Legislature(2005 - 2006)CAPITOL 124

01/24/2006 05:00 PM House OIL & GAS


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05:05:22 PM Start
05:06:24 PM Overview/update from Alaska Oil & Gas Conservation Commission
05:54:43 PM HB300
06:03:39 PM Overview/update from Alaska Oil & Gas Conservation Commission
06:27:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview/Update from Alaska Oil & Gas TELECONFERENCED
Conservation Commission - Cathy Foerster,
Commissioner
= HB 300 OIL & GAS CONSERVATION COMMISSION MEMBER
Moved CSHB 300(O&G) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                                                           
                        January 24, 2006                                                                                        
                           5:05 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Vic Kohring, Chair                                                                                               
Representative Norman Rokeberg                                                                                                  
Representative Ralph Samuels                                                                                                    
Representative Nancy Dahlstrom                                                                                                  
Representative Berta Gardner                                                                                                    
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Lesil McGuire                                                                                                    
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                                
Representative Kurt Olson                                                                                                       
Representative Jay Ramras                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW/UPDATE FROM ALASKA OIL & GAS CONSERVATION COMMISSION                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 300                                                                                                              
"An  Act relating  to the  qualifications  of the  member of  the                                                               
Alaska  Oil  and Gas  Conservation  Commission  who need  not  be                                                               
certified,  trained,  or  experienced  in  either  the  field  of                                                               
petroleum engineering or the field of petroleum geology."                                                                       
                                                                                                                                
     - MOVED CSHB 300(O&G) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 300                                                                                                                  
SHORT TITLE: OIL & GAS CONSERVATION COMMISSION MEMBER                                                                           
SPONSOR(s): REPRESENTATIVE(s) KOHRING                                                                                           
                                                                                                                                
05/04/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
05/04/05       (H)       O&G, RES                                                                                               
01/24/06       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CATHY P. FOERSTER, Commissioner                                                                                                 
Alaska Oil & Gas Conservation Commission (AOGCC)                                                                                
Department of Administration (DOA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Presented  an  overview/update  from  the                                                               
Alaska Oil & Gas Conservation Commission.                                                                                       
                                                                                                                                
DANIEL T. SEAMOUNT, JR., Commissioner                                                                                           
Alaska Oil & Gas Conservation Commission (AOGCC)                                                                                
Department of Administration (DOA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified that it's good  insurance for all                                                               
members of the commission to  have a fundamental understanding of                                                               
the industry he/she regulates.                                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR VIC KOHRING  called the House Special Committee  on Oil and                                                             
Gas meeting  to order  at 5:05:22  PM.   Representatives Kohring,                                                             
Samuels,  Gardner, and  Guttenberg were  present at  the call  to                                                               
order.   Representatives  Rokeberg and  Dahlstrom arrived  as the                                                               
meeting   was   in   progress.      Also   in   attendance   were                                                               
Representatives Olson and Ramras.                                                                                               
                                                                                                                                
^OVERVIEW/UPDATE FROM ALASKA OIL & GAS CONSERVATION COMMISSION                                                                
                                                                                                                                
CHAIR KOHRING  announced that the  first order of  business would                                                               
be  an overview/update  from the  Alaska Oil  & Gas  Conservation                                                               
Commission.                                                                                                                     
                                                                                                                                
5:06:24 PM                                                                                                                    
                                                                                                                                
CATHY P.  FOERSTER, Commissioner,  Alaska Oil &  Gas Conservation                                                               
Commission (AOGCC), Department  of Administration (DOA), informed                                                               
the  committee  that  the  AOGCC   is  a  quasi-judicial  [state]                                                               
regulatory agency.   She said  that the AOGCC is  responsible for                                                               
"everything from the wellhead on  down into the reservoir" in oil                                                               
and gas  operations on all  of Alaska's private and  public lands                                                               
and waters, except Denali National  Park and Preserve.  The AOGCC                                                               
regulates drilling and production for  oil and gas.  In addition,                                                               
the AOGCC protects correlative rights,  which means that if there                                                               
are  two landowners  and one  feels that  the other  landowner is                                                               
infringing upon his/her rights to get  his/her oil and gas out of                                                               
the ground,  the AOGCC  steps in to  ensure that  the correlative                                                               
rights of  both landowners are  being protected.  The  AOGCC also                                                               
prevents  waste of  hydrocarbons  and  promotes greater  ultimate                                                               
recovery  of  hydrocarbons.   The  AOGCC  also protects  Alaska's                                                               
fresh groundwaters.   She  stated that the  AOGCC has  been given                                                               
the  opportunity to  manage the  Class  II Underground  Injection                                                               
Control  (UIC) program  of  the  Environmental Protection  Agency                                                               
(EPA), which includes  any injection of fluids in an  oil and gas                                                               
operation.   Examples of injected  fluids include:   enhanced oil                                                               
recovery fluids, saltwater, and waste disposal.                                                                                 
                                                                                                                                
5:08:40 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  explained that  within  the  AOGCC's mission,  the                                                               
AOGCC has "a  few key" goals and strategies.   The first key goal                                                               
of the AOGCC is to prevent  the physical waste of the hydrocarbon                                                               
resource.   The AOGCC evaluates  every drilling proposal  that is                                                               
submitted.  She  stated that every time a company  wants to drill                                                               
a well in Alaska,  it has to get permission from  the AOGCC to do                                                               
so.    The  AOGCC  ensures that  during  drilling  operations,  a                                                               
company is using sound engineering  practices that don't harm the                                                               
groundwaters and don't cause waste  of oil and gas, either during                                                               
drilling or production, or in the  event of abandonment of a well                                                               
that's not  successful.  Once  there are ongoing  operations, the                                                               
AOGCC has  five full-time inspectors  that travel  throughout the                                                               
state  inspecting operations.   She  informed the  committee that                                                               
the AOGCC also evaluates any  new reservoir development to ensure                                                               
that the  operator's proposed  plans to extract  the oil  and gas                                                               
from the ground  are consistent with good oil  field practices to                                                               
maximize ultimate recovery.                                                                                                     
                                                                                                                                
5:10:27 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER specified  that another  goal  of the  AOGCC is  to                                                               
promote  greater ultimate  recovery.   The  AOGCC watches  what's                                                               
happening in  all of the  existing fields by reviewing  data that                                                               
comes in from the  wells in the fields in order  to track how the                                                               
operator is doing  versus how the operator said  he/she is doing.                                                               
This helps  ensure that  the operator really  is doing  what will                                                               
get the most gas out of the ground.   The AOGCC is able to review                                                               
information  that quickly  tells the  AOGCC whether  good or  bad                                                               
things are  happening.   For example, an  oil reservoir  needs to                                                               
maintain  fairly constant  pressure  in order  to avoid  anything                                                               
that would  decrease ultimate  recovery.   She explained  that if                                                               
the pressure starts  to drop, the AOGCC has to  either inform the                                                               
operator to "shut  in," add the water injection well,  or offer a                                                               
mitigating step  that will achieve  the correct.  When  the AOGCC                                                               
reviews  approved development  plans and  drilling proposals,  it                                                               
does so with an eye for greater ultimate recovery, she noted.                                                                   
                                                                                                                                
5:11:41 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  identified  independently assessing  oil  and  gas                                                               
development as  another key goal of  the AOGCC.  She  stated that                                                               
the AOGCC reviews  every step of an operator's  proposal and ties                                                               
it back to  the statutes in "Title 31" to  ensure that everything                                                               
is in accordance with those laws.                                                                                               
                                                                                                                                
5:12:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG referring  to AOGCC's jurisdiction from                                                               
the wellhead  down asked,  "Where do  you define  the end  of the                                                               
wellhead?"                                                                                                                      
                                                                                                                                
5:12:48 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER answered that in  a drilling operation, AOGCC has to                                                               
ensure that  the blowout preventer  equipment is in  good working                                                               
order.  If there are  surface safety valve systems, AOGCC ensures                                                               
that they  are working properly  and connecting  with sub-surface                                                               
safety valve  systems.  At or  near the surface, the  AOGCC works                                                               
with:   the blowout prevention  equipment, diverters,  and safety                                                               
valve systems.                                                                                                                  
                                                                                                                                
5:13:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG clarified  that the  AOGCC works  with                                                               
everything at a  "gathering facility," but probably  not after it                                                               
goes on a "gathering line" out to a "production center."                                                                        
                                                                                                                                
5:13:26 PM                                                                                                                    
                                                                                                                                
MS.   FOERSTER   confirmed   that   Representative   Guttenberg's                                                               
clarification was  correct and added,  "We're pretty much  on the                                                               
drill site."                                                                                                                    
                                                                                                                                
5:13:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  referring   to  inspection   of  the                                                               
wellheads, inquired about industry  standards and whether there's                                                               
an international  industry standard,  and how the  standards have                                                               
evolved to take into account Arctic drilling and conditions.                                                                    
                                                                                                                                
5:13:58 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  informed  the committee  that  the  AOGCC  applies                                                               
American   Petroleum   Institute   (API)  standards   for   their                                                               
operations.  Also,  she said that where local  industry has asked                                                               
that  AOGCC  "up the  ante"  because  of special  considerations,                                                               
AOGCC has  done that.   However, typically AOGCC "sticks  to" API                                                               
standards.                                                                                                                      
                                                                                                                                
5:14:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG inquired  as  to how  often the  vapor                                                               
recovery and pressures numbers are checked.                                                                                     
                                                                                                                                
5:14:43 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER  explained that  operators have  different reporting                                                               
requirements depending  upon the  pool rules  that are  in place.                                                               
She said  that typically  the AOGCC receives  the data  every six                                                               
months,  year, or  two  years,  depending on  the  field and  the                                                               
criticalness  of  getting  the  data.    However,  the  operators                                                               
receive  the data  on a  "much more"  frequent basis  and AOGCC's                                                               
experience  has  been that  it's  in  the  best interest  of  the                                                               
operators to maximize the recovery.                                                                                             
                                                                                                                                
5:15:34 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  identified  another  key  goal  of  the  AOGCC  as                                                               
protecting Alaska's  underground sources of drinking  water.  The                                                               
AOGCC  reviews every  application for  any sort  of injection  to                                                               
ensure that there's  no way for the injected fluid  to migrate to                                                               
a locale  that not supposed  to.   She explained that  the review                                                               
includes the geology/connectivity of  the different reservoirs in                                                               
which it's acceptable to inject  things into, and the possibility                                                               
that  those reservoirs  might be  "in communication"  with places                                                               
that  it  shouldn't.    In  addition,  the  review  includes  the                                                               
mechanical  integrity  of  the wellbores  to  ensure  that  there                                                               
aren't any leaks  or cement breakdowns that would  allow fluid to                                                               
enter  a path  in and  around the  wellbore and  move to  a place                                                               
where it's not supposed to go.                                                                                                  
                                                                                                                                
5:16:27 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  moved  on  to   the  AOGCC's  goal  of  protecting                                                               
correlative rights.  She explained  that the AOGCC provides every                                                               
landowner with the  opportunity to get his/her fair  share of the                                                               
resources.   If a landowner  feels like that's not  happening for                                                               
him/her  because of  something that  the  AOGCC is  able to  help                                                               
control, the  AOGCC will step  in and adjudicate  the dispute(s).                                                               
For example, she  explained that a typical oil or  gas well has a                                                               
certain drainage area  that it covers, and if  a landowner's well                                                               
is too close to another lease  line, he/she would be draining oil                                                               
or gas that belongs to another landowner.                                                                                       
                                                                                                                                
5:17:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG inquired as  to how often the situation                                                               
that Ms. Foerster mentioned occurs.                                                                                             
                                                                                                                                
5:18:00 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER said  that the  situation has  "not been  an issue"                                                               
since she's worked for the AOGCC,  although she said that she has                                                               
heard of a  "few" cases in the  past in which an  individual or a                                                               
company has  asked the AOGCC to  provide relief.  She  added that                                                               
the AOGCC determines the field rules based on science.                                                                          
                                                                                                                                
5:18:34 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  highlighted  that   there's  a  lot  of  confusion                                                               
regarding  the roles  of  the AOGCC,  the  Department of  Natural                                                               
Resources  (DNR), the  Department  of Environmental  Conservation                                                               
(DEC), and the AOGCC's relationship  with the oil companies.  She                                                               
explained that  the oil  companies own  a significant  portion of                                                               
the resource by virtue of having  leased the right to develop and                                                               
produce  it from  the landowner.   The  landowner is  the primary                                                               
owner  and  typically  receives a  smaller  percentage  [of  the]                                                               
royalty.    The  two  regulatory   bodies,  who  don't  have  any                                                               
ownership in  the resource, but have  a regulatory responsibility                                                               
in the  production of  the resource  are the  DEC and  the AOGCC.                                                               
She further  explained that  the DEC's role  is primarily  on the                                                               
surface, with  an environmental protection  responsibility, while                                                               
the   AOGCC's  role   is  more   resource  conservation   with  a                                                               
groundwater protection responsibility.                                                                                          
                                                                                                                                
5:20:39 PM                                                                                                                    
                                                                                                                                
MS.   FOERSTER   informed   the  committee   that   the   AOGCC's                                                               
headquarters  are in  Anchorage.   She said  that it  also has  a                                                               
field office in Deadhorse, with  some living arrangements for the                                                               
inspectors there.  The AOGCC tries  to keep two inspectors on the                                                               
[North  Slope] at  all times,  although sometimes  there is  only                                                               
one.   The  remainder of  the  AOGCC inspector  staff covers  the                                                               
Matanuska-Susitna Valley and Cook Inlet.   She clarified that the                                                               
AOGCC  has five  inspectors who  rotate between  Cook Inlet,  the                                                               
Matanuska-Susitna Valley, and the North Slope.                                                                                  
                                                                                                                                
5:21:40 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  explained that  the  AOGCC  divides its  technical                                                               
staff into  an "east team" and  a "west team," on  both the North                                                               
Slope and in  Cook Inlet.  The "east team"  consists of the North                                                               
Slope, Prudhoe  Bay, and  all of the  satellites of  Prudhoe Bay,                                                               
while  the "west  team" includes  Kuparuk and  its satellites  as                                                               
well as the National Petroleum Reserve-Alaska (NPR-A).                                                                          
                                                                                                                                
5:22:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG inquired  as to  whether NPR-A  is under                                                               
the AOGCC's  jurisdiction or whether  the AOGCC has  an agreement                                                               
with the federal government to work in the NPR-A.                                                                               
                                                                                                                                
MS. FOERSTER  reiterated that  the AOGCC  regulates [oil  and gas                                                               
development] on all land in  Alaska whether it's private, public,                                                               
or federal.   She added,  "When someone drills in  N-PRA, they'll                                                               
come  to us  for  a permit  as  well."   In  further response  to                                                               
Representative Rokeberg, she noted that  the AOGCC has "east" and                                                               
"west" teams in Cook Inlet.                                                                                                     
                                                                                                                                
5:23:16 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER discussed  the AOGCC's  highlights  in 2005,  which                                                               
include approval  of 88 orders  and other approvals,  approval of                                                               
216  drilling wells,  and approval  of  388 sundry  applications.                                                               
She  explained that  a sundry  application is  necessary when  an                                                               
operator wants to  "get onto a well" and do  something other than                                                               
drill,  such  as  something  that   will  change  the  mechanical                                                               
condition  of the  well or  the  reservoir, or  change the  wells                                                               
producing or  injecting status.  Another  key accomplishment that                                                               
she mentioned is  that the AOGCC had five  enforcement actions in                                                               
2005, which  occur when  an operator  has violated  AOGCC statues                                                               
and/or regulations.                                                                                                             
                                                                                                                                
MS. FOERSTER,  moving on to  highlights of rulings  and findings,                                                               
stated  that eight  AOGCC orders  either established  or modified                                                               
"pool rules."   Seven  orders either  approved or  extended pilot                                                               
projects,  which  are  shorter  in duration  than  a  full  field                                                               
development.  Typically, pilot projects  try out something new to                                                               
determine  whether  it's  going  to   be  good  or  bad  for  the                                                               
reservoir.   She explained that  the short duration  is important                                                               
so  that the  AOGCC  is  able to  "pull  the  plug" if  something                                                               
harmful is occurring.   On the other hand, if  something good for                                                               
the  reservoir is  occurring, the  AOGCC  is able  to extend  the                                                               
project.  If  the pilot project does something  "really good" for                                                               
the reservoir, the  AOGCC will make it part of  the "pool rules."                                                               
She noted that the AOGCC  had eight orders approving or modifying                                                               
enhanced  oil  recovery  and  two  orders  approving  underground                                                               
storage of hydrocarbons,  which is something new in  Alaska.  She                                                               
informed  the committee  that  two operators  in  the Cook  Inlet                                                               
requested  the  approval  of  the   AOGCC  to  use  existing  gas                                                               
reservoirs in Cook Inlet to  store gas that's produced during the                                                               
low-demand months  so that during  the peak-demand months  in the                                                               
winter they can  continue to produce all of their  wells and draw                                                               
from the storage reservoirs to meet  the peak demand.  She opined                                                               
that it's  important that the AOGCC  regulate underground storage                                                               
of hydrocarbons because there are some risks associated with it.                                                                
                                                                                                                                
5:27:24 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER, continuing her discussion  of 2005 AOGCC highlights                                                               
of rulings and  findings, stated that nine  orders were approved,                                                               
modified,  or  denied for  disposal  injection  operations.   She                                                               
explained that the  AOGCC denies something when  it believes that                                                               
it  will create  waste and/or  be  harmful to  the fresh  waters.                                                               
Also, there were four orders  to streamline operations and reduce                                                               
the   paperwork   required    for   routine   wellwork/day-to-day                                                               
operations in the field.                                                                                                        
                                                                                                                                
5:27:59 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER,  referring  to  a  graph of  Alaska  oil  and  gas                                                               
activity over  the last 50  years, explained that the  numbers of                                                               
permits,  active  wells,  and active  reservoirs  have  all  been                                                               
increasing.    In  regard  to approved  permits,  she  said  that                                                               
although the number has dropped  "a little bit," it's not because                                                               
people are  doing less,  rather the  well operations  are getting                                                               
more complex and  more time consuming.  Therefore,  she said that                                                               
the activity  level has remained  "very, very high."   She opined                                                               
that  it has  gotten  more challenging  to keep  up  with as  the                                                               
complexity of the work has increased.                                                                                           
                                                                                                                                
5:29:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  inquired as  to whether  the decreased                                                               
number of approved permits has anything  to do with the amount of                                                               
decreased time for construction in the winter.                                                                                  
                                                                                                                                
5:30:00 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  opined  that  the impact  of  decreased  time  for                                                               
construction  in  the winter  is  "fairly  small," and  that  the                                                               
biggest  impact  is  that  the  work  is  taking  longer  on  the                                                               
routine/multi-lateral drilling.   In regard to  cumulative annual                                                               
well activity, she  stated that drilling permits  have "dropped a                                                               
little  bit,"  but  the  "biggest  drop" has  be  in  the  sundry                                                               
permits.                                                                                                                        
                                                                                                                                
5:30:47 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER, in  regard to  the more  complex wellwork,  stated                                                               
that the AOGCC's  permit workload has increased due  to having to                                                               
maintain  a higher  level of  technical knowledge.   Examples  of                                                               
advances  in wellwork  are enhanced  oil recovery  techniques and                                                               
approval  of pentilateral  wells, in  which branches  are drilled                                                               
off  of the  main bore  as well  as branches  drilled off  of the                                                               
branches.                                                                                                                       
                                                                                                                                
5:32:26 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER,  in regard to  exploratory well  permits, explained                                                               
that there are "a few"  operators that have continued to explore.                                                               
However,  in 2002,  BP  stopped  exploring.   In  the first  five                                                               
years, there were  two to five companies that  were drilling, and                                                               
in 2005, there were 12 companies  that were drilling.  She stated                                                               
that  as more  operators  begin drilling,  AOGCC's  work "gets  a                                                               
little harder."                                                                                                                 
                                                                                                                                
5:35:12 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING inquired  as to whether AOGCC  staffing is adequate                                                               
for the workload.                                                                                                               
                                                                                                                                
5:35:17 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER replied  that the AOGCC currently has  "a couple of"                                                               
vacancies it is actively working to  fill.  In addition, she said                                                               
that  the AOGCC  has  asked for  "a few"  new  positions in  this                                                               
year's budget.   She  added, "We'd rather  operate lean  and mean                                                               
than overstaffed."                                                                                                              
                                                                                                                                
5:35:59 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING said that it's his  hope that in the future, Alaska                                                               
will  see a  greatly  expanded oil  and gas  industry,  as it  is                                                               
Alaska's "ace in  the hole" economically, and that  he'd liked to                                                               
see more  activity.   He asked,  "If that were  to occur,  do you                                                               
foresee a substantial need for  increased staff and perhaps, even                                                               
an increase in the number of commissioners?"                                                                                    
                                                                                                                                
5:36:10 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER answered,  "We don't  see it  now," and  reiterated                                                               
that the AOGCC has asked for  some small increases.  In addition,                                                               
she said that  the AOGCC has asked for funding  of contractors to                                                               
do "very specialized things" that the AOGCC hopes will diminish.                                                                
                                                                                                                                
5:36:36 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING  asked if there would  ever be a scenario  in which                                                               
the AOGCC would need more  than three commissioners to handle the                                                               
work that is required.                                                                                                          
                                                                                                                                
MS. FOERSTER said that it's always a possibility.                                                                               
                                                                                                                                
5:37:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SAMUELS  asked for  clarification of  the vertical                                                               
well and extended reach well slide in the handout.                                                                              
                                                                                                                                
MS.  FOERSTER explained  that  in the  past,  when only  vertical                                                               
wells were drilled, "clever" operators  would tilt their drilling                                                               
rigs.  Therefore,  agencies such as the AOGCC  adopted rules that                                                               
required distance from lease lines.   She added that the distance                                                               
is  not the  surface distance  from  the lease  line, rather  the                                                               
reservoir penetration distance  from the lease line,  in order to                                                               
protect the drainage radius of an operator.                                                                                     
                                                                                                                                
5:38:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  inquired as to  how the number  of "bore                                                               
holes" inside  a multi-lateral wellbore  are counted  and whether                                                               
each bore requires an individual permit.                                                                                        
                                                                                                                                
MS. FOERSTER informed the committee  that every bore requires its                                                               
own permit and  the AOGCC maintains records on  every bore that's                                                               
drilled from the time an operator  applies for a permit, until an                                                               
operator "abandons" a well.                                                                                                     
                                                                                                                                
5:39:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if Ms.  Foerster if she was able to                                                               
recall the maximum number of [bores] in one multi-lateral well.                                                                 
                                                                                                                                
MS.  FOERSTER  answered  that  the   AOGCC  is  starting  to  see                                                               
pentilateral wells,  in which there  are five bores,  all drawing                                                               
from the same reservoir into the same main bore.                                                                                
                                                                                                                                
5:40:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired as  to whether the AOGCC expects                                                               
more than five branches in the future.                                                                                          
                                                                                                                                
MS.  FOERSTER explained  that the  operators  are getting  "very,                                                               
very" good  at drilling the  multi-lateral wells and  are finding                                                               
that it's  cheaper than  drilling a "brand  new" well,  and makes                                                               
less  of  a  "footprint"  than   drilling  a  "brand  new"  well.                                                               
Therefore,  to the  degree  that the  operators  can continue  to                                                               
expand their technology, she answered,  "Why not, let them put as                                                               
many extensions as they can."                                                                                                   
                                                                                                                                
5:40:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if  [adding branches] increases the                                                               
numbers of permits.                                                                                                             
                                                                                                                                
MS. FOERSTER reiterated that every  time an operator drills a new                                                               
penetration,  a new  permit to  drill  is required.   In  further                                                               
response to Representative Rokeberg,  she explained that the time                                                               
frame of the process to add  additional bores varies from well to                                                               
well.   Although  an  operator  doesn't have  to  start from  the                                                               
surface and drill  a new well, there are  certain operations that                                                               
are  added to  the process  that would  not be  necessary if  the                                                               
operator was  drilling a  new well.   Therefore, she  stated that                                                               
adding a bore can  be more complex.  In addition,  as a result of                                                               
the other wellbores  that are open, there's an  increased risk of                                                               
making a  mistake.  Ms.  Foerster explained that an  operator has                                                               
to isolate the existing bores in  a manner that isn't damaging or                                                               
permanent,  and   such  that  they   are  accessible   after  the                                                               
additional bore  is completed.   Then  an operator  has to  cut a                                                               
window in the pipe to create  an opening for the additional bore.                                                               
The  next step  is a  deliberate process  in which  measuring and                                                               
adjustments  occur while  drilling.   Therefore,  to ensure  that                                                               
mistakes aren't  made, an  operator ends up  taking more  time to                                                               
add an additional bore than he/she would to drill a new well.                                                                   
                                                                                                                                
5:43:37 PM                                                                                                                    
                                                                                                                                
CHAIR  KOHRING, in  regard  to the  "actual"  production of  oil,                                                               
asked  how  the  production  levels are  monitored,  and  whether                                                               
monitoring is a function of  the AOGCC.  More specifically, Chair                                                               
Kohring asked  if the state is  able to verify what  the industry                                                               
is  reporting, to  ensure that  the  state is  getting its  "fair                                                               
share" of the royalties from the production of oil.                                                                             
                                                                                                                                
5:44:07 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER  explained that production  volumes are  reported to                                                               
both the  AOGCC and  the DNR.   The  DNR receives  the production                                                               
volumes for revenue purposes and  the AOGCC receives them for the                                                               
reservoir management  and injection purposes.   The production of                                                               
oil and  gas, and  the injection  of every  fluid, goes  into the                                                               
calculation of the AOGCC's regulatory  cost charge.  The industry                                                               
pays  the cost  of the  AOGCC and  the cost  is allocated  to the                                                               
different members of  the industry based on the  volumes of fluid                                                               
that are produced and injected.                                                                                                 
                                                                                                                                
5:45:18 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER discussed key challenges  and projects of the AOGCC.                                                               
One key challenge  is determining the impacts of  major gas sales                                                               
upon  ultimate hydrocarbon  recovery from  Prudhoe Bay  and Point                                                               
Thomson  reservoirs.     Before  one  produces  gas   in  an  oil                                                               
reservoir,  one [should]  get all  of the  oil out  first because                                                               
producing the  gas before all of  the oil has been  produced will                                                               
result in a  loss of some of  the oil.  She  explained that there                                                               
are variables that  impact the loss:  the timing  with which it's                                                               
done, how  much of the  oil is left,  the volumes with  which the                                                               
gas is  withdrawn, and  the mitigating  steps that  the operators                                                               
take to offset the oil losses.   The AOGCC is involved in a study                                                               
that is  reviewing the  reservoir model and  its use  in planning                                                               
and  predicting  for Prudhoe  Bay,  such  that  a matrix  of  the                                                               
allowable gas  offtake will depend  on the timing  and mitigating                                                               
steps.                                                                                                                          
                                                                                                                                
MS. FOERSTER stated  that the AOGCC is  currently conversing with                                                               
the Point Thomson operator to reach  a similar agreement and do a                                                               
similar study  for Point  Thomson.  However,  the issues  will be                                                               
different  because  there  are  questions  as  to  whether  Point                                                               
Thomson  should be  produced  as an  oil reservoir  or  as a  gas                                                               
reservoir.   She explained that  there's a significant  amount of                                                               
gas condensate  associated with the  Point Thomson  reservoir and                                                               
producing it  as a  gas reservoir has  the potential  of creating                                                               
loss of some of the condensate  resources.  The AOGCC needs to do                                                               
a  similar study  to  ensure that  whatever  development plan  is                                                               
pursued   for  Point   Thomson  is   one  that   maximizes  total                                                               
hydrocarbon  recovery.   Another key  challenge is  to facilitate                                                               
expanded statewide exploration and  development.  She stated that                                                               
the AOGCC doesn't want to be a "permitting bottleneck."                                                                         
                                                                                                                                
5:48:38 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER  stated that another  key challenge of the  AOGCC is                                                               
to respond to  the needs for revising AOGCC's  regulations as the                                                               
industry moves  into new areas, such  as nonconventional resource                                                               
recovery, shallow  gas, and gas storage.   The AOGCC needs  to be                                                               
responsive to  the changes  and ensure  that it  is appropriately                                                               
regulating new things as they arise.   She said that the AOGCC is                                                               
working  to  provide information  via  the  Internet to  make  it                                                               
possible for anyone  interested in investing in  Alaska to access                                                               
the data to make good investment decisions.                                                                                     
                                                                                                                                
5:49:45 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER stated that another  key challenge is to continue to                                                               
provide  appropriate regulation  over  the underground  injection                                                               
activities  in  Class  II  and   to  take  primacy  for  Class  I                                                               
injection, if allowed by the EPA.                                                                                               
                                                                                                                                
5:50:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER,  in regard to  making Alaska oil  and gas                                                               
information  available on  the Internet,  asked  where the  AOGCC                                                               
draws the  line between confidential information  and information                                                               
that the it is able to make available to everyone.                                                                              
                                                                                                                                
MS.  FOERSTER  answered, "Our  line  is  very clear  and  solid."                                                               
Information with  confidential status either  has confidentiality                                                               
for a  set time  period or  it has  confidentiality forever.   In                                                               
further  response to  Representative  Gardner,  she informed  the                                                               
committee that the AOGCC's statutes  determine how information is                                                               
categorized.     She  stated  that   another  key   challenge  is                                                               
responding  to the  changing conditions  in a  mature oil  field,                                                               
where  the  infrastructure  is   aging  and  the  operations  are                                                               
changing.   The AOGCC ensures  that operations are safe  and that                                                               
resources are being maximized.                                                                                                  
                                                                                                                                
5:52:32 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  explained  that   the  AOGCC  is  responsible  for                                                               
monitoring  gas  disposition  in   Alaska,  and  therefore  every                                                               
thousand  cubic  feet (mcf)  of  gas  that  is produced  must  be                                                               
accounted for in order to prevent  waste.  She mentioned that the                                                               
AOGCC's  [gas  disposition  monitoring] process  needs  revision.                                                               
AOGCC's final  key challenge is  to continue to evaluate  ways to                                                               
increase  efficiency, reduce  costs, encourage  new operators  to                                                               
enter the state, and encourage operators in Alaska to remain.                                                                   
                                                                                                                                
HB 300-OIL & GAS CONSERVATION COMMISSION MEMBER                                                                               
                                                                                                                                
5:54:43 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING announced that the  next order of business would be                                                               
HOUSE BILL  NO. 300,  "An Act relating  to the  qualifications of                                                               
the member of the Alaska  Oil and Gas Conservation Commission who                                                               
need  not be  certified, trained,  or experienced  in either  the                                                               
field  of  petroleum  engineering   or  the  field  of  petroleum                                                               
geology."                                                                                                                       
                                                                                                                                
5:55:07 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING,  sponsor of  HB 300, explained  that HB  300 "adds                                                               
some substance"  to the requirements  for the public seat  on the                                                               
three-member AOGCC.   As a result  of the oil and  gas industry's                                                               
technical  nature and  complexity, Chair  Kohring opined  that it                                                               
makes  sense  to  require  that an  appointed  individual  has  a                                                               
background in  the oil and gas  industry.  The law  [referring to                                                               
the  public seat  of  the  AOGCC] currently  reads  "Need not  be                                                               
certified,  trained,  or  experienced  in  either  the  field  of                                                               
petroleum  engineering or  petroleum technology."   However,  the                                                               
proposed committee  substitute (CS) says that  the public member,                                                               
"Shall  have  training or  experience  that  gives the  person  a                                                               
fundamental  understanding of  the oil  and gas  industry in  the                                                               
state."                                                                                                                         
                                                                                                                                
5:57:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SAMUELS  moved to  adopt  CSHB  300, Version  24-                                                               
LS0997\F, Kane,  1/23/06, as the  working document.   There being                                                               
no objection, Version F was before the committee.                                                                               
                                                                                                                                
5:57:42 PM                                                                                                                    
                                                                                                                                
DANIEL  T.   SEAMOUNT,  JR.,  Commissioner,  Alaska   Oil  &  Gas                                                               
Conservation  Commission  (AOGCC), Department  of  Administration                                                               
(DOA), stated that  the AOGCC can support HB 300.   He noted that                                                               
although   the  AOGCC   doesn't  feel   like  there's   been  any                                                               
demonstrative  problems with  lack  of experience  by the  public                                                               
member  in the  past, oil  and gas  operations are  becoming much                                                               
more  complex and  it's good  insurance  for all  members of  the                                                               
commission to  have a fundamental  understanding of  the industry                                                               
he/she regulates.                                                                                                               
                                                                                                                                
5:59:29 PM                                                                                                                    
                                                                                                                                
CHAIR  KOHRING  noted  that  [HB  300]  is  "definitely  not"  an                                                               
indictment of past members who have served on the AOGCC.                                                                        
                                                                                                                                
5:59:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SAMUELS asked if  "fundamental understanding" is a                                                               
term of art or if common sense should apply.                                                                                    
                                                                                                                                
MR. SEAMOUNT explained that  the term "fundamental understanding"                                                               
allows for some flexibility.   The AOGCC doesn't currently have a                                                               
definition for it.                                                                                                              
                                                                                                                                
MS. FOERSTER further explained that  while the AOGCC felt that it                                                               
was appropriate to  "tighten up" the requirement  "a little bit,"                                                               
the AOGCC didn't want to restrict  good applicants who might be a                                                               
little unorthodox  or might  not meet a  tight requirement.   She                                                               
said that  it would be  a loss to the  state if such  people were                                                               
kept from applying.                                                                                                             
                                                                                                                                
6:02:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  opined that an appointment  to the AOGCC                                                               
public seat  should not be  a political reward but  rather should                                                               
be based on competence.                                                                                                         
                                                                                                                                
6:03:11 PM                                                                                                                    
                                                                                                                                
CHAIR  KOHRING,  upon determining  that  no  one else  wished  to                                                               
testify on HB 300, announced the closure of public testimony.                                                                   
                                                                                                                                
6:03:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SAMUELS moved  to  report CSHB  300, Version  24-                                                               
LS0997\F,  Kane,  1/23/06,  out   of  committee  with  individual                                                               
recommendations  and the  accompanying zero  fiscal note.   There                                                               
being no objection,  CSHB 300(O&G) was reported out  of the House                                                               
Special Committee on Oil and Gas.                                                                                               
                                                                                                                                
^OVERVIEW/UPDATE FROM ALASKA OIL & GAS CONSERVATION COMMISSION                                                                
                                                                                                                                
6:03:39 PM                                                                                                                    
                                                                                                                                
CHAIR KOHRING  announced that the  final order of  business would                                                               
be the  continuation and conclusion  of the  overview/update from                                                               
the AOGCC.                                                                                                                      
                                                                                                                                
6:04:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG,  referring to prior  testimony regarding                                                               
the  "Prudhoe  Bay  takeoff  rating,"  asked  if  the  study  Ms.                                                               
Foerster  spoke of  is  the  same study  on  which the  committee                                                               
previously heard testimony.                                                                                                     
                                                                                                                                
MS.  FOERSTER  explained   that  when  the  AOGCC   went  to  the                                                               
legislature  during   the  previous   session  and   requested  a                                                               
significant  amount of  money to  embark  on a  study, the  AOGCC                                                               
feared that it would  end up being a study that  it would have to                                                               
do  alone and  for which  it would  have to  build its  own model                                                               
without the cooperation  of the industry.  She said  that [such a                                                               
study] would have cost  a lot of money, taken a  lot of time, and                                                               
there  wouldn't  have  been  a guarantee  that  the  AOGCC  would                                                               
achieve a result with as  high quality as the existing operator's                                                               
model would  have given  the AOGCC.   Fortunately, the  AOGCC has                                                               
been  able to  work with  the operator  and the  other owners  to                                                               
reach  an   agreement  in  which   the  AOGCC  can   utilize  the                                                               
[operator's]  expertise,   through  both  the   AOGCC's  existing                                                               
reservoir engineering staff  and a consultant that  it has hired.                                                               
The  consultant has  25 years  of reservoir  modeling experience,                                                               
much of which has been in Prudhoe Bay, she noted.                                                                               
                                                                                                                                
6:07:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked if  the AOGCC  has an  estimate of                                                               
how much time it will take to complete the study.                                                                               
                                                                                                                                
MS. FOERSTER related that the AOGCC  is confident that it will be                                                               
able  to [complete  the study]  in six  months because  the AOGCC                                                               
will have  full access every  working day to  the model.   If the                                                               
AOGCC  reaches the  end  and  is in  need  of  an extension,  the                                                               
agreement  allows a  reasonable  extension.   However, she  added                                                               
that the AOGCC doesn't think that it will need an extension.                                                                    
                                                                                                                                
6:07:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG, in regard  to Point Thomson, inquired as                                                               
to the  status of  AOGCC's agreement with  ExxonMobil as  well as                                                               
the timeframe.                                                                                                                  
                                                                                                                                
MS.  FOERSTER explained  that the  AOGCC is  still in  the "early                                                               
stages"  of  dealing with  ExxonMobil.    She opined  that  she's                                                               
hopeful that the AOGCC will have  an agreement by this summer [of                                                               
2006] to begin a similar six-month process [with ExxonMobil].                                                                   
                                                                                                                                
6:09:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as  to  whether  ExxonMobil's                                                               
modeling is as good, since it isn't in production.                                                                              
                                                                                                                                
MS. FOERSTER informed the committee  that in the 1970s in Prudhoe                                                               
Bay, the  AOGCC determined  an allowable  gas offtake,  which was                                                               
2.7 billion [standard cubic feet per  day].  She said that it was                                                               
based on a "very good" model,  although it had no production data                                                               
with which to do  a history match.  Now the AOGCC  has a lot more                                                               
data  with  which  it  is  moving forward  on  the  new  "Prudhoe                                                               
studies."  Although ExxonMobil's ability  to analyze the data has                                                               
improved, its  model isn't  nearly as  good as  it will  be after                                                               
there's been production.                                                                                                        
                                                                                                                                
6:10:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  how  the AOGCC  will  be able  to                                                               
complete the study in six months if it doesn't have good data.                                                                  
                                                                                                                                
MS. FOERSTER explained  that the less data that the  AOGCC has to                                                               
evaluate, the quicker  it can complete the  evaluation.  However,                                                               
the AOGCC recognizes that the evaluation will be less reliable.                                                                 
                                                                                                                                
6:11:34 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER stated  that an  AOGCC permit  is required  for the                                                               
drilling of  a well,  alteration in configuration  of a  well, or                                                               
injection of  anything into the ground.   In regard to  the AOGCC                                                               
permitting process, she explained that  the operator has to apply                                                               
to the commission  with what he/she feels would  be the necessary                                                               
supporting documentation.   For example,  for a permit  to drill,                                                               
the  operator  informs  the  AOGCC  of  the  depth  of  drilling,                                                               
provides a  map of  the well's projectory,  informs the  AOGCC of                                                               
the type of  cement and amount to  be used, and the  type of pipe                                                               
to be  used.   The AOGCC uses  the aforementioned  information to                                                               
determine  whether  the well  will  not  violate the  correlative                                                               
rights   of  other   operators,   will  be   undamaging  to   the                                                               
groundwaters, and  will be a  good oil field operation  that will                                                               
be a  lasting safe  well allowing maximum  recovery.   She stated                                                               
that for  each type of permit,  the AOGCC looks at  very specific                                                               
information to ensure that it is  able to "check off all of those                                                               
boxes."  Based  on the AOGCC's technical staff's  analysis of the                                                               
above information, a recommendation  is made to the commissioners                                                               
to either approve or deny the permit.                                                                                           
                                                                                                                                
6:14:16 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER noted  that AOGCC's  drilling permit  approval time                                                               
has remained at about seven days for the "last couple of years."                                                                
                                                                                                                                
CHAIR KOHRING added  that [the permit approval  time has remained                                                               
at  about seven  days]  despite  the fact  that  the process  has                                                               
become more complex.                                                                                                            
                                                                                                                                
MS. FOERSTER further  added that the requirements  that the AOGCC                                                               
has placed on the operators have gotten more stringent.                                                                         
                                                                                                                                
6:15:32 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER  stated that the  sundry application  decisions take                                                               
about  four days,  and  are typically  less  complex because  the                                                               
operators are doing something to an existing well.                                                                              
                                                                                                                                
6:16:07 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER,  in regard to  wellwork in the  sundries, explained                                                               
that  it  could be  either  abandoning  a completion,  adding  or                                                               
plugging  perforations,  or  stimulating producing  pools.    She                                                               
added that  the AOGCC  is seeing  a lot  of repairing  wells, and                                                               
that  wasn't something  it saw  in the  past.   As the  wells are                                                               
aging,  to  maintain  the  mechanical   integrity  and  keep  the                                                               
operation safe, there's  been a lot of repairing.   The AOGCC has                                                               
seen several suspensions, but hasn't  seen a lot of abandonments.                                                               
Rather than  abandoning a well,  the operator is going  back into                                                               
the  well and  drilling multi-laterals.   The  operators use  the                                                               
existing wellbore to go some place  new so that they don't add to                                                               
the footprint, and so that they can get to "things" cheaper.                                                                    
                                                                                                                                
6:17:02 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER explained that when  the AOGCC regulates underground                                                               
injection,  it can  be enhanced  recovery, which  can be  through                                                               
water, miscible injection (MI), dry  gas, and CO2 injection.  She                                                               
clarified that CO2  is a greenhouse gas and  as hydrocarbon gases                                                               
are produced,  CO2 is  taken off  of it and  something has  to be                                                               
done with  it.  For many  reservoirs, CO2 is a  good enhanced oil                                                               
recovery tool.  Therefore, operators are  going to use the CO2 to                                                               
produce more oil.   She stated that the AOGCC  is also increasing                                                               
its vigilance  over gas  storage and  it's the  responsibility of                                                               
the AOGCC to monitor waste disposal.                                                                                            
                                                                                                                                
MS.  FOERSTER  explained  that  as part  of  the  AOGCC's  permit                                                               
approval  process, the  AOGCC  approves  the conservation  orders                                                               
that determine  whether a well  will be produced  as an oil  or a                                                               
gas well.   She added that  there are restrictions on  the amount                                                               
of gas that  can be produced out  of an oil well,  typically in a                                                               
gas:oil ratio.   For every barrel of oil produced  out of a well,                                                               
an operator  can only produce  a certain amount  of gas.   If the                                                               
operator  produces  more  than   the  allowed  amount,  [the  gas                                                               
production] will be  restricted or the operator  won't be allowed                                                               
to produce the well at all  without re-injecting the gas into the                                                               
reservoir.                                                                                                                      
                                                                                                                                
MS.  FOERSTER  added  that  the AOGCC  also  looks  at  allowable                                                               
offtake  rates by  well or  pool, in  both oil  and gas,  because                                                               
there  are   maximum  efficient  rates  for   improving  ultimate                                                               
recovery.   In  addition,  the AOGCC  has performance  monitoring                                                               
requirements.    She  also  mentioned  well  spacing  to  protect                                                               
correlative rights.   Sometimes the AOGCC  grants special spacing                                                               
rules that are  closer together and closer to the  lease lines to                                                               
acknowledge that a reservoir might not  have as big of a drainage                                                               
radius as the statewide rules would allow.                                                                                      
                                                                                                                                
6:20:26 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER explained  that the  AOGCC has  different reporting                                                               
requirements  based on  the  parameters of  the  reservoir.   For                                                               
example, if  the AOGCC  is concerned  about water  production, it                                                               
will  require water  reporting on  a  more frequent  basis.   She                                                               
summarized that  each conservation order  makes the rules  as the                                                               
specific reservoir  requires.  In  regard to  special development                                                               
considerations,  if  there  are   spacing  exceptions  for  valid                                                               
reasons  and offset  operators  don't object  to  them, then  the                                                               
AOGCC  is able  to grant  them.   She mentioned  that Contingency                                                               
Plan (C-Plan) exemptions are spill-response plan requirements.                                                                  
                                                                                                                                
CHAIR KOHRING  noted that the  committee is "very"  familiar with                                                               
C-plan exemptions.                                                                                                              
                                                                                                                                
6:21:46 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER described  annular disposal.   She  said that  in a                                                               
remote operation,  where there aren't disposal  wells nearby, the                                                               
AOGCC wants  to encourage  an operator to  "go out  and explore,"                                                               
and part  of the encouragement  is to  minimize the costs  of the                                                               
operator.  It costs a lot to take  all of the drilling waste in a                                                               
remote location and  move it to a disposal  location.  Therefore,                                                               
in  some circumstances,  the AOGCC  allows annular  disposal into                                                               
the  exploratory  well.    She   then  described  an  information                                                               
dissemination special development consideration.                                                                                
                                                                                                                                
6:24:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG,  in regard  to  Point  Thomson and  the                                                               
potential loss of  condensates from the gas  versus liquid study,                                                               
asked if it  is going to be  separate from the takeoff,  or is it                                                               
integral to the AOGCC's whole study  of the unit.  Also, he asked                                                               
if the AOGCC is privy to ExxonMonbil's $100 million study.                                                                      
                                                                                                                                
6:24:39 PM                                                                                                                    
                                                                                                                                
MS. FOERSTER  informed the committee  that it is integral  to the                                                               
entire development.  She said  that from the AOGCC's perspective,                                                               
the  main concern  is preventing  waste  and maximizing  ultimate                                                               
recovery.  The number one  objective in these studies is ensuring                                                               
that both oil and gas recoveries  are optimized so that the total                                                               
hydrocarbon  recovery is  maximized.   Non-confidential data  has                                                               
been shared  with the AOGCC  by ExxonMobil, she noted.   However,                                                               
due to the  depth of analysis necessary, the AOGCC  needs to look                                                               
at  data that  ExxonMobil  is  not yet  willing  to make  public.                                                               
Therefore, the  AOGCC has to  reach an agreement  with ExxonMobil                                                               
that  will allow  the AOGCC  to review  ExxonMobil's confidential                                                               
data.  The AOGCC is trying to  work toward a study similar to the                                                               
one done with BP in Prudhoe Bay.                                                                                                
                                                                                                                                
6:25:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired as  to  whether  the AOGCC  is                                                               
involved with  the Division of  Oil &  Gas (DOG) in  its approval                                                               
for the annual plan of development.                                                                                             
                                                                                                                                
MS. FOERSTER explained that the  Department of Natural Resources'                                                               
(DNR) process and  the AOGCC's processes are  separate.  However,                                                               
if the DNR has a  hearing or presentation that involves something                                                               
that the  AOGCC is working  on, then  the AOGCC will  also attend                                                               
the hearing or  presentation, and vice versa.  The  AOGCC and the                                                               
DNR  have to  be careful  that  neither violates  confidentiality                                                               
agreements in which  the other isn't involved.   In addition, she                                                               
added that  the AOGCC and  the DNR also  have to be  careful that                                                               
they maintain independence from  each other because they regulate                                                               
"totally different things".                                                                                                     
                                                                                                                                
6:27:28 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Oil and Gas meeting was adjourned at 6:27                                                                  
p.m.                                                                                                                            

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