Legislature(2003 - 2004)
03/27/2003 03:20 PM House O&G
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HJR 17-LEASES IN NATL PETROLEUM RESERVE Number 0104 CHAIR KOHRING announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 17, Strongly encouraging the Secretary of the Interior to conduct additional competitive oil and gas lease sales within the National Petroleum Reserve in Alaska. CHAIR KOHRING, sponsor, informed members that the National Petroleum Reserve in Alaska [known on its Bureau of Land Management (BLM) web site as National Petroleum Reserve-Alaska (NPR-A)] was established in 1923 by President Harding as a 23- million-acre area from which to acquire oil in the event of a national emergency. Then called Naval Petroleum Reserve [No. 4], NPR-A is the largest block of federal land in Alaska. In 1976, Congress transferred management to the Department of the Interior, with a provision that oil development would be prohibited except by Act of Congress; in 1980, the reserve was opened with a further provision that 50 percent of the royalties from any oil extracted would go to the State of Alaska, despite the fact that the reserve is federal land. CHAIR KOHRING said Alaska stands to benefit from additional oil exploration there. He suggested this is timely: because of Congress's recent vote against opening the Arctic National Wildlife Refuge (ANWR) [to exploration and development], it is prudent to aggressively look at other areas in Alaska. He noted that Drue Pearce, former state Senate president and now a special assistant for the U.S. Department of the Interior, recently recommended submitting a resolution of this nature. Number 0375 REPRESENTATIVE HOLM offered his understanding that the state's 50 percent doesn't necessarily go into the general fund. He asked about that. CHAIR KOHRING observed that nobody from the Department of Revenue was at the meeting or on teleconference. He asked Mr. Buckendorf to respond. Number 0528 RANDAL G. BUCKENDORF, Counsel, Anchorage Legal Department, ConocoPhillips Alaska, Inc. ("ConocoPhillips"), presented his own testimony first. Mr. Buckendorf informed members that he does both environmental and pipeline-related legal work; he has been participating in the NPR-A environmental impact statement (EIS) analysis, beginning in 1998 with the northeast planning area, and continuing now with the northwest planning area. He told members: ConocoPhillips believes it is possible for environmentally sound and culturally responsible oil and gas exploration and development to occur in the National Petroleum Reserve-Alaska. As I mentioned, in 1998 the Bureau of Land Management, the BLM, conducted a similar environmental impact statement process and, as a result of that, held two lease sales, in 1999 and again in 2002; this is for the northeast planning area. As a result of that, ConocoPhillips and our partner, Anadarko Petroleum Corporation, participated in those lease sales and are the number-one acreage holders in the northeast planning area. We have also been fortunate to be successful in our exploration process, and just this January have proposed the first development in [NPR-A]. We're currently conducting the environmental impact statement process for three satellite development projects that will be produced back to our Alpine project. That process is currently underway. Number 0672 MR. BUCKENDORF addressed the northwest planning area. Explaining why ConocoPhillips supports "Alternative A" in the draft EIS, he said it is the only option that makes the entire "high-prospectivity area" available for lease in a manner that provides meaningful access to the northernmost part of the reserve, the "Barrow arch," without imposing unnecessary restrictions upon surface occupancy. Contending that Alternative A will fully protect sensitive wildlife and traditional lifestyles, he said it doesn't "prematurely and categorically exclude leasing from certain lands without first understanding the potential negative impacts of the proposed development, if any, and whether such potential impacts can be mitigated or eliminated." Saying Alternative A appropriately identifies sensitive areas while reserving the application of specific protective measures until the future, when site- specific evaluations and determinations can be made, Mr. Buckendorf suggested BLM should proceed with this lease sale as quickly as possible. Number 0850 MR. BUCKENDORF returned attention to Representative Holm's question and said: The 50-50 split, ... as part of the revenue-impact process, is split between the federal and state and local governments. As part of the 1998 analysis, the 1999 lease sale and 2002 lease sale resulted in - I don't have the specific numbers here in front of me - well over a hundred million dollars in lease sales, bonuses. 50 percent does go to the state; the state then shares that with local impacted governments, the North Slope Borough ... particularly. That money goes into what is termed an "impact assistance fund." I believe in the '99 lease sale about ... 60 to 70 percent ultimately went to the North Slope Borough. ... The latest data was not available ... as of last week for the 2002 lease sale. The way I understand the process is that if there are any funds left that do not go into the impact assistance fund, then that can be utilized and goes into the general fund. Number 0970 REPRESENTATIVE HOLM asked whether possibly there could be nothing left for the state, then. MR. BUCKENDORF suggested the Department of Revenue could answer better, but said monies always go to the state and that what ends up going to the local boroughs - the North Slope Borough, in this instance - is for the impact assistance fund. CHAIR KOHRING offered to explore with the Department of Revenue different hypothetical scenarios and what kinds of monies could be expected. He mentioned potential gain in terms of general economic growth and jobs, as well as money to local communities such as Barrow. MR. BUCKENDORF offered to provide data that he'd prepared to submit in testimony in two weeks. Number 1073 REPRESENTATIVE FATE remarked that how much of the state's 50 percent will be used for impact funds and so forth won't be known ahead of time. It depends on "what is turned in" to a committee that determines the impact to villages and whether to grant the money. Furthermore, this money could be put into the permanent fund or PCE [power cost equalization], for example, and thus there might not be any money put into the state's general fund. Number 1240 JAMES COWAN, Geologist, Division of Oil & Gas, Department of Natural Resources, in response to Chair Kohring, said he supports the resolution. He said the revenue sharing is a big aspect and that Representative Fate had painted a pretty accurate picture of how it works. He noted that a specific statute establishes how those funds will be distributed, and agreed that the general fund might not receive a lot. He added that the funds are unpredictable and depend on the sale results, development results, and production. CHAIR KOHRING asked whether Mr. Cowan thinks the timing is appropriate because of the recent [congressional vote against opening] ANWR. MR. COWAN answered in the affirmative. Number 1308 REPRESENTATIVE FATE asked whether Mr. Cowan believes this will redirect the federal efforts away from continuing efforts to open ANWR. MR. COWAN said this has been a concern for several years within the state administration and DNR. He added that he believes it is important for the state to have a benchmark for revenue- planning purposes. Number 1393 CHAIR KOHRING offered his assessment that the industry is quite supportive of this resolution. He said the state should pursue all significant opportunities for oil development in the state. CHAIR KOHRING noted that everyone who'd signed up had testified already. He turned attention to members' comments. Number 1423 REPRESENTATIVE FATE expressed concern about the timing, saying the focus on NPR-A has been used repeatedly in the past to refocus away from ANWR. He emphasized his desire to keep the focus on ANWR instead. CHAIR KOHRING respectfully disagreed. He said he'd prefer drilling in ANWR, but doesn't see this resolution as refocusing. Rather, it is an addition for expanding oil and gas development. Even if few dollars go into the general fund, it will help the economy in a substantial way. Number 1621 REPRESENTATIVE McGUIRE suggested adding a section that encourages a shift in the percentage Alaska will receive. CHAIR KOHRING said he'd be receptive to such a conceptual amendment. Number 1720 REPRESENTATIVE FATE pointed out that the 50-50 split has been adjudicated through litigation brought by the recipients of the impact funds; the State of Alaska lost. He questioned the propriety of requesting in a resolution a different set of figures. REPRESENTATIVE HOLM asked Representative Fate whether there is some vehicle by which the state could change how the state's 50 percent is applied with regard to the general fund. REPRESENTATIVE FATE answered that the 50 percent is already affected by the "impact money." He surmised that changing it such that the federal government receives 40 percent would require an Act of Congress. If the state then got 60 percent, he asked, would the state get 10 percent more or would that 60 percent be split up through "the impact funds"? He said he wasn't sure. Number 1945 REPRESENTATIVE McGUIRE said she envisioned a "WHEREAS" clause that would encourage the congressional delegation to explore an Act of Congress to change the percentage to 60-40. She added that she wasn't sure whether it was worth pursuing. REPRESENTATIVE FATE said he'd be amenable after looking into whether it would be proper and could be done. He pointed out that it is federal property that goes back to the Teapot Dome scandal, and suggested the chance of success would be remote. Number 2070 CHAIR KOHRING reiterated that he is amenable to Representative McGuire's suggestion, and said he'd like to lobby for the highest percentage possible for Alaska. He proposed that he and his staff research the issue, however, with an eye toward bringing it to the House Resources Standing Committee. Number 2114 REPRESENTATIVE CRAWFORD spoke in favor of the resolution. He remarked that Representative Fate's comments gave him pause, and that he didn't want anything to take away from the chances of success with ANWR. He said he believes there is a better chance of getting the jobs sooner through NPR-A, however, and that he doesn't believe this resolution would be detrimental to the efforts towards ANWR. Number 2215 REPRESENTATIVE ROKEBERG stated support for the resolution, but highlighted a national move to focus on NPR-A [instead of ANWR]. He questioned the economic benefit to the state because of current constraints. Number 2324 REPRESENTATIVE HOLM moved to report HJR 17 out of committee [with individual recommendations and the accompanying fiscal notes]. REPRESENTATIVE FATE objected. A roll call vote was taken. Representatives Holm, Rokeberg, McGuire, Crawford, Kerttula, and Kohring voted in favor of reporting HJR 17 from committee. Representative Fate voted against it. Therefore, HJR 17 was reported from the House Special Committee on Oil and Gas by a vote of 6-1.
| Document Name | Date/Time | Subjects |
|---|