CSHB 250(O&G): "An Act establishing a North Slope Gas Commercialization Team to develop recommendations regarding a North Slope gas project; and providing for an effective date."
00CS FOR HOUSE BILL NO. 250(O&G) 01 "An Act establishing a North Slope Gas Commercialization Team to develop 02 recommendations regarding a North Slope gas project; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. FINDINGS. The legislature finds that 06 (1) Alaska's North Slope contains abundant natural gas resources, with an 07 estimated 26 trillion standard cubic feet of recoverable natural gas in the Prudhoe Bay field, 08 an estimated three to five trillion standard cubic feet in the Pt. Thompson field, an estimated 09 two to six trillion standard cubic feet in the Kuparuk, Lisburne, and Endicott fields combined, 10 and other as yet unquantified gas resources; 11 (2) although the major Prudhoe Bay leaseholders and others have examined 12 a variety of options for future development and sale of North Slope gas, a project in which 13 North Slope gas is delivered to Asian markets as liquefied natural gas (LNG) has emerged as 14 an option of particular interest;
01 (3) the Department of Revenue recently commissioned a study by a leading 02 expert on tax and royalty systems applicable to oil and gas development; the study concluded 03 that the state's current tax and royalty structure, relative to that of other current and potential 04 LNG exporting countries, reduces the economic feasibility and competitiveness of a North 05 Slope gas project; 06 (4) that study also concluded that the North Slope producers' estimated project 07 costs of $15,000,000,000 must be reduced, the federal tax regime must be changed, perhaps 08 through the adoption of accelerated depreciation and investment tax credits, and the time from 09 the commencement of the project to the achievement of its target capacity should be 10 shortened, if possible, to help make the project economically feasible and competitive; 11 (5) that study recommended that the state amend the tax and royalty structure 12 applicable to the project and increase the certainty and stability of that structure; 13 (6) the executive branch recently signed memoranda of understanding with the 14 three major Prudhoe Bay leaseholders and Yukon Pacific Corporation; 15 (7) in 1997, the Twentieth Alaska State Legislature passed Legislative 16 Resolve 2 (CSHCR 1 (WTR)), which supports a North Slope gas project, recognizes that a 17 window of opportunity now exists, and encourages the governor to work with leaseholders of 18 North Slope natural gas resources, permit holders, the legislature, and the federal government 19 to develop and complete an LNG project to transport and market North Slope natural gas by 20 the year 2005; 21 (8) modifications to the federal tax regime are required; 22 (9) proposals by the governor for changes to the state's tax and royalty 23 structure should be made to the legislature only after careful examination of the potential 24 ramifications of the changes, under a wide range of economic conditions, in light of the state's 25 obligation to provide for the utilization, development, and conservation of North Slope gas 26 resources for the maximum benefit of Alaskans; and 27 (10) consistent with Legislative Resolve 2, the establishment of a North Slope 28 Gas Commercialization Team is appropriate to research and to enter into discussions with 29 potential project sponsors who have declared an interest in the project and who continue to 30 show an interest in the project, and to make recommendations to policymakers on these 31 important matters.
01 * Sec. 2. NORTH SLOPE GAS COMMERCIALIZATION TEAM; REPORT. (a) There 02 is established a North Slope Gas Commercialization Team to research and recommend changes 03 to state law and, in particular, to the state tax and royalty structure on natural gas, to improve 04 the economic feasibility and competitiveness of a North Slope gas project. The members of 05 the team are 06 (1) the commissioner of revenue, or the commissioner's designee; 07 (2) the commissioner of natural resources, or the commissioner's designee; and 08 (3) the attorney general, or the attorney general's designee. 09 (b) The North Slope Gas Commercialization Team shall gather, compile, and analyze 10 information on ways to improve the economic feasibility and competitiveness of a North Slope 11 gas project through changes in state and federal statutes and regulations and existing state 12 leases. 13 (c) The North Slope Gas Commercialization Team shall prepare a report that includes 14 the following: 15 (1) recommended terms that would be a basis for a contract to be entered into 16 between the state and the potential sponsors of a North Slope gas project that reflect 17 (A) the changes to the state tax and royalty structure needed to improve 18 the economic feasibility and competitiveness of the project; and 19 (B) other provisions that are needed to make a contract binding, to the 20 full extent permitted by the Constitution of the State of Alaska, and to make it 21 consistent with the public interest and the state's obligation to provide for the 22 utilization, development, and conservation of North Slope gas resources for the 23 maximum benefit of Alaskans; and 24 (2) recommended provisions that could be included in legislation needed or 25 appropriate to 26 (A) enter into a contract; 27 (B) provide an appropriate and stable fiscal environment for the project; 28 (C) provide an appropriate and stable regulatory structure for, and aid 29 permitting of, the project; 30 (D) ensure, consistent with the limits imposed by state and federal law 31 and the need for competitively priced goods and services, that a maximum number of
01 Alaska residents and Alaska businesses that are qualified or capable of being qualified 02 are hired to construct and operate the project; 03 (E) protect the environment and the health and safety of workers and 04 the public; and 05 (F) provide natural gas to Alaska communities where economically, 06 technically, and legally feasible. 07 (d) The North Slope Gas Commercialization Team shall deliver its final report to the 08 governor by January 12, 1998. 09 * Sec. 3. MEETINGS AND RECORDS. (a) The North Slope Gas Commercialization 10 Team shall solicit written comments on the recommendations to be included in the final report 11 required by sec. 2 of this Act from interested members of the public and shall hold a public 12 meeting under AS 44.62.310 - 44.62.312 to vote on and issue its final report, including its 13 recommendations. 14 (b) Notwithstanding (a) of this section or a provision of AS 44.62.310 - 44.62.312, 15 the North Slope Gas Commercialization Team is not a governmental body or public entity for 16 purposes of AS 44.62.310 - 44.62.312. 17 (c) Notwithstanding AS 09.25.100 - 09.25.220, records requested by the North Slope 18 Gas Commercialization Team from a potential sponsor of a North Slope gas project and 19 working documents prepared by the team that analyze or incorporate the requested records 20 shall be kept confidential if the records or working documents contain sensitive, proprietary, 21 or privileged information and the potential sponsor requests that the records or working 22 documents be kept confidential. 23 * Sec. 4. LEGAL ASSISTANCE. The Department of Law shall provide legal assistance 24 to the North Slope Gas Commercialization Team. 25 * Sec. 5. PERMANENT RECORD RETENTION; CONFIDENTIALITY. On or before 26 the date that the team's final report is provided to the governor under sec. 2 of this Act, the 27 North Slope Gas Commercialization Team shall transfer to the custody and control of the 28 Department of Revenue all records in the possession of the team, including the team's 29 working documents and records requested from others. Notwithstanding AS 09.25.100 - 30 09.25.220 and sec. 6 of this Act, after the transfer of records under this section, the 31 Department of Revenue shall continue to keep confidential all records and working documents
01 that were required to be kept confidential under sec. 3(c) of this Act. 02 * Sec. 6. SUNSET PROVISION. Sections 1 - 4 of this Act are repealed on the earlier of 03 the date that the governor notifies the revisor of statutes and the lieutenant governor that the 04 final report prepared under sec. 2 of this Act was delivered to the governor under sec. 2(d) 05 of this Act or January 12, 1998. 06 * Sec. 7. This Act takes effect immediately under AS 01.10.070(c).