the presentation.                                                                           
                                                                                                                                
4:22:04 PM                                                                                                                    
There  being nothing  further to  come before  the committee  the                                                               
Senate  Special Committee  on TAPS  Throughput  was adjourned  at                                                               
4:22 p.m.                                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects
AOGCC Presentation.PDF STTP 4/8/2014 3:30:00 PM
Point Thomson White Paper.pdf STTP 4/8/2014 3:30:00 PM
Prudhoe Bay Gas Offtake White Paper.pdf STTP 4/8/2014 3:30:00 PM
North Slope Gas Sales White Paper.pdf STTP 4/8/2014 3:30:00 PM