04/26/1995 03:45 PM Senate RES

     CSHB 207(FIN) am ADJUSTMENTS TO OIL AND GAS ROYALTIES                    
                                                                              
 Number 325                                                                    
                                                                               
 SENATOR LEMAN brought  CSHB 207(FIN) am  before the committee as the          
 next order of business.  He stated the committee would be                     
 addressing a proposed Resources SCS, version "S."                             
                                                                               
 COMMISSIONER SHIVELY, Department of Natural Resources, commented              
 that substantial changes have been made in the new committee                  
 substitute, and the department is not sure that the bill will be as           
 valuable a tool for managing royalties as they originally thought.            
 The department will work with committee staff and the industry to             
 see exactly what the new wording means, and they will be prepared             
 to offer more comments on it at the next meeting of the committee             
 on Friday.                                                                    
                                                                               
 Number 359                                                                    
                                                                               
 ROY BOWDRE, testifying from Delta Junction, stated he was strongly            
 opposed to HB 207 because it gives the commissioner complete                  
 secrecy and it does not make him be responsible to any person or              
 committee.  The state already has the power to lower royalties, and           
 the bill allows it to be done in complete secrecy.  He urged defeat           
 of the legislation.                                                           
                                                                               
 Number 366                                                                    
                                                                               
 LEONARD EFTA, testifying from Kenai, agreed the bill gives the                
 commissioner too much power.  He is also opposed to language on               
 page 5, line 32 and page 6, lines 1 - 3 which provides that the               
 commissioner's final findings and determination regarding royalty             
 reduction is final and not appealable to the court.                           
                                                                               
 Number 375                                                                    
                                                                               
 KEITH BURKE, testifying for the Alliance in Anchorage, voiced their           
 support for the ability of the commissioner to adjust the royalty             
 provisions on marginal fields because they believe it is the                  
 quickest way to create jobs and to create some additional revenues            
 for the state to alleviate some of the fiscal gap problems that are           
 being faced.  However, in looking at the draft committee                      
 substitute, he is concerned about some of the financial parameters            
 that are placed in the bill, the sunset provisions, and the                   
 additional reviews and approval requirements by the legislative               
 body.                                                                         
                                                                               
 Number 407                                                                    
                                                                               
 JIM BRANCH, Production Manager, Exxon Co., testifying from                    
 Anchorage, said the state is seriously trying to improve the                  
 investment climate for the oil and gas industry.  He said the                 
 investment reception and confidence in our state must be improved             
 if we are to be successful in the worldwide competition for oil and           
 gas investment dollars.  He emphasized that the state's number one            
 priority should be budget discipline.  Fiscal reform, primarily to            
 extending reductions, will send the strongest signal to investors.            
                                                                               
                                                                               
 Number 437                                                                    
                                                                               
 KEVIN TABLER, Land Manager for Union Oil Co. in Anchorage,                    
 expressed the company's pleasure that the state is looking into               
 ways in which to work with industry and provide for a better future           
 for Alaska.                                                                   
                                                                               
 Mr. Tabler said UNOCAL supported the version of HB 207 that passed            
 the House, but they have not had an opportunity to fully digest the           
 contents of the new Resources SCS.  However, in looking at it, they           
 do not support its sunset provisions and have concerns with other             
 language in it.                                                               
                                                                               
 Number 488                                                                    
                                                                               
 SENATOR LEMAN commented that a split or dual sunset for existing              
 fields in production and for new fields might be considered.  He              
 said the intent of the committee was to stimulate some activity by            
 having this be open for the next two to two and one-half years, and           
 then the legislature could address that sunset at some time in the            
 future.  He added that he could see how this might affect UNOCAL              
 with existing fields, and he suggested Mr. Tabler come back with              
 another proposal for existing fields and how that sunset may apply            
 to them.                                                                      
                                                                               
 Number 495                                                                    
                                                                               
 CHUCK SULLIVAN, Manager, Contracts/Administration, Parker Drilling,           
 testifying from Anchorage, said the company has been in Alaska                
 since 1969 and has had as many as 10 oil rigs operating in the                
 state.  Currently, they have one rig operating that provides 55               
 jobs directly with the rig.  He said the business environment in              
 Alaska and throughout the world has changed with more competition             
 for investment dollars.  He applauded the legislature's efforts to            
 try to make Alaska's fields more competitive worldwide by                     
 encouraging additional investments in the oil industry.                       
                                                                               
 Number 516                                                                    
                                                                               
 RICHARD FINEBERG, testifying from Fairbanks, said he has not yet              
 had an opportunity to review the new Resources SCS, but he pointed            
 out that there have been two major international comparisons of               
 fiscal systems for petroleum exploration and production completed             
 recently, and there has been no discussion or analysis of these               
 studies in relation to HB 207.  He suggested holding over the                 
 legislation for the interim for the kind of major study it                    
 deserves.                                                                     
                                                                               
  TAPE 95-49, SIDE B                                                           
 Number 005                                                                    
                                                                               
 SENATOR LEMAN said it was his intent to move a version of HB 207              
 out of committee within the next few days, and he suggested that              
 any additional comments on the legislation be forwarded to the                
 committee as soon as possible.  There being no further testimony on           
 HB 207, he closed the public hearing and stated it would be back              
 before the committee at its Friday meeting.