Legislature(1997 - 1998)
03/31/1998 09:10 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 299
"An Act relating to the treatment of well test flares,
nonroad engines, and aggregated fuel burning equipment
associated with nonroad engines under the state's air
quality control program; defining 'stationary source'
for purposes of the state's air quality program."
SENATOR LOREN LEMAN was invited to join the committee to
speak to this bill, which he was the sponsor. His testimony
follows:
"Mr. Chairman, committee members, SB 299 amends Alaska's air
quality control statutes to clarify that non-road engines
are mobile sources and are not to be regulated as though
they are stationary facilities. In Section One, the bill
also provides guidance on the treatment of well test flares,
which is an event that occurs for a short time after the
completion of each well. Section Two adds the EPA and state
adopted regulatory definition of non-road engines to Alaskan
statute. So operators and owners will have the same
understanding at the state level that they do at the federal
level of what a non-road engine is. In addition, the bill
adds the federal definition of stationary source."
"Some have asked why this bill is necessary and I would like
to think that it wouldn't be necessary. I think back in
history, five years ago, Mr. Chairman, I served with the
Senate President and with former Senator Zharoff on a
subcommittee where we worked through the Federal Clean Air
Act and how implementation at the state level - what would
be necessary to implement that act. We agreed with the
department at that time that the issue of mobile sources was
one that would need to be worked out. It has been five
years since we had those subcommittee meetings and slightly
over four years since the effective date of the statute that
was passed by the Legislature. I believe that has been
sufficient time to work things out. Unfortunately, although
some issues have been worked out this issue is one that has
not been. It appears now that the DEC intends to go beyond
the minimum set under the Federal Clean Air Act."
"I'll just note that at most there are 20 rigs working on
the North Slope and Cook Inlet according to information that
I have been given. Drilling rigs are in place an average of
seven to ten days. I think one of the things - I know Mr.
Chairman, that you were in the Resources Committee when we
went through this - one of the things that this committee
would be interested in looking at is the fiscal note, which
I find interesting that they are projecting that it's going
to cost $83,000 not to issue ten permits. I think the
committee can conclude probably similarly to what I have
that this is probably another attempt to add costs when the
department doesn't agree with a bill."
"They're already putting out regulations - in fact they have
proposed regulation out now. They are suggesting this is
going to cost them even more to not implement this bill."
"I think I'll close at least with a simple analogy of what
it is we're talking about. Let's say that I have my house,
which is a stationary facility. It operates year round
twenty-four hours a day. I have a furnace in the house that
is operating at least most of the time, certainly most of
the time in the winter. Let's say that because of that this
house needs a permit because I heat my house with fuel.
Then I go hire my neighbor's kid to mow the lawn with a
lawnmower. According to the way the department is
determining it, I have to include that lawnmower in the
house permit as if it is mowing twenty-four hours a day,
seven days a week, 365 days a year. In reality we all know
that event is a very short event that takes place and is
completed. Certainly that event of the lawnmowing doesn't
impact the operation of my house. But it could, according to
the permit and their interpretation of the impact of how
warm I keep my house. That may be a simple analogy and its
one that small compared to facilities on the slope, but its
one that I think we can understand."
"In questioning before the Resources Committee I asked the
department if they have any hard evidence of ambient air
quality problems on the North Slope. They said they may
have some modeling but nothing in terms of evidence. We're
not talking about a non-attainment area - an area that's not
meeting the requirements of the Clean Air Act. I believe
that this bill - I would have liked to have dealt with this
in a different way but since we have not yet been able to -
this bill is necessary I believe to implement at least what
our intentions were in 1993 when we passed the original
bill."
The committee had no questions or comments for Senator
Leman.
Co-Chair Sharp asked a representative from the Department of
Environmental Conservation to respond and give the
department's recommendation on the bill. AL EWING the
Deputy Commissioner came to the table, introduced himself
and testified as follows:
"Governor Knowles has been very clear in word and deed, that
Alaska is open for business. The area-wide oil and gas
leases on the Kenai Peninsula, in Cook Inlet and on the
North Slope, his actions to cause renewed leasing at the
National Petroleum Reserve are illustrations of his
commitment. It has been equally clear that development in
Alaska must be done right from an environmental perspective.
We have many illustrations of how that commitment is being
kept as well. These two guiding principles, being open for
business and doing it right, go hand in hand. Neither can
endure for long without the other."
"SB 299 is the exact opposite of doing it right. If
enacted, it would prohibit regulation of oil drilling rigs,
which are significant sources of air pollution.
Additionally, because of the imprecise wording of the bill,
it can be interpreted to prohibit regulation of a wide range
of significant sources of air pollution throughout the
state. Even if it's interpretation could be limited to oil
drilling rigs, it would be unacceptable to the
administration and I am confident it would also be
unacceptable to the people living, working and playing on
the Kenai Peninsula, in Cook Inlet, in the village of
Nuiqsut and more generally on the North Slope."
"Air pollution standards are designed to protect human
health and the environment. They are not limited in their
scope to protection of people who live in urban areas. All
Alaskans have a right to clean air to breathe."
"I would like to share with you a quote from a letter sent
last year to Mr. Frank Brown, Vice President of Arco Alaska.
The letter was from Benjamin Nageak, Mayor of the North
Slope Borough."
"A quote from this letter follows. 'There is significant
concerns regarding air pollution impacts to the health of
the Nuiqsut people. There is an increasing incidence of
respiratory problems in Nuiqsut residents and the dark or
yellow cloud often seen over Prudoe is now sometimes seen
extending to Nuiqsut. In view of this, we are very worried
that added air pollution from the alpine development
(processing plants, various emissions, etc.) will cause even
more problems.'"
"The North Slope, the Kenai Peninsula and Cook Inlet are
designated unclassifiable areas for the pollutants of
particular concern (sulfur dioxide, oxides of nitrogen that
are emitted by oil drilling rigs.) We believe that these
areas do currently comply with air quality standards but we
have no data to confirm that belief. However, state of the
art air quality models tell us that if oil drilling rigs are
allowed to operate unregulated, they will in many cases,
cause violations of clean air standards."
"The industry tells us we shouldn't regulate these rigs
until we can confirm that there are air quality standard
violations. The law tells us we have a responsibility to
prevent violations of air quality standards. I think that
is what the people who live, work and play in these areas
expect as well. In my judgement, it would be very unwise to
wait until the health and welfare of Alaskans is adversely
impacted before taking action."
"We understand that oil drilling rigs are mobile and that
they need the flexibility to move quickly from site to site.
We also understand that they need flexibility in how they
operate. Commissioner Brown and I spent a day on the North
Slope recently to get a first hand view of these rigs and
how they operate."
"We've been working with the industry for the past three
years to design regulations that would provide flexibility
and necessary air quality controls. Each proposal has been
rejected by the drillers as being unsatisfactory. Now we
understand why. Their solution is no regulation."
"We are prepared to continue working with the industry to
find a workable solution. But any solution must be
acceptable not only to the industry, but also to the people
who work, play and most importantly, live in and subsist off
the natural resources of impacted areas. Any solution must
also result in compliance with air quality standards."
"We are given a variety of reasons why these rigs shouldn't
be regulated. We are told they don't emit enough pollution
to be a problem. The fact is a single rig can emit as much
pollution as more than 100 city buses operating in a single
very crowded intersection. That is not an insignificant
amount of pollution as anyone who has gotten stuck behind a
city bus can attest. Once again, state of the art air
quality models not surprisingly predict violations on air
quality standards if these rigs are allowed to operate
without controls."
"We are told federal rules don't require these sources to be
regulated. Well, because the Arco Warthog project was
offshore, it was permitted by the federal government. Let
me assure you there has been no non-road engine in the State
Of Alaska that has ever been regulated by the state to the
degree the drilling rig on the Warthog project was
regulated. They required use of .06 percent diesel fuel -
that's sulfur content and established an exclusionary zone
around the project to prevent public exposure to air
pollutants expected to exceed air quality standards. And
remember, this was an offshore project."
"We are told that other drillers in other states aren't
regulated. We've not gone and done a broad survey to see
what other states are doing, because frankly we are not
looking for the lowest common denominator. Our objective is
to maintain clean air in ways that are consistent with the
laws of the land and with common sense."
"In conversation with air program managers of other states,
we find that drilling rigs and other non-road engines are
using low sulfur fuel of .05 percent because that is what is
available in every other state except Alaska. If we were
using .05 percent sulfur fuel in Alaska, drilling rigs would
be insignificant sources of SO2 and would not require
regulation for that pollutant. I believe that drilling rigs
in other states are complying with best available technology
- that's BAT standards. These BAT standards are designed to
control NOx emissions. If drilling rigs were complying with
BAT standards in Alaska, they would be insignificant sources
of NOx also. I'm sure if we looked we could find drilling
rigs in some states not using low sulfur fuel and not
complying with BAT standards and not otherwise being
regulated. But I would not find that a compelling reason to
make that our standard in Alaska."
"We are also told that rigs are constantly moving and
consequently couldn't be much of a problem for very long
even if standards were being violated. We understand that
drilling rigs generally move around a lot. But we also note
that some rigs remain on a site for extended periods of
time, sometimes for a year or more. Mobility though doesn't
seem like very good justification for allowing violations of
air quality standards. We have all seen the beater car
going down the road spewing clouds of blue smoke as it goes.
I don't know about you, but while I'm glad to see it go, the
fact that its moving doesn't make me feel a whole lot
better."
"We are told we use too many conservative functions and our
models don't accurately predict what happens in the real
world. Our models are the best available in the world. The
assumptions we use are standard assumptions spelled out in
law and used throughout the country. We hope to be able to
do ambient air quality monitoring in the future to assess
air quality conditions and trends on the North Slope and
elsewhere in the state. That would cost money that we don't
currently have. In the meantime, we will use the best tools
we have - the model."
"In summary, for all the reasons outlined, we are strongly
opposed to SB 299. It is a major threat to the air quality
of Alaska, it would put our citizens and our environment at
risk, it is the opposite of doing it right and we believe it
is correctly being labeled the dirty air bill. This
concludes my testimony, I'll be happy to respond to
questions."
Senator Phillips looked in his packet of information for
resolutions from the North Slope Borough, the Mat-Su Borough
or the Kenai Peninsula Borough in support of the
Administration's position. Had they passed any such
resolutions, he asked. Mr. Ewing reminded the senator he
just quoted a letter from the North Slope Borough. He
doubted whether the boroughs were even aware the pending
legislation was being considered. Senator Phillips
countered that the deputy commissioner reported to be
protecting their interests and he was interested in actual
evidence that the boroughs agreed with the department's
opinion. Mr. Ewing suggested the best way to get input
would be to gather borough representatives at the committee
table to hear first-hand. He said his office had not been
out garnering support.
Co-Chair Sharp had a question relating to the modeling. He
asked if DEC had any indications that at the locations where
oil drilling was occurring, air quality was anywhere close
to non-attainment levels required by the state. Mr. Ewing
believed that the areas where drilling would be taking place
was complying with the standards. He warned, the models
predicted that these areas would not be in attainment if the
rigs were allowed to operate without some control of the
sulfur content in the fuel. Co-Chair Sharp pointed out that
the rigs already were operating and were in compliance. Mr.
Ewing argued that was because the department was able to
permit and regulate the operations. Under the new law,
permitting and putting limitations on operations would no
longer be allowed. Co-Chair Sharp again asked if the air
quality standards were anywhere near non-attainment or did
the department monitor to ensure they didn't reach those
levels. Mr. Ewing replied there was no ambient monitoring
being done in any of the areas at the time. Therefore, he
could not answer the question, just offer his best
professional judgement, which was that the standards were
being met and could be met so long as the limitations were
in place.
Co-Chair Sharp wanted to know how the department knew the
permitting was working if there was no monitoring. Mr.
Ewing referred to the limitation of the sulfur content
allowed in fuel. They were able to use models to predict
the amount of emissions based on the amount of sulfur in the
fuel.
Co-Chair Sharp asked if low-sulfur fuel was available in the
State Of Alaska or was it shipped in. Mr. Ewing said there
was varying levels of sulfur content fuel within the state
and some of it was shipped in. In the case of the Warthog
project, the fuel was brought from the Northwest Territory.
Senator Donley admitted environmental science was not an
area of his expertise. He asked Mr. Ewing what was his
background. Mr. Ewing spoke of his 25 years working in the
environmental field in air and water quality and other
related areas. Senator Donley wanted to know if he held a
technical degree. Mr. Ewing responded that he did not
possess such a degree, his qualifications were through his
experience plus other departmental employees who did have
specific degrees.
Senator Donley asked what were the standards the department
was trying to enforce. Mr. Ewing referred to the Federal
Clean Air Act standards. Senator Donley wanted to know if
Mr. Ewing knew and could explain those standards to him.
Mr. Ewing offered other staff who could.
Senator Donley asked if the standards were universally
accepted as being necessary. Mr. Ewing qualified that there
were probably no scientific standards that were accepted
unanimously throughout the world. Generally, the standards
being discussed here did have wide acceptance. They had
gone through the rule-making process, were subjected to peer
review and had the basis of the best information available,
he stated. Senator Donley asked how large a group disagreed
with these standards. Were there scientific articles
claiming these particular standards may not be the best, not
necessary or possibly overly restrictive, he wondered. Mr.
Ewing responded that depended on what he was looking for. If
he wanted to make a case for tighter standards, he could
find support; if he wanted less restrictive standards he
could find support for that also. What he was trying to
say, was through the process, they had arrived at these
standards, which were national standards set to protect
human health.
Senator Donley wanted to know how once the national
standards were established by the federal government, how
were the standards tested for compliance. He referred to
carbon monoxide monitoring done in a busy intersection in
Anchorage, which were to establish standards for the entire
city. Wasn't there an issue with how the standards were
administered, he questioned. Mr. Ewing admitted that had
been the argument used by industry and others to grant the
state the authority to oversee monitoring. This would allow
flexibility. He reminded the committee of the federal
oversight on the Warthog project and the tight controls
placed on that project. He felt the federal government was
more restrictive then necessary. What the state offered in
recent years was more flexible approaches to regulating
sulfur dioxide as related to the rigs. He emphasized they
could provide flexibility but having no standard and
ignoring pollution was not a solution.
Senator Donley spoke of the Truckers Association and other
business association complaints regarding air quality in the
Anchorage area and asked why DEC hadn't responded to them.
Mr. Ewing pointed out these were different situations. The
current topic was non-road engines. He did say the
department had proved flexible in the Anchorage and
Fairbanks areas with regard to the automobile issues. While
they may not have been far enough for some people, they did
provide balance and worked within the federal guidelines.
Senator Donley felt that the issues were related in that the
claim of flexibility was in question. Mr. Ewing disagreed,
saying DEC was very flexible, perhaps not to the degree the
senator wanted for the trucking industry and again the oil
drilling industry in this case, but overall balance was
achieved. There was further debate on the air quality
standards and the trucking industry. Mr. Ewing concluded
that DEC could not swing entirely to meet the demands of one
particular interest, leaving other interests unrepresented.
Senator Donley agreed but felt Mr. Ewing was exaggerating.
Mr. Ewing stated that the department in every case listened
to all arguments and tried to make a reasonable judgement.
He felt that in Senator Donley's case a fair judgement had
been made, but if the senator disagreed, they could discuss
the matter further at another time.
Senator Parnell recalled intentions voiced several years ago
by the state to conform to federal standards, but not go
beyond. He then referred to Mr. Ewing's comment on
regulating drilling rigs as a mobile source as required
under federal law. He asked Mr. Ewing where that
information came from. Mr. Ewing clarified non-road engines
were not mobile sources under the Clean Air Act. Mobile
sources were things like automobiles and things that moved
around continually, he explained. Drilling rigs were non-
road engines that did move around, but fell under a
different definition under the Clean Air Act. He continued,
telling the committee DEC was instructed they did not have
to regulate drilling rigs as stationary sources, but they
did have to maintain ambient air quality standards. This
meant that when in an area with clean air, the requirements
of prevention of deterioration came into play. Any source
with the potential to emit pollution that could put the air
quality over the standard, must be regulated, he finished.
He conceded that people were often confused when they read
they didn't need a Title 5 permit - or stationary source
permit. Often they would assume that meant they did not
have to comply with the clean air standards. That was not
the case, he stressed.
Senator Parnell inquired as to the classification of the
North Slope area. Mr. Ewing responded the North Slope was a
non-classifiable area according to the information they had
available. They believed it to be in attainment, but could
not confirm.
Senator Parnell asked, if DEC were to classify the North
Slope area emissions as coming from stationary sources
versus non-road engines, what approximate percentages would
be made up of non-road sources. Mr. Ewing reminded the
senator he did not have any hard data. He outlined the
process when an operator wished to permit a particular site.
The department would compile a list of all the significant
sources on that site and create a model, which would tell
them what to expect as far as ambient air quality. This was
a process they did on every site that was proposed for a
permit.
Senator Parnell again attempted to get an approximation of
the percentage of non-road engine emissions. Would it be 50
percent or 90 percent, he wondered. Mr. Ewing responded
that it depended on the site and the time. He estimated
that some of the time the non-road engine percentage would
be close to 100.
Senator Parnell asked if the measurements were taken from
the drilling rig or from the entire area. Mr. Ewing replied
that they measured the particular site. He explained that
if there were a drilling site where oil development was
being done, close to 100 percent of emission would be coming
from the drilling rig itself.
Senator Parnell then referred to the North Slope Borough
mayor's comments on the cloud over Nuiqsut and asked Mr.
Ewing to explain. Mr. Ewing stipulated that the situation
was not one DEC had documented, but it sounded like the
classic cloud formation that would come from SO2 and similar
types of emissions. He expanded saying, that type of
formation would not be expected on the North Slope because
it usually required intense sunlight for the chemical
reaction to occur. However, even in the absence of the
intense sunlight they were getting reports of observations
of the cloud formations. He stated the department could not
confirm the cloud was a result of activity on the North
Slope or that it was blown in from Asia, he speculated it
was probably from a combination of the two.
Senator Parnell questioned if DEC had any hard data this
phenomenon caused or could cause federal ambient standards
violations. Mr. Ewing replied that the only way to evaluate
future air quality conditions in a situation where a permit
was being considered was to use a modeling technique. He
stressed that an operation could not be measured before it
began and the permitting stage took place before operations
could begin. He said there was nothing unusual about this.
Co-Chair Sharp opened the meeting to public testimony.
First to testify was BRIAN PETTY, Senior Vice President of
Governmental Affairs for the International Association of
Drilling Contractors via teleconference from Washington D.C.
After a short introduction of himself and his organization,
he spoke to the legislation.
"...I am here today to support Senator Leman's well crafted
bill, SB 299. IADC, as Deputy Commissioner Ewing properly
pointed out, has been frustrated in coming to terms with
ADEC on a rational approach to our problem. That problem
being the business of regulating or not regulating drilling
rigs working in Alaska."
"IADC has been engaged here in Washington with the EPA from
early days. After the 1990 Clean Air Act amendments were
passed, we were invited in by the EPA to become part of
their E&P oil and gas cluster - meeting as early as 1993 to
discuss ways of defining properly, non-road engines,
stationary sources and the whole gamut of issues that come
up in oil and gas activities, especially from the
exploration side. I might add that those meetings were
attended widely by the EPA including their solid waste and
water branches. Those discussions evolved further into
active dialog with EPA contractors focusing on the air
regulations in Annarbor, Michigan and in Research Triangle,
North Carolina."
"The culmination of that long process is represented in the
direct final rule that EPA put out just at the end of
December last entitled Control of Air Pollution Emission
Standards for the New Non-road Compression Engines at or
below 37 Kilowatts. We have, at IADC, been attempting to
encourage ADEC to understand the dimension of the federal
regulations and fact that those federal regulations do not
require the inclusion of non-road engines or mobile sources
under Title 5. And that the states in fact are totally
authorized to exclude them as is the case with a number of
oil patch states all over in this country including
Colorado, which in matters environmental is no slouch as
many of you know. Colorado expressly exempts drilling rig
engines from its permitting requirements. That state takes
a back seat to none in terms of considering its pristine
environment because of its high value it accords its tourism
industry. I would add that there are substantial number of
rigs working there - quite a few more than are working in
Alaska as a matter of fact."
"This pattern follows in states Montana, North Dakota,
Kansas, New Mexico, Oklahoma and Wyoming. In Texas there is
a separate regime but it comes to the same result. Drilling
rigs are not considered stationary sources for permitting
purposes. So what is being ventured by ADEC, is absolutely
unique and in ways radical because it deviates from
established patterns in mature dialog and a mature regime
that began with a process here in Washington after the Clean
Air Act amendments were passed."
"IADC, in its international dimension, has information drawn
from environmental regulators all over the world. We've
been an association for sixty years. We are very, very
sensitive to the need for preserving safety and
environmental mitigation in our operations. As a
consequence we are very concerned and alarmed by the
direction the ADEC is taking in Alaska because it threatens
to be an eccentric result that could have the affect of
shutting in a lot of production and certainly exploration in
Alaska, which of course is a vital industry in that state.
That is why I was asked to come in today to just point out
the importance of this to the international association and
to illustrate the depth and length of time we have been
spending with our engineers and our company engineers
engaged in active dialog with EPA engineers for example."
"Our efforts at ADEC go back to about August of 1996 when
our representatives met with representatives of ADEC in
Juneau. At that time those ADEC representatives conceded
the point that drilling rigs were in fact mobile sources in
their use of non-road engines. We were dismayed when in
early 1997; ADEC seemed to reverse itself. There was a
request by ADEC for us to produce questions, which they
agreed to answer promptly. That request was April. We did
not get an answer until late October and that was only after
another letter asking ADEC to come forward with some
justification for their modeling and some explanation why
the State Of Alaska should venture off into an entirely new
area of what was an established national norm."
"As a consequence IADC finds itself today completely
frustrated moving any further with ADEC because ADEC seems
predisposed to venturing a rule that would consider drilling
rigs essentially stationary sources. As a consequence the
Legislation as drafted is very carefully aligned with that
of existing federal law and its interpretation judicially
and we think its a prudent step that will not make one whit
of difference in terms of damaging Alaska's environment but
will have a lot to do with the preservation of a vital oil
and gas industry in the state."
There were no questions from committee members and Co-Chair
Sharp called upon the next person to testify. RUSS DOUGLAS
came to the table and introduced himself as a representative
of the International Association of Drilling Contractors-
Alaska Chapter. Accompanying Mr. Douglas was KYLE PARKER,
also from the AK Chapter of IADC. Mr. Parker acted as the
primary speaker and his testimony was as follows.
"I'd like to start off today just by responding to three of
the points which Deputy Commission Ewing stressed at some
length here to the committee."
"First off, I'd like to respond to his suggestion that for
three years they have been actively pursuing a solution to
this problem with us. That frankly is just not the case.
We have a letter, and I believe it's in your committee
packets, from July 24, 1997 signed by Michael Conway who's
Acting Director of the Air Section down at DEC, wherein he
says that the department is committed to working a longer
term solution to this issue with all interested parties by
establishing and leading a work group. Nothing - no work
group was ever formed following that July 24th letter. As
of March 12th of this year, nothing had been done by DEC to
move forward in forming a work group to work with industry.
So Deputy Commissioner Ewing's suggestion that there's been
an active effort on their behalf to work with industry in
solving this and that we've rejected their proposed
solutions is just not the case."
"Recently they did come out with a draft proposed
regulations, which were presented to us. These proposed
regulations are a form of the California Rig Registration
Program. Industry did respond to him that we did not
believe that was the right solution for Alaska. We are not
opposed - we have not been opposed to sitting down and
working with the department on developing a solution. We
have, I believe been very open to working with them over the
last three years and as recently as March 25th, we had sent
this letter to Commissioner Brown, and I have a copy here
for each of the committee members, wherein we take the
position with this recently proposed workgroup that we would
be pleased to have a opportunity to work in a workgroup
format with the regulators in developing some form of a
solution. But from our perspective, the DEC isn't willing
to step back and take a look to see whether first of all
there's a problem here. As a matter of fact, at that
meeting, one of the representatives from industry suggested
that DEC stand down from its aggressive regulation of
drilling rigs and give industry the time to work with DEC to
develop the facts so we know what the reality is on the
North Slope. We will then develop an appropriate regulatory
framework for mobile sources of emissions. But Deputy
Commissioner Ewing at that point said no, we don't have the
flexibility to do anything but regulate emissions from
drilling rigs. That's all detailed in your letter."
"So please note that industry has been very willing to work
this issue. We've been working it for over three years now
with them and frankly we've been frustrated at every turn in
our negotiations with them."
"So our solution, as the deputy commissioner said - he said
that our solution is no regulation - that is not in fact the
case. We have been willing to sit down and work with them
on an appropriate regulatory framework. That's not
happened."
"The second point is that the deputy commission suggests
that rigs are not regulated. In fact engines on drilling
rigs - engines on all mobile sources are regulated. They
are manufactured to standards that are established by the
federal government. This is the point of our legislation.
The federal government recognizes that you regulate
stationary sources of emissions and mobile sources of
emission differently. The appropriate places to regulate
mobile sources of emissions is at the manufacturing stage
where the engines are manufactured and you put appropriate
technologies on at that point. Stationary sources, you can
add things like scrubbers, higher stacks, pollution
collectors - those types of technologies. Adding those to a
mobile source, you lose mobility."
"Finally, and Russ Douglas will address this at length a bit
more, Deputy Commissioner Ewing started out by saying that
rigs are a significant source of emissions on the North
Slope. Well we in the industry have taken the time to
develop some of the numbers and I'll let Mr. Douglas speak
to that."
Mr. Douglas began speaking.
"My evaluation has been just to make essentially look at
some of the permits on the North Slope and these are the
stationary permits. The level of emissions from those
bigger facilities - the production facilities, the central
compression plant are normally much greater than the
emissions from any drilling rig. There are a limited number
of...
Tape #106 Side B
"...from my evaluation. I've looked at the comparison and
most of them are in the range of ten percent or less in
terms of the contribution of drilling rigs if a drilling rig
were to be on the facility."
"In addition those 20 rigs, not all of the 20 rigs are
running totally on diesel. There are some that are run on
gas - or there's one that is run on gas. Several have
capability to be run electricity, if available can be
powered by that electricity. That further reduces the
amount of actual emissions from drilling rigs from measures
that have been taken by the drilling industry."
"Another point I would like to address is the question about
ambient monitoring on the slope. There was a program begun
in 1986 by the Prudo Bay unit operators to monitor air
quality. They've established three stations at APAD, at the
Gathering Center One and at the Central Compression Plant
and they monitored emissions for quite a while. I believe
this was in conjunction with the DEC. Then the program - or
at least from the DEC standpoint, was discontinued but the
Prudoe Bay unit operators decided they would proceed with
it. So they are monitoring to date. The IADC is in the
process of obtaining that data. But since it is by the
Prudoe Bay unit operators now it has to be requested and
approved by all the unit operators before they can release
that data. I've been assured by my contact at BP who runs
the program that the data show there is no increasing air
quality detriment at this point in time."
"I would also like to add that Alpine, Arco with their
Alpine project, has agreed to a monitoring station at their
facility in regard to the Nuiqsut concerns. So they have
agreed to monitor the air out there as well."
Senator Adams asked that with the passage of this
legislation, could IADC guarantee there would be no
pollution in the North Slope that could affect the safety of
the workers in the North Slope. Would they be willing to
share their data with the communities in the affected area,
he inquired. Mr. Parker responded they would be happy to
share the analysis that was still ongoing as well as the
numbers that were in the current permits and how the
drilling rigs compared in terms of the percentage of
emissions. He assured the committee he would get a copy of
that information to them. He admitted there could be no
guarantee against emissions on the North Slope. That was
part of the ongoing operations, both in the stationary
facilities working to collect and separate the oil and the
drilling rigs discussed at this meeting.
Senator Adams suggested this was just a facade created by
the oil companies. Mr. Parker responded saying that
industry deserved credit in recent years for modifying power
sources on the rigs. Rigs on the North Slope were turning
to electrical generation and less diesel fuel was being
burned. He spoke of other modifications to convert rigs to
natural gas operation. He stressed that this bill was not a
license to pollute.
Senator Parnell referred to pollution in his district in
Anchorage. He stated the issue at hand was not the
emissions, but the permit.
Mr. Parker testified in response to Mr. Ewing's earlier
comments relating to federal compliance and DEC's failure to
research other state's handling of the drilling rig
emissions. Mr. Parker attested that DEC had actually looked
at what California was doing to regulate the non-road
engines. Mr. Parker alluded that California was not the
ideal comparison for Alaska's situation.
This concluded public testimony on the bill.
Senator Phillips offered a motion to move from committee SB
299 with accompanying fiscal note. Senator Adams objected.
Co-Chair Sharp voiced concerns with the fiscal note, saying
he didn't understand why the department claimed to need more
funds to not issue permits. He felt this bill should save
them money.
Senator Pearce joined the discussion on the fiscal note.
She read accompanying comments on the note relating to no
change in staff workload and pointed out the request for an
additional staff position. She suggested that because the
bill was in the Senate Finance Committee, they had the
authority to change the fiscal note. She expressed a desire
to write a new fiscal note eliminating the new staff
position.
Co-Chair Sharp supported this idea. He felt the department
was already making regulation changes the way they wanted,
so he didn't know how it would require more staff to not do
those changes. He declared the personal service line item
should be zero.
Senator Pearce added the Department of Law review would be
applicable. She stated for the record the changes to be
made to the DEC fiscal note, eliminating the personal
services monies and the travel expenses for the would-be
created position. Senator Phillips amended his motion to
accommodate, noting the total amount for the fiscal note
would be $11,600.
Senator Adams asked for clarification on what would be
included in the revised fiscal note. Senator Phillips
responded that what was left was funding for Department of
Law review, advertising, public hearings and publication of
new regulations.
Senator Phillips asked Senator Adams if the North Slope
Borough had passed a resolution opposing this legislation.
Senator Adams noted the letter from the mayor. He
maintained his objection.
Senator Donley pointed out information in the file in
support of the legislation. He wanted to know if there was
a position paper from the department, stating their opinion
in writing. Co-Chair Sharp was only aware of oral
statements made in the Resources Committee and here.
Senator Donley said he found the backup papers in the file
supporting the bill to be very persuasive.
Co-Chair Sharp asked for roll call to be taken on the
motion. The vote was 6-1; Senator Adams cast the lone nay
vote.
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