HJR 28-OPPOSE RESTRICTIONS ON OIL/GAS ACTIVITIES 4:06:30 PM CO-CHAIR WIELECHOWSKI announced HJR 28 to be up for consideration. [CSHJR 28(RES)am was before the committee for consideration.] JEANNE OSTNESS, staff to Representative Johnson, sponsor of HJR 28, provided a brief explanation of the history of Outer Continental Shelf (OCS) drilling. MS. OSTNESS read the following statement: In 1953 Congress passed the Submerged Lands Act (SLA) which granted individual states the rights to natural resources on submerged lands up to three miles from shore. It also reaffirmed federal claims to all resources on lands on the Outer Continental Shelf (OCS) which consists of all lands seaward of the outer limit of the state's 3 mile extent. The passage of the Submerged Lands Act led to the passage of the Outer Continental Shelf Lands Act later in 1953. That act outlines the federal responsibilities over the submerged lands and authorizes the secretary of the Interior to lease those lands for resource development. In the 1960s and 1970s an emergent environmentalist movement resulted in the passage of the National Environmental Policy Act of 1969, the creation of the EPA in 1970 and the establishment of the Clean Air Act in 1972. These and other related bills created the core of the regulatory framework that is currently applicable to all extractive industries. During the 80's, various area specific moratoriums on OCS drilling were passed by Congress. During this time, petroleum revenues dropped markedly. By 1990 the bans on drilling had encompassed so much of the US exclusive economic zone that a blanket moratorium in most areas was enacted by the President. In 2008, President Bush rescinded the presidential moratorium on OCS drilling, removing one of the major roadblocks. And in October of 2008, Congress followed suit and rescinded their ban on OCS leasing and lands came up for lease. The (Mining and Minerals Service) MMS estimates that about 574 million acres of the US OCS are currently off limits representing about 85 percent of OCS acreage offshore in the Lower 48. Estimated resources in the banned areas are 17.8 billion barrels of oil and 76.5 Tcf of natural gas. A recent northern economics report commissioned by Shell oil on the economic impacts of OCS development in Alaska, projects that 35,000 jobs will be created in the state over 50 years of OCS development. Those jobs represent a combine payroll of $72 billion over the 50-year period projected in the study. Unfortunately, recent comments and actions by Interior Secretary Salazar and President Obama have cast the future of OCS drilling into doubt. Present Obama has chosen to delay the lifting of the presidential moratorium on OCS drilling and Secretary Salazar has expressed an interest in closing or severely limiting OCS exploration and drilling in areas of the Lower 48 in favor of an as yet uncrafted comprehensive energy plan. This kind of back-pedaling and uncertainty adversely effects potential exploration and development. Especially in economically uncertain times like these, companies can't afford to risk huge sums of capital unless they have a reasonable guarantee that their investment won't be pulled out from under them at the last minute. To that effect, HJR 28 sends a clear message to President Obama, Secretary Salazar and the US Congress that they should pass no laws or administrative orders that would restrict OCS drilling and exploration in Alaska or the continental US. Further, it urges them to encourage offshore exploration and drilling. I urge you to support this resolution. SENATOR FRENCH asked for Obama's comments which Ms. Ostness referred to. MS. OSTNESS said she has Secretary Salazar's at hand. She does not have President Obama's comments with her but will get them for Senator French. 4:11:54 PM MARILYN CROCKETT, Alaska Oil and Gas Association, supported HJR 28. Ms. Crockett stated the MMS estimates that Alaska's OCS resources contain an estimated 27 million barrels of oil and 132 trillion cubic feet of natural gas. Recent analysis shows it could generate another $1.3 trillion in federal, state and local revenues and contribute 150,000 jobs if the areas offshore that are restricted from development at this time are opened up. On the Alaska level there is the potential to generate 35,000 jobs with a total payroll of $72 billion. Clearly this is an important resource for Alaska and the nation. 4:14:04 PM MS. CROCKETT said that a lot of challenges exist such as remote location and harsh operating environment, but other challenges can be minimized such as access restrictions. 4:14:34 PM JASON BRUNE, Executive Director, Resource Development Council(RDC), supported HJR 28. Mr. Brune stated that RDC is a statewide non-profit, membership funded organization founded in 1975 comprised of individuals and companies from Alaska's oil and gas, mining, timber, tourism and fisheries industries as well as Alaska native corporations, local communities, organized labor and industry support firms. RDC's purpose is to link these together to encourage a strong, diversified private sector in Alaska and expand the state's economic base through the responsible expansion of natural resources. He said an additional 15 trillion cubic feet of gas must be discovered for the trans-Canada or Denali pipeline project to be economically viable over the long term. He stated that we should be encouraging OCS development not hampering it. OCS has a strong track record of coexisting with other industries including fishing. MR. BRUNE stated that energy exploration, development and production in federal and state waters around Alaska will occur in an environmentally sensitive and responsible manner with restrictions when needed. He said the U.S. has a moral obligation to develop domestic energy sources. The OCS is the ideal location and its resources will buy the time needed to develop the alternative and renewable energy resources that will someday break our reliance on foreign oil. 4:17:39 PM MS. OSTNESS drew attention to the House amendment on page 3, line 3 of the resolution. It put an emphasis on "responsible" in encouraging and promoting continued responsible exploration, development and production. SENATOR FRENCH supported the thrust of this resolution, but he was concerned about the WHEREAS clause on page 2, lines 18 - 21. It states that key members of the Obama administration and Congress have stated as "key priority" the restriction of development of Alaska's off-shore oil and gas reserves. Senator French said he wonders if it would be better to remove that clause and focus on telling the Obama administration and Congress that we are strongly in support of OCS development. SENATOR HUGGINS objected for discussion. His first question to the sponsor is whether that is true or not. MS. OSTNESS replied that Secretary Salazar announced the Department of the Interior's new strategy for developing an off- shore energy plan. Ms. Ostness said step one is a 180-day extension on comment period for the proposed 5 year plan for oil and gas development. Step two is assembling a new report on conventional and renewable off-shore energies and having then four regional conferences to review the findings. The final step is expediting renewable energy rule-making for OCS. Ms. Ostness stated that it just seemed that it was a delaying tactic. SENATOR FRENCH said he didn't hear it as a key priority of the Obama administration to impose restrictions on developing Alaska's off shore and gas reserves. That may be the underlying motive but that is not what was stated. It is better off to remove it. SENATOR HUGGINS said it does appear to be a little bit of a stick in the eye. He asked the sponsor if that had been pointed out before. MS. OSTNESS replied no, it had not. CO-CHAIR WIELECHOWSKI said he hoped to move this out of committee today as Secretary Salazar is in Alaska and a message could be sent to him. Co-chair Wielechowski said he tends to agree with Senator French. 4:22:16 PM SENATOR WAGONER said it isn't imperative that this be given to Secretary Salazar tomorrow. He said perhaps this section needs to be rewritten and checked if it is factual. Even if it is factual, it should be rewritten. MS. OSTNESS said she does not think the sponsor would object to taking that section out. CO-CHAIR WIELECHOWSKI asked Ms. Ostness given the choice of delaying the resolution or taking the section out, if she would have a preference. MS. OSTNESS replied that she would rather have it move. SENATOR HUGGINS maintained his objection. He stated that it would be smarter to take a look and see what's true and what's not, change the language and capture the sponsor's intentions. SENATOR FRENCH said he would just as soon remove that section. It cleans it up and the message could be delivered to Secretary Salazar when he's here in Alaska. 4:24:34 PM MS. OSTNESS said that this is viewed as a "sense of the House," had the majority members signed the letter and have given Secretary Salazar the resolution with the House's results. CO-CHAIR WIELECHOWSKI said he would like to move HJR 22 today, but it is a committee process. SENATOR HUGGINS said he agreed with striking it, but the sense of the House has already happened. The resolutions would be different if the Senate changes it. SENATOR FRENCH said there is no obligation that they be exactly the same. The Senate could pass one that says what they have agreed to. SENATOR HUGGINS said he preferred to do the modification so that it moves out, is accurate and doesn't stick somebody in the eye. SENATOR STEVENS pointed out that this is a joint resolution. He questioned that the House has already dispersed their version even though it has not been approved by both the House and the Senate. MS. OSTNESS said a letter was written just indicating that the House has passed this resolution and that it was viewed as a sense of the House at this point. SENATOR STEVENS remarked that sending a joint resolution that hasn't been approved by the Senate was premature. MS. OSTNESS replied that it was just a letter; they didn't send the resolution. SENATOR STEVENS said he is comfortable moving the resolution. It does not harm the resolution to take it out. 4:26:48 PM SENATOR WAGONER asked for clarification on what was sent, was it a letter stating there was a resolution in process? MS. OSTNESS answered yes - and that it had passed the House with a majority vote. SENATOR WAGONER said he'd be comfortable taking it out if the sponsor didn't want to re-write the section, but he thinks if it is left in it should be re-written. SENATOR FRENCH maintains his motion to remove page 2, lines 18 - 21. 4:27:34 PM CO-CHAIR WIELECHOWSKI asked if there was continued objection to the motion of removing page 2, lines 18-21. There were no objections and it was so ordered. SENATOR FRENCH moved to report SCS CSHB HJR 28(RES)am be from committee with individual recommendations. There were no objections and it was so ordered.