Legislature(2013 - 2014)BARNES 124
03/15/2013 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB129 | |
| HB158 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 9 | TELECONFERENCED | |
| *+ | HB 129 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 158 | TELECONFERENCED | |
HB 129-OIL & GAS EXPLORATION/DEVELOPMENT AREAS
1:07:23 PM
CO-CHAIR FEIGE announced that the first order of business would
be HOUSE BILL NO. 129, "An Act relating to approval for oil and
gas or gas only exploration and development in a geographical
area; and providing for an effective date."
1:08:04 PM
DANIEL S. SULLIVAN, Commissioner, Department of Natural
Resources (DNR), offered to discuss how HB 129 will fit into the
broader strategic goals of the state. He has had an opportunity
to pre-brief a number of members on the bill, but he understands
some questions remain.
COMMISSIONER SULLIVAN recalled from previous discussions that
the state has a comprehensive strategy focused on the Trans-
Alaska Pipeline System (TAPS) throughput issue and its desire to
reverse the TAPS decline. The DNR's strategy is comprised of
four key parts: First, the DNR wants to enhance the state's
global competitiveness and investment climate, the keystone part
being tax reform. Second, the DNR wants to promote Alaska's
resources and create positive investment opportunities
throughout the U.S. and world. Third, the DNR wants to
facilitate and incentivize the next phase of North Slope
development, whether it will consist of large fields, shale oil,
unconventionals, small pools, and big or small companies.
Finally, the DNR wants to ensure that the permitting process is
structured, efficient, timely, and provides certainty, which is
the main focus of HB 129, in particular, as it relates to oil
and gas related development.
1:11:02 PM
COMMISSIONER SULLIVAN advised that part of the DNR's strategy
has been to contact potential investors, current investors,
including big and small companies. Certainly, the department
has heard during the aforementioned discussion about the tax
issue and competitiveness. However, the issue of permitting
reform and modernization as it relates to efficient, timely, and
certain permitting has also often been raised. In fact,
recently senior Repsol officials focused not only on meaningful
tax reform, but also expressed desire for such a system for
permitting. This bill and the broader permitting strategy
relate to many other things with respect to the state's
interest, whether it's the TAPS throughput, gas
commercialization of the North Slope, Cook Inlet oil and gas
development, or strategic and critical minerals.
1:12:24 PM
COMMISSIONER SULLIVAN said HB 129 focuses more specifically on
oil and gas activities. The DNR has found everyone interested
in a achieving a competitive environment, which is important not
only with respect to fiscal issues, but also to extend beyond
them. Whether it is federal delays or the large number of
lawsuits, Alaska's reputation is not what is desired in terms of
its permitting system. The department thinks that changes are
necessary; however, it's also important to emphasize the DNR
believes desirable changes can happen without lessening the very
high standards critical for the environment and still achieve
responsible resource development throughout the state.
COMMISSIONER SULLIVAN offered his belief HB 129 can achieve this
while still maintaining the importance of public input on these
issues. This bill maintains that it is particularly important
to receive input at the beginning of exploration and development
phases in geographical areas. This bill would allow deliberate
decision-making and bring certainty into the DNR's system. This
would benefit everyone, including Alaskans, the public, and
investors, which is primarily what this bill intends to do.
1:14:54 PM
WILLIAM C. BARRON, Director, Division of Oil & Gas, Department
of Natural Resources (DOR), stated that several years ago the
division began reviewing general aspects of its oil and gas
operations. The division continually attempts to reach out to
citizens of the state as well as industry and discovered parties
have an underpinning desire to have a broader understanding of
all activities that might be associated with exploration or
development in an area rather than to consider one project or
one plan at a time. In short, communities want to understand
holistically what is going to happen throughout an area.
MR. BARRON said the DNR's challenge in permitting has been
similar to ones encountered during areawide lease sale planning.
In that regard, communities and industry consider how to
progress the lease sale, determine what areas to include, and
extend that process when it considers the exploration and
development phases. However, this not a question of whether oil
and gas activity will occur, but rather is an effort to identify
what kind of activity and how that activity will be performed.
In fact, once the lease sale occurs, the state has made the
decision that it's in the best interest of the state to proceed.
Thus, the next logical progression is to determine the level of
activity and how it will be performed.
1:17:20 PM
WENDY WOOLF, Petroleum Land Manager, Division of Oil & Gas,
Department of Natural Resources (DNR), stated she would discuss
how the division currently approves exploration and development
activities on state oil and gas leases. Next, she would explain
how HB 129 will help the department to streamline its process
for approving exploration and development activities.
MS. WOOLF turned to slide 2 entitled, "Areawide Oil & Gas Lease
Sales." She began with a review of the division's current
system for leasing and permitting, such that the DNR offers oil
and gas leases in five geographical areas called areawide lease
sales, including the North Slope, the North Slope Foothills, the
Beaufort Sea, Cook Inlet, and the Alaska Peninsula.
1:18:07 PM
MS. WOOLF said HB 129 takes the statutory requirement to provide
notice at the beginning of each phase of a multi-phased project
and allows the department to review the phase across the entire
geographical area rather than to conduct finite reviews on
individual projects [slide 3]. In this instance, it relates to
oil and gas development, in general, and the phases include
exploration, development, and transportation. The initial
leasing phase occurs with the decision to offer leases through a
public process, which is the oil and gas lease sale process.
She identified the decision the department reaches at that time
as the best interest finding (BIF). Again, at this stage the
DNR defines how oil and gas development will occur, not whether
it will occur. The bill will allow the DNR to examine a broader
geographical area when evaluating how that development should
occur.
MS. WOOLF explained how the process would change under HB 129
[slide 4]The bill would allow the DNR to authorize oil and gas
exploration and development activities holistically across a
geographical area. The process would still preserve the
requirement for public participation at the beginning of an
exploration or development phase, which she deemed as being very
important. The public benefits since people can comprehensively
evaluate oil and gas activities within a geographical area and
have an opportunity for input at the beginning of the lease,
before the development phase happens. In reality, this bill is
really about planning at the onset, which is something the
public has requested. Similarly, the industry benefits because
it will know at the outset the parameters of the project so they
can submit plans accordingly, which gives industry predictable
results.
1:20:21 PM
MS. WOOLF next offered to step through the oil and gas lease
sale process [slide 5]. The first step in the proposed areawide
oil and gas lease sale is to provide a broad public notice and
opportunity to comment. The DNR initially evaluates certain
statutory criteria and develops mitigation measures for each
lease. The oil and gas director issues a final finding which is
valid for up to 10 years. However, the final finding requires a
general - not site specific - public notice and an opportunity
to comment prior to the exploration phase, the development
phase, and the transportation or pipeline phase.
MS. WOOLF stated that the best interest finding (BIF) is the
leasing phase, which defines the oil and gas exploration
allowed. Additionally, subsequent notices are held at the
beginning of each phase, as required by statute.
1:21:39 PM
MS. WOOLF reviewed the life of an oil and gas lease [slide 6].
After the final finding by the director is made the oil and gas
lease is issued. Initially, an operator would submit the first
plan of operation, for example, for a seismic operation spanning
several leases, with an opportunity to comment. The DNR will
then issue an approval of the plan of operation, subject to any
special stipulations. Next, once the seismic work is finished,
the operator would submit the next plan of operation, perhaps a
few years later, for an exploration well. Such a plan of
operation might consist of an ice road with an ice pad, which
would require a public notice and comment period. Subsequently,
the DNR would approve the plan of operation for the first well.
MS. WOOLF said if the operator was successful with the well, the
operator might present a plan for a second well within the same
lease. The DNR would issue a public notice and hold a comment
period prior to approving the plan of operation for the
exploration well. If the operator is successful with a
discovery, the lessee would formulate a development plan and
initially submit a conceptual development plan to DNR to outline
how the lease will be developed, followed by an initial
development plan of operation for the first pad.
MS. WOOLF highlighted that once again, the DNR would issue a
public notice and would hold a comment period for the beginning
of the development phase. If the operator needs to modify the
plan after this phase is approved, the operator would submit a
modified development plan, which would require an additional
public notice and comment period.
MS. WOOLF said that finally, once the operator is ready for a
pipeline that the operator must come in with a separate
application for the pipeline. Under HB 129, the pipeline
process will not change since pipeline applications will
continue to be processed for common carriers under AS 38.35 or
for an easement under AS 38.05.850.
1:24:01 PM
REPRESENTATIVE JOHNSON asked whether she has been outlining the
current lease process.
MS. WOOLF confirmed the aforementioned procedure is the current
process.
1:24:13 PM
REPRESENTATIVE P. WILSON asked the presenter to point out the
steps on the slide as she proceeds.
MS. WOOLF agreed to do so. She identified she is currently
covering year 8, slide 6.
1:25:00 PM
MS. WOOLF said in the event an operator had additional
development plans or need enhanced recovery that once again, the
operator would be required to submit a plan of development, with
a plan of operation for the new pad and the DNR would issue a
public notice and comment period prior to issuing a decision.
Even though this process still pertains to the same operator,
the same lease, and the same reservoir being developed, each
piece will require separate public noticing, which is how the
DNR has been implementing leases.
MS. WOOLF, in the even an adjacent lease is issued, the
aforementioned process would begin again, with public noticing
necessary for additional exploration wells and the plan of
development, even if the operation will tie into existing
facilities. However, the transportation process is performed
separately once the pipeline is constructed.
1:26:13 PM
MS. WOOLF explained changes to the lease process under HB 129.
Primarily HB 129 will allow an [oil and gas lease] to be
evaluated over a broader geographical area [slide 7]. She
related a scenario, in which the geographical area on the North
Slope might be defined as the Western North Slope. In fact,
this area has been extensively developed and is separate from
the North Slope parcels that are not as well developed. She
pointed out potential geographical areas for exploration
activities on the slide. Specifically, the proposed
geographical areas would consist of broader areas, but the
overall area would be smaller than the areawide lease sale
boundaries.
MS. WOOLF explained that at the beginning of an exploration
phase, the DNR would provide a public notice with an opportunity
to comment. At this time, the public will be able to evaluate
where exploration should occur in the broader area and identify
any specific concerns. For example, on the North Slope the
activities would include such things as ice roads, ice pads,
portable drilling equipment, off-road vehicle use, and temporary
housing.
1:27:40 PM
MS. WOOLF said the geographical areas for development
activities, by definition, would be more focused [slide 9].
Once an operator has reached the development phase, more
permanent activities will happen. Thus the geographical areas
are typically smaller and may encompass a number of leases that
are being planned for development. Further, the geographical
area may include an existing oil and gas unit with discussions
of future development. Additionally, the DNR may want to focus
on the core area that is already fully developed in a large
legacy field such as Kuparuk or Prudhoe Bay.
1:28:37 PM
MS. WOOLF, for the purpose of discussion, suggested how leasing
would happen under HB 129 on a small area located between some
of the legacy fields to further demonstrate how the process
would work [slide 10]. The DNR would define the geographical
area and prepare a public notice and an opportunity to comment
for the exploration activities - defining what the activities
would consist of. Meanwhile, the DNR would solicit information
from other state, federal, and local agencies, as well as the
industry with respect to the exploration phase decision. Based
on the input, the DNR would finalize and approve the exploration
phase decision. Once that happens an operator would submit a
plan of operation. However, at this point the DNR will not
public notice each plan of operation since the geographical area
is included in the exploration phase.
1:29:59 PM
CO-CHAIR SADDLER asked her to clarify the public notice process.
MS. WOOLF answered that the public notice process is tied to AS
38 and specifically to AS 38.05.945 (b) and (c), which is a 30-
day process. She further explained that AS 38.05.945 requires a
broad public notice.
1:30:43 PM
REPRESENTATIVE P. WILSON related her understanding that since
the oil and gas activities under the lease would cover a
geographical area that the authorization is broad and would not
necessitate individual public noticing for subsequent plans,
largely since the public will have already provided comments.
MS. WOOLF answered that is correct; that individual plans will
not be public noticed, but the geographical area plan will be
public noticed. Further, individual plans must comply with the
mitigation measures in the lease and cover all of the parameters
and special stipulations in the exploration phase approval. In
fact, any time a plan of operation is submitted that does not
comply or is one that contains an exception, the DNR would need
to public notice since the plan of operation would not meet the
lease parameters. Therefore, nothing in HB 129 would prevent
the DNR from reviewing specific portions of a [plan of
operation] and request public comment for specific activities
that are out of the norm.
1:31:45 PM
CO-CHAIR SADDLER asked for further explanation of the chart.
MS. WOOLF explained that this means is that when the lease plan
of exploration is submitted, public notice and opportunity to
comment does not need to be performed for each individual plan
of operation. The public notice portion will already have been
done. However, the plan of operation will still require
approval by the division. Of course, when the oil and gas
division approves a plan of operation - and the division is
currently working on its regulations covering the approval
process - it goes through an agency review. She emphasized that
internal review does not change under the bill. In fact, the
plan of operation is subject to lease mitigation factors, which
have already undergone an extensive public process. In response
to a question, Ms. Woolf pointed out the purple lines on the
chart for "Exploration Phase" and for "Development Phase" on
slide 9 indicate points at which additional public notice and
opportunity are not required.
1:32:51 PM
REPRESENTATIVE P. WILSON asked whether the reason the public
notice and opportunity to comment is not required is that it has
already been done for the geographical area. She understood if
anything changed, that a subsequent public comment period could
be held.
MS. WOOLF said that is correct.
1:33:15 PM
MS. WOOLF resumed her presentation. She predicted that the
development phase decisions would be tied to a more specific
development, such as an operator might submit a group of leases
for an oil and gas unit that will be operated by one company.
First, the companies would come in with an overall conceptual
plan for developing the lease, group of leases, or the unit. At
that point, the DNR would issue a public notice on the smaller,
more focused geographical area, indicating the type of proposed
activity for the oil and gas development, including any pads,
roads, or pipelines. At the time the DNR issues its decision,
it will have the parameters of how operators will submit their
plans of operation. So long as the operator submits plans of
operations in compliance with the lease mitigation measures and
the development phase parameters, the operator could proceed
with its site specific plans of operation. In fact, the
operator can proceed with its site specific plans of operation
without the need for additional public notice for each of those
phases.
MS. WOOLF highlighted that under HB 129, the public notice
periods will be deleted for the individual plan, the amended
plan, and the modified or enhanced recovery plan. However, the
bill would not change the public notice requirement for
transportation, which, as mentioned earlier is a separate not
addressed by the bill.
1:35:02 PM
MS. WOOLF emphasized the department will continue to approve
plans of operation as part of the lease requirement, which
doesn't change under the bill. Additionally, the bill will not
change any other permitting requirements oil and gas development
is subject to such as permits from Alaska Oil and Gas
Conservation Commission (AOGCC), local permits, or permits from
the Department of Environmental Conservation (DEC). For
instance, the proposed changes will not affect wetland permits
necessary for dredge and fill, or other kinds of permitting
activities. In essence, what this bill does is to allow the DNR
to review oil and gas leases more holistically. In essence, the
public will provide input on a geographical area rather than be
asked to react to an individual project.
1:35:55 PM
MS. WOOLF discussed results [slide 10]. Again, HB 129 would
provide the state, the public, local agencies, and industry an
opportunity for a holistic, comprehensive review of oil and gas
activities prior to exploration or development. The department
would define a geographical area, prepare the public notice,
define the activities and types of activities allowed, and
request public comment on the exploration phase. Once the
exploration phase is approved, the division would approve
specific plans of operation in compliance with the conditions of
the approved exploration phase. Using the process established
under HB 129, it would not be necessary to seek additional
public noticing for each of the exploration phase activities.
1:36:52 PM
MS. WOOLF said once operators are successful and the lease moves
to a development phase, the DNR would prepare a public notice,
define the development activities for the geographical area, and
solicit public comments. Once the development phase approval is
complete, so long as the operators are in compliance with the
lease mitigation measures and all the stipulations in the
development phase approval, they can proceed with the
development activities and their plans of operations will be
approved by the division without the further need for additional
public notice. Again, the pipeline process would be dealt with
separately.
1:37:48 PM
REPRESENTATIVE SEATON expressed concern that geographical areas
might be broad since they are not defined. For example, a
geographical area might include all of Cook Inlet lease area.
He expressed further concern that the public would only have one
opportunity to comment prior to the seismic activity or other
activity through the development phase. In fact, the area for
the development phase would be so broad that the public really
would not have an opportunity to comment. At the time public
comment is solicited, the pad location would be unknown and they
won't know if development will occur in multiple places in the
basin. Without some constraints, the public could assume there
could be 20 wells drilled at Anchor Point because the potential
exists since the leases exist. Consequently, the public will
only have "one shot" at it.
MR. BARRON agreed that Representative Seaton has raised good
concerns. However, he characterized Representative Seaton's
comments as "mixing some things in a bucket and stirring them
around." He said the aforementioned activities wouldn't take
place in that way in Cook Inlet. First, the exploration phase,
by definition, would be a broader area than the development
phase. Second, the development phase could be the size of the
unit itself or smaller if the department chose to make it so.
Finally, seismic activities currently undergo extreme public
disclosure relative to the National Marine Fisheries Service
(NMFS), which is also part of the process. Hence, the public
would know what oil and gas activity would be occurring in the
specific geographical areas.
1:41:39 PM
MR. BARRON highlighted that the division would establish, by
regulation, the geographical areas for the exploration or
development using a public process. For example, the DNR would
identify the geographical areas in the Kenai area for
exploration, which might encompass the entire west side of Cook
Inlet, but it would likely also identify small discrete packages
for the actual exploration. He envisioned this would be done by
regulation. Additionally, the public process associated with
establishing those geographical areas will engage with the
public upfront.
MR. BARRON characterized the process under the bill as "getting
ahead of the overall work activity." Certainly, this will allow
people to know a given area will be part of a broad geographical
area for exploration. Further, the development phase would
consist of a more defined finite area. This is the process
department has developed to ensure public involvement; however,
Representative Seaton raises some very valid points on whether
the public will only have one time for a "bite at the apple."
Keep in mind that every decision the division makes is
appealable, he said.
MS. WOOLF confirmed that is correct. The plan of operation that
would still require approval for the very specific activities,
which an appealable decision.
MR. BARRON concurred that the public will have an opportunity to
appeal the decision to the commissioner.
1:43:13 PM
REPRESENTATIVE SEATON [referring to slide 9], said the
exploration phase includes exploration wells on any of the
leases. For example, Apache has leases on the west side of Cook
Inlet and has also been performing seismic operations from
Anchor Point to Kenai on the east side of Cook Inlet. Under the
bill as depicted on the slide, he understood Apache could
indicate the plan to perform seismic operations, exploration
pads, and wells for the entire area on multiple leases, but only
be subject to a single public noticing and comment period for
the initial proposed oil and gas lease exploration plan. He
expressed concern that Ninilchik residents would not likely
comment on seismic or exploration pad activity on the west side
of Cook Inlet; however, they would want to comment if
exploration pads were planned for downtown Ninilchik. In any
event, once, once the statewide lease sales occurred the comment
period will be closed. In other words, he predicted residents
would wish to comment on noise activity or exploration pads in
their own neighborhood, but not necessarily for activity in
remote areas. He wondered if the effect of HB 129 will be to
cause people to prematurely react when they normally would not
desire to comment.
MR. BARRON offered his belief it would verge on being
irresponsible for the division to put the entire Cook Inlet in
one geographical area. First, he pointed out unique differences
exist between the east and west side of Cook Inlet. Second, the
division has held this discussion internally, and he recalled
suggestions that perhaps the two portions of the west side of
Cook Inlet would fall in different geographical areas.
Meanwhile, he predicted the east side of Cook Inlet could
contain numerous geographical areas, even for exploration. He
understood residents on the east side of Cook Inlet might be
interested in the west side of Cook Inlet but not know when to
comment; however, part of the public process will be to
establish geographical areas for the exploration phase in public
forums so residents are informed of the size and location of the
geographical areas. Once the aforementioned geographical areas
are established, the DNR intends to reach out to the public and
industry to evaluate what activities should occur on the west
side in each geographical area. Specifically, he envisioned the
process would occur in an open forum in order to determine which
activities should take place. For example, the discussion would
identify whether issues will arise with respect to subsistence
hunting and fishing. Further, that type of activity could be
identified in smaller areas rather than over the entire lease
sale.
1:47:43 PM
MR. BARRON highlighted the intent of HB 129 is to initially
identify areas and concerns in a public process to inform the
public that certain areas are protected. Meanwhile, the
industry will also know what needs to happen to mitigate their
operations to satisfy the findings of the geographical area.
Actually, he envisioned the geographical areas for the
development phase will be even more fine-tuned. Once an
exploration well has reached total depth (TD) and the operator
seeks to identify a unit, the operator would need to submit a
development plan. Perhaps the unit might actually be the
geographical area. Again, at that point, the public associated
with the geographical area could clearly weigh in while the
industry will know exactly how to proceed in the specific area.
Certainly, each area will be different, such as North Slope as
compared to Kenai.
1:48:51 PM
REPRESENTATIVE SEATON allowed it would be nice if that process
happened, but he did not see anything in the statute that
requires the lease to unfold in that fashion. After all,
currently, Apache has performed seismic operations in the whole
Cook Inlet. Under the bill, their activity would not only
include the seismic program, but the exploration pads and wells
in all of its leased areas. He asked whether anything in this
statute constrains activities so an operator's activity wouldn't
encompass the entire geographical area.
MS. WOOLF emphasized it is important to remember this process is
not required, but only represents an approach that could be
taken. Keep in mind that the Cook Inlet area and Southcentral,
Alaska have already undergone an extensive planning effort on
state lands. For instance, the Kenai Peninsula Area plan and
the Susitna Area Plan are finished, yet those plans will still
undergo an extensive public process every 10 years. That's the
point at which the state and local government decides how should
the state's surface lands be used, she said. For example, the
area plan review considers the highest and best use and the
multiple resource values that need to be protected.
Specifically, all oil and gas development is subject to area
plans and must be in compliance with those plans. Basically,
the process under the bill represents yet another layer of
planning on top of the area plan. In fact, at least in the Cook
Inlet, the base layer area plans lay out the foundation for
state land management, including wildlife habitat and industrial
settlement. If oil and gas development will be allowed, the oil
and gas leasing process will happen.
MS. WOOLF highlighted that the way the division performs its
BIF, which is a phased review of the lease, effectively
postpones exploration, development, and transportation phase
analysis reviews until a later date. This allows the department
to holistically consider the geographical area instead of
undergo individual consideration. In terms of the previous
example of Apache's seismic activity, if Apache requested the
entire Cook Inlet area be considered and the division made a
decision that covers the west side of Cook Inlet, then Apache
wouldn't be included in the decision since the activity would
not cover the entire Cook Inlet geographical area. Furthermore,
anytime a plan doesn't meet lease mitigation measures or any of
the parameters, the division would need to hold a specific
public notice for that particular operation.
MS. WOOLF pointed out the public notice being used is the [AS
38.05.945] noticing, which means that if the division described
the whole Kenai Peninsula as an area, the statute is very broad,
which would require notices be posted in all post offices in the
Kenai Peninsula Borough. The notice would state the entire
geographical area in the Kenai Peninsula, ranging from Homer to
Soldotna. It would be incumbent upon the resident to note the
planned activity at "their back door" and to investigate and
comment on the plan. This is precisely why the division tied
the noticing to the AS 38.05.945 requirements - to make it clear
that the division wants public input from across the entire
geographical area, in particular, to identify any concerns prior
to exploration and development.
1:53:00 PM
REPRESENTATIVE SEATON expressed additional concern that once the
lease moves to the development phase, any modifications made to
the operation plan would not be subject to further public notice
or comment periods. He related a scenario in which one
development plan is approved, but subsequently modified, which
would not allow for additional public comment.
MS. WOOLF, with respect to the development phase, indicated the
operator will define a reservoir, which will be more focused and
specific. By contrast this will allow the division to consider
the project holistically. She related a scenario in which the
geographical area included Anchor Point and Homer but the entire
area is underlied by oil and gas. The proposed plan might be to
develop the area using three to four pads, with one pipeline and
feeder lines, as well as build a processing facility.
Certainly, all the aforementioned activities would be listed in
the notice since it is very specific to oil and gas development.
If the public comment includes concerns about noise, truck
traffic close to residents, or the location of the pipeline
bisects public recreational opportunities, it is important to
learn those concerns at the beginning of the project. After
all, this allows the division to define the criteria in its
decision so the operator can plan around the public's concerns.
Furthermore, if the operator isn't able to do so, the division
would need to issue another public notice based on the
operator's inability to work within the parameters of the
decision.
1:55:49 PM
CO-CHAIR SADDLER offered his belief the current situation has
substantial feedback loops. He asked the department to
characterize the types of comments the division receives and
whether the comments are consistent or if new points are raised
throughout the process. He further asked how the comments are
processed by the division.
MR. BARRON answered that with very rare exception, the division
does not receive many comments on the plans. Typically, the
comments the division receives are usually extreme ones opposing
any oil and gas development in the area. Incidentally, the
comments on projects are not generally addressing localized
concerns. Surprisingly, the vast majority of the projects have
almost no comments. As a matter of fact, the division started
examining the process and began wondering whether peopled didn't
understand what was happening in the whole area or that it was a
localized issue. Moreover, the division wanted to find ways to
better represent the citizens and achieve better planning.
Ultimately, he said division is interested in acting as good
land management stewards and seeks to enhance and expand its
knowledge base to encompass a broader base of the public in a
way that allows them to comment more holistically.
MR. BARRON, in response to the second question, said that any
public comments made under the current system are addressed by
the decision, for example, when four or five people say the same
thing, such as submitting a form letter. In the event only one
person commented, the division's response would be to answer why
the decision is being made.
CO-CHAIR SADDLER understood that the division receives comments
and acknowledges them. He asked whether the division integrates
or changes any plans.
MR. BARRON answered yes; the division has frequently gone back
to the industry to identify a reasonable concern and has
modified the plan accordingly.
1:58:43 PM
CO-CHAIR SADDLER asked how this system compares to systems used
in other states, and for federal notices. He asked whether the
DNR's current system is excessive or if it is insufficient.
MR. BARRON said it is difficult to do any significant comparison
to the Lower 48 because most of the land in the Lower 48 is
privately owned rather than being state land. With respect to
the federal structure, he believed Alaska's structure is more
onerous. He related his experiences have been limited to the
Kenai Peninsula, in particular, to Bureau of Land Management
(BLM) properties. Otherwise, the lead agency had been the U.S.
Fish and Wildlife Service (USFWS). The division typically works
with the lead agency on the process. Ironically, he stated that
one of the ideas for the bill originated with USFWS, since that
agency wanted to know upfront all of the activities that would
occur. In other words, the USFWS did not want to know "bite by
bite" or "year by year" what activity would happen. Again, the
division would like to establish the activities in advance.
2:00:05 PM
CO-CHAIR SADDLER surmised that criticism might be that the DNR
is trying to avoid public's opportunity to comment. He asked
whether the intent of the bill is to block public comment for
oil and gas exploration and development.
MR. BARRON answered absolutely not. Instead, the DNR would
prefer to identify the public's concerns in advance of the
activity and let the public "lean in real hard" and "be very
specific" about the activities associated with the exploration
or development in an attempt to holistically inform people
rather than inform them piecemeal.
2:00:41 PM
CO-CHAIR FEIGE asked whether [the upfront comments are
preferable] rather than to have individual leasees react to
individual public comments throughout the process.
MR. BARRON answered yes.
2:00:49 PM
CO-CHAIR SADDLER whether he anticipated any meaningful reduction
in public comment.
MS. WOOLF replied that she expects more public comments under
the bill, because it will allow the public to comment in the
beginning and help plan and evaluate a project prior to moving
forward with land management. She offered her belief that the
public finds that a much more meaningful dialogue. She
suggested that there is a lot more participation in the DNR's
planning processes than in the reaction to a specific plan of
operation. She surmised that one reason few comments are
received so since people have the sense that their comments will
not make a difference. However, at the initial planning point,
the division is defining the parameters in which future
exploration and development will occur.
[MR. BARRON nodded yes.]
2:01:56 PM
REPRESENTATIVE JOHNSON said it seemed to him that this bill
would front-end load the permitting process. He wondered how
this change will affect the department's workload. It seemed as
though a lot of work would need to happen initially.
MR. BARRON replied the DNR has discussed this aspect internally
and the description of "front-end loading" is an accurate one.
He anticipated that projects would move through the process more
quickly since the process currently includes a 30-40 day public
comment period, along with a 10-day public review at each step,
which is time consuming. Additionally, it's time-consuming for
the DNR to answer comments on each phase. Thus he thought HB
129 would speed up the process by identifying the activities in
an area, which will be more meaningful. He suggested the
primary points as being to know in advance and to be able to
anticipate project management. Finally, it is better to plan
upfront rather than stop and plan again, which also adds costs.
2:04:12 PM
CO-CHAIR FEIGE asked whether the DNR would have more time for
permit enforcement.
MR. BARRON answered that should be one of the benefits.
2:04:37 PM
REPRESENTATIVE JOHNSON asked whether different producers would
be working in the same area.
MR. BARRON answered he identified part of the reason the
division is doing this now. He related a scenario in which
three leases are adjacent to one another in a geographical area,
but the operators need to go through the entire process to
submit applications and obtain public comment on each lease. If
one operator undergoes the process and the next operator wants
to use the same rig, the second operator must undergo the entire
process. He pointed out under the bill, it won't matter which
operator is involved, if the division establishes the right
geographical area and people know the activity that will occur
the process works much smoother.
REPRESENTATIVE JOHNSON wanted to make sure that is how it would
work and he said he is now satisfied.
2:06:36 PM
REPRESENTATIVE HAWKER inquired as to the reason this legislation
is needed. He wondered whether the department already has the
authority and it's more a matter of regulation than
necessitating a change in statute.
MR. BARRON answered that when this process was started a year
ago, the opinion was split in terms of whether the statutory
change was necessary.
2:07:42 PM
REPRESENTATIVE HAWKER queried as to who was giving the advice.
MR. BARRON responded the department engaged numerous people in
the division, within DNR, and in the Department of Law. The
division's goal has been to avoid court. However, since there
has not been a unified sense within the department, it was
thought best to go the legislative route.
2:08:49 PM
REPRESENTATIVE HAWKER understood. However, he highlighted his
concern, which is the exclusionary problem, such that when the
statutes say something is allowed, implicitly, it identifies
something that can't be done. He suggested that this wouldn't
be necessary unless the division is otherwise prohibited from
doing something. He expressed his concern that this validates
that the division is prohibited from doing "something." He
cautioned the DNR to be sure the department isn't inadvertently
compromising some other authority, since the department already
has the authority - in his view. He characterized his question
as being a rhetorical question. He offered to support the DNR's
decision to pass the bill out of committee. He further
requested the director to hold a discussion with him prior to
the bill going to the floor for a vote.
2:11:01 PM
REPRESENTATIVE P. WILSON shared Representative Hawker's concern.
She suggested this will give certainty to companies and the
public on what the DNR can do and if something different will
occur, it means starting the process over in a certain area.
However, she anticipated some people would use this bill to
drive the process. She said she can see both sides, but was
concerned about unintended consequences.
MR. BARRON appreciated the comments.
2:12:45 PM
REPRESENTATIVE SEATON stated he is concerned about public
comment, such that there is one generalized comment period but
not a specific comment phase. He asked at what point besides
the broad general area people would have the opportunity to
comment on development taking place in their area. He recalled
temporary water use permits were allowed to be rolled over for
five years but general DEC air quality permits do not require
public comment. Additionally, an AOGCC permit to drill doesn't
require public comment, he said.
MR. BARRON responded that when the DNR defines and works with
the public on exploration activities, it can identify seismic
activities and exploration drilling. At that time, the public
can raise concerns about specific areas and identify areas that
need to be avoided or stipulate what needs to be put in place.
In fact, what's really important is to be able to consider on a
broader basis the activities that could take place in the area.
Again, the fine tuning would happen with the development of the
geographical area. In fact, it is focused and upfront comments
on how to develop, but not whether development will happen.
Furthermore, the lease sale identifies that oil and gas
exploration development will take place, which is why the parcel
is up for lease. He offered his belief that including the
public in the planning phase is much more important than
understanding each individual activity. He agreed there might
be three operators performing the activity, but what's important
is people will know what activity will take place and what rules
govern the activity.
2:17:08 PM
REPRESENTATIVE SEATON understood Mr. Barron's position is that
people in the central Kenai Peninsula will have sufficient
understanding of the impacts of a gas plant on the whole Kenai
Peninsula if they know that type of facility is being planned.
MR. BARRON offered his belief it comes down to how well the
geographical areas are established. He characterized this as
the crux of the question. If the areas are established through
the public process when the DNR develops its regulations, the
public has yet another opportunity to weigh in and specify the
size, location, and purpose of a geographical area. He
anticipated that would be the type of engagement with the public
the DNR would encourage.
2:18:44 PM
REPRESENTATIVE SEATON asked whether this bill would require the
DNR to develop regulatory conditions on geographical areas.
MS. WOOLF answered that the DNR has regulation requirements
under the department's lease sale provisions. It states that
when the department chooses to hold a phased oil and gas lease
sale, public notice will be provided under regulations adopted
by the department. Consequently, the DNR has been actively
working on regulations related to how the DNR approves plans of
operation. If this bill were to pass, the department would
incorporate any additional regulations into the existing
regulation project. While the current regulation project isn't
specifically tied to this bill, it is how the department would
address the regulations. She indicated this relates to a phase
under the DNR's lease sale, not a project phase under the plan
of operation.
2:19:40 PM
CO-CHAIR SADDLER asked whether any exploration and development
would occur outside of the geographical areas or if it is all
covered under the bill.
MR. BARRON answered this activity would be associated with state
lands that are part of a lease sale so any state land that is
part of a lease sale would be rolled into this package.
2:20:23 PM
REPRESENTATIVE JOHNSON asked to discuss the difference between
public notice and public notification. He offered his belief
that public notice requires a 30-day comment period. He related
a scenario in which in a well is planned, whether the public can
contest it after the comment period, perhaps on-line, so if the
operator decides to put in a platform, the public can comment.
MS. WOOLF responded that the department is actively working on
this. In fact, the DNR's decisions are public information and
the information on decisions, along with any non-confidential
information the department receives from the other agencies is
available. Specifically, the department has been working
internally to try to make this information more accessible to
enable the public to readily view individual decisions on the
DNR's website. However, people can currently obtain the
information, she said.
2:22:06 PM
REPRESENTATIVE JOHNSON acknowledged that is what he was
interested in hearing. Since the department has transparency
and is working to make the process even more transparent gives
him a certain amount of comfort.
2:22:43 PM
CO-CHAIR FEIGE, after first determining no one else wished to
testify, closed public testimony on HB 129.
2:23:08 PM
REPRESENTATIVE SEATON expressed concern that the bill will
create public distrust of the process. For example, if a
geographical area encompassed all of Southeast Alaska, Wrangell
residents would not likely testify during the exploration phase.
However, if the operator made a subsequent decision to drill a
well in Wrangell, he wondered if residents would have an
opportunity to weigh in [since the public comment period would
be closed at that point]. Overall, the changes could distress
people, especially since the DNR's [statutes would] not limit
the scope of the geographical areas. He concluded that if the
geographical area an areawide lease sale on the Kenai Peninsula
is large, he will have problems with this [bill].
2:25:03 PM
REPRESENTATIVE JOHNSON shared Representative Seaton's concern;
however, he predicted an initial lawsuit will charge that a
geographical area is too big. Therefore, he encouraged the
department to make the geographical areas as small as possible.
He offered his support for the concept noting that this [bill
represents] good mega-project management, especially since
history indicates a project is most successful when all the
information is available upfront. He understood that each time
a project is slowed it becomes more expensive. Anyway, he felt
certain numerous people will challenge oil and gas projects if
the DNR goes beyond a large area. He supported the committee
moving the bill along.
CO-CHAIR SADDLER said he likes the idea of HB 129. He takes
comfort in the department's testimony that a significant amount
of public testimony would not be cut off by the bill and that
dialogue will occur. He predicted there would be more public
comment upfront if people realize that they have the opportunity
to influence the process.
2:27:12 PM
CO-CHAIR SADDLER moved to report HB 129 out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE SEATON objected for the purpose of discussion.
He said he wasn't necessarily opposed to "getting a handle" [on
geographical areas]; however, he did not think "we've got enough
meat on the bones, currently." For one thing, the committee has
not considered any amendments since this is the first hearing
the on the bill. He was unsure whether the public even has an
awareness of HB 129. Therefore, he objected, not because he's
opposed to larger geographical areas, but because there
currently isn't any restraint on the size of the geographical
areas. In conclusion, he did not think this would serve the
public well.
REPRESENTATIVE SEATON maintained his objection.
2:28:24 PM
A roll call vote was taken. Representatives Hawker, Johnson, P.
Wilson, Saddler, and Feige voted in favor of reporting HB 129
out of the committee. Representative Seaton voted against it.
Therefore, HB 129 was reported out of the House Resources
Standing Committee by a vote of 5-1.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 129 Briefing Paper.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB 129 Fiscal Note DNR-DOG-2-27-13.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB 129 House Resources Hearing Request.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB 129 Transmittal Letter.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB 129 ver A.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB 129 Weissler Public Testimony .pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HB129 Sectional Analysis.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HRES HB129 DNR Presentation 3.15.13.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 129 |
| HRES HB 158 Letter Packet 7.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 158 |
| HRES HB158 Letter Packet 8.pdf |
HRES 3/15/2013 1:00:00 PM |
HB 158 |