Legislature(2005 - 2006)CAPITOL 124

03/31/2005 05:00 PM House OIL & GAS

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05:05:26 PM Start
05:06:09 PM HB224
05:48:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Moved Out of Committee
Bills Previously Heard/Scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                                                           
                         March 31, 2005                                                                                         
                           5:05 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Vic Kohring, Chair                                                                                               
Representative Ralph Samuels                                                                                                    
Representative Berta Gardner                                                                                                    
Representative Norman Rokeberg                                                                                                  
Representative Nancy Dahlstrom                                                                                                  
Representative Lesil McGuire                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Beth Kerttula                                                                                                    
OTHER LEGISLATORS PRESENT                                                                                                     
Representative Jay Ramras                                                                                                       
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 224                                                                                                              
"An Act relating to the sale or securitization of certain of the                                                                
state's oil taken as royalty."                                                                                                  
     - MOVED HB 224 OUT OF COMMITTEE                                                                                            
HOUSE BILL NO. 234                                                                                                              
"An Act relating to the due date for the payment of oil and gas                                                                 
royalty and net profit shares and amending the rate of interest                                                                 
payable on royalties or net profit shares."                                                                                     
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 224                                                                                                                  
SHORT TITLE: SALE/SECURITIZATION  OF STATE ROYALTY OIL                                                                          
SPONSOR(s): REPRESENTATIVE(s) BERKOWITZ                                                                                         
03/18/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/05       (H)       O&G, RES, FIN                                                                                          
03/31/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
WITNESS REGISTER                                                                                                              
REPRESENTATIVE ETHAN BERKOWITZ                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 224 as sponsor.                                                                               
REPRESENTATIVE MIKE HAWKER                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered  questions  regarding  HB 224  as                                                               
MARK MYERS, Director                                                                                                            
Division of Oil and Gas                                                                                                         
Alaska Department of Natural Resources                                                                                          
POSITION STATEMENT:  Answered questions regarding HB 224.                                                                       
KURT GIBSON, Petroleum Investments Manager                                                                                      
Division of Oil and Gas                                                                                                         
Alaska Department of Natural Resources                                                                                          
POSITION STATEMENT:  Answered questions regarding HB 224.                                                                       
ACTION NARRATIVE                                                                                                              
CHAIR VIC KOHRING  called the House Special Committee  on Oil and                                                             
Gas meeting  to order  at 5:05:26  PM.   Representatives Kohring,                                                             
Samuels,  and  Gardner  were  present   at  the  call  to  order.                                                               
Representatives Rokeberg,  McGuire, and Dahlstrom arrived  as the                                                               
meeting was in progress.                                                                                                        
HB 224-SALE/SECURITIZATION  OF STATE ROYALTY OIL                                                                              
5:06:09 PM                                                                                                                    
CHAIR KOHRING announced that the  only order of business would be                                                               
HOUSE  BILL   NO.  224,   "An  Act  relating   to  the   sale  or                                                               
securitization of certain of the state's oil taken as royalty."                                                                 
REPRESENTATIVE   ETHAN  BERKOWITZ,   Alaska  State   Legislature,                                                               
presented  HB  224  as  sponsor.   He  explained  that  the  bill                                                               
addresses the idea  of the securitization of oil as  well as gas,                                                               
or "anything that the state sells  or gets royalties off of."  He                                                               
noted that  a few years ago  the state chose to  securitize money                                                               
that it  received from a  tobacco settlement.  He  clarified that                                                               
to securitize is to take future  payments up front in a lump sum.                                                               
He continued:                                                                                                                   
     Some  would argue  there's  a  discounting that  occurs                                                                    
     because you haven't actually  received the product, but                                                                    
     yet there's  others who might  suggest that  [it] could                                                                    
     be a premium price because  in the instance of oil, the                                                                    
     price is so  high today. ... It could  bring an element                                                                    
     of stability to the industry that everyone seeks.                                                                          
REPRESENTATIVE BERKOWITZ explained that any  time there is a sale                                                               
of  an  asset,  the  buyer  is  essentially  buying  all  of  the                                                               
5:09:32 PM                                                                                                                    
CHAIR KOHRING asked if this has happened in other states.                                                                       
REPRESENTATIVE  BERKOWITZ replied  that  he hasn't  heard of  any                                                               
other  states that  have  securitized oil.    However, he  noted,                                                               
"Alaska's in a unique position where it is our oil."                                                                            
REPRESENTATIVE MIKE  HAWKER, Alaska State  Legislature, commented                                                               
that the bill is a  product of discussions among legislators over                                                               
how  the state  might  approach  ways to  stabilize  oil and  gas                                                               
revenues and potentially  lock in higher prices.   He noted, "The                                                               
bill was crafted  to be a permissive bill, not  a mandatory bill,                                                               
in  that  it  really  is  simply putting  into  statute  here  an                                                               
authority for  us to  investigate this  further, fully,  and with                                                               
the appropriate academic resources."                                                                                            
5:10:50 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  asked,  "Is  this kind  of  the  GARVEE                                                               
[Grant  Anticipation Revenue  Vehicles]  bond of  oil, ...  where                                                               
we're trying to create a  financial instrument that ... generates                                                               
near  term   cash  with  the   risk  elements  of  a   long  term                                                               
REPRESENTATIVE BERKOWITZ replied:                                                                                               
     It could be viewed that  way. ... When people initially                                                                    
     conceptualize  securitization with  Alaska's oil,  they                                                                    
     tend to go  to the big picture and  imagine we're going                                                                    
     to  securitize  all  our  royalty.     And  it  doesn't                                                                    
     necessarily  have to  be viewed  in  that context;  you                                                                    
     could deal  field by field,  for example.  And  I think                                                                    
     in  some of  the more  marginal fields,  securitization                                                                    
     might  prove  to  be an  interesting  way  of  bringing                                                                    
     stability for the producers and  also getting the state                                                                    
     out of the day-to-day management.                                                                                          
5:11:56 PM                                                                                                                    
REPRESENTATIVE HAWKER  clarified that  a GARVEE  bond is  a grant                                                               
anticipation revenue  vehicle in which  [a state] will  receive a                                                               
federal  grant in  a  fixed dollar  amount in  the  future for  a                                                               
certain project.  There are  two big differences between a GARVEE                                                               
grant  anticipation vehicle  and  securitization, he  said.   One                                                               
difference is  that there  is no assurance  that the  GARVEE bond                                                               
would  be  met  by  those   grants,  while  securitization  is  a                                                               
commodities   transaction  more   than  a   revenue  anticipation                                                               
transaction.  Another difference is  that the amount for a GARVEE                                                               
bond is  fixed, whereas with securitization  there potentially is                                                               
a way to hedge prices and lock in on high oil prices.                                                                           
5:13:30 PM                                                                                                                    
REPRESENTATIVE SAMUELS asked for clarification.                                                                                 
REPRESENTATIVE HAWKER replied  that securitization would actually                                                               
be time limited;  the state could securitize the  royalties for a                                                               
certain time  frame for  a certain reserve.   He  continued, "Now                                                               
[industry  has] paid  you  for  that up  front;  if  they do  not                                                               
develop   it,  don't   produce  it,   don't  get   it  downstream                                                               
themselves, it  sits in the  ground and reverts to  the sovereign                                                               
at the expiration of the securitization term."                                                                                  
5:15:01 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  stated, "I'm  rather astounded  to think                                                               
that you're  considering developing a financial  instrument based                                                               
on nonproduced commodity."                                                                                                      
REPRESENTATIVE  HAWKER replied,  "I would  truly expect  that the                                                               
people making  the investment would  expect to produce.   But the                                                               
point is if  they chose not to produce, the  resource would still                                                               
remain and ultimately revert to the sovereign."                                                                                 
5:15:53 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  noted that  the state would  benefit but                                                               
he voiced concern about the investors.                                                                                          
REPRESENTATIVE  BERKOWITZ   stated,  "If   I  wanted  to   get  a                                                               
securitized interest in  something, I would buy  from a producing                                                               
REPRESENTATIVE ROKEBERG asked  if the sponsors had  looked at the                                                               
history of the  security called PBT, Prudhoe Bay  Trust, which is                                                               
traded on the New York Stock Exchange against Prudhoe Bay oil.                                                                  
REPRESENTATIVE HAWKER replied that he had not.                                                                                  
5:17:24 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  said, "Clearly  when you're going  to be                                                               
creating some kind of financial  instrument, you make assumptions                                                               
about discounted rates at present  values and managing risk."  He                                                               
asked  how   the  sponsors  proposed   to  manage  the   risk  in                                                               
REPRESENTATIVE BERKOWITZ  responded that  Representative Rokeberg                                                               
was making the issue more  complex than necessary.  He continued,                                                               
"If  you put  something on  the  market, and  if you  get a  high                                                               
enough bid  for it, then you  make the transaction; if  you don't                                                               
get a high enough bid, you don't make the transaction."                                                                         
REPRESENTATIVE  ROKEBERG   stated  that  if  [the   state]  can't                                                               
guarantee industry  the amount of  recognized realized  return by                                                               
investor, there  won't be any  investors.   He said, "To  do that                                                               
you're going to  have to discount the flow that  would be derived                                                               
from  the  terms  of  the  state  arrangement  with  whoever  the                                                               
producer  is.   You're  discounting your  future  cash flow,  and                                                               
you're  giving  something   up  that  shifts  the   risk  to  the                                                               
5:18:36 PM                                                                                                                    
REPRESENTATIVE BERKOWITZ  reminded the  committee that  the state                                                               
securitized a tobacco settlement.                                                                                               
REPRESENTATIVE  ROKEBERG agreed  and pointed  out that  he was  a                                                               
leading  proponent  of  that  action.    He  commented  that  the                                                               
securitization of the tobacco settlement  was primarily driven be                                                               
risk elements  and the state was  "very fortunate to get  some of                                                               
the highest benefits by being early on."  He continued:                                                                         
     Those  types  of ...  instruments  are  no longer  even                                                                    
     marketable  on  Wall Street.    But  that was  a  major                                                                    
     driving  force  behind that  decision  as  a matter  of                                                                    
     public policy,  was to lower  the risk to the  State of                                                                    
     Alaska to  that income stream, thereby  securitizing it                                                                    
     and putting it  on the market and shifting  the risk to                                                                    
     Wall Street,  and we did good.   I'm not sure  the same                                                                    
     scenario here comes into play,  particularly if you get                                                                    
     into  a situation  with a  commodity that  may have  an                                                                    
     upside potential  for raising  prices, you're  going to                                                                    
     be  giving it  away and  the investor  will be  betting                                                                    
     that you're wrong.                                                                                                         
REPRESENTATIVE HAWKER  reiterated that  the bill is  a permissive                                                               
bill  that  would  allow  the   "best  minds  in  the  state"  to                                                               
investigate  the possibility  or  securitization, and  if it  has                                                               
merit, the state could propose a transaction.                                                                                   
5:23:02 PM                                                                                                                    
CHAIR KOHRING closed public testimony.                                                                                          
5:23:24 PM                                                                                                                    
MARK MYERS, Director, Division of Oil and Gas, Alaska Department                                                                
of Natural Resources, commented:                                                                                                
     One of  the concerns  I would  have is  that ultimately                                                                    
     the state  has to recognize  it's not the  producer; it                                                                    
     doesn't ultimately control the  rate of production.  We                                                                    
     have a say  in it through our plan  to development, but                                                                    
     on  a day-to-day  basis the  operations  belong to  the                                                                    
     producers of  that particular field.   So if  the state                                                                    
     were to  sell, it  doesn't really  have the  ability to                                                                    
     guarantee x amount of barrels  on a given day, and that                                                                    
     might be  a problem in  terms of cash flow  for someone                                                                    
     who has a limited option in time for a volume of oil.                                                                      
     Also,  under our  current requirements  for royalty  in                                                                    
     kind  sales, and  this would  be a  type of  royalty in                                                                    
     kind sale, ... in the  ground is a little bit different                                                                    
     than  actually  selling  at Pump  Station  One,  as  we                                                                    
     normally do.  But we  have a requirement to achieve the                                                                    
     royalty in value  as a benchmark.  So it's  going to be                                                                    
     very hard  for us  to benchmark when  there'd be  a net                                                                    
     benefit to  the state  because, again, we're  not going                                                                    
     to  be able  to  predict prices,  [nor]  are we  really                                                                    
     going to know  how much of a discount  a person's going                                                                    
     to have to take in buying the commodity....                                                                                
     Generally  these  types  of  deals  would  have  to  be                                                                    
     significantly discounted,  probably, over  the expected                                                                    
     market  value to  make sure  that  your investment  was                                                                    
     secure.   So I  do think  there's a  potential conflict                                                                    
     with our  physical and economic  way standard.   Again,                                                                    
     if you have a contract  and you're trying to deliver as                                                                    
     much oil as you can in  a period, it may lead the state                                                                    
     ...  to  a  position  where it's  in  conflict  on  the                                                                    
     physical  and economic  way standards  in terms  of the                                                                    
     rates  of productions  and the  off-take rates  of both                                                                    
     oil and gas.                                                                                                               
5:26:00 PM                                                                                                                    
KURT GIBSON,  Petroleum Investments Manager, Division  of Oil and                                                               
Gas,  Alaska  Department  of  Natural  Resources,  asked  if  the                                                               
purpose of  the bill was to  use the securitization as  a form of                                                               
price hedging,  and if so, if  there was another way  to go about                                                               
establishing  a price  hedging  mechanism without  securitization                                                               
because, he noted, the two are not necessarily linked.                                                                          
REPRESENTATIVE  HAWKER  replied,  "The  intent of  this  bill  is                                                               
simply  to  grant the  state  the  authority to  investigate  the                                                               
merits or the demerits of this  sort of transaction in all of the                                                               
permutations that it might be  constructed ... [that may provide]                                                               
any benefit to the State of Alaska."                                                                                            
5:27:18 PM                                                                                                                    
REPRESENTATIVE BERKOWITZ commented that  price hedging wasn't his                                                               
original  intent  for  the  bill.    He  turned  the  committee's                                                               
attention to AS  38.06.010, which is the purpose  section for the                                                               
Alaska  Royalty Oil  and Gas  Development  Advisory Board,  which                                                               
     It is  the purpose  of this  chapter to  facilitate the                                                                    
     wise  development  of  Alaska's  oil  and  gas  royalty                                                                    
     interests by providing means  and procedures for sales,                                                                    
     exchanges, or  other disposition of those  interests in                                                                    
     ways  calculated  to  promote private  economic  growth                                                                    
     consistent with applicable  environmental standards and                                                                    
     public  fiscal stability,  and  in  accordance with  AS                                                                    
REPRESENTATIVE BERKOWITZ  commented that  there are many  ways to                                                               
point out problems  with any kind of different way  of looking at                                                               
disposing of a state asset.  However, he said:                                                                                  
     if  we're going  to  be consistent  with exploring  the                                                                    
     wise  development  of  Alaska's  oil  and  gas  royalty                                                                    
     interests,  we ought  to give  the [Alaska  Royalty Oil                                                                    
     and   Gas  Development   Advisory  Board]   the  widest                                                                    
     latitude possible, and let the  people that are trained                                                                    
     ... in this area make  a choice and bring those choices                                                                    
     to the legislature.  ... I can conceive  of a situation                                                                    
     where we could dispose of  a considerable amount of our                                                                    
     royalty  interests  for a  large  sum  of money,  which                                                                    
     would  provide,  for example,  a  pot  ... [where]  the                                                                    
     revenue off  of that  pot would  be sufficient  to help                                                                    
     bridge the state's fiscal gap.                                                                                             
5:29:24 PM                                                                                                                    
CHAIR  KOHRING noted,  "I can  also foresee  the state  incurring                                                               
some  major risk  because you  really  don't know  what's in  the                                                               
ground  unless you  have some  very  competent people  to get  in                                                               
there and  do some very thorough  analyses to see what  we really                                                               
have there."                                                                                                                    
REPRESENTATIVE  BERKOWITZ   agreed  that  there  would   be  risk                                                               
involved, yet he pointed out that  year after year there are more                                                               
transactions occurring in the oil fields.  He continued:                                                                        
     There  are lease  transactions on  a regular  basis, so                                                                    
     clearly the industry  has the means and  the ability to                                                                    
     make  these  kinds  of   transactions,  to  make  these                                                                    
     assessments, and  the state  had some  understanding of                                                                    
     what goes on with those  kind of transactions and ought                                                                    
     to have  as wide a  latitude as possible to  dispose of                                                                    
     our interests or  to protect our interests.  ... We can                                                                    
     have a better  idea of the value of our  property if we                                                                    
     contemplate what securitization would bring to us.                                                                         
5:30:27 PM                                                                                                                    
REPRESENTATIVE   SAMUELS  asked   Mr.  Gibson   to  clarify   the                                                               
difference between hedging and securitization.                                                                                  
MR. GIBSON  explained, "The  primary difference  is ...  when you                                                               
contemplate  securitization,   you're  exchanging  a   series  of                                                               
payments for  a single  lump sum.   But  the prospect  of hedging                                                               
price risk simply suggests that you  agree on a forward price for                                                               
a commodity and then continue to  receive a series of payments at                                                               
that  price."     In  response  to   Representative  Samuels,  he                                                               
     The  key distinction,  I think,  would be  the discount                                                                    
     rate.  ...  In  both  cases  you've  got  a  series  of                                                                    
     payments.  When you  securitize you exchange the series                                                                    
     of payments for a lump  sum; in order to determine what                                                                    
     the present  value of that  series of payments  is, you                                                                    
     have to establish a discount  rate.  In either case you                                                                    
     have to establish a forward  price.  In one case you're                                                                    
     continuing to  receive a series of  payments but you've                                                                    
     agreed  upon a  price; you're  no longer  floating with                                                                    
     the market.   In the  case of securitization,  not only                                                                    
     are you  agreeing on a  forward price,  you're agreeing                                                                    
     on how you're going to  discount that price and take it                                                                    
     in a single lump sum payment today.                                                                                        
5:32:17 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG asked  Mr. Gibson  if he  had ever  seen                                                               
anything  like this  done.   He  remarked that  he thought  there                                                               
would  be a  high  discount  rate and  the  state  would give  up                                                               
substantial amounts of future income.                                                                                           
MR. GIBSON  responded that there  would have to be  a substantial                                                               
discount  rate to  accommodate the  price volatility.   He  noted                                                               
that  he  has never  seen  a  sovereign  sell  its royalty  on  a                                                               
securitized   arrangement.     In   response  to   Representative                                                               
Rokeberg, he stated  that he is not aware of  any other commodity                                                               
that  has  been  securitized,  noting  that  his  familiarity  is                                                               
primarily with oil, gas, and deregulated power.                                                                                 
5:33:54 PM                                                                                                                    
REPRESENTATIVE BERKOWITZ commented that  there is indication that                                                               
the Republic of Congo and Mexico both have done this.                                                                           
CHAIR  KOHRING   asked  if  the  sponsors   have  asked  industry                                                               
representatives what they think about this bill.                                                                                
REPRESENTATIVE  BERKOWITZ replied  that  he  has had  preliminary                                                               
conversations with  different members  of industry and  has heard                                                               
mixed responses, ranging  from distrust of the  state to interest                                                               
in the idea.                                                                                                                    
5:35:10 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  asked  the   sponsors  why  they  chose                                                               
securitization over the hedging concept.                                                                                        
REPRESENTATIVE   BERKOWITZ   explained    that   he   opted   for                                                               
securitization  because preliminary  numbers indicated  that this                                                               
was an option worth pursuing.  He continued:                                                                                    
     If  someone  wants to  talk  about  hedging as  another                                                                    
     alternative,  I'm not  adverse to  that.   I think  the                                                                    
     state should  have at its disposal  every possible tool                                                                    
     when it comes  time to getting the most  value from our                                                                    
     resource.   And there  are different ways  of assessing                                                                    
     whether we get the most value.   And I would argue that                                                                    
     we  have a  constitutional requirement  to get  maximum                                                                    
     value,  even  if  it  requires us  to  make  some  hard                                                                    
     choices and go through  some difficult protocols, which                                                                    
     is what I heard might be  some of the concerns with the                                                                    
5:36:58 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  responded  that he  too  believes  that                                                               
[legislators] have  a responsibility to generate  a secure income                                                               
stream for  the state.  He  asked if the sponsors  would consider                                                               
adopting "some  type of  a studying task  force or  commission or                                                               
something  to look  into this  as  well hedging  and these  other                                                               
issues."  He commented:                                                                                                         
     What we have in terms of  the bill here is a suggestion                                                                    
     that  we turn  over the  responsibility to  the [Alaska                                                                    
     Royalty  Oil and  Gas  Development  Advisory Board]  to                                                                    
     make a  public policy.   I'm not sure that's  the right                                                                    
     thing  we  should do  statutorily,  when  in fact  this                                                                    
     decision  should be  made in  the  legislature. ...  If                                                                    
     this concept  has any  merit, I  think it  does deserve                                                                    
     further study rather than just  devolving our rights to                                                                    
     another agency.                                                                                                            
5:38:36 PM                                                                                                                    
REPRESENTATIVE BERKOWITZ commented that the  bill is written in a                                                               
permissive  way.   He reiterated  that because  [the legislators]                                                               
have a  constitutional obligation to  get maximum value  from the                                                               
state's   resources,  "it   seems  almost   incumbent  upon   the                                                               
commissioner  of  [the  Alaska Department  of  Natural  Resources                                                               
(DNR)]  to pursue  an investigation  whether securitization  does                                                               
bring  maximum benefit  to the  state  from out  resources."   He                                                               
continued, "I  think if [DNR  personnel] haven't taken a  look at                                                               
securitization,  they've been  remiss  in their  responsibility."                                                               
He commented  that the preliminary  numbers [of  projected income                                                               
from securitization] are very high.                                                                                             
REPRESENTATIVE HAWKER remarked that he  would be happy to arrange                                                               
more informal  discussions [with committee members];  however, he                                                               
said that  he would be  uncomfortable presenting  the preliminary                                                               
numbers to the committee as a statement of fact.                                                                                
5:40:46 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  commented that he is  more interested in                                                               
hedging strategies than in securitization.                                                                                      
REPRESENTATIVE BERKOWITZ  pointed out that one  of the advantages                                                               
of  securitization is  that it  could be  applied on  a field-by-                                                               
field basis.   He  said, "It's another  option for  investment in                                                               
the  state, and  it offers  the  state another  way of  providing                                                               
5:42:16 PM                                                                                                                    
REPRESENTATIVE HAWKER replied to Representative Rokeberg:                                                                       
     I  don't believe  that these  financial strategies  are                                                                    
     mutually exclusive; it  is not one or the  other. ... I                                                                    
     think we have an absolute  obligation ... to pursue all                                                                    
     strategies that  may benefit  the state.   And  I would                                                                    
     personally be very  happy to work with  you on pursuing                                                                    
     a hedging strategy  as well as this strategy.   I think                                                                    
     the more  ... investigations  we put  on the  table the                                                                    
     farther we  can take every  one of these  issues, [and]                                                                    
     the more  comfortable we  can get  the public  with the                                                                    
     state participating in  some very sophisticated capital                                                                    
5:42:59 PM                                                                                                                    
CHAIR KOHRING  asked for the  opinion of the  committee regarding                                                               
the bill.                                                                                                                       
REPRESENTATIVE  ROKEBERG replied,  "I'm  not  at all  comfortable                                                               
moving this  bill right now because  I'm not sure what  it really                                                               
does.  It may give the  royalty board the license to gamble right                                                               
now;  without a  little  more oversight  and  direction from  the                                                               
legislature, I'm not at all comfortable moving it on."                                                                          
CHAIR  KOHRING suggested  the concept  of making  any transaction                                                               
that  the  commissioner  may engage  in  subject  to  legislative                                                               
5:43:57 PM                                                                                                                    
REPRESENTATIVE BERKOWITZ  pointed out that any  long-term sale of                                                               
more than  a single  year's worth  of royalty  currently requires                                                               
legislative approval.                                                                                                           
CHAIR KOHRING  clarified that  on page  1, line 9  of HB  224 the                                                               
word "commissioner" refers to the DNR commissioner.                                                                             
5:46:56 PM                                                                                                                    
REPRESENTATIVE DAHLSTROM moved to report  HB 224 out of committee                                                               
with individual recommendations.                                                                                                
5:47:53 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG stated,  "I won't  object to  moving the                                                               
bill but I'm going to be signing 'Do not pass,' for the record."                                                                
There  being no  objection, HB  224 was  reported from  the House                                                               
Special Committee on Oil and Gas.                                                                                               
There being no  further business before the  committee, the House                                                               
Special  Committee  on  Oil  and Gas  meeting  was  adjourned  at                                                               
5:48:46 PM.                                                                                                                   

Document Name Date/Time Subjects