02/26/2014 03:30 PM Senate RESOURCES

           HJR 26-OFFSHORE OIL & GAS REVENUE SHARING                                                                        
                                                                                                                                
3:31:30 PM                                                                                                                    
CHAIR GIESSEL announced HJR 26 to be up for consideration.                                                                      
                                                                                                                                
3:31:38 PM                                                                                                                    
REPRESENTATIVE SADDLER, sponsor of HJR 26, Alaska State                                                                         
Legislature, said this resolution simply asks the federal                                                                       
government  to  enact a  fair  and  equitable system  of  sharing                                                               
federal  revenues from  offshore development.  He explained  that                                                               
offshore oil  and gas development is  a boon for the  country; it                                                               
brings us a  secure source of domestic energy,  revenue and jobs,                                                               
but it creates costly impacts  in states like Alaska. The federal                                                               
government  recognizes  these  strains  by sharing  some  of  the                                                               
proceeds of  this development  to help  state's offset  the costs                                                               
for the  improvements and services necessary  to have responsible                                                               
and safe  development. On  land they share  half of  the revenues                                                               
and within three  miles from shore they share 27  percent. In the                                                               
four states  bordering the Gulf  of Mexico they share  a whopping                                                               
37.5  percent.  Current  law  says Alaska  will  receive  a  zero                                                               
percent  share from  oil  produced in  the  Chukchi and  Beaufort                                                               
Seas, Cook Inlet and offshore.                                                                                                  
                                                                                                                                
Everyone knows the federal waters  offshore contain a lot of oil,                                                               
but   development   of   Alaska's  offshore   resources   require                                                               
infrastructure   investments  including   new  roads,   airports,                                                               
utilities and  housing, and additional services  must be provided                                                               
for  including oil  spill and  emergency response,  environmental                                                               
monitoring mitigation, public health and safety.                                                                                
                                                                                                                                
3:34:04 PM                                                                                                                    
The Chukchi and  Beaufort Seas sales generated  $2.75 billion and                                                               
that would  have brought more  than $1  billion to Alaska  if the                                                               
same revenue sharing provisions were  afforded Alaska as the Gulf                                                               
of Mexico states. But Alaska didn't get a single cent.                                                                          
                                                                                                                                
Opponents  of revenue  sharing argue  that  the federal  treasury                                                               
cannot afford to give up  money, but Representative Saddler would                                                               
argue  that revenue  sharing opportunities  can incentivize  more                                                               
lease sales and bring in  more development, ultimately opening up                                                               
more  opportunities  for the  federal  government  and states  to                                                               
share more money.                                                                                                               
                                                                                                                                
REPRESENTATIVE SADDLER said  the time couldn't be  better or more                                                               
opportune  to have  this  kind of  legislation  move through  the                                                               
Congress as Senator  Lisa Murkowski is the ranking  member in the                                                               
Senate Energy and Natural Resources  Committee, and the new chair                                                               
of that committee is Senator  Merrill Landrew of Louisiana who is                                                               
also  a strong  advocate for  the  oil industry  and OCS  revenue                                                               
sharing. These two senators have  introduced the Fixing America's                                                               
Inequities with  Revenue Act  (FAIR ACT),  which would  extend to                                                               
Alaska and  all Outer Continental  Shelf States (OCS)  states the                                                               
same 37.5 percent share that the Gulf States now receive.                                                                       
                                                                                                                                
3:35:58 PM                                                                                                                    
ADRIAN  HERRERA,  Coordinator,  Arctic Power,  Washington,  D.C.,                                                               
supported HJR  26. He said  Arctic Power is a  501(c)(6) not-for-                                                               
profit organization  arguing for the  environmentally responsible                                                               
oil  and  gas  exploration  in  Alaska's  Arctic.{  Arctic  Power                                                               
strongly supports  HJR 26  as it will  bring parity  with onshore                                                               
resource development  and parity with  the Gulf of  Mexico states                                                               
which currently  do enjoy revenue  sharing. They believe  it will                                                               
allow  for much  safer and  environmentally sound  development to                                                               
occur  nationwide, particularly  in  Alaska's  rural Arctic,  the                                                               
area closest to  the most active OCS leasing areas  in the nation                                                               
currently.                                                                                                                      
                                                                                                                                
Zero revenue sharing does nothing  to encourage or allow safe OCS                                                               
resource development  and by allowing  the state to have  a share                                                               
of the  resources will allow for  a much more even  playing field                                                               
and safer situations as states develop their offshore areas.                                                                    
                                                                                                                                
3:37:49 PM                                                                                                                    
SENATOR MCGUIRE joined the committee.                                                                                           
                                                                                                                                
MR. HERRERA said  the House of Representatives has  passed an OCS                                                               
revenue sharing  bill, HR  2231, that passed  last summer  with a                                                               
vote of  2035 in  favor and  186 against. This  issue is  quite a                                                               
non-partisan  issue. Senator  Begich also  has a  revenue sharing                                                               
bill, S  199, but  it is Alaska-centric  only and  probably won't                                                               
generate  much support.  It uses  the  same 37.5  percent as  the                                                               
Landrew Murkowski bill.                                                                                                         
                                                                                                                                
MR. HERRERA  said this  resolution will be  up against  the White                                                               
House  view  and the  Bureau  of  Ocean Energy  Management.  They                                                               
testified  last  year  against  the   FAIR  Act  and  their  main                                                               
complaint  was that  this  will  be a  loss  of  revenue for  the                                                               
national treasury.  But they strongly  disagree and feel it  is a                                                               
short  sighted  view  for  many  of  the  reasons  Representative                                                               
Saddler  does. They  believe the  perceived  notion that  revenue                                                               
sharing  will  take  away   from  the  President's  environmental                                                               
policies.  Ironically,  the  prime  beneficiary of  the  fund  is                                                               
Louisiana, Chair Landrew's home state.                                                                                          
                                                                                                                                
Further, he said if you make  OCS developed and more attractive -                                                               
whether  it be  a wind  turbine or  an offshore  oil field  - you                                                               
could expect more  companies to operate in these  areas. Thus you                                                               
would get a better revenue  stream, and under revenue sharing the                                                               
state would be  mandated to use 10 percent of  their winnings for                                                               
environmental   conservation,    environmental   mitigation   and                                                               
alternative  energy  development,  which  are  exactly  the  same                                                               
projects  that  the Land  and  Water  Conservation Fund  and  the                                                               
President's environmental policies are trying to achieve.                                                                       
                                                                                                                                
CHAIR  GIESSEL  found  no  further  comments  and  closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
3:41:04 PM                                                                                                                    
SENATOR FAIRCLOUGH  moved to report HJR  26, version 28-LS1439\N,                                                               
from committee  to the next  committee of referral  with attached                                                               
fiscal note and individual recommendations.                                                                                     
                                                                                                                                
SENATOR  FRENCH  objected,  saying  that about  a  week  ago  the                                                               
committee heard  a nearly identical resolution,  SJR 5, sponsored                                                               
by  Senator  Wielechowski,  which   was  held  in  committee.  He                                                               
supported this resolution  but wondered why the  other one didn't                                                               
pass. He  thought his caucus  member had not been  treated fairly                                                               
in this instance. He then withdrew his objection.                                                                               
                                                                                                                                
Finding no  further objections, Chair  Giessel said HJR  26 moved                                                               
from the Senate Resources Standing Committee.