Legislature(1993 - 1994)
04/07/1993 05:00 PM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL & GAS
April 7, 1993
5:00 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Pete Kott, Vice-Chairman
Representative Jerry Sanders
MEMBERS ABSENT
Representative Jerry Mackie
Representative Joe Sitton
Representative Harley Olberg
Representative Gary Davis
OTHER HOUSE MEMBERS PRESENT
Representative David Finkelstein
COMMITTEE CALENDAR
*HJR 35 Endorsing approval by the United States Congress
of S 254 or comparable legislation imposing a fee
on imported oil.
HEARD AND HELD IN COMMITTEE FOR FURTHER
CONSIDERATION
*HCR 12 Relating to the use of natural gas as a motor
vehicle fuel in Alaska.
HEARD AND HELD IN COMMITTEE FOR FURTHER
CONSIDERATION
HB 199 "An Act providing for oil and gas exploration
licenses, and oil and gas leases, in certain areas
of the state; and providing for an effective
date."
HEARD AND HELD IN COMMITTEE FOR FURTHER
CONSIDERATION
(* first public hearing)
WITNESS REGISTER
Michael Johnson, Legislative Aide
to Representative Joe Sitton
State Capitol
Court Building, Room 609
Juneau, Alaska 99801-1182
Phone: (907) 465-2327
POSITION STATEMENT: Delivered sponsor statement on HJR 35
Representative David Finkelstein
State Capitol
Court Building, Room 612
Juneau, Alaska 99801-1182
Phone: (907) 465-2435
POSITION STATEMENT: Prime Sponsor of HCR 12
Bernie Karl
K & K
P. O. Box 10687
Fairbanks, Alaska 99710
Phone: (907) 457-6880 - home
(907) 488-1409 - work
POSITION STATEMENT: Supported HCR 12 with amendments
Grant Doyle
AG Midland
P. O. Box 80327
Fairbanks, Alaska 99708
Phone: (907) 458-0385 - home
(907) 488-8883 - work
POSITION STATEMENT: Supported HCR 12 with amendments
Mead Treadwell, Deputy Commissioner
Department of Environmental Conservation
410 Willoughby Avenue
Juneau, Alaska 99801
Phone: (907) 465-5054
POSITION STATEMENT: Supported HCR 12 with amendments
Ron King, Air Pollution Safety
Department of Environmental Conservation
410 Willoughby, Suite 301
Juneau, Alaska 99801-1795
Phone: (907) 465-5050
POSITION STATEMENT: Provided information related to HCR 12
Jeff Ottesen, Chief
Right-of-Way and Environment
Division of Engineering and Operations
Department of Transportation
3132 Channel Drive
Juneau, Alaska 99801-7898
Phone: (907) 465-2985
POSITION STATEMENT: Answered questions related to HCR 12
Sen K. Tan, Assistant Attorney General
General Civil Division
Department of Law
1031 W. 4th, Suite 200
Anchorage, Alaska 99501
Phone: (907) 269-5100
POSITION STATEMENT: Answered questions related to HB 199
David Lappi, President
Lapp Resources, Inc.
4900 Sportsmen Drive
Anchorage, Alaska 99515
Phone: (907) 248-5684
POSITION STATEMENT: Commented on bonding requirements of
HB 199
Jim Eason, Director
Division of Oil & Gas
Department of Natural Resources
P. O. Box 107034
Anchorage, Alaska 99510-0734
Phone: (907) 762-2547
POSITION STATEMENT: Commented on HB 199
Bill Webb, General Manager
Alaska Sport Industry Alliance
4220 B Street, Suite 200
Anchorage, Alaska 99503
Phone: (907) 563-2226
POSITION STATEMENT: Supported HB 199, but not the bonding
Kevin Tabler
UNOCAL
909 W. 9th Avenue
Anchorage, Alaska 99501
Phone: (907) 276-7600
POSITION STATEMENT: Supported open position on annual
bonding
Richard Richmond
(address not available)
POSITION STATEMENT: Commented on bonding with regard to HB
199
Pete Nelson, Land Manager
Texaco
2550 Denali Street
Anchorage, Alaska 99503
Phone: (907) 278-9611
SPONSOR STATEMENT: Supported annual bond in the amount of
the annual work committment
PREVIOUS ACTION
BILL: HJR 35
SHORT TITLE: URGE FEDERAL FEE ON IMPORTED OIL
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) SITTON,Davidson,Brice,
B.Davis,Davies,Ulmer,Carney,Nordlund,Finkelstein,James,
Brown,Hudson,MacLean
TITLE: Endorsing approval by the United States Congress of
S 254 or comparable legislation imposing a fee on imported
oil.
JRN-DATE JRN-PG ACTION
03/17/93 683 (H) READ THE FIRST TIME/REFERRAL(S)
03/17/93 683 (H) OIL AND GAS, RESOURCES
03/19/93 715 (H) COSPONSOR(S):B.DAVIS,DAVIES,
ULMER,CARNEY
03/19/93 715 (H) COSPONSOR(S):NORDLUND,
FINKELSTEIN,JAMES
03/19/93 715 (H) COSPONSOR(S): BROWN
03/22/93 738 (H) COSPONSOR(S): HUDSON, MACLEAN
04/06/93 (H) O&G AT 05:00 PM CAPITOL 124
04/07/93 (H) O&G AT 05:00 PM CAPITOL 124
BILL: HCR 12
SHORT TITLE: USE OF NATURAL GAS IN MOTOR VEHICLES
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) FINKELSTEIN
TITLE: Relating to the use of natural gas as a motor vehicle
fuel in Alaska.
JRN-DATE JRN-PG ACTION
03/01/93 485 (H) READ THE FIRST TIME/REFERRAL(S)
03/01/93 485 (H) O&G, RESOURCES, TRA, FINANCE
04/06/93 (H) O&G AT 05:00 PM CAPITOL 124
04/07/93 (H) O&G AT 05:00 PM CAPITOL 124
BILL: HB 199
SHORT TITLE: OIL & GAS EXPLORATION LICENSES/LEASES
BILL VERSION:
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
TITLE: "An Act providing for oil and gas exploration
licenses, and oil and gas leases, in certain areas of the
state; and providing for an effective date."
JRN-DATE JRN-PG ACTION
03/05/93 549 (H) READ THE FIRST TIME/REFERRAL(S)
03/05/93 549 (H) OIL & GAS, RESOURCES, FINANCE
03/05/93 549 (H) -ZERO FISCAL NOTE (REV)
3/5/93
03/05/93 549 (H) GOVERNOR'S TRANSMITTAL LETTER
03/15/93 (H) O&G AT 05:00 PM CAPITOL 124
03/16/93 (H) O&G AT 08:00 AM CAPITOL 124
03/22/93 (H) O&G AT 05:00 PM CAPITOL 124
03/22/93 (H) MINUTE(O&G)
03/25/93 (H) O&G AT 05:00 PM CAPITOL 124
03/31/93 (H) O&G AT 05:00 PM CAPITOL 124
04/06/93 (H) MINUTE(O&G)
04/07/93 (H) O&G AT 05:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 93-12, SIDE A
Number 000
CHAIRMAN JOE GREEN called the meeting to order at 5:10 p.m.
and noted only three members of the committee were present:
Representatives Green, Sanders, and Kott, which did not
constitute a quorum, but testimony would be taken.
HJR 35: URGE FEDERAL FEE ON IMPORTED OIL
Number 032
MICHAEL JOHNSON, LEGISLATIVE AIDE TO REPRESENTATIVE JOE
SITTON, PRIME SPONSOR OF HJR 35, testified on his behalf.
He read a sponsor statement. (A copy of the sponsor
statement may be found in the House Special Committee on Oil
and Gas Committee Room, Capitol Room 114, and after the
adjournment of the second session of the 18th Alaska State
Legislature, in the Legislative Reference Library.) In
summary, the statement said HJR 35 encourages Congress to
approve federal senate 254, which imposes a fee on imported
oil. Senate 254 would set a price floor of $25 per barrel
on crude oil entering the United States. By making imported
oil less attractive, this resolution would thereby reduce
our dependence on foreign oil, help balance the trade
deficit, promote energy conservation, and encourage
development of the domestic industry in renewable and
alternative fuels.
Number 084
REPRESENTATIVE JERRY SANDERS asked if Representative
Sitton's office had any communication with the Congressional
Delegation.
MR. JOHNSON replied in the negative.
Number 100
VICE CHAIRMAN PETE KOTT referred the committee to Page 1,
Line 13 of HJR 35 and suggested that the number "2000" would
read more clearly if it is specified that it means years.
Number 116
MR. JOHNSON said he could not speak for Representative
Sitton, but felt there would be a problem with changing this
term.
Number 126
CHAIRMAN GREEN asked Mr. Johnson how he felt HJR 35 would
affect the energy tax if it was imposed.
Number 138
MR. JOHNSON did not have an answer; however, he stated the
price floor was part of the President's ideas concerning the
energy tax.
Number 149
CHAIRMAN GREEN stated HJR 35 proposed a 35% increase over
the current price, and asked if this would create a problem
with homeowners in the Lower 48.
Number 163
MR. JOHNSON felt there might be some resistance in certain
areas.
Number 177
CHAIRMAN GREEN stated since the committee did not have a
quorum HJR 35 could not be passed out, and asked Mr. Johnson
to get a response from the Congressional Delegation.
Number 182
MR. JOHNSON agreed to comply.
HCR 12: USE OF NATURAL GAS IN MOTOR VEHICLES
Number 207
REPRESENTATIVE DAVID FINKELSTEIN, PRIME SPONSOR OF HCR 12,
stated the idea of HCR 12 is to promote the use of natural
gas to fuel vehicles in Alaska. He felt this would help
deal with air pollution problems.
Number 241
BERNIE KARL stated he was in favor of HCR 12, but was in
hope of an amendment that would add propane. He stated
propane comes from California to Fairbanks and he did not
feel this was necessary since we have the fuel here in
Alaska. He felt using propane would help the air pollution
problems.
Number 310
VICE CHAIRMAN KOTT asked what it would cost for a pump price
for using propane in Alaskan's vehicles.
MR. KARL said the total cost would be approximately $1.00
per gallon.
Number 322
VICE CHAIRMAN KOTT asked if there were advantages of using
propane over natural gas.
Number 325
MR. KARL said propane has been used longer in vehicles than
natural gas. A disadvantage of propane is a fuel pump has
to be put on the vehicle in cold climates, and with natural
gas fuel pumps are not necessary. He also stated that
propane is more dangerous in accidents than natural gas,
although it is safer than gasoline. The advantage that
propane has is that it is a liquid and it only has to have
20 pounds of pressure on it so a small tank will hold the
same amount as a fuel tank, and if the vehicle is run
strictly on propane and not duel-fuel, it will run at the
same gas mileage. With natural gas there is about a 10%
difference and you do not get the distance you do with
propane.
Number 414
GRANT DOYLE said he supported HCR 12, but would like to see
it amended to include propane. Advantages of propane he
mentioned were that it is safer than gasoline, and that
vehicles run cleaner with propane so it would help with the
air pollution problem.
Number 452
MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION (DEC), introduced Ron King,
Mobile Sources Programer for the DEC, Jeff Ottesen with
Department of Transportation (DOT), and Barbara Sheppard,
Alternative Fuels Coordinator and stated they were here to
answer any questions that the committee might have.
MR. TREADWELL supported HCR 12 and suggested a few changes.
He said the DEC and the DOT with support of many private
sponsors held a major conference on compressed natural gas
vehicles. He said if HCR 12 passed, a task force would be
put together to try to figure out a way to make the program
work, including municipalities, gas utilities, and gasoline
retailers.
Number 500
MR. TREADWELL suggested that a lot more people be added to
HCR 12 like the mayor of Fairbanks, Commissioner Campbell of
the DOT, Mapco, Tesoro, Chevron, Phillips, Ray Lachem, mayor
of the North Slope Borough, presidents of Ford, Chrysler,
and G.M., along with other independent gasoline retailers.
Number 550
RON KING, AIR POLLUTION SAFETY, DEC, showed a map of
transmission lines, and where certain stations were located.
He said there were stations at this time that could possibly
be encouraged to shift to natural gas.
Number 588
MR. TREADWELL hoped to have the above-mentioned task force
off the ground by spring of 1993.
CHAIRMAN GREEN asked if Mr. Treadwell envisioned this being
useful in Alaska rather than a metropolitan area.
Number 609
MR. TREADWELL felt if this fuel alternative was to prove up
over time it could get the DEC out of the oil spill business
and help clean things up. It will have to be made to have
it work so there is a supply where people are going to
drive.
Number 632
VICE CHAIRMAN KOTT asked Representative Finkelstein if he
would be willing to include propane in HCR 12.
REPRESENTATIVE FINKELSTEIN said it was more a drafting
question as to whether HCR 12 could include both, because of
the way it is written. Possibly a Fairbanks representative
would introduce a propane resolution, he added.
Number 647
CHAIRMAN GREEN's only concern with HCR 12 is being able to
have filling stations in appropriate places.
REPRESENTATIVE FINKELSTEIN appreciated all the DEC's
suggestions and said he would work to incorporate a new
version of HCR 12.
Number 653
VICE CHAIRMAN KOTT asked, since the DEC was coming up with a
task force, that HCR 12 be pushed through rather quickly.
Number 662
REPRESENTATIVE SANDERS asked if the retail price of natural
gas would be approximately $.60 per gallon.
MR. KING said that the $.60 was the current estimate that he
has been given.
Number 665
REPRESENTATIVE SANDERS then asked Mr. Karl if the propane
would be approximately $1.00 per gallon.
MR. KARL said he estimates $1.00, but as the volume
increases the price would decrease.
Number 669
REPRESENTATIVE SANDERS asked if the price of natural gas
would go down also.
MR. KING said probably not.
Number 671
REPRESENTATIVE SANDERS asked if one alternative is $.60 and
one is $1.00, why push the $1.00 alternative.
MR. KING said he did not think they could deliver natural
gas for $.60 in Fairbanks.
Number 676
MR. KARL said one of the major problems with liquified
natural gas is to keep it liquified. He said a reason for
the higher expense is that the propane trucks go to Prudhoe
Bay empty. The price of propane currently in Fairbanks is
$1.28, he added.
TAPE 93-12, SIDE B
Number 000
MR. KARL further stated that he could not think of anywhere
in the state one could not go and buy propane. He said 90%
of Fairbanks' gas stations have propane.
Number 046
REPRESENTATIVE SANDERS asked if the price would get down to
$.60.
Number 051
MR. KARL said he could not guarantee that the price for
propane would get down to $.60.
Number 061
REPRESENTATIVE SANDERS asked if he thought it might get down
to $.60.
Number 062
MR. KARL felt that was a good possibility. He said he knows
there is a good possibility if the tax would give up their
$.08 per gallon in road tax.
Number 070
REPRESENTATIVE SANDERS said if the state was to give up
their $.08 that would affect natural gas also.
Number 073
MR. KARL wished he could say it would be $.50 or $.52, but
in good conscience he felt it would be right at a $1.00 per
gallon.
Number 076
REPRESENTATIVE SANDERS asked if propane would be viable at
$1.00 trying to compete with natural gas at $.60.
Number 083
MR. KARL said it would be viable and is cheaper than people
are paying for fuel in Fairbanks now. He said natural gas
would not be sold in Fairbanks for $.60.
Number 100
JEFF OTTESEN, CHIEF, RIGHT-OF-WAY AND ENVIRONMENT, DIVISION
OF ENGINEERING AND OPERATIONS, DEPARTMENT OF TRANSPORTATION,
said Mr. Karl was correct, natural gas could not be sold in
Fairbanks for $.60. He stated the fuel itself is very
inexpensive, it is the storing and cleaning of the natural
gas that is expensive.
Number 135
REPRESENTATIVE SANDERS asked if there was a difference in
the price.
Number 140
MR. OTTESEN said in the Fairbanks situation you would be
looking at equivalent costs to propane, but he felt two
alternative products would not be as strong as just one.
Number 150
REPRESENTATIVE SANDERS asked if it would be better to push
just one over the other.
Number 153
MR. OTTESEN thought it would be easier for the public to
understand that there is a single choice and it is available
statewide.
Number 173
REPRESENTATIVE SANDERS said he is not arguing with the
concept or picking either alternative, but he felt pushing
two things at one time would not be as beneficial as one
thing.
Number 183
MR. OTTESEN said when the DOT was looking at both propane
and natural gas they chose natural gas over propane because
there are problems with propane in cold weather. There are
also problems with natural gas, like distribution and
storage problems, but it is cheaper.
HB 199: OIL & GAS EXPLORATION LICENSES/LEASES
Number 203
CHAIRMAN GREEN said that testimony on HB 199 would be taken
up at this time in reference to the bonding situation.
Number 225
SEN TAN, ASSISTANT ATTORNEY GENERAL, GENERAL CIVIL DIVISION,
DEPARTMENT OF LAW, said he was available to answer any
questions.
Number 237
DAVID LAPPI, PRESIDENT OF LAPP RESOURCES, INC., made four
points in reference to HB 199, as follows: 1) he thought a
dangerous precedent was being set by requiring bonding of
limited entry users of the state's resources; 2) it would be
difficult for small companies to obtain bonds; 3) the higher
up front costs to make the entrepreneurial activity
extremely difficult for small companies; and, 4) if the
fiscal gap is to be funded with increased production
revenues and royalties in the state - explorers around the
world need terms on exploration licenses that are at least
as attractive as terms that can be obtained in overseas
countries.
Number 272
CHAIRMAN GREEN asked Mr. Lappi if there was not bonding if
he had a suggestion as to how to handle this problem.
Number 284
MR. LAPPI felt there were alternatives to be used in place
of bonding. He further stated that insurance and regular
inspections of operations is very important in countries
where they have major problems with prior practice. If
environmental regulations were lax or not in force at the
time those operations were being carried out, but the
situation in Alaska with full regulations and enforcement
would preclude a lot of these problems.
Number 297
JIM EASON, DIRECTOR, DIVISION OF OIL AND GAS, DEPARTMENT OF
NATURAL RESOURCES, referred to Mr. Lappi's comments and
stated the bonding provisions that are included in HB 199
are not intended for environmental purposes. He could not
think of any instance in which someone is given the
opportunity to explore without some cash, bonding,
guarantee, or financial securities of some sort that give
the host country some assurance that the proposed work
commitment will be undertaken and completed.
Number 325
BILL WEBB, GENERAL MANAGER, ALASKA SPORT INDUSTRY ALLIANCE,
said the Alliance supported HB 199 for the most part, but
felt the bonding was unnecessary as it is written. He said
the Alliance would support bonding of the annual program.
Number 359
KEVIN TABLER with UNOCAL stated they support the open
position on annual bonding.
Number 370
CHAIRMAN GREEN put the situation in perspective by saying
the committee has heard testimony from one extreme
supporting bonding for the entire program to the other end
of the spectrum saying no bonding or if so a percentage of
the amount of work commitment that would be bid on an annual
basis. He stated the committee needed to bring these two
extremes together if HB 199 would work and asked for input.
Number 391
MR. EASON stated HB 199 is to encourage exploration, but
encouraging serious participants. In concept, all companies
should have the same resources, intent, and ability to
perform, but he said this is not the case. He stated many
times in the past there have been problems when you do not
have financial security to back the performance that is
promised to the state. There are possible legal
ramifications that arise if you set a standard so low it
becomes inconsequential. Litigation is likely to arise from
several different perspectives. First, one would be
potential litigation from unsuccessful bidders, who have bid
from a responsible position against bidders that turns out
are not responsible and do not perform. Secondly, in a
situation where you have something as well defined as a work
commitment, as opposed to a dollar amount, it makes it that
much easier for disputes to arise between the licensee and
the state over who has finished a work commitment and what
exactly constitutes completion of a work commitment.
Number 440
MR. TAN said the basic premise in the line is lifelong
licensing. Legislation as it is written right now, not only
speaks to the bond, but other financial security. Mr. Tan
said if it is an open ended process, we are not protecting
the interest of the state and would be in a position of
future litigation.
Number 469
MR. WEBB stated he does not see a major risk to the state,
they undoubtedly are going to use qualified contractors here
in Alaska. The worst case scenario is nothing happens. He
stated a bond of $1 million certainly discourages small
operators. He stated there are other provisions in law, as
far as environmental damage, that would take care of any
environmental problems.
Number 501
CHAIRMAN GREEN said if HB 199 would minimize the amount of
commitment that an operator would be held to, either through
a bond or some sort of security, and the state could get the
land back but it may be several years down the road before
the state could reoffer that and the intent is to get that
drilled early.
Number 522
MR. TAN said the program is to essentially offer
opportunity. During this period the State has given up the
right to do anything with the land. The concensus would be
if there is a requirement to put up a bond for other
financial increments then there is an incentive to move and
get something done. In the bid process, the commitment for
the consideration for the contract is the work commitment.
Number 546
MR. WEBB said he would suggest an annual bond, and if you do
not perform you loose it at the end of one year.
Number 574
MR. EASON said everyone is thinking what does or does not
happen after a bid is selected. What we have forgotten is
that we have taken away any objective way of evaluating a
bid, whether it is sealed or outcry, if it costs nothing,
people bid $100 million, no matter how much money they have.
With large companies sitting at the tables there would be no
way for an administrator who is responsible for selecting
the apparent high bidder in a situation to make an informed
choice.
Number 616
REPRESENTATIVE SANDERS asked Mr. Richmond if there were
other financial instruments available to the independent
drillers that might protect the state's interest; anything
besides bonds.
Number 620
RICHARD RICHMOND said the major concern among all the people
seems to be the availability of a bond. He feels some
security is necessary to guarantee performance of a
contract. He said there are other instruments that could be
used, like irrevocable letters of credit, which are widely
used in the rest of the world. There is no insurance
product that would guarantee performance. The only product
would be a bank guarantee or an individual type bond.
Number 647
PETE NELSON, LAND MANAGER, TEXACO, said Texaco supports the
AOGA's (Alaska Oil and Gas Association) position regarding
the annual bond in the amount of the annual work commitment
for that year with a provision that a bond would be
forfeited if the work was not done in that one year. She
felt this fell in the middle of what the large oil companies
want and the smaller companies and independents.
Number 000
MR. EASON said a few things that raised a red flag when he
read the AOGA's proposal was looking at things on an annual
basis, but it is subject to potential litigation because of
the fining problem. It is very difficult to set up an RFP
(request for proposal) to entertain and review proposals
when you do not have the same schedule of events that are
proposed to occur. Another problem is most companies do not
want the state in their business. He stated an alternative
he has would require less bonding or security up front, but
it would also do some things that are very positive. It
would encourage earlier more intensive exploration and
evaluation of the acreage. It would leave a larger amount
of money in the hands of the licensee to do that and at the
same time it would incur some penalties if you did not. It
would also provide some cash return to the state in the
event the licensee walks away during any point of that
commitment period, short of the entire body of this
commitment.
MR. EASON faxed a copy of his formula to the committee at
this time. (A copy of this fax may be found in the House
Special Committee on Oil and Gas Committee Room, Capitol
Room 114, and after the adjournment of the second session of
the 18th Alaska State Legislature, in the Legislative
Reference Library.)
Number 101
MR. EASON said the winning offer is for a five year work
commitment of spending $50 million and the way this security
provision would work is each year you would calculate the
annual obligations that have to be posted by applying a
formula. The formula would consist of a numerator, it would
have the total value of the work commitment you proposed
minus the cumulative expenses that are incurred. There
would be a denominator that would consist of the number of
years remaining in the program. He further stated costs
allowable for the expenses would be very limited and very
direct measurable costs labor, benefits, rentals, and
contract costs. Overhead would be excluded, eliminate the
costs of providing bonds.
Number 186
CHAIRMAN GREEN asked Mr. Eason if before the Commissioner
put out the bids as to what costs would be allowable, or
would they be standard.
MR. EASON said there would be a definition and he had a
suggested one. He suggested that the definition be put into
HB 199.
Number 230
CHAIRMAN GREEN asked by using this method if it would limit
licensing to major players.
MR. EASON said for these size projects, this would be the
kind of company that would need to do this. It is an option
for the company, either a very small company or a very large
company, to have the exclusive right to explore the area and
to convert it to leases.
Number 270
MR. LAPPI said the way HB 199 is currently written there is
no requirement of any company to explore or extend any money
before the tenth year. If the state is truly interested in
promoting exploration and getting work done early on he said
he felt this bill should then address this problem. He said
the state should not shy away from trying to produce wealth
because a lawsuit may result. The state needs to produce
wealth and produce the wealth on the expectation that
lawsuits may occur.
Number 302
MR. RICHMOND did not realize HB 199 was written with a 10
year obligation. He said that would be impossible to get
for any company, except for the very strong as far as a bond
is concerned. The maximum bond that any company would want
to write in terms of time would not exceed three years at
the very maximum. He said speaking on the forfeiture type
of bond, which in effect is a financial guarantee and for
anyone, and again only the very strong company.
Number 327
MR. EASON said other countries that have an easier way of
dealing with this are not troubled by having to follow
competitive procedures. The simple solution to this would
be to amend the statutes to allow the Commissioner to
negotiate with any individual he wants to have a work
commitment performed on state lands that he at his
discretion is in the state's best interest.
Number 348
MR. WEBB said the state has land that nothing is happening
on. He did not feel there would be too much of a
competitive situation.
Number 388
MR. TABLER said he would like to have the opportunity to
write comments on Mr. Eason's proposal after UNOCAL has the
chance to review it.
ADJOURNMENT
Number 399
CHAIRMAN GREEN adjourned meeting at 7:00 p.m.
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