Legislature(2009 - 2010)BARNES 124

02/25/2010 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 264 PIPELINE FROM OUTER CONTINENTAL SHELF TELECONFERENCED
Moved Out of Committee
+= HB 273 MUNICIPAL GENERAL GRANT LAND TELECONFERENCED
Moved CSHB 273(CRA) Out of Committee
*+ HB 318 UNREGULATED POTABLE WATER SYSTEMS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
          HB 264-PIPELINE FROM OUTER CONTINENTAL SHELF                                                                      
                                                                                                                                
8:07:21 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON announced that the  first order of business would                                                               
be HOUSE BILL NO. 264, "An  Act relating to the right-of-way for,                                                               
and  a  state  property  tax  exemption  concerning,  a  pipeline                                                               
transporting oil  produced on the  outer continental shelf  to an                                                               
established pipeline in the state."                                                                                             
                                                                                                                                
8:08:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JAY RAMRAS, Alaska  State Legislature, speaking as                                                               
the prime  sponsor of HB 264,  explained that HB 264  grew out of                                                               
Congressional  legislation   understanding  the   sensitivity  to                                                               
environmental aspects  of the North  Slope.  The Chukchi  Sea and                                                               
the  Beaufort  Sea  are very  important  and  highly  prospective                                                               
offshore oil drilling sites.   The potential amount of revenue to                                                               
the State of  Alaska from these sites isn't vast,  but the volume                                                               
of  oil  that  would  travel through  the  Trans-Alaska  Pipeline                                                               
System (TAPS)  is vast.   Therefore, as throughput of  Alaska oil                                                               
declines, it becomes less valuable  through the pipeline and more                                                               
costly to transport.  If  there was federal oil traveling through                                                               
that same pipeline,  Alaska's oil would be  more affordable going                                                               
to market.  Therefore, the  Congressional delegation has proposed                                                               
legislation  that  would require  a  submerged  pipeline for  the                                                               
movement of  offshore oil in  federal waters in both  the Chukchi                                                               
and Beaufort  Seas and also  remove the  option to tanker.   This                                                               
legislation  would provide  the Department  of Natural  Resources                                                               
(DNR) commissioner the power to  expedite the review of right-of-                                                               
way  applications  for  the  construction   and  operation  of  a                                                               
submerged line as well as  an above-ground gathering line to join                                                               
the submerged line at the shore.   Certain state tax breaks would                                                               
be offered  to prospective  pipeline developers.   In  fact, this                                                               
legislation    would    incentivize     the    onshore    effort.                                                               
Representative Ramras  said that the benefit  of this legislation                                                               
is through delivery  of oil in TAPS and the  demonstration of the                                                               
willingness  to work  with  a new  corporate  partner that  could                                                               
potentially employ  35,000 Alaskans  and increase revenue  to the                                                               
North Slope region and state.   He explained that using pipelines                                                               
would  mitigate risk  that  would result  from  the operation  of                                                               
tankers in ice-laden seas.                                                                                                      
                                                                                                                                
8:12:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS expressed his  desire for two narratives to                                                               
emerge from  HB 264.  The  first narrative is the  thoughtful and                                                               
deliberate  corporate  methodology  and governance  behind  Shell                                                               
Oil's (Shell)  actions, which aren't necessarily  dictated by the                                                               
court system.   Shell, he related, is trying to  be a responsible                                                               
developer  that   is  at   the  beginning   of  a   50-year  plus                                                               
relationship with  Alaska.   The second narrative  is to  shine a                                                               
light  on  Mayor Itta  and  the  Inupiat people  and  [encourage]                                                               
sensitivity  to  the  10,000-year tradition  of  hunting  bowhead                                                               
whale.    Both  narratives  are  critical  to  understanding  the                                                               
importance  of above-ground  pipelines  while  finding a  balance                                                               
between extracting  a valuable resource  and being  respectful of                                                               
the Inupiat  culture.  He pointed  out that Shell, one  of the 50                                                               
largest businesses in  the world, is integrating with  one of the                                                               
oldest cultures,  the Inupiats, in  the world.  He  expressed the                                                               
need  for less  bullying by  the court  system, more  sensitivity                                                               
from  the  corporation, and  more  willingness  to craft  careful                                                               
development by  the Inupiat.   He further  expressed the  need to                                                               
continue the  aforementioned conversation  in order  to sensitize                                                               
the members of  the House to the dance between  Shell Oil and the                                                               
residents of the North Slope Borough.                                                                                           
                                                                                                                                
8:17:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER inquired as to the meaning of Section 3.                                                                 
                                                                                                                                
REPRESENTATIVE  RAMRAS informed  the committee  that some  of the                                                               
language in  HB 264  was taken from  the original  Alaska Gasline                                                               
Inducement Act  (AGIA) legislation  and some language  deals with                                                               
reimbursement  from   the  state  to  the   North  Slope  Borough                                                               
regarding tax provisions.                                                                                                       
                                                                                                                                
8:18:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER inquired  as  to  what HB  264  does in  a                                                               
sentence.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAMRAS  specified that HB  264 is a  tax incentive                                                               
that allows  for reimbursement  by the state  to the  North Slope                                                               
Borough  for taxes  for  the cost  of  the above-ground  pipeline                                                               
property tax  value as it  meets the federal  submerged pipeline.                                                               
He related his  understanding that Shell is many  years away from                                                               
an actual submerged pipeline.   Therefore, the legislation should                                                               
be  less  about  the  timing and  more  about  understanding  the                                                               
narratives of the two principle groups involved.                                                                                
                                                                                                                                
CO-CHAIR  HERRON   characterized  HB   264  as   timely  enabling                                                               
legislation.                                                                                                                    
                                                                                                                                
8:21:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  asked if  a statutory change  is required                                                               
for DNR to expedite the review or action.                                                                                       
                                                                                                                                
REPRESENTATIVE RAMRAS answered that he didn't know.                                                                             
                                                                                                                                
CO-CHAIR HERRON  asked if this  legislation is more like  "a kick                                                               
in the pants."                                                                                                                  
                                                                                                                                
REPRESENTATIVE RAMRAS replied yes.                                                                                              
                                                                                                                                
8:21:37 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HARRIS questioned whether  the sponsor is carrying                                                               
the legislation for the administration.                                                                                         
                                                                                                                                
REPRESENTATIVE RAMRAS  answered, "I thought  this bill up  all by                                                               
myself."     In  further   response  to   Representative  Harris,                                                               
Representative  Ramras  said  that  he didn't  inquire  with  the                                                               
administration regarding its stance on HB 264.                                                                                  
                                                                                                                                
8:23:57 AM                                                                                                                    
                                                                                                                                
CAM  TOOHEY,  Alaska  Government and  External  Affairs  Manager,                                                               
Shell Alaska,  referring to the slide  presentation entitled "Oil                                                               
and Gas  In The  Arctic OCS," reminded  the committee  that Shell                                                               
has a  fairly lengthy history  in Alaska.   In fact,  Shell began                                                               
exploring in  the Cook Inlet  region in  the 1950s and  the first                                                               
discovery and  first offshore platform  was Middle  Ground Shoal,                                                               
the production  of which  continues today.   Shell was  also very                                                               
active in the Gulf of Alaska  Bering and Beaufort Seas in the mid                                                               
1980s  and then  the  Chukchi  Sea.   Shell  is predominately  an                                                               
offshore company  worldwide.  Of  the 33 wells Shell  has drilled                                                               
in Alaska,  32 have been  located in the  water.  In  1988, Shell                                                               
sold its Alaska Cook Inlet  leases and then re-entered Alaska, in                                                               
the Beaufort  Sea, in 2005.   Mr. Toohey, referring to  the slide                                                               
entitled "Shell  in Alaska Today," highlighted  that Shell picked                                                               
up about  135 leases in the  Beaufort Sea for about  $85 million.                                                               
These are federal  leases and revenues.  In  2008, Shell obtained                                                               
275  leases in  the  Chukchi  Sea, which  amounts  to about  $2.1                                                               
billion.  The  aforementioned was the largest  expenditure by any                                                               
one  company in  a  federal  lease sale.    He  noted that  other                                                               
international oil  and gas offshore  companies with  expertise in                                                               
Arctic and sub-Arctic regions  participated in the aforementioned                                                               
lease  sale,  such  as  ConocoPhillips,  Totale  (ph),  ENI,  and                                                               
Repsall (ph).   To date,  Shell has  expended over $3  billion on                                                               
leases and equipment.   Mr. Toohey related that  Shell and others                                                               
are  so interested  in  the  offshore in  Alaska  because of  the                                                               
estimated billions and  billions of barrels of  oil and trillions                                                               
of cubic feet  (tcf) of natural gas.  Some  of these numbers have                                                               
been  validated with  the exploration  that occurred  in the  mid                                                               
1980s and early  1990s.  He noted that all  of the discoveries in                                                               
the  1980s  and 1990s  were  stranded  because of  economics  and                                                               
technology.   However,  Shell believes  those  hurdles have  been                                                               
overcome.   Still, Mr. Toohey  reminded the committee  that until                                                               
exploration occurs  and the wells  are in place, the  numbers are                                                               
only estimates.   He noted  that he  has copies available  of the                                                               
Institute of Social and Economic  Research (ISER) study, which is                                                               
an in-depth  report on the  opportunity in which Shell  is trying                                                               
to participate.                                                                                                                 
                                                                                                                                
8:27:15 AM                                                                                                                    
                                                                                                                                
PETE  SLAIBY,  Vice  President,   Shell  Alaska,  clarified  that                                                               
although  the  ISER report  was  commissioned  by Shell,  it  was                                                               
performed independently  using independent  data and  was managed                                                               
by ISER.   The report  encompassed the Beaufort Sea,  the Chukchi                                                               
Sea, and some  activity in the North Aleutian Basin.   The report                                                               
assumes  industry-wide participation.    Referring  to the  slide                                                               
entitled "Alaska  OCS -  Benefits To Alaska  and the  Nation," he                                                               
highlighted  that this  project  would provide  over the  50-year                                                               
life  of  the  project  about   35,000  jobs,  with  some  swings                                                               
occurring throughout.  The project  would extend the life of TAPS                                                               
by decades.   He related that with the gasline  coming into play,                                                               
the expenditure  warrants every molecule  of gas  available being                                                               
set  aside to  support the  investment.   Therefore, the  need to                                                               
input  additional   volumes  from   the  offshore   becomes  more                                                               
important.    Another benefit  of  the  Alaska Outer  Continental                                                               
Shelf (OCS)  is the  domestic energy  security it  would provide.                                                               
During the  April 2009 visit  by the U.S. Department  of Interior                                                               
Secretary, it was related that the  U.S. is importing close to 65                                                               
percent of its domestic oil.   Therefore, the Alaska OCS presents                                                               
a major opportunity.   Referring to the  slide entitled "Alaska's                                                               
Future  with OCS:  Major Findings",  Mr. Slaiby  pointed out  the                                                               
estimated payroll  of about  $72 billion  [averaged over  the 50-                                                               
year period], which  provides $5.8 billion directly  to the state                                                               
and  local  government.    He reminded  the  committee  that  the                                                               
aforementioned is  merely a snapshot  in time.  He  then recalled                                                               
Representative Ramras discussing lowering  the pipeline tariff by                                                               
increasing volumes.   [The OCS] extends the life  of the pipeline                                                               
and thus would result in  additional oil production over a longer                                                               
period  of time.    Furthermore, [an  OCS  pipeline] provides  an                                                               
opportunity to  bring additional oil  into the pipeline.   If the                                                               
assumption  is that  there is  a large  Chukchi anchor,  it could                                                               
mean a  pipeline from  the Chukchi  Sea to Pump  Station 1  and 2                                                               
over  the   National  Petroleum  Reserve-Alaska  (NPR-A).     The                                                               
aforementioned would  bring in  a lot of  middle class  leases on                                                               
both state leases as well as the NPR-A.                                                                                         
                                                                                                                                
8:30:36 AM                                                                                                                    
                                                                                                                                
MR. SLAIBY, in response to  Representative Harris, confirmed that                                                               
the projected $5.8  million direct to state  and local government                                                               
is over a 50-year period.                                                                                                       
                                                                                                                                
REPRESENTATIVE  HARRIS  highlighted  that the  [OCS]  is  federal                                                               
waters, and thus  the revenue to the state would  be less than if                                                               
it were on state land.                                                                                                          
                                                                                                                                
MR. SLAIBY  answered that the  aforementioned would be  a correct                                                               
assumption.   He  noted that  the parameters  ISER was  given was                                                               
that at  this point there  shouldn't be an assumption  of revenue                                                               
sharing.    Shell is  actively  involved  in the  discussions  in                                                               
Washington, D.C.,  regarding the  desire to have  revenue sharing                                                               
for the state.                                                                                                                  
                                                                                                                                
8:31:38 AM                                                                                                                    
                                                                                                                                
MR. SLAIBY, continuing  with the slide entitled  "North Slope Oil                                                               
Production  without OCS,"  explained that  the chart  illustrates                                                               
the declining  production in  TAPS.  The  figures being  used are                                                               
from   the  U.S.   Geological   Service   (USGS)  regarding   the                                                               
possibility  of  oil, primarily  from  the  Beaufort and  Chukchi                                                               
Seas.   The important thing to  understand, he said, is  that the                                                               
[OCS] oil will add much needed  volumes to the oil pipeline.  The                                                               
impact of  having the volume of  oil in TAPS results  in a travel                                                               
time to Valdez that's four  times faster.  Therefore, keeping the                                                               
volumes and the temperature in the  pipeline at a higher level is                                                               
hugely  important.   Although Shell  had a  false start  in 2007,                                                               
Shell is  now "shovel  ready."  Since  infrastructure is  a major                                                               
issue,  Shell  is  bringing  it  all  from  Dutch  Harbor.    The                                                               
aforementioned    involves   all    the   logistics,    including                                                               
transportation, oil spill response, and material supply.                                                                        
                                                                                                                                
MR.   SLAIBY,  referring   to  the   slide  entitled   "Technical                                                               
Solutions," then  turned to what  the solutions would  look like.                                                               
He stressed  the importance of  realizing that this isn't  a Gulf                                                               
of Mexico  solution.  The  report considered the volumes  and the                                                               
break  even   economics  to  support   a  structure,   which  are                                                               
significant.   Drawing  from  the ISER  report,  he related  that                                                               
there  would  be approximately  four  to  six structures  in  the                                                               
Beaufort Sea and  an equal amount in the Chukchi  Sea and perhaps                                                               
two structures in the North  Aleutian Basin.  The aforementioned,                                                               
he  reminded the  committee, is  merely  a snapshot  and it  will                                                               
likely be  different.  The point,  he said, is that  this project                                                               
will require  heavy, robust structures  albeit fewer of  them and                                                               
there are  fewer companies that  could support  such development.                                                               
He  explained  that  the  structures  illustrated  on  the  slide                                                               
entitled "Technical  Solutions" and "Arctic Class  Platforms" are                                                               
concrete gravity-based structures.   These structures sit solidly                                                               
on the  bottom and  are designed to  break-up multi-year  ice and                                                               
work on the principle of an  upside down icebreaker such that the                                                               
ice  is thrown  over  the top  and  is broken  on  the way  down.                                                               
Clearly,  multi-year  ice and  cold  is  of  concern as  are  the                                                               
shallow waters that  are less than 150 feet.   The technology has                                                               
been  proven for  almost  50  years.   The  sea  states and  wind                                                               
conditions  are  probably  less  than  other  areas  where  Shell                                                               
operates.    He related  that  Shell  has concrete  gravity-based                                                               
structures in  the North Sea,  some of  which have been  in place                                                               
since 1975,  in sea state  and wind  state that exceed  what will                                                               
occur in the  Chukchi and Beaufort Seas.  The  key to the Chukchi                                                               
Sea and  Beaufort Sea structures  is to  design them in  a robust                                                               
fashion that will withstand the multi-year ice.                                                                                 
                                                                                                                                
8:35:30 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MUNOZ  asked if  Shell has submerged  pipe in  the North                                                               
Sea.                                                                                                                            
                                                                                                                                
MR. SLAIBY replied  yes, adding that it's  all basically standard                                                               
pipeline at this point.                                                                                                         
                                                                                                                                
8:36:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON  surmised then that these  structures are similar                                                               
yet unique  in comparison to  the North Atlantic structures.   He                                                               
questioned whether it  was because the North Atlantic  is deep in                                                               
comparison to the [Chukchi and Beaufort Seas].                                                                                  
                                                                                                                                
MR. SLAIBY  clarified that it  would depend upon the  location of                                                               
the  drilling  in  the  North   Atlantic.    There  are  floating                                                               
solutions  in  the  North  Atlantic,  in the  area  west  of  the                                                               
Shetland  Islands  in the  north  of  Scotland.   These  concrete                                                               
gravity structures  were utilized in  the 1970s for  the Scottish                                                               
area of the North Sea as well  as for some areas in the Norwegian                                                               
sector.   The concrete-gravity was convenient  because they could                                                               
be constructed  locally in yards close  to the areas.   There are                                                               
deep water fjords in Norway that  supported this, he noted.  [The                                                               
concrete gravity-based structure] was  an ideal value proposition                                                               
for many areas, such as the Phillips field and others.                                                                          
                                                                                                                                
8:37:13 AM                                                                                                                    
                                                                                                                                
MR. SLAIBY  related that perhaps  the most important  thing Shell                                                               
learned  upon its  return to  Alaska can  be summarized  with the                                                               
following statement  made in 2007  by Mayor Itta, "Too  much, too                                                               
soon, too  fast."   Shell listened to  Mayor Itta,  the assembly,                                                               
and the  planning committees in  Kotzebue and Barrow,  which lead                                                               
to Shell  revising its programs.   He opined that  although Shell                                                               
is confident  it will meet shareholder  and stakeholder concerns,                                                               
Shell recognizes  it's a  "show me" world.   Therefore,  Shell is                                                               
willing to  move at  slower pace, to  gain confidence,  and prove                                                               
that it  can drill the wells.   Shell, he relayed,  believes that                                                               
once  it  can  drill  some   wells  and  demonstrate  competence,                                                               
discussions regarding  pace can  be held again.   In  response to                                                               
the stakeholders  in the  North Slope  Borough and  the Northwest                                                               
Arctic Borough,  Shell has  basically halved  its program,  at an                                                               
economic cost.  Bringing the  infrastructure means that Shell can                                                               
basically drill the second well for  about the price of the first                                                               
well.   However,  he  opined  that it's  more  important to  gain                                                               
confidence and  a place in the  community and to a  have business                                                               
that spans decades.   Each year Shell has well  over 100 meetings                                                               
with stakeholders in different  areas, although statutorily Shell                                                               
was expected to have 27 meetings.   Shell has held what it refers                                                               
to  as  "Offshore 101"  in  an  attempt  to educate  folks  about                                                               
offshore [drilling].  Furthermore, Shell  has spoken with a group                                                               
of  elders in  the North  Slope Borough  regarding discharge  and                                                               
various environmental impacts.                                                                                                  
                                                                                                                                
8:40:02 AM                                                                                                                    
                                                                                                                                
MR. TOOHEY,  referring to the slide  entitled "Legal Challenges,"                                                               
highlighted  that  some of  the  hurdles  Shell faces  are  legal                                                               
challenges.  In  2007 Shell's activities in both  the Chukchi and                                                               
Beaufort Seas  were halted  by an  injunction.   Legal challenges                                                               
have continued as  federal permits have been  issued.  Currently,                                                               
the main hurdle is the  D.C. Circuit Court case regarding Shell's                                                               
five-year  lease  plan.    The U.S.  Department  of  Interior  is                                                               
revising  that  plan  and  there  should  be  some  announcements                                                               
regarding  that  revision shortly.    Those  revisions will  have                                                               
bearing on Shell's  ability to drill in 2010 in  the Chukchi Sea.                                                               
He noted  that although  Shell's plans  of exploration  have been                                                               
conditionally approved by the  Minerals Management Service (MMS),                                                               
they have been  challenged in the 9th Circuit Court.   Mr. Toohey                                                               
pointed out that  Shell has multiple other  challenges to federal                                                               
activities,  including  listings,  critical habitat,  and  actual                                                               
permits for Shell's activities on federal issues.                                                                               
                                                                                                                                
8:41:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HARRIS  asked if  most of  the litigation  is from                                                               
environmental  groups  or  is  it   mixed  with  litigation  from                                                               
indigenous individuals on the North Slope.                                                                                      
                                                                                                                                
MR. SLAIBY answered that the  majority of litigants in the recent                                                               
round  of  litigation over  the  Beaufort  and Chukchi  Seas  are                                                               
environmental groups.  However, he  pointed out that although the                                                               
Native  village  of Point  Hope,  the  Inupiat community  of  the                                                               
Arctic  Slope, and  the Alaska  Eskimo Whaling  Commission (AEWC)                                                               
have decided  to participate in  litigation, a number  of village                                                               
corporations  have  filed  briefs  in  support  of  the  offshore                                                               
activity.    He  related  his   understanding  that  the  Tikigaq                                                               
Corporation in Point Hope would  support [offshore activities] as                                                               
would Olgoonik  Corporation in the  village of  Wainwright, which                                                               
is located in an area that's  highly impacted.  He noted that the                                                               
North  Slope  Borough  has  chosen not  to  participate  in  this                                                               
legislation  because  the  mayor   of  the  North  Slope  Borough                                                               
believes he needs to continue to  have a dialogue with the MMS in                                                               
order to address the needs of his constituents.                                                                                 
                                                                                                                                
8:44:18 AM                                                                                                                    
                                                                                                                                
MR.  TOOHEY,   referring  to   the  slide   entitled  "Regulatory                                                               
Challenges  - Permits,"  related that  in addition  to litigation                                                               
Shell  faces challenges  with regard  to the  volume of  permits.                                                               
The main  challenge is that most  of the permits in  the offshore                                                               
are federal  permits and haven't  been issued in the  more recent                                                               
exploration activity  timelines.  Therefore,  there is a  lack of                                                               
knowledge, capacity,  and process within the  federal agencies to                                                               
issue these permits in a timely  manner.  At this point, Shell is                                                               
waiting for the Environmental Protection  Agency (EPA) air permit                                                               
for  the Chukchi  Sea and  a separate  [EPA air  permit] for  the                                                               
Beaufort Sea.   Although those processes  are nearing completion,                                                               
Shell has to  execute contracts for drilling  activities in July,                                                               
August,  and September.   Therefore,  Shell is  in a  position of                                                               
committing  resources for  an activity  that  may or  may not  be                                                               
permitted.  The  permitting, he emphasized, is  a huge challenge.                                                               
Mr. Toohey related  that Shell has the majority  of the necessary                                                               
permits, it's  just that the  EPA air permit  is a key  permit to                                                               
obtain.   Mr. Toohey explained  that Shell's plan  of exploration                                                               
is conditionally approved  and the MMS is the  main authorizer of                                                               
Shell's  activities.   In  the  conditional  approval of  Shell's                                                               
offshore  permit,  MMS would  list  all  the required  subsequent                                                               
permits.   Therefore,  that  permit isn't  usable  until all  the                                                               
individual  sub-permits are  obtained.   He  reiterated that  the                                                               
majority of the  sub-permits have been obtained, but  the EPA air                                                               
permit has not and is key to the process.                                                                                       
                                                                                                                                
8:46:27 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON requested that Mr.  Slaiby explain the comment he                                                               
related from Mayor Itta regarding MMS.                                                                                          
                                                                                                                                
MR.  SLAIBY related  his understanding  that during  Mayor Itta's                                                               
speech to  the [AEWC] the mayor  related that one of  the reasons                                                               
he chose not  to participate in the lawsuit,  specifically on the                                                               
exploration  plans,  is  because  it eliminates  his  ability  to                                                               
address issues with  the MMS.  Mr. Slaiby opined  that Mayor Itta                                                               
believes  that not  entering  in the  lawsuit  provides him  more                                                               
leeway to continue what is becoming a better dialogue with MMS.                                                                 
                                                                                                                                
8:47:33 AM                                                                                                                    
                                                                                                                                
MR. TOOHEY, continuing with the  slide entitled "Challenges Met -                                                               
Why Should  Shell Be Allowed  to Drill?", informed  the committee                                                               
that whether Shell  drills or not it would  continue the baseline                                                               
science  gathering process.   In  order  to plan  for success  in                                                               
development, data has to be  collected now because the open water                                                               
season  is only  90  days long.   Shell  has  undertaken a  large                                                               
science program that  is being performed in  conjunction with the                                                               
North Slope  Borough and others.   The aforementioned  program is                                                               
in addition to  the federal program and state  resources that are                                                               
spent on science.  Oil spill  response is an on-site program when                                                               
drilling  occurs.    That  program  is  a  new,  state-of-the-art                                                               
program that  hasn't been  used in  an exploration  scenario like                                                               
this anywhere  in the world.   The  program was modeled  after [a                                                               
program] from Valdez.   The oil spill  response vessel supporting                                                               
that  program, an  ice-breaker, is  the first  Arctic ice-breaker                                                               
that has been built in the last  30 years.  The program, which he                                                               
characterized as robust, is manned  and operated by locals on the                                                               
North Slope.   Mr.  Toohey then informed  the committee  that the                                                               
2010 program  is a  one drill ship  program without  3-D seismic,                                                               
which   is   much   different   than   the   original   proposal.                                                               
Furthermore, it's  a one-year program  and thus after a  year the                                                               
stakeholders, community, agencies, and Shell  will be able to re-                                                               
evaluate whether the program needs  to be adjusted to accommodate                                                               
concerns.                                                                                                                       
                                                                                                                                
8:49:37 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MUNOZ asked if Shell  has worked with the communities to                                                               
encourage local hire and opportunities.                                                                                         
                                                                                                                                
MR. SLAIBY  replied yes, adding that  local hire is a  large part                                                               
of the  value proposition and  includes working with  the village                                                               
corporations,  regional  corporations,  and Alaska  companies  in                                                               
general.    Since Shell  is  keenly  aware that  without  revenue                                                               
sharing,  [local hire]  is a  major  part of  Shell's license  to                                                               
operate in the state.   For example, the aforementioned oil spill                                                               
response  program  is  managed  by  the  village  corporation  of                                                               
Barrow, Ukpeagvik  Inupiat Corporation  (UIC), and works  in both                                                               
the  Beaufort and  the  Chukchi Seas  with  opportunities to  put                                                               
satellites in  surrounding communities.   Furthermore,  Shell has                                                               
been hiring Alaskans  to work in various aspects  of the industry                                                               
in the  Gulf of Mexico.   Currently,  there are 11  new operating                                                               
professionals.  When Shell begins  drilling [offshore in Alaska],                                                               
the Alaskans  in the Gulf  of Mexico  will return to  Alaska with                                                               
great experience.  The  aforementioned, he indicated, illustrates                                                               
Shell's  commitment  to build  leadership  with  Alaskans in  the                                                               
state.   In fact, about 60  percent of Shell's office  [staff] is                                                               
Alaskans.                                                                                                                       
                                                                                                                                
8:51:42 AM                                                                                                                    
                                                                                                                                
MR.  TOOHEY, referring  to the  slide entitled  "Summary," stated                                                               
that  although  the resource  is  big,  until exploration  occurs                                                               
there  are only  estimates.   The federal  leases that  have been                                                               
sold and  the investment  to explore  those leases  sums billions                                                               
and  billions of  dollars.   Therefore, it's  a large  investment                                                               
that only  a few companies in  the world can make.   Furthermore,                                                               
it's  a great  opportunity  for  the state.    In conclusion,  he                                                               
expressed hope  that Shell will  be able to explore  those leases                                                               
in 2010.                                                                                                                        
                                                                                                                                
8:52:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON  recalled that the  sponsor of HB  264 introduced                                                               
it   to  elevate   dialogue  and   exposure   of  this   possible                                                               
development.    Co-Chair  Herron  then  inquired  as  to  Shell's                                                               
position on HB 264.                                                                                                             
                                                                                                                                
8:52:44 AM                                                                                                                    
                                                                                                                                
MR.  TOOHEY pointed  out that  Shell is  in a  stage that's  much                                                               
removed from  pipelines; rather,  it's in  a position  to explore                                                               
and  determine if  the  resource is  present.   Therefore,  Shell                                                               
appreciates the dialogue at this  stage because it provides Shell                                                               
the opportunity to  discuss the economic aspects  of the program.                                                               
Still, Shell remains  cognizant that a dialogue  regarding how to                                                               
benefit  from and  relate  to the  offshore  activities needs  to                                                               
occur in Alaska.  Part  of the aforementioned discussion includes                                                               
the North  Slope Borough.   He,  again, related  his appreciation                                                               
for  the  dialogue,  but  reiterated that  Shell  is  focused  on                                                               
exploring and trying to find a resource.                                                                                        
                                                                                                                                
8:54:05 AM                                                                                                                    
                                                                                                                                
MR. SLAIBY said  that Shell recognizes that property  taxes are a                                                               
large part  of the value  proposition for those most  impacted by                                                               
this  proposal,   including  the  whalers  and   the  subsistence                                                               
communities in  both the  North Slope  Borough and  the Northwest                                                               
Arctic Borough.   Clearly, the  amount of property tax  the North                                                               
Slope Borough would  collect is significant.  In  fact [the ISER]                                                               
report  estimates [property  tax  in the  amount  of about]  $3.5                                                               
billion will be  collected.  The property tax revenue  as well as                                                               
job opportunities  are an important  part of the program  for the                                                               
local residents.                                                                                                                
                                                                                                                                
8:55:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HARRIS surmised  that two of the  main concerns of                                                               
North  Slope  residents  are  regarding  how  to  deal  with  the                                                               
migrating whale  population in  terms of  the noise  and activity                                                               
the pipeline  operations cause  and how  to deal  with a  leak or                                                               
spill.   He then  inquired as  to how  Shell is  addressing those                                                               
issues.                                                                                                                         
                                                                                                                                
MR.  SLAIBY  agreed  that  the  aforementioned  as  well  as  the                                                               
cumulative  impact, which  is the  ability of  the structures  to                                                               
survive  ice,  are  some  of   the  issues  of  the  North  Slope                                                               
residents.   With respect to  the insonification of  water, Shell                                                               
is  in  continual dialogue  with  the  communities regarding  the                                                               
amount of noise it causes in  the water.  Further, Shell seeks to                                                               
limit the amount [of noise it  causes in the water] while working                                                               
in conjunction  with other industries.   In the Beaufort  Bay, in                                                               
particular  in Camden  Bay, an  agreement has  been reached  such                                                               
that  Shell ceases  operations during  the hunting  season around                                                               
Cross Island.   In fact,  Shell shuts down  its rig and  pulls it                                                               
back to  about the  ice limits  in order to  let the  whales move                                                               
through.   Mr. Slaiby  emphasized that Shell  seeks to  avoid all                                                               
contact  with  marine mammals  that  it  can,  which is  part  of                                                               
Shell's  incidental  harassment  authorization.   Shell  believes                                                               
that there  will be enough open  water and that restraint  can be                                                               
used  such that  the  communities  will be  satisfied.   He  then                                                               
related his  personal opinion that  there have probably  been six                                                               
seismic surveys  run at  the same  time in  the Beaufort  Sea and                                                               
they have impacted whaling.  As  the Vice President of Shell, Mr.                                                               
Slaiby said  that the last thing  he would want is  to be accused                                                               
of impacting  the subsistence hunt  in Barrow.   The same  can be                                                               
said for industry as a whole.                                                                                                   
                                                                                                                                
MR. SLAIBY  then addressed  the oil spill  response concern.   He                                                               
told the committee  that 90 percent of Shell's energy  is used to                                                               
ensure no  oil gets into  the water,  which is achieved  by fully                                                               
booming out the  recovery booms when things such  as routine fuel                                                               
transfers  occur.   He  emphasized  that  there have  been  large                                                               
advances  of recovery  of oil  in broken  ice and  ice conditions                                                               
since the  Exxon Valdez.   The program  Shell utilizes  is three-                                                               
tiered  such  that  [an  icebreaker   vessel]  and  a  vessel  of                                                               
opportunity will be located at the  drill site from the moment of                                                               
operations.    Furthermore,  midway  between the  shore  and  the                                                               
drilling operations  there will  be an  oil spill  response barge                                                               
that has  oil spill  recovery booming  techniques.   Moreover, in                                                               
the impacted communities equipment  and trained personnel will be                                                               
put in place  for shore-based activities.   The aforementioned is                                                               
unprecedented with  respect to any type  of exploration drilling.                                                               
Mr. Slaiby  emphasized that Shell  has an impressive  record with                                                               
respective to not  having blow outs.  Although there  may well be                                                               
a certain amount of oil that  enters the water during these types                                                               
of  endeavors,  Shell  believes  it   will  be  minimal  and  the                                                               
possibility  of  a blow  out  in  this  area would  be  extremely                                                               
remote.                                                                                                                         
                                                                                                                                
9:00:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HARRIS related  that  he lived  through the  1989                                                               
Exxon Valdez  oil spill when the  company said it had  [the same]                                                               
in place  [for spills].   However, it  wasn't available  for use.                                                               
Representative  Harris  agreed  with the  earlier  comments  that                                                               
Shell  has  to  prove  itself.   He  said  that  although  he  is                                                               
supportive of  what Shell is  doing, the lesson learned  with the                                                               
Exxon  Valdez spill  is that  the need  to be  prepared can't  be                                                               
short changed.                                                                                                                  
                                                                                                                                
MR. SLAIBY  stated his agreement.   He said that in  his 30 years                                                               
on the  production side he has  chased oil, the vast  majority of                                                               
which has been other's oil.   The resources of Shell are deployed                                                               
to be used by any group.   With the amount of traffic and transit                                                               
in  the Arctic,  Shell's  assets  will be  available  for use  by                                                               
anyone for any  cause.  Mr. Slaiby reiterated  his agreement with                                                               
Representative  Harris,   and  added  that  beyond   the  capital                                                               
investments  it's  important to  have  people  ready to  respond.                                                               
Therefore, vast  amounts of Shell's  energy will be put  into oil                                                               
spill  response  drills  in  order  to  ensure  that  people  are                                                               
trained,  the   equipment  is  checked  and   operable,  and  the                                                               
materials are  available.  Shell,  he said, is prepared  to stand                                                               
ready for any  group to judge Shell's preparedness  to operate in                                                               
this environment.                                                                                                               
                                                                                                                                
9:03:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HERRON asked  if the  North Slope  Borough will  remain                                                               
silent on HB 264.                                                                                                               
                                                                                                                                
9:03:31 AM                                                                                                                    
                                                                                                                                
MARLA BERG, Liaison, North Slope  Borough, clarified that at this                                                               
point the borough is monitoring HB 264.                                                                                         
                                                                                                                                
9:04:37 AM                                                                                                                    
                                                                                                                                
KEVIN BANKS,  Director, Division  of Oil  and Gas,  Department of                                                               
Natural  Resources, began  by noting  his agreement  with earlier                                                               
statements that  the Arctic OCS  is a place  of vast oil  and gas                                                               
wealth.   He then  extended an  offer to  the sponsor  to provide                                                               
more  detailed  information  regarding  the  U.S.  Department  of                                                               
Interior's estimates  of undiscovered resources.   The Arctic OCS                                                               
is  also  a location  where  current  leasing has  occurred  with                                                               
companies other  than Shell.  In  the sale process that  has been                                                               
conducted by  the U.S.  Department of  Interior, there  have been                                                               
new entrants  to the Alaska  Arctic, which he characterized  as a                                                               
good  sign in  terms of  the diversification  of the  state's oil                                                               
industry.  With  regard to tankering, he  recalled his experience                                                               
working with  MMS when it conducted  routine petroleum technology                                                               
assessments that  were conducted by fairly  large and responsible                                                               
engineering  firms from  around the  country.   Those assessments                                                               
considered the  possibility that  tankers could berth  in manmade                                                               
atolls in  the Chukchi Sea to  take on cargos and  then move them                                                               
to the Aleutian Islands for  transshipment into larger ships.  He                                                               
acknowledged that every time oil  is picked up and moved, there's                                                               
the  potential for  a spill.   Tankering  is an  alternative that                                                               
industry  can consider,  but pipelining  oil to  shore is  a much                                                               
better alternative.                                                                                                             
                                                                                                                                
MR.  BANKS  then  turned  to  HB  264  specifically.    The  term                                                               
"expedite" in Section  1 is preferable to  other language because                                                               
statute already  specifies timelines.  With  regard to rights-of-                                                               
way in  the state, Mr.  Banks explained that typically  those are                                                               
obtained   through  the   pipeline  coordinator's   office  using                                                               
reimbursable funds provided by the applicant for the right-of-                                                                  
way.   Therefore,  there's an  automatic mechanism  by which  the                                                               
resources required to  [fund] the permitting are paid  for by the                                                               
applicant.   In terms  of the kinds  of revenue  being discussed,                                                               
Shell mentioned that  there is about $3.5 billion  related to the                                                               
property  tax  that is  the  subject  of HB  264.    Of the  $3.5                                                               
billion, about  95 percent of  that would  go to the  North Slope                                                               
Borough under the current rules.   He explained that normally the                                                               
state collects tax  up to 20 mills in the  state and that revenue                                                               
is  shared  with the  local  government,  specifically the  local                                                               
government would  receive about  95 percent  of the  $3.5 billion                                                               
and the remaining 5 percent would go  to the state.  Section 3 of                                                               
HB  264,  he  related,  will  only impact  the  share  the  state                                                               
collects.  In terms of direct  revenue, which is addressed in the                                                               
fiscal note, there  are direct revenues from  the OCS development                                                               
to the  state in  the form  of royalties,  bonus bids,  and rents                                                               
that  are paid  to the  federal  government within  three to  six                                                               
miles of shore.  The aforementioned  land in Alaska is subject to                                                               
revenue sharing  with the state  such that the state  receives 27                                                               
percent of those revenues.                                                                                                      
                                                                                                                                
9:10:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HARRIS asked  if  Mr. Banks  could describe  what                                                               
real and personal property are.                                                                                                 
                                                                                                                                
MR.  BANKS  said  he  couldn't answer  because  he  doesn't  have                                                               
expertise in the area of taxes.                                                                                                 
                                                                                                                                
9:10:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA highlighted that  the state is experiencing                                                               
a  situation in  which change  is occurring  faster than  it ever                                                               
has.  She then asked if  the division deals with the knowledge of                                                               
when the  permafrost will be present  and the weather of  a given                                                               
time.                                                                                                                           
                                                                                                                                
MR. BANKS replied  yes.  He explained that prior  to permitting a                                                               
project, a  best interest finding  by the commissioner has  to be                                                               
conducted,   and  potential   environmental  impacts   addressed.                                                               
However, it's  not the same  process the federal  government goes                                                               
through under  the National Environmental Policy  Act through the                                                               
environmental impact  statement (EIS)  process and  the extensive                                                               
analysis  that has  to  be  conducted by  federal  agencies.   He                                                               
attributed that  to the  fact that  the legislature  decided that                                                               
oil development  on state lands  is in  the best interest  of the                                                               
state,  and thus  the  state, in  its  findings, embellishes  and                                                               
describes the relative cost of  benefits.  He reiterated that the                                                               
legislature has already  decided that oil and  gas development is                                                               
good  for  the state.    In  further response  to  Representative                                                               
Cissna,  Mr. Banks  clarified that  the state  can't develop  its                                                               
resources with abandon and at the expense of the environment.                                                                   
                                                                                                                                
9:13:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  asked  if  HB 264  changes  the  current                                                               
practice  of right-of-way  actions  being  processed through  the                                                               
pipeline  office  and  paid  for  by the  applicant.    She  then                                                               
requested further elaboration on  the real property tax provision                                                               
in Section 3 of the legislation.                                                                                                
                                                                                                                                
MR.  BANKS related  his understanding  that  the term  "expedite"                                                               
means to  him a nudge to  start the process as  soon as possible.                                                               
However, HB 264  wouldn't change any existing  processes in terms                                                               
of reimbursable  cost type  permitting.   Mr. Banks  then offered                                                               
that the  thrust of Section  3 is to  exempt the revenue  that is                                                               
for  property taxes  to the  North  Slope Borough  that would  be                                                               
impacted by HB 264.                                                                                                             
                                                                                                                                
9:15:41 AM                                                                                                                    
                                                                                                                                
JIM   GREELEY,  Petroleum   Property   Assessor,  Tax   Division,                                                               
Anchorage Office,  Department of Revenue, in  further response to                                                               
Representative  Gardner,  explained  that  [the  department]  was                                                               
unclear as to the intent of  Section 3 when developing the fiscal                                                               
note.   Therefore,  the fiscal  note relates  two scenarios.   He                                                               
explained  that the  state shares  property tax  collections with                                                               
the local municipalities.  Currently,  of the 20 mills levied the                                                               
North Slope Borough has been  collecting about 18.5 mills and the                                                               
state has  been collecting 1.5 mills  historically, and therefore                                                               
about .015  percent would go to  the state.  The  .015 percent is                                                               
what the  state would  give up  under the  first scenario  of the                                                               
fiscal note.   The second scenario accounts for  the potential of                                                               
the taxpayer to  use the payment to the North  Slope Borough as a                                                               
credit  against other  tax liabilities  that they  may have.   He                                                               
reminded  the committee  that normally  property  taxes are  such                                                               
that the  tax, a  20 mill  tax, is  levied by  the state  and the                                                               
borough can  then tax up to  its mill rate for  the property that                                                               
falls within  its jurisdiction.   The payment by the  taxpayer to                                                               
the local  jurisdiction is then a  credit to the amount  owed the                                                               
state.   Under HB 264,  the amount owed  by the state  is already                                                               
exempted,  and  therefore a  broad  interpretation  of Section  3                                                               
could include  the amount paid  to the  North Slope Borough  as a                                                               
credit  potentially  to other  types  of  property.   Still,  the                                                               
department is unsure of the intent of HB 264.                                                                                   
                                                                                                                                
9:19:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HARRIS asked  if the language on page  3, lines 3-                                                               
4,  is an  attempt to  encourage  the development  of a  pipeline                                                               
onshore and to  discourage tanker operations that  would take oil                                                               
from offshore rigs and not place it in the pipeline.                                                                            
                                                                                                                                
MR. GREELEY  responded that although the  aforementioned seems to                                                               
be a reasonable interpretation of  the intent of the legislation,                                                               
he is hesitant to speak for the sponsor.                                                                                        
                                                                                                                                
9:20:57 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON announced the intent  of the co-chairs to forward                                                               
HB 264 from committee today.                                                                                                    
                                                                                                                                
9:21:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MUNOZ  pointed out that  there is quite a  difference in                                                               
the  potential tax  liability under  scenarios  1 and  2.   Under                                                               
scenario 1, the potential tax  liability is $8-$16 million, while                                                               
under scenario  2 the  tax liability is  $118-$214 million.   She                                                               
then  opined that  the  sponsor's  intent seems  to  be to  reach                                                               
scenario 2.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  RAMRAS related  his intent  to work  with DOR  to                                                               
clarify  Section 3.    He then  opined that  it's  very early  to                                                               
assess  where  the  valuation  of  the  pipeline  goes.    Still,                                                               
Representative  Ramras related  his belief  that an  above-ground                                                               
pipeline will  provide the ability  for many  marginally economic                                                               
fields on the way to TAPS  to be accessed and potentially provide                                                               
great  value  to  the  state.    Although  Representative  Ramras                                                               
recognized  that HB  264  is  less likely  to  pass through  both                                                               
legislative  bodies,  it  will   hopefully  lead  to  provocative                                                               
discussions.                                                                                                                    
                                                                                                                                
9:23:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HARRIS asked if his  understanding that the intent                                                               
of HB  264 is to protect  the interest of the  local community on                                                               
the North Slope is correct.                                                                                                     
                                                                                                                                
REPRESENTATIVE RAMRAS replied yes.                                                                                              
                                                                                                                                
REPRESENTATIVE HARRIS then encouraged passage of HB 264.                                                                        
                                                                                                                                
9:23:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA  stated that she identifies  very much with                                                               
Mayor  Itta's   comments  because  what  [this   legislation]  is                                                               
addressing  is something  the legislature  needs to  grasp.   The                                                               
fact,  she  said, is  that  the  climate  in Alaska  is  changing                                                               
dramatically.  Furthermore, the  change is occurring faster [near                                                               
the OCS] than elsewhere.   The residents of these communities are                                                               
dependent on  oil and gas  for heating and  transportation needs.                                                               
Although  these communities  weren't initially  driven by  money,                                                               
they  are dependent  upon it  now.   Also, these  communities are                                                               
having  a more  difficult  time obtaining  fuel.   For  instance,                                                               
communities that  have fuel  delivered by  river are  feeling the                                                               
impact of  lower water levels that  cause the river not  to reach                                                               
as far  and thus the fuel  has to be flown  to these communities.                                                               
The  cost for  such is  high.   Representative Cissna  emphasized                                                               
that  this committee  is charged  with helping  these communities                                                               
face  the future  in a  sustainable manner.   She  then suggested                                                               
that the  state legislature needs  to address the  challenge that                                                               
the state  lacks a diverse  economy and  is dependent on  oil and                                                               
gas to sustain  government.  The fiscal  policy subcommittee, she                                                               
related, is reviewing the fact that  Alaska doesn't do a good job                                                               
building  alternative industry.    Alaska, she  suggested, is  in                                                               
many  ways acting  as a  colonial  state because  multi-nationals                                                               
actually support the state.  This  issue needs to be addressed by                                                               
the legislature, she emphasized.                                                                                                
                                                                                                                                
REPRESENTATIVE  RAMRAS said  that  he shares  the sensitivity  of                                                               
Representative Cissna.   However, he related his  belief that the                                                               
community of Barrow is far more  durable and time tested than the                                                               
urban centers of Alaska.                                                                                                        
                                                                                                                                
9:29:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   MILLETT   characterized   HB   264   as   timely                                                               
legislation and related  that she is excited at  the prospects of                                                               
offshore production.   She then commended  Shell.  Representative                                                               
Millet then  related that  she is  very sensitive  to sustainable                                                               
living and a subsistence lifestyle  because her mother lived such                                                               
a life.   Shell, she opined, has done an  incredible job in terms                                                               
of engaging  the North Slope community  and has set the  bar high                                                               
for future developers.   She further opined that Shell  is a good                                                               
partner for the state.                                                                                                          
                                                                                                                                
9:31:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  remarked  that  she  has  found  today's                                                               
presentation  to be  fascinating.   Although she,  too, commended                                                               
Shell's  efforts to  be sensitive  to communities,  she said  she                                                               
didn't   feel  she   understands  what   the  legislation   does,                                                               
particularly  in terms  of the  tax  incentives.   Representative                                                               
Gardner  remarked that  although  a pipeline  is  better for  the                                                               
state  than tankers,  she hasn't  heard any  evidence that  a tax                                                               
incentive  is  necessary   for  such  a  decision   to  be  made.                                                               
Obviously, as the testimony has  related, there is great interest                                                               
in  the resources  in the  Arctic seas.   Furthermore,  she noted                                                               
that  she  hasn't  heard  that  the property  tax  is  a  burden.                                                               
Therefore, she announced  that she isn't ready to  forward HB 264                                                               
from committee.                                                                                                                 
                                                                                                                                
9:32:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HARRIS surmised  that  everyone understands  that                                                               
the issue of  climate change is real, regardless  of one's belief                                                               
of the  cause.  The  Arctic ice is receding  and there is  a good                                                               
chance that in 10-15 years there  will be a clear year round path                                                               
up  the  western  side  of  Alaska  to  the  North  Slope.    The                                                               
aforementioned will  allow for  tanker traffic  as well  as other                                                               
traffic.   He emphasized that  it's not  in the best  interest of                                                               
Alaska to have  tanker traffic go to the North  Slope and not use                                                               
Alaska's  in-state  facilities,  which  is  a  real  possibility.                                                               
Representative Harris said:                                                                                                     
                                                                                                                                
     We  want  to  do  whatever  we  can  to  make  it  more                                                                    
     attractive to  bring that oil  and gas onshore  and use                                                                    
     the facilities  that we have,  and hopefully  will have                                                                    
     for many, many years, to  the benefit of Alaska, Alaska                                                                    
     residents, jobs  and all  that sort  of thing.   Rather                                                                    
     than do what we've done in  this state for a long time,                                                                    
     and  move our  natural resources  out of  state without                                                                    
     any  change ....    That  could be  a  possibility.   I                                                                    
     believe that part of this  bill may be an encouragement                                                                    
     to try and keep that from happening.                                                                                       
                                                                                                                                
9:34:42 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KELLER said  he is encouraged that  Shell is still                                                               
present,  in spite  of  the setbacks  it has  faced.   He  echoed                                                               
earlier  statements regarding  appreciating Shell's  approach and                                                               
being sensitive to the environment and the culture.                                                                             
                                                                                                                                
9:35:25 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HERRON  said he didn't believe  HB 264 will get  all the                                                               
way to  the governor.   Although  Co-Chair Herron  understood the                                                               
concerns  of  committee  members  and  the  desire  to  have  the                                                               
discussion in this  committee, the wishes of the  sponsor will be                                                               
respected.  To that end, he requested a motion.                                                                                 
                                                                                                                                
9:36:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MUNOZ moved  to report  HB  264 out  of committee  with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
                                                                                                                                
REPRESENTATIVE GARDNER objected.                                                                                                
                                                                                                                                
9:36:33 AM                                                                                                                    
                                                                                                                                
A  roll call  vote was  taken.   Representatives Millet,  Harris,                                                               
Keller,  Herron, and  Munoz voted  in favor  of reporting  HB 264                                                               
from  committee.    Representatives   Cissna  and  Gardner  voted                                                               
against it.   Therefore,  HB 264  was reported  out of  the House                                                               
Community and  Regional Affairs Standing  Committee by a  vote of                                                               
5-2.                                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB 264 Sponsor Statement.PDF HCRA 2/4/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 264
HB264-DOR-TAX-2-2-10 Tax on Pipeline from outer continental shelf.pdf HCRA 2/4/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 264
HB318-DEC-CO-02-22-2010.pdf HCRA 2/25/2010 8:00:00 AM
HB 318
HB 264 - Shell in AK 2.25.10.ppt HCRA 2/25/2010 8:00:00 AM
HB 264
HB 264 - OCS Benefits Study 2-page summary.doc HCRA 2/25/2010 8:00:00 AM
HB 264
HB 273 - Borough Entitlement Statistics.PDF HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273 - Cert. of Entitlement LTR.PDF HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273 - Municipal Selection Eligible Map.pdf HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273 - Municipal Selection Land Status Map.pdf HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273 - Sponsor Statement.PDF HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273 - Yakatat Borough Acreage Press Release.PDF HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 273-DNR-TAD-02-08-2010.pdf HCRA 2/11/2010 8:00:00 AM
HCRA 2/25/2010 8:00:00 AM
HB 273
HB 264 - Econ Analysis of OCS Dev-Exec Summary (2).pdf HCRA 2/25/2010 8:00:00 AM
HB 264
HB 318 - Sponsor Statement.PDF HCRA 2/25/2010 8:00:00 AM
HB 318
CS HB 318 Version R.PDF HCRA 2/25/2010 8:00:00 AM
HB 318
HB264-DNR-CO-02-24-2010.pdf HCRA 2/25/2010 8:00:00 AM
HB 264